The downside of diversity

The closest thing the business world has to a universally acknowledged truth is that diversity is a good thing: the more companies hire people from different backgrounds the more competitive they will become. Diversity helps companies to overcome talent shortages by enlarging their talent pools. It helps them to cope with globalisation by expanding their cultural horizon. It stimulates innovation by bringing together different sorts of people. And so on.

But what about the downside of diversity? It does not pay to ask this question. Many countries have equal-opportunity laws on their books. American universities (and many others as well) are institutionally committed to the idea that diversity promotes learning and creativity. Most important perhaps, nobody wants to come across as unsympathetic to minorities or unappreciative of cultural variety.

Yet a glance beyond the corporate-diversity statements suggests a more complicated picture. It is notable how many of the world’s best companies, such as McKinsey and Apple, have cult-like cultures—probably because they are also very diverse: they need a strong culture. It is also notable how many of the world’s best companies are rooted in small towns: think of Lego (Billund) or Walmart (Bentonville). Distinctive religious groups such as the Mormons in America and the Parsis in India have also made an outsized contribution to corporate life.

It is far too easy to present “diversity” in one-sided terms: as a triumph of enlightenment over bigotry and creativity over closed-mindedness. But the subject is too important to be left to the cliché-mongers. Diversity can bring risks as well as benefits and perils as well as perks. There are trade-offs to be made, for example between the trust that comes from sharing a common background and the cultural sensitivity that comes from employing people from different parts of the word.

Roy Y. J. Chua, of Harvard Business School, is one of the few academics to produce serious studies of this subject. Chua agrees that in a world of multinational corporations and global product markets success depends more than ever on your ability to foster multicultural thinking and cross-border collaboration.

But in a paper in the current issue of the Academy of Management Journal (“The Costs of Ambient Cultural Disharmony: Indirect Intercultural Conflict in Social Environment Undermine Creativity”) he goes on to note that getting people from different nationalities and cultural backgrounds to co-operate is fraught with difficulties. At best differences in world-view and cultural styles can produce “intercultural anxiety”, at worst outright conflict. The very thing that can produce added creativity—the collision of different cultures—can also produce friction. The question is whether the creativity is worth the conflict.

Chua argues that creativity in multicultural settings is highly vulnerable to what he calls “ambient cultural disharmony”. Tension between people over matters of culture, he says, can pollute the wider environment and reduce “multicultural creativity”, meaning people’s ability to see non-obvious connections between ideas from different cultures. “Ambient cultural disharmony” persuades people to give up on making such connections because they conclude that it is not worth the trouble.

Chua also says that “ambient cultural disharmony” has its strongest impact on people who regard themselves as open-minded. Closed-minded people expect cultural tensions. Open-minded people don’t expect them and so react to them more strongly. In another irony, Chua also discovered that the only people who are not affected by cultural conflict, at least in terms of creativity, are the people who are at the heart of it. They are more likely to explain the problems in personal rather than cultural terms.