MASTER WOP-P ERASMUS MUNDUS 2008

MASTER THESIS

Diversity and team performance: curvilinear relationships or linear models with mediated relationships?

Key words: team work, demographic diversity, team reflexivity, performance

Author:

Carolina

Garay

Universidad

de

Valencia

Valencia,

Espaa

camaluj@alumni.uv.es Tutor Home University: Prof. Vicente Gonzlez- Roma, Universidad de Valencia Tutor Host University: Prof. Salvatore Zappal, Universit di Bologna

ABSTRACT This paper aims to investigate new lines of explanations on the relationships between demographic diversity and team performance. This field of study, as shown by the last main important reviews made by Williams & OReilly (1998) and van Knippenberg & Schippers (2007), has yielded inconsistent and sometimes contradictory findings regarding the effects of diversity on team outcomes and team processes. In order to overcome the problem of contradictory results from previous studies, it is necessary to take into account the possible role of mediator and moderator variables that may underlie the negative and positive effects of demographic diversity as well as to consider the possible non linear relationships between demographic diversity and team outcomes, as suggested by van Knippenberg & Schippers (2007). In this study, we will investigate whether the relationship between demographic diversity and team performance is curvilinear with an inverted U shape, or whether it is linear and mediated by team reflexivity. These relationships will be tested in a sample of 155 work teams from three savings banks. Data was gathered at on two occasions 6 months apart. To test the study hypothesis, hierarchal multiple regression analysis and structural equations models will be used. We expect that the results of this study will contribute to a deep understanding of demographic diversity since it will examine two different alternatives; which may explain the effects of demographic diversity in teams, opening a new line of enquiry for future theory and research.

INDEX 1. INTRODUCTION 1.1 THEORETICAL FRAMEWORK 1.2 TEAM OUTCOMES: PERFORMANCE 2. NON-LINEAR RELATIONSHIPS AND REFLEXIVITY 3. RESEARCH QUESTIONS AND OBJETIVES 4. CONTRIBUTIONS OF THE PRESENT STUDY 5. METHOD 6. ANALYSIS 7. RESULTS 8. DISCUSSION

1. INTRODUCTION Diversity in teams and organizations has become an important issue in organizational behaviour, given the increasing diversity in organizational settings, due to several changes that organizations and workforces have undergone in the last years. Globalization, immigration, the incorporation of the women in the workforce and the competitive environments in which the organizations are immersed are part of these major trends. Several demographic changes are expected that will affect the workforce by 2030 in Europe. For example, a shrinkage of the workforce is expected. From 1985 and 1995, the workforce in Europe has increased from 154 to 169 million people, and it will be 183 million people by 2010. Nevertheless, by 2050 it is expected that the size will be the same as in 1985, due to the decline in birth rates. In addition, in terms of age, nowadays over 20% of the workforce in the European Union is over 50 years old. Between 2020 and 2050, this percentage is expected to increase to 30%. Another feature is the incorporation of women into the labour market, which is expected to become 44% of the active population by 2010. Finally, due to the low birth rates, an increase in immigration is expected, since Europe will need over 40 million people to replace its active population. (Susaeta Erburu, Navas Lpez,2005). The European Union is also concerned about diversity in the workplace, since () Europes changing demographics (low birth rates, ageing populations and shrinking workforce) that in the coming years will require many companies to consider a much more diverse pool of talent to meet their recruitment needs, including crossborder sourcing (European Commission, 2005, pg. 5). This reality is fostering attempts to promote diversity in the workplace as well as to prevent discrimination. In addition, organizations increasingly operate in a multinational and multicultural context (Milliken & Martins 1996). This means that people interact in a major degree with different people in its day-to-day work. These issues have as a result organizations with a greater proportion of heterogeneity, not only in visible attributes like sex or age, but also regarding functional and educational background since organizations are increasingly turning in the use of cross-functional teams (van Knippenberg et al.2004). Work teams are set in organizations with the goal of creating more innovative, high performing organizations (Weber & Donahue, 2001). Existing literature states that 4

work teams are critical tools for solving problems and making decisions in highly complex environments (Shaw & Barrett-Power, 1998). They also play a role in the overall effectiveness of organizations (Guzzo, 1998). Therefore it is necessary to understand how diversity influences team performance. It is still unclear if diversity in work teams brings added value to their functioning and thus their outcomes based on the large pool of resources, perspectives and viewpoints the members may bring, enhancing their potential and creativity, or if on the other hand, diversity produces conflicts within the group through categorizations and in turn, intergroup bias, that may impair the internal processes and lead to negative outcomes (Williams & OReilly, 1998; Mannix & Neale, 2005, van Knippenberg & Schippers, 2007). In this state of art of diversity research, there is a call to recognize why these differences are present, and how can they become integrated in order to yield a more comprehensive and solid knowledge of diversity in teams. In addition, we need to identify how to counteract the negative effects that past research showed it may produce.

1.1THEORETICAL FRAMEWORK Diversity could be defined as a characteristic of a social grouping that reflects the degree to which objective or subjective differences exist between group members (van Knippenberg & Schippers 2007). This definition is broad and may include any particular aspect plausible to make a differentiation, as demographic attributes (such as race or gender) or nondemographic attributes (those related to functional background, for example) and also aspects such as values, beliefs and personality. Some authors have distinguished diversity in terms of types of diversity, defining two major categories, based in their visibility. Thus, diversity could be related to those attributes more detectable and observable, such as race or gender, and those less detectable, such as functional background or technical abilities (Milliken & Martins, 1996). The latter would be more job-related, whereas the former would be less jobrelated (van Knippenberg et. al, 2004). Job relatedness refers to the degree to which the attribute captures experiences, skills or perspectives pertinent to cognitive work tasks (Weber & Donahue, 2001). Nevertheless, both types of diversity could also be related and not be such distinct in practice. For example, two persons with different races may have experienced different educational cultures, and thus may espouse different values (Jehn et al., 1999). This general distinction (readily detectable attributes- underlying attributes) has favoured that the research on diversity followed two theoretical paths well differentiated: the social category perspective and the information-decision making perspective (van Knippenberg et al., 2004). Each one has focused on certain attributes and certain processes of the teams. Social categorization perspective has focused on the conflict, communication problems, liking and cohesiveness, whereas the Informationdecision making perspective has focused on cognitive processing demands, careful analysis and information use (Williams & OReilly, 1998, Milliken & Martins, 1996, van Knippenberg & Schippers, 2007). The outcomes assessed include turnover, performance, communication, innovation to mention a few (van Knippenberg & Schippers, 2007) As William & OReilly (1998) noted, these theories can lead to contradictory predictions about the effects of diversity. One thing worthy to notice is that most of the research at the beginning has focused on attributes such as age, tenure, sex, racial/ethnicity and background diversity. This trend has become to change, and 6

now research on diversity also includes aspects such as beliefs or values diversity (van Knippernberg & Schippers, 2007). As we have mentioned, according to the two perspectives that have studied diversity in work teams, there are different assumptions. In order to understand the results that diversity research has presented, we will explain in brief the two theoretical backgrounds that guided this research and some of their findings. The social category perspective postulates that the persons make socialcategorizations, after being involved in a process of social comparison that helps the individuals to define themselves. Making use of these categorizations, people include themselves and the others into social categories through a variety of aspects, such as age, gender, status, skills, etc. These processes lead to a definition and a construction of a social identity, and thus, the belonging to a certain social group or category (Williams & O`Reilly, 1998). Once this categorizations are made, people make distinctions in order to maintain its self-identity and self-esteem by considering the ones similar in a positive manner (the so-called in-group members) and considering the dissimilar ones in a negative manner (out-group members). This view has been complemented with the similarityattraction approach. This argues that similarity on certain attributes (demographic, values or attitudes) increases interpersonal attraction and liking, because this similarity positive reinforces ones attitudes and beliefs (Williams &OReilly, 1998). From this perspective diversity has been related to dysfunctional aspects of groups functioning, producing conflict, stereotyping and turnover, to mention a few (Williams & O Reilly 1998). This means that when there is present heterogeneity between members in a work team, the members are supposed to make categorizations based on the salient attributes they have and to constitute in-groups and out-groups categorizations of similardissimilar members, thus, favouring the similar ones and perceiving dissimilar members as less trustworthy, honest and cooperative. This, in turn, leads to a conflict inside the group and may affect the outcomes as well. To date, there is some evidence supporting this perspective of diversity, also called the pessimistic view of diversity (Mannix & Neale, 2005), although there are some contradictory findings also. For example, heterogeneity in tenure was associated with lower levels of social integration and turnover (OReilly, Cadwell and Barnett, 1989). It is proposed that having entered to the organization at the same time may facilitate both attraction and 7

interaction, therefore the linking between the members. When the people have not entered into the organization at the same time, they find more difficult to create such ties, thus the possibility for interaction and communication is less, decreasing the satisfaction of the members and also their the motivation within the group. Having less social integration, in turn, leads to individual turnover. This question was also mentioned by Milliken & Martins (1996), whom based on the ideas from Pfeffer, argued that when people joint organizations or subunits at the same time, they not only may develop a similar set of skills but also develop similar identification and communication patterns based on their common time of entry. In a similar vein, DrachZahavy and Somech, (2002) found that high heterogeneous teams in tenure were less supportive and effective than low heterogeneous teams in tenure. The time the team has been together has been proposed to be a key factor to understand the effects of diversity on team performance and team outcomes. Chatman et al. (2001) found that among student teams and officers from financial services firm greater heterogeneity led to group norms to be less cooperative, but this effect diminished over time. As a function of contact (time being together) the group changed, becoming more cooperative. Over time, when the people get know each other, the salience of the categorizations dissipates and the members may be more inclined to cooperate with one other. Diversity in values (when members of a group differ in what they think about the groups goal, target or mission) reduces satisfaction, intent to remain and commitment to the group, as showed by Jehn, Northcraft and Neale (1999). They found that when the members of a team had different values about what the group is supposed to meet, this leads to a conflict not only about what to do or how to do it (processes more related to the task), but also yields to an interpersonal conflict, since the differences on perspectives may lead to categorizations that can provoke hostility and resent. In this study, was also studied the functional diversity, but it was found to positively influence the group performance, mediated by task conflict. These results suggest (also Ancona & Cadwell, 1992) that different types of diversity may have different effects on team outcomes. Diversity in gender diversity and race diversity were found to be associated with lower psychological attachment from the individual, in terms of frequent absences and less intent to stay with the organization (Tsui, Egan, OReilly, 1992). Another study conducted by Baugh and Graen (1997) found that members of teams that were diverse 8

in terms of gender and ethnicity perceived their team as less effective, compared to homogeneous groups. The authors suggested that in diverse teams, members feel they have to work harder in creating and maintaining their working relationships. This lead to a situation where the team outcomes seem to be less valuable compared to the effort exerted to produce them. It appears that not all the attributes of diversity are related to negative outcomes, and that also the tenure of the team and the type of task should be considered if we want to understand clearly the effects of diversity. Regarding the tenure of the team, it seems important to take into account how much time the team has been together, since over time some detrimental effects of diversity could be overcome due to the fact that the people begin to develop a common identity. With respect to the type of task, as Van Knippernberg et al (2004) noticed, we may expect positive effects from diversity when a team is performing a complex and nonroutine task. The information-decision making perspective states that diversity can bring value to a group, because the members will have more skills, abilities, knowledge, and experience, forming a large pool of resources and information than members of homogeneous groups. These different experiences and viewpoints may lead to positive and favourable outcomes, enhancing their capacity for creative problem solving, through its implicit informational sharing (Mannix & Neale, 2005). Moreover, the need to reconcile these diverse opinions and knowledge into a shared understanding could lead to a more creative and innovative group performance (van Knippenberg & Schippers, 2007). Heterogeneity brings the opportunity to share different viewpoints and perspectives, and this is also related to a greater capacity to reach a better quality of solutions (Hoffman & Maier, 1961). This composition ensures consideration of a larger set of alternative potential solutions, preventing group thinking (Bantel and Jackson, 1989). Diversity may have positive effects on the quality of team decision making when it gives rise to debate and disagreement (De Dreu and West, 2001) something more unlikely to occur in homogeneous teams, where prevails an orientation to conformity and compliance. This debate and disagreement due to the different perspectives and frame of reference are seen as a resource that can promote a better performance. Diversity in organizational decision-making groups also is related to higher quality decisions since groups think in more realistic and complex way about their context (Milliken & Martins, 1996). 9

Thus, from this perspective, diversity is expected to produce positive outcomes and enhance team performance, due to the valued resources the members have and can apply in their work. As we mentioned, the type of task is relevant to understand in which conditions performance should benefit from diversity. Complex and nonroutine information and decision-making tasks are expected to invite more information processing and set the stage for potentionally positive effects of diversity (van Knippenberg et al., 2004). There is evidence supporting this view of the diversity, but also contradictory findings. Wiersema & Bantel (1992) found that the firms that most likely to undergo strategic change had a top management with heterogeneity educational diversity (different sets of task-relevant skills, knowledge and abilities as a function of the educational background). This was supposed to bring diversity of information, sources and perspectives, also promoting creative-innovative decision making. But diversity in other variables (age, organizational tenure and team tenure) was negatively related. Another study conducted by Bantel & Jackson (1992) showed that innovation in banks was greater in banks headed by more educated managers who came from diverse functional background. Functional diversity refers to the differences in workplace experiences, especially the exposure to a particular functional area (Pelled et al, 1999). In a similar vein, Hambrick, Cho and Chen (1996) showed a positive association between educational, functional and tenure diversity over the competitive actions taken by 32 US airlines, and also over their general performance. The cognitive repertoire that these teams were supposed to have helped developing more creative, noteworthiness and scoped competitive actions, showed it to be slow. This relation was also found by Ferrier and Lyon (2004), where firms that showed a better performance where led by heterogeneous teams. Watson et al. (1993) conducted a study with students for 17 weeks, comparing heterogeneous and diverse groups in a complex task, in a university context. They found that at the beginning, the homogenous groups outperformed the heterogeneous groups, but at the end, both had the same level of performance and the diverse groups scored higher on two task measures (range of perspectives and alternatives generated). These are related to the broad range of alternatives that a diverse group may bring to discussion in performing a task.

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As we can see, these two perspectives show that diversity would be deleterious to the group functioning since when each person organizes its exchanges and relationships based on social-categorizations and social comparison, these processes may result in otherness (Williams et. al, 1998); whereas at the same time would be beneficial in the sense that allows a team to posses a variety of information and expertise, that in turn may lead to a better performance. Nevertheless, it is difficult to reconcile these contradictory situations in an intact teamwork working in an organization. The members of a group at the same time could have done a categorization (and therefore subgroups), based on a salient attribute (e.g. gender), and at the same time, discussing different viewpoints, but if they have any bias due to the previous categorization, it is difficult to image a discussion about the task where all the participants are able to be listened and took into consideration each other regardless those categorizations (supposing that these categorizations mean a disruption into the group dynamics, as showed by Social categorization theory) . This disparity on the results of diversity research has produced a call in order to take the diversity phenomenon in a more complex way. Some attempts include carrying out research with possible moderators and mediators for the relationship between diversity and team outcomes as well as team processes (Guzzo et. al 1996, Williams & OReilly, 1998, van Knippenberg & Schippers, 2007).Some authors (e.g. Jackson and Joshi, 2004; Pelled et al, 1999; Jehn and Bezrukova, 2004) have started new lines of investigation given the gaps identified in the research of the topic. The gaps include the lack of an integrative framework and the systematically investigation of direct effects (van Knippenberg & Schippers, 2007). These new lines of investigation focus on the processes that underlie those effects and may explain, in a better way, the results showed.

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1.2 TEAM OUTCOMES: PERFORMANCE Organizations rely on teams to enhance quality, develop new products and solve critical problems (Tjosvold et al., 2003). Since teams are becoming more diverse it becomes necessary to understand how diversity influences their performance and effectiveness. Regarding the team outcomes we will focus on group performance. Group performance is defined by three criteria, following Hackmans ideas (1987, cited in Williams & OReilly, 1998): (1) the productive output of the group meets or exceeds the performance standards of the costumer; (2) the social processes used in carrying out the work maintain or enhance the capability of the members to work together subsequent team tasks; and (3) the group experience satisfies rather than frustrates the personal needs of the group members. Existing literature shows that we need to improve our understanding of the influence of diversity on team performance, since much is still unknown regarding its impact on work group outcomes (Webber et al., 2001) and the contradictory findings reported in several narrative reviews ( see Milliken & Martins, 1996; Williams & O`Reilly, 1998, van Knippenberg & Schippers, 2007). For instance, Williams & O`Reilly (1998) have concluded that increased diversity has negative effects on the ability of the group to meet its members needs and to function effectively over time. This conclusion is due to the evidence that diversity impair group cohesion and attachment, which in turn, disrupt group performance, drawn from Social category theory. Milliken & Martin (1996) observed that the more diverse groups seem to have greater coordination cost than groups composed of homogeneous people. This, in turn, affects team performance. The value-in-diversity perspective predicts that diversity enhances group performance because of the broader perspectives on the problem at hand, the greater pool of potential solutions to examine and the development of more innovative ideas that members can bring ( Knouse & Dansby,1999). Some results seem to support the idea that functional- occupational diversity improves at least some types of performance (Jackson, Joshi, Erhardt, 2003). Nevertheless, the idea that different types of diversity may have different impacts on the work groups performance -e.g. highly job-related diversity attributes such as education, may have stronger impact in tasks performed than

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less job-related attributes such as sex, have received mixed support (Weber et al., 2001, van Knippenberg et al., 2007). There is evidence that the nature of the task to be performed moderates the effects of diversity in performance, thus diversity is often beneficial for tasks that require creative problem solving (Jackson & Joshi, 2004). Heterogeneity in terms of abilities and experiences may have a positive effect on performance, especially when tasks assigned are diverse (Campion, 1993). In a similar vein, van Knippenberg et al. (2004) proposed that diversity may be positively related to performance when performance requires information processing and creative, innovative solutions. The organizational context is also important to understand diversity effects on performance, for example Jehn and Bezrukova (2004) found that diverse groups perform better in work environments that focus on creativity and innovation. The effects of diversity on performance have traditionally been studied as a linear, direct relationship. This approach has overlooked the possibility that diversity effects can be understood as a non-linear relationship. This is to say that the effects of diversity could be interpreted in terms of the level of diversity present in a team; distinguishing among low, moderate and highly diverse teams where different consequences might be observed. In this regard, there is evidence of U shape relationships (Early et al., 2000, Richard et al., 2004) as well as inverted-U shape relationships between diversity and performance (Gonzlez- Roma et al., 2006; Dahlin et al., 2005). The literature reviewed so far demonstrates the unclear assumptions related to diversity research. There is a need of research focusing in other aspects that were insufficiently covered in the past. For instance, the inclusion of mediators and moderators variables; as well as non-linear relationships to clarify the effects of diversity were mentioned as critical points to analyse (Williams & OReilly, 1998; van Knippenberg & Schippers, 2007) .In other words, to disentangle the controversial findings of diversity research, it seems critical to comprehend under what conditions and by which mechanisms diversity might have positive or negative effects on team performance. In order to explain these questions, the present study contributes by focusing on two different alternatives: (1) a non-linear relationship model and (2) a linear model with a mediator variable. Our aim is to ascertain which is more useful to explain the

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diversity and performance relationship, thus extending past knowledge and resolving the observed needs. In this regard, our study includes some of the new attempts within diversity research in order to overcome past discrepancies (van Knippenberg et al., 2007). Their consideration brings us the opportunity to have a more comprehensive vision of diversity; which has proved not to be a straightforward phenomenon. These issues are important because they also have practical implications. Moving forward in our understanding over diversity can help organizations regarding how to manage diversity as well as how to make use of it effectively thus avoiding (potential) negative consequences.

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2. NON-LINEAR RELATIONSHIPS AND REFLEXIVITY NON-LINEAR RELATIONSHIPS: As we have already mentioned, the consideration of non-linear relationships represents a new attempt within diversity research to understand the ambiguous conclusions of the evidences already commented. Past research has shown that when a team is highly heterogeneous there is a lack of a common frame of reference due to the differences in the viewpoints and perspectives that each member brings, which can result incompatible (van Knippenberg & Schippers, 2007). In addition, William & OReilly (1998) also noted in their review that large amount of diversity may offer little value and impair the group cohesion and functioning. In the case of a highly heterogeneous team, it can be argued that there are more salient characteristics at hand and for that reason it is more likely categorization processes to be triggered. These categorization processes may interfere with any teams ability to capitalize on increased information (Dahlin et al., 2005) or the cognitive resources available. These ideas are coherent with the assumption that to benefit from diversity of information, expertise, experience, etc., group members should be able to manage and to understand the contributions of dissimilar others. Therefore, an important issue arises: whether it is possible that the level of diversity given in a group limits or fosters the potential effects that diversity might have on team processes and outcomes. In this regard, it was suggested that moderate levels of diversity will not impair the group processes and outcomes (Williams & OReilly, 1998; van Knippenberg & Schippers, 2007). This is to say that when is present a moderate level of diversity members can handle the categorizations or conflicts that may arise, being able to benefit from them without impairing the team. In this sense, the members would have differences among them but they would have some common points as well which can facilitate the cohesion and openness needed within the team. Thus, it may be possible that for a given level of diversity, the group would be able to benefit from it up to a certain degree. Beyond this level, it would not be more beneficial and diversity will disrupt group processes, for example, introducing misunderstandings (van Knippenberg et al. 2004) or information overload (Dahlin et al, 2005). As group members differ more among each other (favouring categorizations and 15

subgroups), it is more likely that they will not share a common sense of reference or identity which can allow them to understand others contributions (van Knippenberg et al. 2007). Therefore, as diversity increases, categorization processes may begin to override the potential cognitive resources making team processes and functioning difficult, creating coordination and communication problems (Gonzalez- Roma and West, 2006). Thus, a highly diverse team might promote conflicts or misunderstandings that impair team performance, for instance coordination and communication problems may arise due to the wider range of alternatives and perspectives the members bring. This situation may create difficulties in task performance, since agreements might result problematic to achieve. Strong differences among the members may foster barriers that limit the potential that diverse resources are supposed to have. Another aspect to consider is that members may not be able to integrate each others information (Dahlin et al., 2005) because they cannot find a common framework, thus not taking advantage of their diversity. In the case of a team low in diversity, it seems that due to the present similarities there will be no problems regarding social categorizations, potential conflict or poor communication. However, the team is likely not to have significant cognitive resources, due to the resemblance in perspectives, backgrounds and experiences. The similarities may foster a common identity that prevents disputes or tension but at the same time fosters group thinking and fixed routines, which not add value to the teams performance. Based on these ideas, an inverted U shape relationship can account for the positive effects from diversity. Therefore, when the teams composition is defined by moderate levels of diversity; this will not hamper the team processes allowing the members to benefit from diversity. In this condition the members may be able to enhance their performance through the wider range of resources, broader perspectives, a more varied network of contacts available to work with and a greater capability to process information and make decisions (Milliken & Martin, 1996; Knouse & Dansby,1999). Therefore, it might be expected a better performance from moderate diversity teams than lower as well as higher diversity teams (van Knippenberg et al., 2007). Moreover, moderate levels of diversity may also help to avoid the negative effects of categorization or the negative effects of increased complexity (Van der Vegt & Bunderson, 2005). Moderate increments of diversity could bring to the team more 16

cognitive resources, with small negative effects on team processes and psychological safety (Gonzalez- Roma and West, 2006). Regarding non-linear models, there is some evidence for inverted U-shape relationships in recent diversity research. For example, Gonzlez-Roma et al (2006), investigated a possible non-linear relationship between age, sex and tenure diversity and team innovation (measured as quantity and quality of innovations) in a sample of health care teams. They have found tenure diversity having a curvilinear, inverted U shaped relationship with quantity of innovation. The explanation for this result was that at low levels of tenure diversity, a team may lack the cognitive resources needed to produce innovative solutions. However, a moderate level of tenure increased team innovation without impairing the processes needed to generate and implement the ideas. This pattern of relationship suggests that as diversity increases, categorization processes begin to override the potential creativity gains, impeding the successful implementation of new ideas and in turn reducing team innovation. Richard et al. (2004) studied gender and racial diversity in management and firm performance. Hypothesizing non-linear relationships, they found that moderately heterogeneous management groups exhibited better performance than other management groups. They suggest that at high levels of diversity, problems such as poor communication reduced social cohesion and increased conflict may appear, leading to a decreased performance. Another study conducted by Dahlin et al. (2005) assessed how diversity teams used the information, finding curvilinear patterns for this relationship. The highly diverse educational teams used broader ranges of information, but only up to a point. This happened also with the depth of the information use. The findings suggest that some diversity in educational background brings more information available to a team, but yet too much makes it difficult to access, explore and link. The results show that highly diverse teams reach a saturation point above which they no longer continue to gain benefit from diversity, because the members are not able to handle the information adequately. They found also an inverted U shape relationship regarding the integration and depth of information with nationality diversity, suggesting that moderate nationally diversity stimulated depth and integration of the information, dominating the negative effects of social categorizations. Another possible explanation is that the differences

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noticed in the early stages were suppressed as members got to know each other, identifying points of similarity. Following these ideas, we think that moderate levels of diversity will not hamper the team processes and consequently, can have positive effects on performance. The members will be able to enhance their performance because they will have a wider range of resources and perspectives (Milliken & Martin, 1996; Knouse & Dansby, 1999) that they will be able to use adequately. Therefore, it is expected that moderate diverse teams will be able to perform better than low as well as highly diverse teams (van Knippenberg et al., 2007). According to past research and these ideas, we propose the following hypothesis:
H1 The relationship between demographic diversity and team performance depends on the level of diversity, so that relation shows an inverted- U shape.

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TEAM REFLEXIVITY: Past research has overlooked the role of mediator and moderator variables (Williams & OReilly, 1998; van Knippenberg et al, 2004), which are supposed to better explain the effects of diversity on performance. In this regard, van Knippenberg et al (2004) have developed an integrative model, called CEM Model (CategorizationElaboration Model) in order to overcome this failure on diversity research. The CEM model integrates the aforementioned two traditional approaches of diversity research, integrating them for the first time. On the basis of the model lies the idea that diversity research has to consider the role of the team as an information processor when explaining the effects that diversity may have on performance. It is proposed that the core of the positive effects of diversity lies in the elaboration of task relevant information: we propose that diversity within a group is positively related to the elaboration of task-relevant information and perspectives within the group that is, to group members exchange, discussion, and integration of ideas, knowledge, and insights relevant to the groups task (van Knippenberg et al, 2004, p. 1010). Elaboration is defined as the exchange of information and perspectives, individual-level processing of the information and perspectives, the process of feeding back the results of this individual-level processing into the group, and discussion and integration of its implications (van Knippenberg et al, 2004, p. 1011). Thus, to the extent that the members of a group elaborate their different ideas and perspectives they may benefit from them, leading to positive outcomes such as improved creativity, innovation and decision quality (van Knippenberg et al, 2004). It is assumed that to benefit from the diverse cognitive resources the team have, the available information must be handled adequately. Therefore, one of the key propositions of the model is that the relationship between diversity and team performance is mediated by the team elaboration of information relevant to the team task. In the present study, we propose team reflexivity as an indicator of elaboration of information. Reflexivity refers to the extent to which group members overtly reflect upon the groups objectives, strategies and processes, and adapt them to current or anticipated endogenous or environmental circumstances (West, 1996).

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In this respect, reflexivity could be used as a key process to understand the effects of diversity in teams, since when team members reflect upon what have they done, how they have done it, this promotes a constructive discussion that may lead to new considerations and new solutions. In addition, reflexivity can be used by the team to manage the tasks- related conflict that sometimes appears among members (Jehn et al. 1999). This task-related conflict in addition to productive dissent and disagreement may enhance reflexivity (Schippers et. al, 2003). Thus, when team members reflect, they might find a way to enhance their effectiveness (West, 1996) Therefore, reflexivity can be an indicator of the elaboration of information done within the group, mediating the complex relationship between diversity and team performance (van Knippenberg et alm 2004). If social categorization processes emphasizing common goals may inhibit dysfunctional conflict (Williams & OReilly, 1998) through the opportunity to re-categorize dissimilar members as in-group members, reflexivity may promote a situation where each member shares and appropriates the groups products, creating a shared understanding which reinforces those common goals, helping to avoid conflicts. Regarding the effects of reflexivity, De Dreu (2002) found that greater innovation and team effectiveness were present only when there was a high level of team reflexivity within the teams. Tjosvold et al. (2003) in a study conducted in China, found teams with high levels of task reflexivity resulted in a positive in-role performance and compliance within the teams. In other study, Tjosvold, Tang and West (2004) found a positive association between reflexivity and team innovation. The study of the relationship between diversity and team reflexivity is scarce, but with interesting findings. One study was conducted by Schippers et al. (2003), where reflexivity was found mediating the relationship between diversity and team outcomes (satisfaction, commitment and performance) The study also showed the moderator effects of team longevity and outcome interdependence in the proposed relationship. The results showed that highly outcomeinterdependent and highly diverse teams were more reflexive than the teams low in outcome interdependence and diversity. In contrast, when outcome interdependence was low, the homogeneous teams tended to be more reflexive than highly diverse teams. They also found effects for group longevity, where diverse teams high on group longevity were found to be less reflexive, whereas homogeneous groups with high group longevity were more reflexive. These results suggest that reflexivity can help 20

members to overcome obstacles within the team, benefiting from the diverse resources they share; but this process is stimulated when diverse teams are clearly interdependent in their goals. It was also found that this effect seems to diminish over time, may be due to some conflicts that might arise and disrupt the team processes. All these findings indicate that it seems important to have a common goal in order to engage in reflexivity. It can be argued that sharing objectives stimulates the exchange of information and discussion about the work, because the members need each others contribution to meet the goals they have. In addition, common goals seem to minimise the possible categorizations done enabling reflexivity and promoting the acceptance of the contributions of dissimilar members. The other study conducted by Somech (2006) evaluated the relationship between functional diversity, team reflection and team outcomes (in-role performance and innovation) and the moderating role of leadership style (participative or directive). Team reflexivity was also tested mediating the interactive effects of leadership styles and functional diversity on team outcomes. The results showed that in highly functional diverse teams a participative leadership style was positively associated with team reflexivity. It seems that when a leader fosters participation opening communication channels and information exchange, members engage in debate, analysis and processing which allow them to make use of the large pool of resources present in the team. In contrast, a directive leadership style seems to be more adequate to promote team reflexivity when teams are functional homogeneous. One possible explanation is that in these teams a directive leader might encourage members to prevent group thinking and conformity which are more likely to be present when members are more similar. Other finding from this study is that team reflexivity was positively associated with team innovation. This is to say that when members are able to discuss about the teams objectives and processes they might find new ways and new solutions to be applied in their work, thus enhancing their performance. Regarding the mediating role of team reflexivity, it was found to mediate the relationship between the interaction of participative leadership style/functional diversity and team innovation. Therefore, when in a functional diverse team is present a represents a critical process in participative leader, team reflexivity is fostered among members, which in turn promotes team innovation. Thus, team reflexivity diverse teams to make use and exploit effectively their resources, which allow the teams 21

to enhance their effectiveness and performance. However, as the author posits, it should be taken into account the type of task in determining the need for team reflexivity. For instance, regarding team in role performance it was found no association with team reflexivity. It can be argued that team reflexivity maybe important for complex and nonroutine tasks. The empirical evidence has shown that diversity can have positive as well as negative effects on team processes (e.g. team reflexivity) (Williams & OReilly, 1998; van Knippenberg et al, 2007). In addition, reflexivity has been found to affect positively group performance because it is related to the elaboration of task-relevant information (De Dreu,2002; Schippers et al, 2003; Tjosvold et al., 2003). It can be argued that negative or positive effects of diversity on performance may be explained by the extent to which teams are reflexive. As it was commented, reflexivity can help to minimise the possible barriers between diverse members (e.g. categorizations) enabling the exchange of different ideas and perspectives, which can be applied to enhance team performance. Nevertheless, taking into account the Social Category perspective, we can argue that members may find it difficult to engage in reflection upon what they do due to their differences or poor integration. The salience of differences may provoke that members highlight social categories thus communicating frequently with the so-called in group instead of the whole group, thus inhibiting reflexivity. Taking into consideration past research and the ideas commented, a positive as well as a negative effect from diversity on team process (e.g. reflexivity)can be expected, and reflexivity to impact positively on performance. Therefore, the following hypotheses are proposed:
H2 Diversity influences reflexivity H2a. Diversity positively influences reflexivity H2b. Diversity negatively influences reflexivity H3 Reflexivity positively influences performance

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3. RESEARCH QUESTIONS AND OBJETIVES Since the empirical findings on the relationship between demographic diversity and team outcomes show an inconsistent pattern of results, we need to overcome this situation bringing more clarity to the understanding of these relationships. Researchers have started two lines of investigation, where the research is aimed to: -ascertain whether the linear relationship between diversity and team outcomes depends on third variables (moderators) or whether it is mediated by other variables (mediators). -ascertain whether the relationship between diversity and team outcomes depends on the level of diversity variables, testing no-linear relationships In this study we want to test these two alternative hypotheses derived from both lines of investigation, as a way to establish which is more useful to understand the relationship between diversity and team outcomes. Taking into consideration the state of art of the research, and based on the literature reviewed, we want to answer the following questions: 1. Has diversity (in age, gender, organizational tenure and educational dimensions) a curvilinear (specifically, an inverted- U shape) relationship with team performance? 2. Could reflexivity (as a mediator) explain the relationship between diversity and team performance? These questions are translated in the following objectives: 1. To describe the possible curvilinear pattern in the relationship between diversity and team performance. Specially, recognizing whether this relationship may be presented as an inverted U shape. 2. To recognize whether reflexivity may mediate the relationship between diversity and team performance.

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CONTRIBUTIONS OF THE PRESENT STUDY .4 We think that the present study may help to develop a better understanding of the complex relationships between diversity and team process and outcomes. As we pointed out before, one of our main contributions is that two different approaches to explain diversity and team performance will be tested. A first model, proposing a curvilinear relationship, tries to answer the following question: Is it possible that non-linear relationships can account for the positive effects from diversity on team performance?. This question sounds appropriate since many of the critics regarding the inconclusive findings in the research postulates that past research have mainly focused on linear relationships (van Knippenberg et al, 2007). We propose the possibility to evaluate other types of relations that might better explain the effects of diversity. The other model proposing a mediator variable, tries to answer the following question: Should we expect benefits from diversity when members elaborate information (e.g. reflect upon what and how they act), thus exploiting their considerable pool of resources?. It can be the case that the positive or negative consequences of diversity can be better understood if some processes underlying the relationship between diversity and performance are considered (Williams & OReilly, 1998). To our knowledge, this is the first study to test a proposition of the CEM Model (van Knippenberg et al, 2004) in an intact work setting, pointing to the elaboration of information as a process that may enhance the positive aspects from diversity. The study will also help to recognize which characteristics may counteract its detrimental effects. These issues are relevant due to the actual state of the art of the field, which is searching for a more integrative and comprehensive conceptualization of diversity and its effects on teams and organizations. This interest increases because of the actual context in which organizations work. For instance, as the workforce becomes increasingly diverse, organizations need to handle and manage diversity adequately. This is important because of its potential benefits in terms of competitiveness for organizations (e.g. innovation or higher performance). In addition, the proper handling of diversity could avoid the negative outcomes (e.g. discrimination caused by categorizations or bias) that might impair the organizational performance and in turn, cause other negative consequences (lower attachment to the organization, job dissatisfaction) on employees. 24

Therefore, this study would like to contribute with advisable suggestions for organizations making use of heterogeneous teams. Thus, knowing which conditions might enable the benefits that diverse teams are supposed to have, there will be useful implications to management and human resources practices.

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5. METHOD Participants and Procedure The data used in this study were gathered as a part of a wider research on team climate conducted by Valencia University (Spain), through its department named UIPOT (Unidad de Investigacin de Psicologa del Trabajo y las Organizaciones) in 2002. The sample of work teams used in the present study was composed of 155 branches from three different savings banks that operated in the same region of Spain. Savings banks are financial entities, constituted as private foundations that have financial criteria but with a social end. These organizations assign a great proportion of their benefits to be invested in several social activities. These promoted activities include the foundation and development of projects in the areas of culture and arts, education, human capital and employment, nature conservation and social services, among others. In the three savings banks, the branches had the same structure and similar sizes, and they performed the same functions. Typically, a bank branch is composed of a branch manager, one or two internal auditors (depending on branch size), and a small number of administrative personnel who perform administrative and tellers tasks. Our branches could be considered work teams following the ideas proposed by Guzzo et al. (1996) that define a work team. A work team is made up of individuals who see themselves and are seen by others as a social entity. They are interdependent since they share common goals and work processes, coordinating their tasks to achieve those goals. Their roles were functionally interdependent, every branch had a team identity within the broader organizational system in which they were embedded, and their average size was 4.8 (see below). Finally, they are embedded in a larger social system (the savings banks, society). The researchers contacted personnel managers from the three banks to ask for their collaboration in the study. Once they agreed to collaborate, the personnel managers informed the branch managers that a study on team diversity carried out by a university research team was going to take place in their organization, and they were asked to collaborate in the data gathering phase. A group of trained questionnaire administrators hired by the research team contacted every branch manager involved, after they were informed about the investigation, in order to arrange for the administration of questionnaires in his/her branch. The participants filled out the 26

questionnaires during collective administration sessions held by their own bank branch during working hours. In every collective administration session, a questionnaire administrator explained how to fill out the questionnaires and guaranteed confidentiality and anonymity of response. In some cases, when a branch member could not participate in a collective session the set of questionnaires was personally delivered to him or her and collected a few days later by the corresponding questionnaire administrator. Data was gathered on two occasions separated by six months. At Time 1 (May 2002), 718 team members and 151 team managers responded to the questionnaires. At Time 2 (November 2002), 680 team members and 150 team managers filled out the questionnaires. Team size (that is, the number of branch members, not including the team manager) showed an average of 4.87 (SD = 1.76) at Time 1 and 4.82 (SD = 1.89) at Time 2. On both occasions, team size range varied from 3 to 13 team members. The response rate was 95.4% at Time 1 and 92% at Time 2. For every team participating in the study, at least three team members filled out the questionnaires. Team tenure (the period of time that the team had operated with the same member composition that the team showed at both measurement occasions, as reported by the team manager) showed an average of 2.4 years (SD = 3.4) at Time 1 and 2.9 years (SD = 3.7) at Time 2. Regarding team members gender, the percentage of men was 55% at Time 1 and 56% at Time 2. In relation to team members age, 41.1% at Time 1 and 40.1% at Time 2 were between 25 and 35 years of age; 24.4% at Time 1 and 24.7% at Time 2 were between 36 and 45 years of age; and 22.6% at Time 1 and 23.7% at Time 2 were between 46 and 55 years of age. Measures Demographic diversity measures. We measured diversity with respect to four demographic variables: sex, age, education and organizational tenure. The aforementioned questionnaire provided the data used to compute the diversity indices. In order to preserve the confidentiality and anonymity of the respondents, the demographic questions were asked in these terms, e.g. how long have you been working in your present team? where the type of answers were between 6-12 months, between 1 and 3 years, etc. Since our diversity variables were computed as categorical, the operationalization of the diversity variables was based on Blaus (1977) heterogeneity index, which is expressed by the following formula:

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H = 1 p i2
i =1

where pi is the proportion of team members in category I, and I is the number of categories. Team reflexivity Five items of the Task Reflexivity Scale developed by Carter & West (1998) were used to measure teams reflexivity. These items were: The methods used by the team to get the job done are often discussed, We regularly discuss whether the team is working effectively together, In this team we modify our objectives in the light of changing circumstances, How well we communicate information is often discussed, This team often reviews its approach to getting the job done. Items were scored on five-point Likert scales ranging from (1) strongly agree to (5) strongly disagree. Reliability estimate (Cronbachs alpha coefficient) was .90. To test the study hypotheses, we had to aggregate team members scores on team reflexivity at the team level following a referent-shift consensus model of composition (see Chan, 1998). Prior to aggregating, first we assessed within-team agreement in team reflexivity by means of the interrater agreement index, rwg(J), developed by James, Demaree and Wolf (1984), and then we estimated the relative consistency of responses among team members by computing the intraclass correlation coefficient (ICC[1]) (Bliese, 2000). The mean value for the rwg(J) was .72 (SD = .22), which denotes a sufficient level of within-team agreement in the study sample. The ICC(1) value obtained for team reflexivity was .29. Therefore, we concluded that the level of consistency of responses among team members in team reflexivity was adequate. We also carried out a one-way analysis of variance (ANOVA) to ascertain whether there was statistically significant between-team discrimination on the team reflexivity scale. The results obtained (F(154, 563) = 1.85, p < .01) show adequate between-teams discrimination on team reflexivity scores, and they support the validity of the aggregate team reflexivity measures (Chan, 1998). Team performance Team performance was measured by a 2-item scale responded by team managers. One item was selected and adapted from Jehn and colleagues group performance scale (Jehn, Northcraft & Neale, 1999): How well do you think your work team performs? Respondents answered using a 5-point scale (1 = very badly, 5 = very well). The other item was as follows: What is the quality of the work carried out 28

by your team?. Respondents answered using a 5-point scale (1 = very bad, 5 = very good). Thus, our measure of team performance focused on the quality of the work performed by branches. Reliability estimates (Cronbachs alpha coefficients) at Time 1 and at Time 2 in the sample of team managers were .73 and .68, respectively. Mean values at Time 1 and Time 2 were 4.09 (SD = .38) and 4.06 (SD = .40), respectively.

6. ANALYSIS To test Hypothesis 1, which predicts a non-linear relationship with an inverted U-shape between diversity variables and team innovation; we conducted a hierarchal regression analysis. At the first step, we entered three control variables: team size, team tenure and performance criterion (leader) in Time 1. We included this variable since literature shows that prior performance is a predictor of future performance (Wiersema & Bantel, 1992) Regarding the other control variables, previous research has shown that both team tenure and team size may affect team outcomes. For example, size of the group may have effects since larger teams have more potential for heterogeneity (Pelled et al., 1999, OReilly et al., 1989). Team tenure can have a direct impact in performance, since over time certain ways of communication and interaction may be developed (Wiersema and Bantel, 1992, Ancona & Cadwell, 1992). At the second step we entered all diversity variables considered. Finally, at the third step, we entered the squared terms of diversity variables. To test Hypothesis 2, 2a and 2b and 3 - our prediction that reflexivity mediates the relationship between diversity and team performance- we used a structural equation modeling (SEM), following the suggestions made by James, Muliak and Brett (2006). SEM should be applied when theoretical mediation models are thought of as casual models. The other approach used regarding the evaluation of mediation models is the Baron-Kenny approach which shares some characteristics but also has some differences from SEM approach. Baron & Kenny (1986, cited in Brown, 1996) have defined that a variable functions a mediator when it meets the following conditions: (a) variations in levels of the independent variable significantly account for variations in

29

the presumed mediator, (b) variations in the mediator significantly account for variations in the dependent variable and (c) when (a) and (b) are controlled a previously significant relationship between the independent and dependent variable is no longer significant. Their test of mediation includes four steps: (1) the outcome variable is regressed on the initial variable, (2) the mediator variable is regressed on the initial variable, (3) the mediator variable is regressed on the outcome variable controlling for the initial variable and (4) the outcome variable is regressed on the initial variable controlling for the mediator variable. The effect of the initial variable should reduce to no significance (full mediation) if not, there is a partial mediation (James et al., 2006). One of the main differences between Baron-Kenny approach and SEM approach is the presumed baseline model. James et al. (2006) note that the base line in the K-B approach is a partial mediation model, because the third step of the approach estimates the regression of the outcome variable on the mediator variable with the initial variable controlled. This is congruent with a partial mediation model, but not with a full mediation model. On the contrary, the SEM approach uses the complete mediation model as the baseline when a complete mediation is presumed. Another difference is that SEM does not include the test for the relationship between the initial variable and the outcome variable, which is the Step 1 in B-K approach. In addition, recent research (McKinnon et al., 2002) has shown that the power and Error I Type rates for the Baron and Kenny approach are not adequate. James et al. (2006) suggest that when theory and research are insufficient to hypothesize complete or partial mediation, a complete mediation should be tested since this model is the most parsimonious model. Therefore, based on the recommendations by James et al. (2006), we used the SEM approach to test our model. This technique allowed us to examine the indirect relationships between demographic diversity and team performance via team reflexivity. A single model was tested which included the hypothesized mediated relationships.

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7. RESULTS Table 1 shows the means, standard deviations and correlations among the variables. Team size and team tenure are not significantly related to team performance (r = .010 and r = .083, respectively), but previous performance is significantly related (r =. 525, p < 0.01) Team reflexivity is linearly and significantly related to organizational tenure diversity (r =.245, p <0.01) and performance (r =.162, p < 0.05). Age diversity correlated significantly with performance (r = -.195); but in general, all diversity variables show no significant relationship with performance.

Table 1 Descriptive Statistics and Correlations among variables

M ean 1 T e a m s iz 1 Te 2 Te a m te n u re T 1 3 P e rfo rm a n c e T 1 4 T a s k re fle x iv it y T 1 5 S e x D iv e rs ity T1 4 .8 7 2 8 .6 1 4 .0 8 4 .0 1 .3 5

SD 1 .7 6 4 1 .0 7 .3 8 .5 8 .1 6

1 1 0 ,1 6 5 * -.1 1 9

1 .0

-0 ,8 6 -.1 .0 3 4

.0 4

Hypothesis 1, which predicted that the relationship between diversity and performance was curvilinear with an inverted U-shape.

6 A g Table iv presentsythe results of the hierarchical regression analysis used0to test .2 7 4 * * .1 0 e D 2 e rs it T1 .5 3 .2 7 E d After controllingDfor e rsinfluence u c a tio n a l iv the1 ity T
of control variables and linear terms, the

.6 5

.1 8

.1 8 4 * .0 4 -.1 2 0 .0 1 0

changes in R2 were not statically significant (Step 3, R2 = 0.17). Moreover, just one of theO rg a n iz a tio n a l te n tenure T 1 e rs presents .4 1 8 squared terms (organizational u re D iv it y the expected negative sign. diversity) .2 9

.0 4 .0

9 P e rfo rm a n c e t2

4 .0 5

.4 0

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These results do not support our hypothesis that teams with moderate levels of diversity perform better than low diverse teams or highly diverse teams.
Table 2- Regression analysis with performance as dependent variable

Predictors Step 1 Controls Size Team tenure Performance Diversity variables Sex Age Education Org. Tenure
Note, ** p < 0.01, * p < 0.05, two tailed tests

Step 2

.081 .041 .532**

.104 .049 .512**

.064 -.176 .098 .014

Squared terms Sex

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Age

Regarding the hypotheses H2, H2a, H2b y H3, we conducted a path analysis to test our mediational model, using Lisrel 8.80 (Joreskog & Sorbom, 2006). Figure 1 shows the estimated path coefficients for our mediational model. We also entered team size, team tenure and previous performance as control variables in our hypothesized model, to control for the possible effects on team performance.
Figure 1- Results of Hypothesized model

Note, ** p < 0.01, * p < 0.05, two tailed tests. Fit indices include: 2 (7) = 11.91, p = .10;

CFI = .94; SRMR =.08; RMSEA = .07; AGFI =.90

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The hypothesized model shows that two control variables had a significant relationship with performance. Previous performance showed a significant relationship with performance in Time 2 ( = 0.17, p < .05) as well as team tenure ( = 0.65, p <.01). Hypothesis 2, which was about the relationship between diversity and reflexivity, received partial support. As shown in Figure 1, there was a significant relationship between educational diversity and team reflexivity ( =.14, p <.05). This results counts for H2a, which predicted that diversity positively influences team reflexivity. H2b did not received support; none of the diversity variables presented a significant negative relationship with team reflexivity. Finally, Hypothesis 3, which was that reflexivity influences team performance, was confirmed. There was a significant path from team reflexivity to team performance ( = .11, p <.05). In regards to model fit, the hypothesized model had a chi-square of 11.91 (p >.05), with 7 degrees of freedom. The other indices for the model (CFI = .94; SRMR =.08; RMSEA = .07; AGFI =.90) were considered as indicating good model fit. Thus, the mediational relationship was found only for educational diversity, even after controlling for team size, team tenure and previous performance. This indicates that teams more diverse in education tend to reflect upon their work and processes, and this in turn, affects group performance positively. To test whether the mediation model found was full or partial we compared the proposed model with a model that included a direct path from educational diversity to performance. The difference in fit between the two models was not statistically significant (2 (6) = 10.71, p >.05) indicating that the addition of this path in the partial mediation model did not add significantly to the model. Therefore, the total mediation model was selected because it was the most parsimonious model.

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8. DISCUSSION The study of the relationship between demographic diversity and team outcomes has been developed showing inconsistent results over time. This situation could be explained as a result of the lack of an integrative framework to understand diversity effects (Williams et al. 1998. van Knippenberg et al., 2004) but also the lack of research taking into consideration other possible explanations, such as non-linear relationships or mediation- moderator factors (van Knippenberg et al., 2007). In order to overcome the present situation and improve our understanding of the relationship between team diversity and team outcomes, new lines of investigation started to study this phenomenon in a more complex way, including non-linear models and mediators-moderators variables(Earley et al., 2000, Dahlin et al., 2005, Schippers et al., 2003). Taking this into account, our study served two purposes: it examined two possible alternatives regarding the explanation of the relationship between team diversity and team outcomes based on these new approaches, to ascertain which can be most useful to explain the consequences of diversity in work teams. One of our hypotheses evaluated a curvilinear pattern between team diversity and team outcomes and the other evaluated the possible role of a mediator variable (team reflexivity) regarding diversity effects on team outcomes. Thus, the present study extends these new attempts of research to understand diversity. Regarding nonlinear models, research has yielded mixed results. This suggests the need to explore further these types of relationships. Past research shows that positive effects are present in both homogeneous teams and highly diverse teams (Van der Vegt et al., 2005, Dahlin et al., 2005) whereas other studies show that positive effects are enabled when moderate levels of diversity are present ( Gonzlez-Roma et al., 2006, Richard et al., 2004). Given moderate levels of diversity, the team benefits from a wider pool of resources, since according to the Information-decision making theories, diversity groups have more cognitive resources and perspectives to share, also more skills and abilities to perform the tasks, thus enabling innovative behaviours. But these potentially positive effects of diversity may only obtain up to a certain level, beyond which some problems may appear disrupting teams functioning (van Knippenberg et al., 2007). Based on these assumptions, we expected an inverted-U shape relationship 35

between diversity and team innovation, but the analysis did not support our proposition. A possible explanation for these results is that diversity has a linear relationship with team performance, as it was studied in past research and stated by both Social category perspective and Information-decision making perspective (Williams et. al, 1998, van Knippenberg et al. 2007). It is possible that for benefit from diversity , the level of diversity present in a certain group is not as relevant as we proposed, instead other processes may explain better when we should expect positive effects from diversity. Since the alternative of curvilinear relationships has not be confirmed, it is possible that the relationship between diversity and team performance may be better explained regarding a linear model that takes into consideration mediator factors, as proposed for example in the CEM model (van Knippenberg et al., 2004). Our second hypothesis proposed that team reflexivity mediate the relationship between diversity and team outcomes. Team reflexivity has been proposed as a key factor to promote team effectiveness, because when team members overtly reflect upon their actions and processes, they gain insight and develop new ways to work (West, 2002). In this study we found that educational diversity was positively related to team reflexivity. Our results suggest that the teams that were more engaged in reflection upon their objectives, strategies and processes were the more educationally diverse teams. When team members are diverse in their educational background - and therefore knowledge, experience and viewpoints they may need to conciliate these different contributions to carry out their tasks. This exchange and discussion may promote a shared understanding that enables the benefits from diverse cognitive resources. This is congruent with the proposition made by van Knippenberg et al. (2004) that diversity is positively related to performance to the extent that members elaborate task-relevant information and perspectives within the group. The large pool of information available may stimulate a reflection that in turn helps the members to elaborate task-relevant information for their work, influencing positively their performance. As noted by Tjosvold et al. (2003), to the extent that teams engage in team reflexivity they are able to perform effectively over time. Having different educational backgrounds seems to promote the reflection of the members on their actions, in turn this may improve their performance due to the discussion and review triggered; where a broader pool of cognitive resources shared and considered may enhance the quality of the decisions made and solutions adopted. This idea supports the value in diversity perspective which states that the differences in 36

information, knowledge and perspectives may benefit group performance (van Knippenberg et al., 2007). Regarding the other types of diversity examined, we did not find such a relationship. A possible explanation could be related to the type of diversity attribute considered. Pelled et al. (1999), based on ideas from Zenger and Lawrence, noted that some attributes (e.g. age) form the context for more general social relationships and are less directly associated with team objectives and for that reason are unlikely to have much direct bearing in conversations about technical work. In this sense, there are some dimensions of diversity that may have a stronger impact on performance (job relatedness) than others, as some authors have proposed (Milliken & Martins, 1996, Gonzlez-Roma, West, 2006). Job-relatedness of a demographic attribute is defined as the degree to which that attribute captures experiences and skills germane to cognitive tasks at work (Pelled et.al, 1999 pag.3). Educational diversity is an attribute that is highly job-related, since it is related to certain acquired knowledge, certain competences, skills and abilities that may influence directly the task performed. It is possible that others dimensions of diversity being less job-related do not invite the members to reflect upon the processes and ways of work. These results support previous findings regarding the importance that job-relatedness of diversity dimensions may have on team outcomes (Pelled et al., 1999, Gonzlez-Roma & West, 2006). Clearly, our findings indicate that more research is needed regarding team reflexivity and diversity. As some previous studies have shown (Schippers et al, 2003; Somech, 2006), it could be possible that some moderators should be considered to understand deeply how the different dimensions of diversity are related to reflexivity and performance. Strengths and limitations of the study In order to interpret correctly the results shown, the strengths and limitations of the study will be commented. Our study makes some contributions to the literature. First, we extended new lines of research regarding the complex relationship between diversity and performance. As such, we included the examination of nonlinear models and a linear model with a mediator variable in the same study. Second, the present study used data from an actual workplace setting. Third, the nature of the study was longitudinal, so the design allowed us to test casual relationships. Fourth, we found 37

partial support for the hypothesized mediational model between educational diversity and performance, showing that team reflexivity mediates this relationship while controlling for team size, team tenure and previous performance. Thus, the mediating role of team reflexivity can account for the performance consequences of diversity. Regarding the limitations of our study, a number of limitations must be considered. First, we must notice that the sample included only one type of teamwork. This restricts the generalisation of our results. Second, some authors have proposed that diversity research should examine the interaction between diversity dimensions, and not to evaluate their effects in isolation (van Knippenberg et al., 2007). We did not consider the possible interactions between the diversity variables studied and how these relationships may affect our results. Diversity is a complex phenomenon that we need to understand given all the changes that workforce is facing. As a complex phenomenon, many team processes are involved regarding the effects that diversity may produce in work teams. For instance, contextual factors may play a role also, as showed in past research (Jehn & Bezrukova, 2004). Although much is still unclear, one thing worthy to notice is that the relationship between diversity and team outcomes is not as straightforward as past research has shown. In this study we showed how team reflexivity could help the performance of diverse work teams. Teams that are diverse with respect to education seem to reflect more on their objectives, processes and tasks. This elaboration of task-relevant information due to the diverse perspectives exchanged, in turn, improves team performance. Our findings highlight the importance of focusing on mediator processes to explain diversity and performance dynamics, contributing to the new approaches that attempt to ascertain how diversity affects and influences teamwork. More efforts are needed regarding diversity and team outcomes, but we think that the results presented here offer a fruitful agenda for future research. This study has practical implications also. To the extent that members of a team reflect upon their actions and processes, their performance could be positively affected. Differences in educational background and thus knowledge and perspectives, seem to promote the exchange and discussion between members. These practices should be fostered from team leaders as well as the organizational context. As Schippers et al. (2003) noticed reflexivity might diminish over time in highly diverse teams. For that 38

reason, it is very important the monitoring and feedback from the teams leader to promote and ensure that reflexivity is being adopted by team members. This implies the necessity to create space and time for the members to dialogue, discuss and exchange the information they have, assessing how this exchange is applied in the daily work.

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