| With the rise of globalization, international assignments and multicultural teams, managing cultural diversity has become essential to organizations. As managing cultural diversity in team work has historically been a challenge (Earley & Gibson, 2002), academics and practitioners have directed resources toward enhancing understanding of how best to manage team diversity and improve effectiveness of international assignments (Tsui et al, 2007). Cultural Intelligence (CQ) is the ability to behave effectively in culturally diverse situations (Earley & Ang, 2003). Theory and research suggest that cultural diversity within teams often relate negatively to team member experiences of team processes, thereby negatively impacting team outcomes. The current study relies on similarity/attraction theory (Byrne, 1971), social identification theory (Turner, 1982) and self-categorization theory (Turner. 1982) to evaluate the relationship between cultural diversity and team processes (cohesion, participation, relationship and task conflict) and team outcomes (performance and satisfaction). The moderating effect of Cultural Intelligence on the relationship between cultural diversity and team processes was also explored. Data were collected from fourth year business school students working in teams of four to six to manage a virtual company competing with other teams in a stimulated market. A significant negative relationship was found between cultural diversity and team cohesion and participation; and a significant positive relationship was noted between cultural diversity and both team relationship conflict and task conflict. Furthermore, team satisfaction correlated positively with team cohesion and negatively with both types of team conflict while team performance was unrelated to team cultural diversity and perceptions of team processes. Finally, team members' CQ positively moderated the relationship between team cultural diversity and team processes (cohesion, participation and relationship conflict), where the team was comprised of two different cultures only. Where teams were comprised of members from more than two cultural groups, the moderation was negative. |
