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The Effect of Functional Diversity on Team Creativity: Behavioral and fNIRS Evidence

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Abstract

Variation in functional expertise is an important decision that managers face when designing teams tasked with being creative. We develop theory that predicts that functional diversity has countervailing effects on team creativity through its positive (negative) effect on the uniqueness (usefulness) of the proposals generated. We conduct an experiment where functionally homogeneous or heterogeneous two-person teams are tasked with proposing a creative use for an unused university space. We measure the uniqueness, usefulness, and overall creativity of team proposals. We also use functional near-infrared spectroscopy (fNIRS) neuroimaging technology to investigate the underlying team cognitive processes. Measured outcomes and fNIRS data support our predictions. Combining conventional experiment and advanced neuroimaging techniques, our study informs theory and practice by providing evidence of how functional diversity affects team creativity. This paper was accepted by Suraj Srinivasan, accounting. Funding: This work was supported by the National Natural Science Foundation of China (NA) [Grant 72172132] and CPA Ontario’s Centre for Sustainability Reporting and Performance Management (NA). Supplemental Material: The online supplemental appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02157 .

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Creativity and innovation have become critical organizational capabilities in today’s global environment, and leveraging creative potential of employees across various cultural contexts has become increasingly important. Although recognized among researchers, cross-cultural differences in creativity are not yet well understood. We contribute to this line of research by constructing a theoretical model that focuses on cultural differences in cognition (i.e., holistic vs. analytic thinking) that affect the evaluation of creative ideas. The cultural cognition perspective allows us to theorize about the interrelationship between an idea’s novelty and its usefulness. We propose that to the extent there is a trade-off between an idea’s novelty and usefulness, cultural differences in cognition will systematically influence the trade-off relationship such that Easterners will perceive a stronger trade-off between novelty and usefulness as compared with their Western counterparts. Such effects of cultural cognition, however, can be reduced by contextual factors of multicultural exposure, cognitive team diversity, and organizational climate for innovation. Our cultural cognition perspective complements the extant cultural value and social norms perspectives on cross-cultural differences in creativity and innovation.
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In this paper, we examine the role of budgets as a central instrument within the management control system (MCS) in a creative context. In particular we investigate whether creative firms characterized by different kinds of creativity use their budgets in a similar way. We hereby distinguish between expected creativity (for open, self-discovered problems) and responsive creativity (for closed, presented problems) (Unsworth 2001) and investigate the interactive versus diagnostic use of budgets (Simons 1990, 1991, 1995). Based on a comparative study involving four creative firms, we find that creative firms being mainly characterized by expected creativity use their budgets in a more interactive way. In creative firms in which responsive creativity is most important, the budgets are used in a rather diagnostic way. This study contributes to the management control literature by acknowledging that a diagnostic use of budgets does not per se stifle creativity. Instead, it is important to understand that the specific creative context might have implications for the way in which MCS instruments are used to sustain the creative process.
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We review research in team diversity to take stock of the current state of the science, the trajectory that led to this state, and a potential way forward that would lead to more integrative theory in diversity research. We outline how diversity research has developed into the current state of the science with growing consensus on key mediating processes in the diversity-performance relationship and growing consensus that this relationship is contingent on moderating influences. We see important challenges in moving the field forward in two key areas: first, in integrating diversity research with its emphasis on diversity in relatively stable attributes – trait diversity – with research in more state-like composition variables – state diversity; second, in integrating research in compositional diversity with research on emergent diversity – diversity in team interaction processes and team emergent states. We propose that meeting these challenges will result in more broad-ranging theory that has for instance the potential to bridge research in team diversity and individual-team dissimilarity (relational demography).
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Findings from prior research on the relationship between functional diversity and team innovation have been inconclusive. This study aims to reconcile the mixed findings in the literature by investigating how functional diversity may influence team innovation and when such influence may or may not occur. The view of teams as information processors suggests that functionally diverse teams may capitalize on their knowledge benefits to produce innovations through knowledge sharing. However, knowledge sharing and subsequent team innovation do not necessarily occur in functionally diverse teams. Drawing on the motivated information processing in groups theory, we propose that affect-based trust in a team moderates the effects of functional diversity on team innovation (via knowledge sharing). The results based on a sample of 96 research and development teams indicate that functional diversity had a negative indirect relationship with team innovation via knowledge sharing when affect-based trust in a team was low, and this relationship became less negative as the level of affect-based trust in a team increased. The relationship was not significant when affect-based trust in a team was high.
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The role of cross-functional teams has been a topic of discussion for years. This study develops a theoretical model that extends prior research by exploring how functional diversity influences team performance through team cohesion and team learning. In addition, the model examines the conditions (team behavioral integration) under which the expected negative nonlinear relationship between functional diversity and team cohesion is mitigated. Hypotheses were tested using longitudinal data from 45 teams working on a semester-long simulation. The findings not only supported the moderating role of team behavioral integration in the relationship between functional diversity and team cohesion, but also revealed support for the mediating hypothesis of team learning on the team cohesion–team performance relationship. Overall, this study addresses a prior research gap by clarifying why (the underlying processes) and when (context) functional diversity leads to higher team performance.
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Organizations that rely heavily on employee creativity face a dilemma: the particular nature of creative production calls for a substantial use of formal control, yet such control can undermine employee creativity. We examine this dilemma by analyzing how an organization's reliance on creativity influences its choice of control practices. More specifically, we argue that an organization's high reliance on employee creativity generates two types of cost, which will be reflected in the control choices made by its top management. First, a high reliance on employee creativity brings with it particular risks of dysfunctional employee behavior such as an overly narrow focus on the individual task or the opportunistic use of task-specific expertise. Second, it generates costs when it induces organizations to abstain from the use of (otherwise effective) controls because such controls increase the risk of undermining employee creativity. We identify two characteristics of the work setting – the importance of employees' intrinsic task motivation and the lack of task-specific cause–effect knowledge on part of managers – which help us to better understand the sources of the cost of creativity. Using survey data from 457 companies, we provide evidence that the importance managers attach to their employees' intrinsic task motivation is associated with a higher emphasis on assessments of non-task related performance, while a perceived lack of task-specific cause–effect knowledge on the managers' side is associated with more use of predefined targets for performance evaluation. Both work characteristics contribute to explaining higher emphasis on employee selection processes and increased delegation in work settings that heavily rely on employee creativity.
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This paper compares the effectiveness of Project Discovery (PD) with the traditional accounting undergraduate program at the University of Illinois at Urbana-Champaign (UIUC). PD is a comprehensive program of instruction designed to implement an "educating for expertise" approach to accounting education. More specifically, PD emphasizes acquiring intellectual skills and improving attitudes without losing traditional accounting declarative knowledge. We compare the instructional processes used with, and learning outcomes of, the first class of PD graduates with samples of same-semester traditional program graduates. Our data include measures of course syllabi and students' demographic characteristics, declarative knowledge, intellectual skills, and attitudes. We analyze data on instructional processes using ANCOVAs and x2 anal
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With the introduction of functional near-infrared spectroscopy (fNIRS) into the experimental setting, developmental scientists have, for the first time, the capacity to investigate the functional activation of the infant brain in awake, engaged participants. The advantages of fNIRS clearly outweigh the limitations, and a description of how this technology is implemented in infant populations is provided. Most fNIRS research falls into one of three content domains: object processing, processing of biologically and socially relevant information, and language development. Within these domains, there are ongoing debates about the origins and development of human knowledge, making early neuroimaging particularly advantageous. The use of fNIRS has allowed investigators to begin to identify the localization of early object, social, and linguistic knowledge in the immature brain and the ways in which this changes with time and experience. In addition, there is a small but growing body of research that provides insight into the neural mechanisms that support and facilitate learning during the first year of life. At the same time, as with any emerging field, there are limitations to the conclusions that can be drawn on the basis of current findings. We offer suggestions as to how to optimize the use of this technology to answer questions of theoretical and practical importance to developmental scientists. WIREs Cogn Sci 2015, 6:263-283. doi: 10.1002/wcs.1343 For further resources related to this article, please visit the WIREs website. The authors have declared no conflicts of interest for this article. © 2015 John Wiley & Sons, Ltd.
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This study examines turnover from 1976 to 1980 for 599 top-management group members in a sample of 31 Fortune 500 companies. A measure of demographic distance was defined on the basis of both age and date-of-entry similarity. The proportion of the top-management group turning over was inversely related to the firm's financial performance and positively related to the coefficient of variation of the distance among managers. At the individual level of analysis, managers who were older, were in firms that performed worse, and were more dissimilar in terms of age were more likely to turn over. The results suggest that it may be possible both to predict and manage turnover by considering the compositional characteristics of groups.
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Functional diversity in teams has been conceptualized in a variety of ways without careful attention to how different conceptualizations might lead to different results. We examined the process and performance effects of dominant function diversity (the diversity of functional experts on a team) and intrapersonal functional diversity (the aggregate functional breadth of team members). In a sample of business unit management teams, dominant function diversity had a negative, and intrapersonal functional diversity, a positive effect on information sharing and unit performance. These findings suggest that different forms of functional diversity can have very different implications for team process and performance and that intrapersonal functional diversity matters for team effectiveness.
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We used self-categorization theory--which proposes that people may use social characteristics such as age, race, or organizational membership to define psychological groups and to promote a positive self-identity--to develop and test hypotheses about the effects of demographic diversity in organizations on an individual's psychological and behavioral attachment to the organization. Individual-level commitment, attendance behavior, and tenure intentions were examined as a function of the individual's degree of difference from others on such social categories as age, tenure, education, sex, and race. We expected that the effect of being different would have different effects for minorities (i.e., women and nonwhites) than for members of the majority (i.e., men and whites). Analyses of a sample of 151 groups comprising 1,705 respondents showed that increasing work-unit diversity was associated with lower levels of psychological attachment among group members. Nonsymmetrical effects were found for sex and race, with whites and men showing larger negative effects for increased unit heterogeneity than nonwhites and women. The results of the study call into question the fundamental assumption that underlies much of race and gender research in organizations--that the effect of heterogeneity is always felt by the minority.
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Papers from four different groups were published in 1993 demonstrating the ability of functional near infrared spectroscopy (fNIRS) to non-invasively measure hemoglobin concentration responses to brain function in humans. This special issue commemorates the first 20years of fNIRS research. The 9 reviews and 49 contributed papers provide a comprehensive survey of the exciting advances driving the field forward and of the myriad of applications that will benefit from fNIRS.
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Creativity often leads to the development of original ideas that are useful or influential, and maintaining creativity is crucial for the continued development of organizations in particular, and society in general. Most research and writing has focused on individual creativity, yet in recent years, there has been an increasing acknowledgment of the importance of the social and contextual factors in creativity. Even with the information explosion and the growing necessity for specialization, the development of innovations still requires group interaction at various stages in the creative process. Most organizations increasingly rely on the work of creative teams where each individual is an expert in a particular area. This book summarizes the exciting new research developments on the processes involved in group creativity and innovation, and explores the relationship between group processes, group context and creativity. It draws from a broad range of research perspectives, including those investigating cognition, groups, creativity, information systems and organizational psychology. The first section in this book focuses on how group decision making is affected by factors such as cognitive fixation and flexibility, group diversity, minority dissent, group decision-making, brainstorming and group support systems. Special attention is devoted to the various processes and conditions which can inhibit or facilitate group creativity. The second section explores how various contextual and environmental factors affect the creative processes of groups. The chapters explore issues of group autonomy, group socialization, mentoring, team innovation, knowledge transfer and creativity, at the level of cultures, and societies.
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An increasing number of organizations are turning to teams for innovation and creativity. The present study investigated the effects of team knowledge management (TKM) on the creativity and financial performance of organizational teams. Our analysis of data collected from 65 sales teams, across 35 branches of a Korean insurance company, showed that team knowledge utilization (but not team knowledge stock) was positively related to team creativity, which in turn predicted team financial performance over the 6-month period. The positive effects of knowledge utilization were stronger when team leaders had a systematic cognitive style and when teams were exposed to high environmental uncertainty. Furthermore, the systematic cognitive style of leaders had a positive main effect on team creativity and positively moderated the relationship between team knowledge stock and team creativity. The implications of these findings were considered, and some possible directions for future research were suggested.
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Using 20 actual work units with 79 respondents, this study explores the relationships among group demography, social integration of the group, and individual turnover. Results suggest that heterogeneity in group tenure is associated with lower levels of group social integration which, in turn, is negatively associated with individual turnover. Models of these effects using individual-level integration measures are not significant. Further, the results suggest that it is the more distant group members who are more likely to leave. Both individual-level and group-level age demography directly affect turnover and are not moderated by social integration. The findings suggest a process by which group demography affects outcomes and support the usefulness of organizational demography for understanding group and individual functioning.