Second, transnationalWrms face the challenge of eVectively managing employees
from diverse cultural and social backgrounds. While successful knowledge creation
and transfer depends on eVective HR strategies such as the development of
transnational teams, this task may be made more diYcult by the diversity of the
workforce. As noted earlier, cultural diversity may both add value and be dysfunc-
tional. Knowledge-sharing depends to some extent on social cohesion, but cultural
diversity can hinder the development of social cohesion between employees
(Cramton and Hinds 2005 ). The geographic distribution of operations in trans-
nationalWrms may exacerbate the diYculties of knowledge-sharing. For example,
geographic distribution makes the task of communicating a uniWed strategic vision
and set of values more diYcult (Engle et al. 2001 ). Hence, challenges for HR
managers include the design and implementation of eVective communication
across theWrm and strategies to develop a shared mindset.
- 3 Transnational Teams
Transnational project teams, which rely on cross-cultural collaboration, are increa-
singly used in organizations. A study by McDonough et al. ( 2001 ) found that 22
percent of participatingWrms reported that they would use globally distributed
teams for new product development in the next few years. Transnational teams
encompass members with diVerent nationalities; team members have diVerent
national and/or cultural backgrounds and are cooperating to achieve a shared
goal (Earley and Gibson 2002 ). There is considerable variation within such
teams; the work patterns and circumstances may be quite varied; while some
teams will work at a shared location for the duration of the project, others will
be virtual teams or will gather at one location for only part of the project.
Cross-cultural research, such as that building on Hofstede’s research, has sug-
gested that national culture should explain between 25 and 50 percent of variation in
attitudes (Gannon 1994 ). However, this has been questioned recently (Gerhart and
Fang 2005 ) and research exploring whether, and how, this diversity might aVect the
performance of transnational teams is inconclusive. As noted earlier, diversity may
have both positive and negative eVects on work group performance. Factors that
inXuence the eVectiveness of transnational teams include the types and magnitude
of cultural diversity, the organizational context, geographic spread and location of
team members, diVerent expectations of working practices, in addition to the
characteristics of the task itself (James and Ward 2001 ). Taking such factors into
consideration, it is suggested that the performance of transnational teams
will depend to some extent on the management processes; global leadership
is therefore emerging as an important area of investigation and interest. Chal-
lenges for HR managers related to transnational teams include the design and
implementation of appropriate recruitment and selection processes, programs for
transnational firms and cultural diversity 517