Diversity and Relatedness

The diversity literature is by itself very diverse. There is, however, a tendency in the contributions to place arguments along two perspectives: one emphasizes how people prefer to work with people who are similar to them and that communication flows easier when interacting with people who have similar heuristics, worldviews, and outlooks. The second perspective emphasizes how working together with people who are different triggers creativity and could lead to something completely new. Horwitz (2005) refers to these two different mechanisms as paradigms and names them “similarity attraction” and the

“cognitive resource diversity”. Horwitz (2005) argues that the two competing theories derive from social psychology (similarity-attraction paradigm) and management (cognitive resource diversity paradigm).

The cognitive resource diversity perspective¹¹ holds that diverse teams should ideally outperform homogenous teams “because they possess a broader range of task-relevant knowledge, skills and abilities, giving the group a larger pool of resources that when combined may generate new insights” (Van Engen and Van Woerkom 2010, 133). Van Engen and Van Woerkom (2010) further argue that when people have different experiences and expertise, they might have different perceptions of what the problem is, and what the solution to that problem might be. This in turn has implications for behavior, strategy, and

11This PhD thesis uses the word ”perspective” as oppose to ”paradigm”, as the author considers perspective more suitable, especially when it comes to the issues of cognitive complementarities and dimensions of proximities bridging these divides.

innovation. The underlying assumption of the cognitive resource diversity perspective is “that teams consisting of heterogeneous members promote creativity, innovation, and problem solving, hence generating more informed decisions” (Horwitz 2005, 224-225). Horwitz (2005) draws attention to whether variety of human resources in terms of i) educational backgrounds and ii) work-life experiences provide the firm with more diverse knowledge pools on which to draw. Hong and Page (2004) argue that their results demonstrate that an ideal group would contain high-ability problem solvers who are diverse (Hong and Page 2004).

Firms that employ individuals with different pools of resources gained through their functional background or through a range of external social ties (Argote and Ingram 2000) will make more effective decisions based on that they would have a broader base on which to make these decisions. It has also been argued by Jackson, May, and Whitney (1995) that diverse teams will deliver more creative solutions than more similar teams would, due to these meeting and boundary-crossing interactions. Diversity of this kind has been referred to as

“socio-cognitive horsepower” (Carpenter 2002, 280) and holds that individuals with different backgrounds will have different “frames” and ways of analyzing the world and can access different sources of resources.

This follows up on the seminal work by Penrose (1959) and others, e.g. Barney (1991) and Wernerfelt (1984) of the resource-based view of the firm, and highlighting that firms are heterogeneous because they have diverse individuals with diverse cognitions and heuristics (internal) and the resources that can be reached (external) through these internal individuals. Hence, a more diverse internal workforce could potentially reach an equally diverse marketplace (Cox 2001). These individuals “collectively serve as a team´s lens, each filtering unique environmental cues and interpreting them for the rest of the unit´s members. Similarly, units whose members have nonredundant (i.e., nonoverlapping) external network ties have access to information that other units, lacking in such variety, cannot easily obtain” (Harrison and Klein 2007, 1205), hence leading to a self-reinforcing process of diversity.

This stands in sharp contrast to the similarity attraction perspective, which holds that “homogeneous teams are likely to be more productive than heterogeneous teams because of mutual attraction of team members with

similar characteristics. Heterogeneous groups, in contrast, are hypothesized to be less productive and have lower team cohesion because of inherent tensions and relational conflicts arising from member differences” (Horwitz 2005, 224).

The similarity attraction perspective emphasizes social homophily and assumes that people prefer to engage in relationships with other people that are similar to themselves (McPherson 2001) and that this similarity eases communication and could enable a more efficient execution of tasks. Similarity breeds connection (McPherson 2001, 415) following the principle behind homophily that birds of a feather flock together. “Similar people tend to interact with each other. Similarity is thought to ease communication, increase the predictability of behaviour, and foster trust and reciprocity” (Brass et al. 2004, 796). Many contributions from e.g. social psychology emphasize how people are more likely to believe information when it comes from similar others (O`Reilly 1983) than from people that are perceived to be dissimilar. This has important implications for knowledge transfer, as “knowledge transfer is more likely between individuals who display similar attitudes as well as firms having encountered similar problems in the past” (Darr and Kurtzberg 2000, 30).

“Relatedness” or “proximity” represents an in-between position in this debate of the similarity attraction perspective and the cognitive resource diversity perspective. Boschma (2005) draws attention to five forms of proximity (see discussion in 2.1.3): cognitive, organizational, social, institutional and geographical, and draws attention to the menace of having too much proximity.

It is clear that each of the five types of proximity facilitate interaction, but it is also a danger that too much of this proximity could lead to situations of “lock-in” due to a lack of openness and novelty. This is what has been referred to as

“the proximity paradox” by Boschma and Frenken (2010), and it has a clear link to the cognitive resource diversity perspective and the similarity attraction perspective. On the one hand, it argues that proximity, “being near”, can be essential for enabling effective communication and interaction between actors, but too much proximity can be harmful because it may reduce the novelty brought in to the firm. Antecedent to this paradox are studies from developmental psychology, i.e. work by Vygotsky (1962) and the “Zone of Proximal Development”, “cognitive complementarity” (Nooteboom 2000a) and “cognitive distance” based on a constructivist, interactionist view of knowledge (Mead 1934, Nooteboom 2000a, Weick 1979, Hendriks-Jansen

1996, Berger and Luckmann 1967, Wuyts 2005). One strand of literature that is highly relevant is that concerning “related variety” (cognitive complementarity) and “unrelated variety” (cognitive distance) that is for example used to analyze the conditions under which people cross-fertilize through interactions within firms and mobility flows between them (Timmermans 2014, Boschma, Eriksson, and Lindgren 2009). This in turn emphasizes the goldilocks principle (Fitjar, Huber, and Rodríguez-Pose 2016) and the importance of engaging with partners at “the right distance”.