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Culture and Diversity

This GPS II sub-project is coordinated by Helsinki School of Economics. Prof. Risto Tainio is in charge of the project. M. Sc. (Econ.) Sampo Tukiainen is the Ph.D. student in the sub-project. This sub-project examines the interrelationships between project outcomes and cultural diversity. It especially focuses on the ways in which a global project should be organized for the effective management of cultural variety and diversity.

The previous research on cross-cultural leadership offers two major guidelines on how to successfully manage culturally diverse projects. The first and most common guideline is that project managers should minimize diversity in order to avoid conflicts and problems that are likely to emerge. The reasoning underlying this guideline is mostly built around the concept of “ethnocentrism”. It refers to a universal behavioral process, where subgroups within an organization emerge because of perceived differences between people. Based on these differences, people group themselves into “us” and “them”. One’s own group is often felt superior and negative attitudes are shown towards the “others”. Eventually, this results in polarized and conflicting social relations, reducing collaboration and project performance. Therefore it is widely suggested that the management of global projects should try to minimize diversity and increase homogeneity among people.

The second guideline claims almost the opposite. Management should not be afraid of conflicts stemming out of diversity, but instead utilize its benefits. Instead of conflicts and problems, diversity of people is proposed to lead into cross-cultural learning and increased understanding of multiple worldviews. The reasoning behind this guideline builds on the tendency towards “ethnorelativism”. The process starts when people from different cultures experience mutual respect, positive curiosity, and show motivation to collaborate across the differences. This serves as the basis for building friendships and trust, and learning from each other across the teams. Eventually, the gaps between people and groups are bridged, the differences are managed, and collaboration is achieved by mutual adaptation. Consequently, the project organization benefits from effective cooperation and utilization of the diversity of expertise. The lesson for the management is that they should tolerate diversity, and try to promote understanding and learning across the differences.

In this subproject, we explore, and ultimately question, both of these arguments. We claim that there hardly exists any universal, optimal strategy for managing successfully global, culturally diverse projects. It is doubtful that there exists a relatively simple, unidirectional causal relationship between project outcomes and diversity of the people. We demonstrate that the words like ‘cause’ and ‘effect’ should be used with caution. Both “avoiding ethnocentrism”, i.e. minimizing diversity and “enhancing ethnorelativism”, i.e. maximizing diversity, are strategies the effects of which are dependent on the conditions they are applied. More specifically, the use of these human resource strategies is mutually interrelated. If the ‘diversity’ is going too far, and starts causing problems, management is likely to balance the situation by homogenizing work force. On the other hand, if the unity and groupthink starts dominating, the management readjusts the situation by increasing diversity.

Helsinki School of Economics HSE |VTT Technical Research Centre of Finland | Helsinki University of Technology HUT | Stanford University SU