have implemented diversity initiatives, it is diYcult to measure the relationship
between diversity initiatives and organizational performance outcomes. Recent
research has begun to explore the factors that moderate the relationship between
diversity and performance (Grimes and Richard 2003 ; Richard 2000 ). Richard
( 2000 : 174 ) concluded that cultural diversity does add value to aWrm but the
eVects of diversity ‘are likely to be determined by the strategies aWrm pursues and
by how organization leaders and participants respond to and manage diversity.’
- 3 Developing an Integrated Approach
Richard et al. ( 2004 ) sought to integrate the opposing views by developing a
theoretical framework based on Blau’s ( 1977 ) theory of heterogeneity and social
identity theory (Tajfel and Turner 1985 ), which posits that, in groups that are
culturally homogeneous, members will communicate more frequently and in a
greater variety of ways, due to their shared views. This, in turn, increases the group
members’ satisfaction and cooperation, and decreases intra-group conXict. In
contrast, in culturally heterogeneous groups, social categorization processes lead
to the formation of divisions (or ingroups and outgroups), in turn leading to
greater conXict and creating barriers to communication. However, the relationship
between heterogeneity and conXict is not linear. Blau ( 1977 ) posited that high levels
of cultural heterogeneity could overcome barriers associated with moderate het-
erogeneity, as group members become more diVused over social categories of
diversity and ingroup/outgroup identities are less marked. Therefore, Richard
et al. ( 2004 ) hypothesized that cultural diversity in management groups has a
U-shaped curvilinear relationship to performance; their empiricalWndings did not
fully support this hypothesis yet raised an interesting issue for future exploration.
As discussed in section 25. 6 , the design and implementation of HRM practices need
to be integrated with the strategy of the transnationalWrm, to address the demands
of cultural and institutional factors in the global and local context.
- 2 Knowledge-Sharing
Managers in transnationalWrms face two important and sometimes conXicting
challenges related to knowledge-sharing. First, they need to create and leverage
employees’ knowledge throughout the global network (Nohria and Ghoshal 1997 ).
Knowledge creation and sharing largely depends on the willingness and commit-
ment of employees to engage in the necessary yet complex tasks of coordination
and communication (Minbaeva et al. 2003 ). Leveraging of knowledge enables a
transnationalWrm to take advantage of worldwide access to information, learning,
and creativity, to develop competitive products or services. Further, leveraging
knowledge helps theWrm to deal with the uncertainty related to operating in a
global, volatile environment (Suder 2004 ).
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