This chapter gives an overview of the thesis research by presenting background information, the problem statement, and the research aim and objectives.
The construction sector has seen major changes due to globalization and rapid technological evolution, leading to an emergence of business opportunities and projects in new markets while simultaneously introducing increased competition among construction companies (Horta & Camanho, 2014). These changes have brought together people from diverse backgrounds, beliefs, and cultures, allowing them to live and work in unison as a heterogeneous workforce in industrialized countries. Over and above, the highly competitive environment has forced construction companies to find ways to improve their performance (Gupta, 2013). As asserted in a seminal article by Cox and Blake (1991), managing diversity has a critical impact on organizational competitiveness and efficiency. Therefore, construction companies can significantly benefit from the implementation of internationalization strategies and the management of diverse workplaces in the international market (Gupta, 2013).
Diversity in the workplace refers to people from different socio-cultural backgrounds, whether it be race, ethnicity, gender, age, religion, nationality or cultural background, working together in an organization (Abosede et al., 2014). Today, cultural diversity challenges organizations, which operate in different countries and have a workforce holding different beliefs, values and customs as adverse implications may arise at the company or market level (Das Neves & Melé, 2013; Lozano & Escrich, 2016). Managing cultural diversity is not only about inclusion but also addresses the business case of embracing and leveraging differences in the workplace as stated by Sharma (2016) through the collaboration of different cultures and experiences to add value to the workplace. Therefore, cultural diversity is currently recognized as an important competitive resource in organizations (Wrench, 2016), where differences between people are valued, and different knowledge, skills and capabilities are provided by the workforce (Benschop et al., 2015).
1.2 Research Question and Objectives
The researcher elaborates the problem and the objectives to be accomplished in order to consider this research a success.
1.2.1 Problem Definition
Cultural diversity has become of prime importance as globalization and technology have increased (Horta & Camanho, 2014). Having diversity does not automatically convey success and profitability, but it can cause problems if differences are not effectively managed. Hence, modern organizations are making considerable efforts to manage increasing diversity, as it is an acute enabler for successful organizations (Clayton, 2010). Thus, they are creating multicultural environments by emphasizing diversity and inclusion, and by focusing on the role of human resources to leverage the talents, experiences and perspectives of people as a source of competitive advantage (Horta & Camanho, 2014). This strengthens organizational adaptability and increases the benefits of such a workforce by gaining access to multicultural markets and consequent global projects (Wrench, 2016). One of the best examples is the UAE, which witnessed modernization and rapid economic development (Al Ariss & Guo, 2016). It brought people from all over the world together resulting in its unique identity of having a very rich culturally diverse population (Al-Esia & Skok, 2015). The UAE embodies the opportunistic nature of workplaces being dominated by a foreign workforce (Al-Jenaibi, 2012).
Additionally, demographic factors such as migration and international human mobility are on the rise, contributing to the shaping of ethnically diverse societies by bringing together people from different cultural and national backgrounds (Lozano & Escrich, 2016; Botika, 2018). An example is the case in Germany, which has become a multicultural society due to its high levels of immigration, resulting likely from industrialization and fast economic growth (Muchowiecka, 2013).
Ethnicity or ethnic diversity is one dimension of cultural diversity, as considered by Das Neves & Melé (2013) and Botika (2018), which includes aspects of nationality, language, religion, physical appearance and identity (Serva, 2018). As stated by Cox and Blake (1991), ethnicity might affect the performance of an organization. They added that ethnic groups bring better access to social and cultural networks. Similarly, Abosede, et al. (2014) contend that modern companies can match employees with the ethnic composition of their clients to bring greater access and better understanding of the needs of the diverse customer base, which can be a key to the company's competitive edge. However still, the main goal of having an ethnically diverse human capital/workforce is not only increased market access or involvement in government contracts, but also increased profitability and reduced costs (Clayton, 2010). As workforce productivity is interlinked with high team performance, there is the necessity to support and manage an ethnically diverse workforce (Peters & Allison, 2011).
However, research on the construction industry has pointed out the difficulties experienced in effectively managing diversity in organizations (Peters & Allison, 2011). The effects may still differ among environments in which organizations operate (Filbek et al., 2017) given their social and legal perspectives (Podsiadlowski et al., 2013). With regards to ethnicity, some ethnic groups are still underrepresented and face barriers in the workplace (Nathan, 2016). Additionally, new skills need to be learned to adapt to a more diverse employee base, recruiting efforts and interactions between workers may differ, and managerial skills must adjust (Filbek et al., 2017).
Therefore, by assuming that diversity is well managed in an organization, the main intent of this research study is to conduct an organizational level comparison of international companies in Germany and the UAE in the construction sector to investigate cultural diversity management policies and practices concerning the implications of having an ethnically diverse workforce. Dubai has one of the world's largest migration rates, which affects the nature of workplaces that are dominated by a foreign workforce (Al-Jenaibi, 2012). In contrast, Germany, although considered a generally diverse country, houses organizations that are still at an early stage of managing diversity (EY, 2016). Particular emphasis will be placed on ethnic groups' adherence to company goals and their effect on organizational performance. Thus, the question examined in this research is:
“How does an ethnically diverse workplace impact organizational performance in the construction industry?”
1.2.2 Research Aim and Objectives
The aim of this research is to investigate cultural diversity management policies and practices in international building and construction companies, considering the implications of having an ethnically diverse workforce and exploring the impact and relationship between ethnicity and organizational performance.
To achieve this aim, the following objectives are considered:
• Determine the major ethnic groups of selected organizations in the construction sector in Germany and the UAE.
• Explore the effects of cultural diversity, with regards to ethnicity, on workplace interactions that consequently influence productivity. Results to be found through literature review and interviews.
• Explore the impact of an ethnically diverse workplace in construction organizations on development of international competence. Results to be found through literature review and interviews.
• Identify the measures put in place to manage an ethnically diverse workforce by investigating how and why diversity is managed. Results to be found through literature review and interviews.
• Identify the impact of an ethnically diverse workplace on organizational financial performance in the construction sector.
2.0 Literature Review
This chapter reviews the existing literature on the topics of cultural diversity and ethnicity with respect to organizational performance, with the focus on the situation in Germany and the UAE.
Diversity is broadly defined as recognizing and being aware of what makes people different (Wambui et al., 2013; Gumede, 2016). The need for understanding and appreciating differences of humanity, cultures, ethnicity and others is important by practicing respect for people who are different from our own (Patrick & Kumar, 2012). In the workplace, diversity refers to similarities and differences among people, including, but not limited to, cultural backgrounds, race, ethnicity, age, religion, gender, physical abilities, social class, political beliefs and sexual orientation (Saxena, 2014; Abosede et al., 2014), leading to a heterogeneous workforce (Saxena, 2014). Furthermore, Patrick and Kumar (2012) state that diversity involves how people perceive others, as these perceptions can affect their interactions. Therefore, an organization that includes a workplace with a variety of differences between people will teach them to interact and operate in a multicultural environment. It can be assumed that people from different backgrounds might also work differently; consequently, they need to be managed differently (Parrotta et al., 2016). Hence, to effectively advance diversity initiatives, an organization needs to understand primary and secondary dimensions of diversity, which are individuals' personal identities that shape their values, perceptions and experiences (Ewoh, 2013). Primary dimensions are the unchangeable and inborn differences such as age, ethnicity, race, gender, disability and sexual orientation, whereas secondary dimensions are those changeable and modified through human lives, including educational background, geographical location, status, income, religious beliefs and work experience (Ewoh, 2013).
2.2 Cultural Diversity and Organizational Performance
Cultural diversity is related to culture, which has been notably defined in terms of organizations by Hofstede (1993, p.89) as “the collective programming of the mind that distinguishes one group or category of people from another''. Cultural diversity refers to differences within a community that are represented in terms of race, ethnicity, gender, religion, nationality and language. As the workplace today has become more heterogeneous, implementing a culturally diverse workforce has not only become standard but also an economic necessity and an essence for every organization (Martin, 2014; Ayega & Muathe, 2018).
With rapid globalization, many organizations have expanded into new markets and become multinational as they operate in two or more countries (Battistuzzo & Piscopo, 2015), with workforces composed of people from different cultures and beliefs (Tutar et al., 2014). Similarly, in the construction industry many projects have emerged internationally, hence Tutar et al. (2014), Battistuzo and Piscopo (2015) and Choi et al. (2015) contend that the demand for multicultural teams has grown. This means that clients, suppliers, contractors and other stakeholders with diverse cultural, economic and legal backgrounds are frequently brought together, including their different working procedures and ways of thinking, to cooperate and coordinate on projects (Ochieng, 2012; Waziri & Khalfan, 2014; Huang, 2016). This poses great challenges for project managers in a global context, such as geographical distance, multicultural team compositions, cultural differences and conflicts. Hence, it may influence the project delivery (Al-Sibaie et al., 2014). Managers and leaders in these multinational organizations need to be cross-culturally competent (Ochieng & Price, 2010) and aware of cultural issues they might face in order to work effectively and guarantee high performance as required or expected. This includes well-functioning teamwork, effective people and project selection, the right cross-cultural team, joint decision-making, communication and collaboration (Ochieng, 2012; Huang, 2016).
As the culture of multicultural project teams can be characterized as a set of collective beliefs and values, this inevitably lead to the necessity of development and management of people (Ochieng, 2012) because it might impact the cohesion and efficiency of the organization (Singh, 2018). Thus, Battistuzzo and Psicopo (2015) assert that related organizational strategies need to be well set and implemented to achieve success and higher performance.
2.2.1 Organizations and Performance
An organization can be defined as a network of individuals who work together to achieve common objectives (Saxena, 2014). According to Martinelli (2001, p.69), ‘‘an organization consists of a family of interacting, hierarchically arranged and decision-making units''. He added that performance relates to outcomes, which result from management decisions and how these decisions are executed in an organization by their employees. Others define it as a measure of the state of an organization (Martinelli, 2001). Respectively, organizational performance is related to how individuals and teams perform a function aligned with the goals of the organization. Therefore, it is necessary for members of an organization to understand how they contribute to the mission, vision and goals of the organization in order to add value (Ashdown, 2014; Atiyah, 2016).
To improve the performance of construction organizations, an understanding of the organizational characteristics is necessary, as is recognizing the organization's resources and consequently adopting appropriate strategies (Oyewobi et al., 2017). Most importantly, in the case of a culturally diverse workplace, managers need to focus on and utilize the capabilities, competencies and skills of the workforce (Sultana et al., 2013). Malkani and Kambekar (2013) argue that having multicultural internal teams in a working environment can benefit the organization as these individuals offer differing perspectives, attributes and values, fostering an environment of learning and new ideas while also permitting the application of new organizational processes. Particular to the construction industry, a diverse human workforce represents a valuable asset (Malkani & Kambekar, 2013). When managed well, it can enhance individual and organizational performance, including increased worker productivity (Lozano & Escrich, 2016), higher work quality, as well as improved organizational processes, turnover, market value and profit (Sarwar et al., 2016). Therefore, HR management practices have become a significant element (Saxena, 2014; Sarwar et al., 2016), as they are concerned with managing the human aspect of an organization. Accordingly, organizational objectives can be achieved along with individual development and satisfaction (Saxena, 2014).
As additionally proposed by Cox and Blake (1991), managing a diverse workplace effectively impacts the areas of cost, innovation, creativity, problem solving and resource acquisition through attraction of the best personnel, marketing advantages, organizational flexibility and adaptability (Wambui et al., 2013). Therefore, in anticipation of future international challenges, successful construction companies are hiring a more diverse workforce, becoming increasingly resilient and customer-centered (Gupta, 2013).
2.2.2 Organizational Structure
Maduenyi, et al. (2015) contend that organizational structure is defined as the established form of relationships among the components of an organization. It is about how people are organized and how their work is divided and coordinated. Recounting the influential Damanpour (1991), organizational structure includes the levels of hierarchy, formalization, level of horizontal integrations and centralization with regards to authority and patterns of communication. Formalization is the extent to which an organization can use procedures and rules that need to be followed in order to standardize individuals' behavior. This can affect flexibility and consequently, creativity and learning (Liao et al., 2011). Centralization is related to the hierarchal level that has the authority of decision-making, which usually takes place at top levels of an organization. In a centralized organization, a non-participatory environment can be created that reduces communication, commitment and involvement of individuals (Maduenyi et al., 2015). Long et al. (2012) argue that the structure of an organization should have open lines of communication between individuals and departments, as the flow of information is significant to an organization's effectiveness. As Hofstede (1993) states, one should be aware that different cultures might have dissimilar viewpoints of power and hierarchy. Related to an ethnically diverse organization, Janssens and Zanoni (2014) state there are critical equality markers that address structural components determining power differences. These markers are ordinarily decided by the dominant groups on the value of certain forms of knowledge, competencies and skills, as well as the identity of an individual. Nevertheless, it is recommended that proper structures be set and implemented with the purpose of achieving organizational objectives (Maduenyi et al., 2015).
2.2.3 Cultural Diversity as a Double-Edged Sword
According to Fujimoto et al. (2013), cultural diversity could be viewed as a double-edged sword. It may affect the workplace positively or negatively depending on how leaders manage the organization; this involves harmonization of different beliefs, values and customs (Lozano & Escrich, 2016). In his influential text, Hofstede (1983) writes that cultural differences have a major influence on managerial success.
Negative effects of a culturally diverse workplace are commonly acknowledged in terms of adverse behavioral and relational consequences, which include less social cohesion, miscommunication and relational disputes (Fujimoto et al., 2013; Saxena, 2014) in which there is potential for the ensuing frustration and dissatisfaction to result in higher member turnover. Therefore, managing such a workplace remains an immense challenge for any organization (Schneider et al., 2014). Additionally, conflicts between employees may arise from interpersonal, work-related or historical and regional reasons. Reasons can vary as diverse members have potentially conflicting beliefs, thoughts, norms, values, and traditions, which result in lost efficiency and productivity (Martin, 2014). Conversely, a diversified workforce with different cultures and ways of thinking can have positive effects and implications that are acknowledged in terms of cognitive outcomes such as creativity, ideas and innovation (Fujimoto et al., 2013; Darwin & Palanisamy, 2015; Atiyah, 2016; Nathan, 2016). Martin (2014) and Busolo (2017) further emphasize that members from distinct social backgrounds could bring different experiences, knowledge and skills. This can consequently benefit the organization. Thus, organizations which operate internationally and have members from diverse backgrounds and maintain cross-border partnerships have the need to develop cultural sensitivity (Singh, 2018). Cultural sensitivity, also known as cultural awareness (Sherman, 2018), is the knowledge and realization of cultural differences, together with accepting these differences (Buchtel, 2014). It is simply being aware that people are not the same and that there is no culture better than another or one right way to do something (Sherman, 2018). A summary of this section is shown in Table 1.
Adverse Behavioral and relational consequences Cognitive Outcomes
Less social cohesion Better creativity
Miscommunication New ideas
Relational disputes Innovation
Result in lost efficiency and productivity Result from different experiences, knowledge and skills
Table 1. Summary of negatives and positives of a culturally diverse
workplace. Data obtained from literature
2.3 Cultural Dimensions Theories
Two of the most significant models that have had an impact in research and could be used to compare cultures are Hofstede (Zlomislic et al., 2016) and Schwartz's national cultural dimensions frameworks (Ng et al., 2007). Hofstede's framework was derived empirically, whereas Schwartz's was developed theoretically, but both utilize large-scale multi-country samples (Ng et al., 2007). Hofstede's work has been used in research relating to international management and cross-cultural communication, and thus in the case of this study his model is taken into consideration.
2.3.1 Hofstede's Cultural Dimensions
Geert Hofstede was a Dutch social psychologist, who directed a study of cultures across modern nations. In his view, culture is important, as it is relates to the unwritten rules about how to be a good member of a group (Hofstede, n.d.). Through his work, he identified four cultural dimensions that formed a basic framework for viewing others, and utilizing this informative framework can lead to a better understanding of ourselves and others (Gill, 2017). Going back to Hofstede's (1993) seminal work, the first dimension is ‘Power Distance' (PDI), defined as the degree to which members of an organization expect and accept hierarchy and power inequality. The second dimension, ‘Individualism-Collectivism‘ (IDV), is the degree to which members prefer to act as individuals who value freedom and independence, or choose to be integrated in groups. The third dimension, ‘Masculinity-Femininity' (MAS), relates to gender differentiation. It is the extent to which values in a society (success, performance, competition) most interlinked with the role of men, prevail over values (quality of life, caring and solidarity) more associated with the role of women. The fourth dimension is ‘Uncertainty Avoidance' (UAI), and represents the extent to which members prefer structured over unstructured situations. This means having clear formal rules for how members should behave, seek consensus and take fewer risks. Later, a fifth dimension was added, ‘Long term-Short term Orientation' (LTO), which is the degree to which members value tradition, social hierarchy and fulfilling social obligations. It is about focusing on the present and past instead of the future-oriented values. A summary of this section is shown in Figure 1.
In this study the focus will be mainly on the first two dimensions due to its relation to the research. Yet, to relate to the cultural dimensions model, Hofstede et al. (2010) provided scores for some countries, as shown in Table 2. These scores are generalizations and do not describe reality but ought to be relative.
Country PDI IDV MAS UAI
USA 40 91 62 46
Germany 35 67 66 65
Japan 54 46 95 92
France 68 71 43 86
Netherlands 38 80 14 53
Indonesia 78 14 46 48
West Africa 77 20 46 54
Russia 95 50 40 90
China 80 20 50 60
Arab Countries 80 38 53 68
Table 2. Culture dimensions scores from 0-100, reformed from Hofstede et al. (2010)
2.4 Diversity Perspectives: Multiculturalism
Managers may adopt different perspectives on diversity, which will direct how they manage and implement diversity in the workplace. One main perspective is ‘multiculturalism' (Meeussen et al., 2014). Gottfredson (1997), an American psychologist and writer, reviewed the philosophy of multiculturalism as a reform movement that reflects social and political currents of its time. It stressed the need to acknowledge and respect cultural differences between members from different backgrounds, and to consider them as a strength and added value (Meeussen et al., 2014).
Multiculturalism in the workplace is commonly referred to as ‘managing workforce diversity' (Gottfredson, 1997). She added similarly that the term ‘multiculturalism' emphasizes non-discrimination, equality, reducing power differences among groups, integration across all levels of an organization, and finally valuing differences by dispelling stereotypes and accepting different beliefs and values. Beliefs are the practices in a specific culture and members' perceptions of how things are done, whereas values are the preferred practices and members' perceptions of how things should be done (Ochieng, 2012). Therefore, it is about inclusiveness and ensuring the contribution of diverse groups, especially minority members who are disregarded or underrepresented (Meeussen et al., 2014; Galinsky et al., 2015). According to Jansen et al. (2015), minority members would feel more engaged and involved with their work in organizations that urge multiculturalism, as it provides identity safety to the degree that it values and respects their different cultural identities (Meeussen et al., 2014). Muchowiecka (2013) states that multiculturalism in practice involves different measures, depending on the country, which may consist of more than one policy. However, some main practices can be prominent, such as legal recognition that embraces protection from discrimination in law, and public recognition that includes support for ethnic minorities in organizations (Muchowiecka, 2013).
2.5 Cross-Cultural Competence
Cross-cultural competence can be defined as a continuous process where members and organizational systems recognize values and respond effectively to individuals of all cultures, races, ethnic backgrounds, languages, religions and other factors. Hence, it can be viewed as a set of policies, behaviors and attitudes that are put together to enable a system to work effectively (Akbari, 2015). To improve cultural competence according to Jenifer and Raman (2015), members of an organization should be given cultural knowledge training that will make them aware of the different cultures in the workplace and recognize differences in beliefs, values, behaviors, perceptions and interpretations. They also added that communication in multicultural teams could be a challenge due to language differences; therefore, language training should be given especially for members who come into contact with foreigners. Finally, organizations should enforce mutual benefit policy so that all members from diverse cultures receive similar benefits and eventually a win-win situation (Jenifer & Raman, 2015).
Cultural aspects play a significant role as invisible barriers in the workplace. This can occur due to differing norms, roles, beliefs, values, misunderstandings, stereotypes and ethnocentrism (Jenifer & Raman, 2015). Thus, organizations need to focus on eliminating these invisible cross-cultural barriers and creating a communication incentive environment in order to foster an inclusive organizational climate (Ortlieb & Sieben, 2013a; Jenifer & Raman, 2015).
Communication was defined by Axely (1984) in his seminal text as a metaphorical pipeline that transforms information from one member to another. Communication between individuals belonging to diverse cultures is considered as cross-cultural communication (Jenifer & Raman, 2015). Normally, cross-cultural communication can bring a slight individual change, but not collective change as elaborated in Figure 2. Usually in cross-cultural societies, one culture is dominant and all other cultures are compared to it (Schriefer, 2018). Additionally, it is the glue that binds multicultural team participants together in multinational project work (Ochieng & Price, 2010). Yet, as stated earlier, conflicts and disagreements may arise between such individuals (Gupta, 2013; Kakarika, 2013). To avoid these situations, cross-cultural communication needs to be effective. This means that an organization has to appreciate other cultures, understand the barriers it may face and identify means of overcoming them (Jenifer & Raman, 2015). This has become critically important in international management practice (Abugre, 2018) where managers are expected to be cross-culturally competent (Shaban, 2016; Abugre, 2018). Moreover, the concept of multicultural leadership is needed, which involves the qualifications of professional ‘expertise' and social ‘empathy' (Huang, 2016; Dziatzko et al., 2017).
2.5.1 Intercultural Competence
When working in a global team or interacting with members from other countries in the workplace, a high degree of intercultural competence is needed and expected (Al-Jenaibi, 2012). This includes learning new languages, understanding different cultural patterns and core values, all of which may affect communication. Therefore, the first step for project managers is to realize that individuals from different cultures act and express thoughts in various ways, even if they use the same language (Akbari, 2015). Intercultural communication focuses on exchanging ideas and cultural patterns between individuals, leading to the development of deep relationships. Usually in an intercultural society, everyone interacts with each other and consequently learns from one another. Hence, nothing is left unchanged, and individuals grow together to become better (Schriefer, 2018), as shown in Figure 3.
Ethnic diversity, which is one aspect of cultural diversity, is defined by Botika (2018) as a group of individuals with different cultural and national backgrounds. To be explicit in this research, the emphasis will be on individuals with different national backgrounds but shared traits, such as language, society, tradition or culture. Focus on religion, color and gender is not considered to avoid political and racial debates.
Nathan (2016), Hoogendoorn and van Praag (2012) describe ethnicity as a complex concept, which includes aspects not only of culture but also of nationality, language, religion, physical appearance and identity. Identity henceforth is the concept an individual develops about him or herself throughout his or her life, and can be defined by the belief, personality, appearance, education, expressions and ways of interaction that distinguish a person or group (Serva, 2018).
Ethnic diversity is not always embraced in mostly homogeneous countries since it is associated with immigration. This occurs also in organizations where ethnic majorities are natives of the country and are likely to employ people who are similar, hence making diversity unconsciously avoided (Botika, 2018). However, Singh (2018) examines the need for multicultural organizations to accept and employ people from various ethnic backgrounds. Thus, the focus is on ethnic minorities who are regarded as one distinctive socio-demographic group as marked by Ortlieb and Sieben (2013a).
2.6.1 Ethnic Groups in the Workplace
Many theories suggest that ethnic diversity can bring both benefits and tradeoffs in the workplace (Botika, 2018). On the one hand, an ethnic composition of minority employees can enrich the domestic labor market with high and low-skilled workers. Correspondingly, skill shortages and pertinent labor make organizations dependent on them (Ortlieb & Sieben, 2013a). This can be seen in construction firms that need people with certain skills, hence the need to employ the right person (Abosede et al., 2014). Yet, ethnic minorities still face unequal opportunities at work, such as being under-presented or at a low level of employment, in addition to being discriminated (Ortlieb & Sieben, 2013a; Nathan, 2016). In his article, S. (2016) defined discrimination as the unfair and negative treatment of an individual, and prejudice as the unjustified attitude towards an individual because he or she belongs to a certain social group. These two terms are different, but both are associated with stereotyping that may be formed due to encountering unfamiliar cultures, traits and behavior (Botika, 2018). Nathan (2016) contends that discrimination due to bias and social norms can be found in the organizational workplace, but may also be exhibited from clients, suppliers and others, causing tension and harm to various groups (Surbhi, 2016) in addition to directly harming revenue (Nathan, 2016). Nevertheless, many clients prefer companies which employ ethnic minorities, as this shows the organization's authenticity and international perspective, along with it following policies of equality and anti-discrimination (Worthington et al., 2008).
Further benefits can be derived from ethnic diversity due to increased market access, as access to customers in the domestic or international markets can be facilitated through the competencies of ethnic minorities (Ortlieb et al., 2013b), which could also help in the expansion into other countries (Martin, 2014). However, a range of obstacles may arise, including collecting information about local laws and legislations, and customs in that specific country (Nathan, 2016). Therefore, Martin (2014) and Botika (2018) insist on having an ethnically diverse workforce together with their cross-cultural understanding, knowledge and information of local culture specifics to overcome such obstacles and design proper strategies. Moreover, knowledge can be useful for the organization as these workers can inform the concerned managers and employees about the culture of the foreign country, and as a result save time, cost and energy. Otherwise, the organization would need to hire specific trainers from foreign countries or purchase documentaries, books and other investments (Martin, 2014).
2.6.2 Team Performance
A project team as expressed by Thamhain (2012) is a set of individuals who have different origins, needs and experiences integrated in one working group. They are usually selected for their skills and special qualities (Thamhain, 2012). A high-performance team is a unified working group of individuals with particular roles and complementary skills and talents aligned with the organization's objectives and committed to achieving a specific goal. Additionally, they always demonstrate high levels of collaboration and innovation (Hoogendoorn & van Praag, 2012).
Many studies have different conclusions regarding the contribution of ethnic diversity to organizational performance through teamwork (Busolo, 2017). According to Gupta (2013) and Busolo (2017), ethnic diversity has been found to improve organizational performance because they form effective teams as ethnically diverse members bring along different abilities and skills set, and hence, more learning opportunities and complementary skills (Hoogendoorn & van Praag, 2012). Owing to that, they argue that ethnically diverse teams are associated with increased creativity and innovation. Gupta (2013), however, added that moderate ethnicity in an organization has no impact on aspects of organizational outcomes such as sales, market share or profit. In addition, Marx et al. (2015) argue that an ethnically diverse team might result in a lack of cohesion and disunity, especially in organizations where ethnicity is underscored by strong emotions. Gupta (2013) and Kakarika (2013) agree that such a team is a potential and inevitable source of conflict. This leads to the division of team members into subgroups along with poor interaction, causing communication problems (Kakarika, 2013).
Having ethnic minorities can be advantageous, and thus referring back to what was argued by Cox and Blake (1991), an ethnically diverse workplace may bring positive effects and productivity to an organization since a vast set of skills and abilities is brought (Busolo, 2017). Gupta (2013), Nathan (2016) and Akay, et al. (2016) agree with Cox and Blake that ethnic diversity affects outcomes and preferences, and that productivity by itself can improve the overall performance of a company and the engagement of stakeholders by reducing the price of services.
Productivity defined as a measure of how organizational resources are adopted effectively and used to accomplish organizational goals (Ofoegbu & Ibojo, 2013), is necessary for long-term profitability and competitiveness (Muchiti & Gachunga, 2015). Hoogendoorn and van Praag (2012), Rasul and Rogger (2015), Muchiti and Gachunga (2015) assert that ethnic diversity affects employees' productivity by means of collaboration, and some factors can act as indicators such as employee motivation and how they feel determined about their job, level of efficiency in the organization and its effectiveness to attain a predetermined objective, job satisfaction and level of content, and service quality if it is able to meet and/or exceed the customer's expectations (Darwin & Palanisamy, 2015).
Laterally, an ethnically diverse workforce adds a psychological value to the workplace environment. Involvement and empowerment of such employees, and acceptance, tolerance and non-judgmental attitude can lead to higher job satisfaction and wider knowledge sharing (Botika, 2018).
2.6.4 Opportunities and Challenges
By having an ethnic diverse workforce, learning opportunities and complementariness to the organization can be brought (Darwin & Palanisamy, 2015). Competent individuals with different backgrounds in an organization can be put together and matched to accomplish specific tasks (Rasul & Rogger, 2015). Additionally, ethnic groups may have a range of abilities, knowledge and norms that can help improve decision-making and problem solving (Darwin & Palanisamy, 2015). Yet, Gupta (2013) argues that these groups have a major challenge regarding communication, where different individuals may encounter difficulties in understanding each other's habits or customs leading to conflicts (Kakarika, 2013; Saxenaa, 2014), and consequently impacting the ability to solve problems (Gupta, 2013)
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