Cultural diversity from perspective of individual employees: On which organizational level is cultural diversity advantageous for an organization.

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Cultural diversity from perspective of individual employees

On which organizational level is cultural diversity advantageous for an organization.

Master Thesis

Authors: Noorullah Ghairat & Wenlu Lu Supervisor: Marianna Strzelecka

Examiner: Mikael Lundgren Term: VT20

Subject: Degree Project Level: Master

Course code: 4FE41E

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Abstract

Economic globalization has greatly increased opportunities, but also requires the organizations to be more open and constantly try to create a new working environment. Organizations today are composed of people of different races, ages, languages, religions, and lifestyles.

Organizational management's work tends to use a coordinated approach to bring people from different backgrounds together and maximize the ability and talent through multicultural teams.

If managed properly, diversity can bring a competitive advantage to the organizations, but if poorly managed, workforce diversity can have negative outcomes. Due to the lack of research on which organizational level is cultural diversity advantageous for organizations to have, this study will focus on understanding cultural diversity and explore new perspectives about the experiences of different individuals in multicultural settings.

This qualitative study takes social constructivism as a philosophical position. It has drawn conclusions by an inductive approach based on the empirical data which we have collected through the interviews and literature, where the focus was to construct meaning and interpret the data collected which came from the experiences of the participants.

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Keywords: Cultural diversity, effects of cultural diversity, multicultural teams and organizations

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Acknowledgment

First of all, we would like to thank our thesis supervisor Marianna Strzelecka, and examiner Mikael Lundgren for the knowledgeable insights and helpful feedback. It can be said that we

could not achieve this thesis without their constructive feedback.

Second, we would like to express our special thanks and gratitude to everyone who participated in this study specifically the interview participants who shared their great experiences with us. Achieving this thesis is inseparable from your patience and contribution.

Finally, we would like to thank our classmates for the oppositions in the seminars. Your suggestions and opposition have greatly helped us during this thesis.

Thank you very much!

Noorullah Ghairat & Wenlu Lu Linnaeus University

Leadership & Management in International Context program Kalmar, Sweden

May/2020

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1 Introduction

1.1 Background

Modern globalization of economic activities and its related governance issues started at the end of the Second World War, while it significantly accelerated only after 1960s due to the emergence of multinational corporations and fast growth of international trade. The collapse of Bretton Woods system (semi-fixed exchange rate) set up in post-war period (1971) resulted in the expansion of international securities investment and bank lending particularly money market added to the complexity of international economic relations. This was often thought to be the genuine globalization of an integrated and interdependent world of the economy (Hirst et al, 2009, p.335).

In a globalized economy, the international transactions of national economies are rearticulated and subsumed by genuinely global processes and transactions into a new structure (Hirst et al., 2009). Economic actors and activities become disembodied from national societies and domestic policies, whether of private corporations or public regulators must routinely take account of the potentially global determinants of the sphere of operations (Ibid). So, the level of integration, interdependence, and openness of national economies, governance mechanisms for the international economy, investment or which Kenichi Ohmae (1995) defines as four Is (investment, industry, information technology, and individual consumers) gives the consumers the possibility to viable economic units around the world so they can get whatever they need from outside without looking for assistance from the governments.

As socially disembodied global processes and transactions grow, the national space becomes permeated and transformed by the global. Thus, private and public decision-makers face increasing uncertainty as to how to orient and decide the most appropriate course of action (Hirst et al, 2009).

The struggle for competitiveness in the modern world- industry rivalry and the availability of mass consumer needs have forced many companies to focus on internationalization. However, they are face obstacles’ one of which is the human involvement and their interaction in work environment. This is due to the existence of differences in the norms, values and traditions of different societies or nations on a global level. In the last few decades, organizations came to

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an understanding that “cultural effects on human behavior, the organization and behavior of groups, the processes of social change, social trade-offs, forms of political and economic organization, mechanisms for resolving conflict among groups and individuals, and national and international social systems” (Rutherford et al, 1990, p. 50). Culture provides a source of identification for members of an organization. In international business, we often talk about country-based culture, but culture also exists in professional, organizational, and religious settings. Therefore, we need to understand that in growing globalization that spans time, distance, location, and national boundaries, the increasing globalization of societies and cultural diversity requires expanding the scope of cross-cultural analysis in work environment.

1.2 Problem description

The current increasingly connected world, no matter whether capital, commodities, people, technology, and concepts flow around and are closely connected. Focusing on the people and their diverse cultures and how to treat this cultural diversity is still an important practical issue.

We could easily find indirect promotion of local employees by major hiring firms (Shield Geo., recruit shop) claiming that hiring locally will decrease the organization’s cost and integrate easily. As well as the prejudice existing in our work environments or organizations where most people believe only in their own culture and ways of working and see this as the only proper solution on a long-term basis for their organization, has made it very hard for global talent or talented foreigners to get into the job market (Glazer et al, 2014).

Social researchers who study the cultural phenomenon have specifically focused on cultural diversity in organizations and they have come up with diverse results and findings (Glazer et al, 2014., Stahl et al, 2007., Cox et al, 2016). It can be noted that in today's organizations, a team of members of different nationalities is a common fact. Many managers prefer to work with people from different cultural backgrounds and they believe in the advantages that multicultural teams provide. Many studies have focused on identifying the impact of cultural diversity on team outcomes (Stahl et al, 2007. Misoc, 2017). Cultural diversity leads to process losses through task conflict and social integration reduction but also it can lead to process gains through increased creativity and satisfaction. (Stahl et al. 2007). Consultants, academics, and business leaders point out that a well-managed diverse workforce can bring potential competitive advantages to the organization (Nelson et al, 2013). Value diversity lies in that workforce heterogeneity promotes creativity and innovation (Johnson, 2019). The most innovative companies deliberately establish heterogeneous teams to be able to have multiple

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perspectives and solutions for a problem. Moreover, companies with strong innovation capabilities do better than most other companies (Cox et al, 2016., Xu et al, 2012).

Culturally diverse teams are proven to be a strong asset for the success of organizations. Nemeth et al (1983) found that the "minority" group adopted multiple strategies and found more solutions than the "majority" group. This suggests that, groups in the minority's field of vision are more creative. They further concluded that continued exposure to the views of minorities stimulates creative thinking processes (Cox et al, 2016). On the other hand, Glazer et al (2014) suggest that cultural diversity in organizations is of low or no significant importance. They recommend that we should not try to study and highlight the cultural differences in organizations and concludes that such attempts do not provide many impacts (Sieck et al, 2013).

Studies using the social cognitive theory suggests that cultural diversity has a positive impact on the organizations. This theory emphasizes that if we bring people from different backgrounds to work together, it improves team’s performance regarding having multiple solutions to problems, variation in best skills (best skill of each individual) and making the team environment as a learning opportunity. while the similarity-attraction theory is not only supporting a culturally homogenous workplace but also warns of the stronger negative impact of cultural diversity on employee turnover, sentiment, commitment, etc. The similarity attraction theory indicates that people tend to find it easy to work with others from their own background or to whom they are alike.

Managers at workplaces are confused to go for a monocultural or hetero-cultural team settings in their workgroups. Thus, cultural diversity is not only a profound theoretical proposition but also a problem that needs to be faced and responded to, in concrete life practices. In this study, we want to explore that on which organizations’ level does cultural diversity have a positive impact and how do the employee’s multicultural teams and organization perceive cultural diversity in their workplaces.

As many individuals feel that their members feel they face discrimination. Whether we agree to this statement or not, it does not necessarily mean that we can ignore the fact that people are different from each other in terms of race, gender, ethnicity, culture, social identity, religion, language, political opinions, background, etc. (Lin et al, 2005).

As we can see many examples above which are either in favor or disfavor of cultural diversity at the workplace. What is hard to understand is the difference in the findings and results of these studies. Even though every single study is conducted under the specific circumstances and

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conditions it is provided with. What is missing here is the perspective of those who are working in such environments on day to day basis. We have tried to collect their perspectives on cultural diversity or differences in their workplaces and see how and when do they see it positive in an organization.

These various and often contradicting perspectives on cultural diversity led us to the conclude that the phenomenon should be further examined through lens and perspectives of individual employees of culturally diverse teams or organizations. As companies depend on the wellbeing of their employees, their perception of a multicultural work environment matters to them, to better understand and manage diversity in their workforces.

This research has helped us to understand that the problem is not always diversity nor has cultural diversity been proven totally negative for the organizations. If there is a fair percentage of findings and results of the study supporting both positive and negative effects of cultural diversity, we will need to know how to collaborate effectively with people from different backgrounds and wherein an organization these people from diverse backgrounds can have a positive impact. Thus, we will be able to adapt to different ways of working, which promotes the efficiency of the team.

The study was intended to explore the perception of induvial employees about the advantages and disadvantages of working in multicultural teams. As well as on which specific organizational level (top, middle and lower management) is cultural diversity advantageous to have.

1.3 Purpose of study

The purpose of this study is twofold. First, we have sought to understand the employee’s perspective whether cultural diversity is advantages or disadvantage for a team or organization. Second, we should be able to see at which management levels are culturally diverse group perceived as the most advantageous. Thus, this study will enable us to further understand the benefits of cultural diversity in the workplace and to know when to promote cultural diversity in the workplace. We look at this phenomenon through the eyes of individuals directly involved in culturally diverse teams.

1.4 Research Question

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As we were trying to construct our research questions, we looked for several criteria which were important for us to keep in mind such as relevance to our study program and spotting out a possible research gap which would be useful both for us to learn about and for the gap to complete in order to create new knowledge or understandings about the phenomenon we were concerned about. The gap spotting method adopted to discover relevant research questions (Alvesson et al, 2013). As the gap spotting method requires researchers to find neglected blind spots in the process of literature review of similar topics and discover research questions based on these blind spots found in the previous literature (ibid).

After reviewing the literature about cultural diversity and its impact, and the knowledge of organizations & organizational levels we have a relatively comprehensive understanding of the research field. There are numerous studies of cultural diversity, but many studies focus on how cultural diversity will affect the organization in terms of positive and negative effects, We have noticed that the previous studies have seen the impact of cultural diversity from the organization’s point of view and have focused to study the phenomenon from the viewpoint of leadership in organizations. We also noticed that there were no significant studies showing on which organizational level (top, middle & lower) does the cultural diversity have advantages in an organization. In order to supplement these gaps, we hope that we can explore and gain new knowledge and insights to add to this field from a new perspective which in our case will be the perspective of those employees who work in culturally diverse organizations or teams and enrich the interpretation of cultural diversity and organizations, thus the questions we have formulated are:

RQ1. On which organizational level is cultural diversity advantageous for an organization?

In the process of constructing this problem, we consider as many interpretations as possible to solve the gaps in the field, while minimizing the limitations of the problem. The second problem is based on the refinement and supplementary interpretation of the first problem which is more practical.

Sub Q1. On which organizational level do employees of multicultural teams perceive bridging relationships advantageous in their workplaces.

Since the second problem is more specific which clarifies the ground and focus of our research in a clearer way. The aim is to be able to find new insights, knowledge, and understanding

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regarding the research topic by describing which organizational level cultural diversity is advantageous, the purpose is to help the organizations to properly manage their culturally diverse workforce.

1.5 Significance of this study

With the successful conduct of this study, we will be able to come up with new knowledge regarding the phenomenon. We will be able to discuss and explore this phenomenon in detail and understand if under what conditions cultural diversity is advantageous to have or should be avoided. From one side, this will help us understand workplace diversity in details and from the other, it might help a practicing manager to know when and where is mono- or multi-cultural arrangements preferred (Amaram, 2007). in addition, it has helped us understand how to successfully pool the unique knowledge, skills, and abilities of each individual team member, to see the power of different perspectives of team members and to achieve the desired goals successfully. it has helped us increase and add to the existing information and create a clearer perspective regarding this topic. As we have explained the diverse findings, in this study we will mainly be focused on the cultural differences at workplace. We have also tried to know different organizational levels to understand and clarify if on which specific level will it be more suitable or positive for an organization to have a team of individuals from different cultural backgrounds. Thus, we have a practical contribution both to the management and individuals’ practitioners to understand and manage cultural diversity in a better way.

The theoretical contributions are the combination of social capital theory to see whether employees prefer bonding with people from the same background or like to bridge with people from diverse cultural backgrounds. Besides, we have used similarity attraction theory and social cognitive theory to further explain and show why employees prefer to bond or bridge with other individuals based on their preferences.

As in result of our research, we have concluded that people prefer to bridge their relationships across different cultures in their workplaces and see this as an opportunity for social and professional development. We have also found people are aware of the challenges existing in multicultural work environments. However, the social and professional learning and developing opportunities and the enjoyable work environment it provides, has shaped their perception to be more positive towards cultural diversity in their workplaces and see a cultural diversity as a strong asset at their workplaces. To specifically answer the research question, the study shows that cultural diversity is more advantageous on managerial levels in organizations due to various reasons specified in the conclusion part of this study.

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2 Literature Review

In this Chapter, we have tried to collect different definitions of various authors about culture, what role does it play and how it includes our daily life including work environment. To be more specific, we have focused on culture at workplace as our study emphasizes on the cultural differences at workplace and how its perceived by different individuals working in these multicultural settings. The sub-chapter culture in a workplace gives an overview of the current analysis and definition of culture from various angles.

We have then moved to cultural diversity specifically at workplace. To be able to distinguish between surface level and deep level differences which are included in the cultural differences among individuals working together. As many people believe that cultural diversity is concerned with surface level or demographic differences. Our review of cultural diversity provides a clear and more comprehensive information regarding the cultural role in workplace and how its perceived through previous researchers and more specifically what are dimensions of a culture.

We have also included information about organization as a process and structure. Even though our research question is concerned with organization as a structure, we have covered the concept of organization and its related meaning from process and structure perspectives. The intention was to clarify the different level of organizations so the reader can better understand the research focus by have a review of previously existing studies covering both culture and organization from various angles. At the end of this chapter, we have looked at the impact of cultural diversity on organizations and teams.

2.1 Culture in a workplace

Culture is a broad concept that is related to various disciplines which makes it difficult to give it a strict and precise definition. Many philosophers, sociologists, anthropologists, historians, and linguists have been working hard to define the concept of culture from the perspective of their respective disciplines. The word 'culture' comes from the Latin cultus, which means 'care', and from the French which means 'to till' as in 'till the ground' (Berger, 2000). According to Varner et al (2011, p.4) “Culture explains how people make sense of their world” In our daily

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life, what clothes we wear, the food we eat, the language we speak, how we greet visitors, the way we show love, or the perspective of thinking are all within the culture.

Culture provides a definition for the laws and environments that people recognize (Voget, 1960).

In workplace, culture involves the way of thinking of the team, their perceptions and behaviors at work environment. Therefore, everyone has a culture of their own. Culture is the condition of spending our everyday life, because the other people we meet are living in the same environment that receive the same information (Kohls, 2011). Helen Spencer-Oatey defined culture is a social phenomenon, a product created by people's long-term creation, and at the same time, it is also a historical phenomenon and a deposit of social history (Spencer-Oatey, 2004, p.4). Thus, "culture explains how people understand their own world" (Varner et al, 2011, p.5). To be precise, culture is condensed in the material and dissociated from the material. The history, geography, traditional customs, lifestyle, literature and art, norms of behavior, ways of thinking, and values of countries or nations that can inherit ideas, etc., are universally recognized ideologies that can be passed on between human beings.

Hofstede (2001, p.2) highlights that “collective programming of the mind which distinguished the members of a group or category from those belonging to another group or category”. It shows that culture is not innate but obtained through learning and training. Furthermore, People who grew up in a specific country or region and received education and vocational training, means that they are influenced by different cultures such as vocational, regional and national cultures. People are programmed mentally and emotionally thus, they have the cultural, religious, language, and other backgrounds.

On the other hand, If the individual is not aware of this, then the influence of people with different backgrounds he/she contacts will be more obvious to him/her. (Weinert, 2015, p.

85). It can be found that culture is not produced by genes but according to the environment in which the individual is and the people or things they contact with. So, individuals will be affected by values, behaviors, and thinking.

The framework of the cultural level proposed by Hofstede is to define the culture according to the small number of dimensions in which each culture changes and is concerned with cross- cultural communication and shows the effects of a society’s culture on the value of its members and how these values influence the behavior of the society members. These frameworks cannot fully describe the complexity of the culture (Hofstede, 2001). As well as the framework is based on national cultures and their differences in terms of. In our study, the focus on overall cultural differences in workplace among individuals who came from different cultural backgrounds. As

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culture is no longer fixed (Sembdner, 2011, p.32), it is also the reason why it is difficult to define culture from a perspective or field. All in all, based on Schneider et al (2014, p. 4), The culture characteristics can be shown such as: Interrelated system of dimensions, ways of perceiving, thinking, feeling, behaving & evaluating which is shared on group level and learned through socialization and which provides frames of references for action and decisions.

Furthermore, according to Schneider (2014, p. 4) the cultural concept also emphasizes the tension and duality. The primacy of nation culture, nation culture is a crucial option in the field of research culture, but in practice, it is very difficult to distinguish the results caused by the interaction between ethnic culture and other cultures (society, organization, religion, etc.). The impact of effectiveness needs to be compared and analyzed in combination with more other cultures. Research in a wide range of fields, including diverse teams, shows that managers ignore the danger of these differences. As a matter of fact, diversity is increasing day by day in today’s work environment and thus, cultural diversity has become a reality.

2.2 Cultural Diversity

When it comes to diversity, the first thing which comes to people’s mind are ethnicity and nation, but the scope of this concept today is not limited to this (Stevens et al, 2011, p. 532).

Diversity is a broad concept that often appears in life and can be applied in many fields. The concept of diversity has many different definitions, and these definitions are generally very broad (Nkomo et al, 1999, P. 85). Parvis emphasized that diversity not limited to one occasion but exists in every society and every workplace (Parvis, 2003, p. 37). Diversity includes differences in culture, race, values, language, religious beliefs, etc. (Parvis, 2003, p. 37). From this we can see that diversity affects people on daily basis.

According to the descriptions, diversity is a complex term because it covers a large area and is hard to generalize. So, in order to facilitate understanding and analysis, the research scale can be divided into elementary and intermediate (Loden et al, 1991, p. 20). For elementary diversity, we can focus on gender, age, height, race, and other innate characteristics. Intermediate level can pay more concentrate on characteristics that can be changed through personal experience, such as income, faith, education, location, belief. These two points are very helpful for us to look at society or understand ourselves. Diversity can be defined as "a mixture of people with different group identities in the same social system" (Nkomo et al, 1999, P. 91). So, the increasing work cooperation among people from different cultural backgrounds and cross- cultural communication is becoming more and more frequent. Therefore, the organization's

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management and understanding of cultural diversity are very important. Understanding the concept of diversity is beneficial to subsequent cultural diversity and the impact of cultural diversity. It can be said that anyone is always in the process of learning and understanding nature, which is the basis of how to explain the surrounding things. According to the above intermediate scale, cultural diversity is the core part of people. Because the two dimensions of culture are difficult to change, it is essential for a person's early exposure to society and life development. So, culture is the main characteristic root of diversity.

Cultural diversity is defined as the heterogeneity of national cultures of team members (McGrath et al, 1995). It can also be understood as a variety of different forms by which groups and societies express their culture. These manifestations are inherited within them. Cultural diversity is not only reflected in the expression of human cultural heritage through rich cultural expressions but also in the various ways of artistic creation, production, transmission, sales and consumption through various methods and technologies (Shachaf, 2008). Cultural diversity is a basic feature of human society and an important driving force for the progress of human civilization. Everyone is affected by multiple cultural factors. The cultural diversity includes race, gender, organization, profession, and ethnic heterogeneity (Corritore et al, 2018).

Formation of a work group from people with all these deep or surface level differences has its own challenges and benefits. In simple words, it is like pieces of puzzle which must be put together in the right way to make sense and be something which adds value. In this example, we think of the organization as a puzzle which from a strategic point of view must put all its resources including human in the right place in order to achieve its desired goals. As previously emphasized, we study cultural diversity or differences on general level at workplace and our study is not concerned with any form of specific culture.

2.3 Organization

The word organization refers to an institution, a business firm and or a government department.

According to the management context, it refers to the formal arrangement of duties, responsibilities, and clear authority amongst its members so that the organization can achieve its goals. The organization plays a crucial role in the success of businesses. As Andrew Carnegie a Scottish American industrialist once said “Take away our factories, take away our trade, our avenues of transportation, our money. Leave nothing but our organization, and in four years we shall have re-established ourselves.” (Andrew Carnegie 1835-1919). It is the foundation upon which the structure of management is built, without which no management functions can

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be performed in the right way. It’s the and responsibilities required of each organization member in various management functions with a target of achieving predetermined goals.

According to Louis Allen (1958), “Organization is the process of identifying and grouping work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.”. Koontz et al (1972) describe the organization as “establishment of an intentional structure of roles through determination and enumeration of the activities required to achieve the goals of an enterprise and each part of it, the grouping of these activities, the assignment of such groups of activities to a manager, the delegation authority to carry them out, and provision for coordination of authority and informational relationships horizontally and vertically in the organization structure. The totality of such activities and authority relationships that constitute the organizing function” (Koontz et al 1972, p. 66).

An individual in this case entrepreneur organizes different factors necessary for production such as, labor, capital, machinery, and raw materials in order to process them into productive activities and a final product which is then offered to consumers through various agencies.

These business activities are divided into various functions that are assigned to different individuals. This Process is called organizing. According to George Terry, “Organizing is the establishment of effective authority relationships among selected work, persons, and workplaces in order for the group to work together efficiently” or “organization is the creation of relationship among persons and work so that it may be carried on in a better and efficient way” (Gupta, 2007. P, 133). Management tries to put together these various functions and activities to achieve its predetermined goals.

The term organizations in management have two distinct meanings, organizations as a structure, and organization as a process.

Structure:

As a structure “an organization mean an organized group of persons working together to achieve some common objectives. The term organization structure might be defined as a system of job positions, the roles assigned to them and the authority relationships among the various positions. The structure provides a framework to employees for performing their functions, and facilitates workflow in the organization” (Gupta, 2007, P, 132). These employees are bound together towards the achievement of the predetermined common objectives. The management determines the relationship among these employees based on their responsibilities and titles.

Process:

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Under the process or dynamic concept, “the term ‘organization’ is used as a process of ongoing activity. In this sense, an organization is a process of organizing work, people and the systems.

It is concerned with the process of determining activities that may be necessary for achieving an objective and arranging them in suitable groups to be assigned to individuals. It considers the organization as an open adoptive system and not as a closed system. Dynamic concept lays emphasis on individuals and considers the organization as a continuous process” (ibid).

2.4 Organization Characteristics

Every single author has defined the word organization according to their own perspective and angle. The one common ground between all the authors is the viewpoint on the establishment of relationships based on authority among its members so that the organizational objectives can be optimally achieved. Some of the most common characteristics of organizations are into five different stages such as:

2.4.1. Division of Work:

The most obvious task of an organization is organizing the whole process of a business. This process is divided into various activities and functions assigned to different individuals in order to achieve the organizational objectives. This creates a division of employees into teams and departments. To be efficient, they are assigned to specific activities with the help of the organization. This leads to specialization of efforts and skills (Gupta, 2007, P. 136).

2.4.2. Grouping jobs or activities:

The defined activities are brought together under manageable units (jobs) and groups (departments) assigned to a manager. Coordination of these activities is as important as its division. It helps avoid duplication and a smoother flow of functions among the different units or departments in an organization. These functions are highly dependent on one another.

Without a proper coordination it could lead to low or poor performance by the whole organization (ibid).

2.4.3. Common Objectives:

Each of the organizational units or departments is striving for the desired target which leads to the achievement of the enterprise goal. The various desired goals of each different collectively lead to major organizational goals. The organization should be structured in a way that builds

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clear understandable, achievable, and realistic goals that leads to proper achievement and accomplishment.

2.4.4. Delegation of Authority:

Each organization member and group are assigned with well-defined responsibility and provided with the authority required for its accomplishment. The delegation of authority creates a chain of command such as top, middle and lower management. As authority flows from top management to the middle and lower, it creates an authority relationship between different organizations members and units. This should be structured and designed in a way that motivates people to perform their part of work together.

2.4.5. Coordination of Activities:

Activities and efforts of different individuals are properly put together and the interrelationship between different positions is clearly defined so that everyone knows to whom he can give or get instructions (Gupta, 2007, P. 137).

2.5 Organizational Structure

According to Mintzberg (1972) Organizational structure is the framework of the relations on jobs, systems, operating process, people and groups making efforts to achieve the goals. It is a set of methods dividing the task to determined duties and coordinates them which refers to the models of internal relations of organization, power and relations and reporting, formal communication channels, responsibility and decision-making delegation is clarified. (Oders, 2005, p. 201).

Due to the increasing competition, emergence of more skills and educated workers, the technological development, as well as faster internationalization chances for the businesses starting from 1990s, resulted in many organizations looking for reorganizations of their organizational charts from traditional pyramid to organizational structures as inverted pyramid, cluster, wheel, virtual organization, hourglass (Odgers, 2005, p. 92).

Inverted Pyramid Organizations created by Nordstrom retailer agency which was founded in 1901 (Kotler, 2016). This structure turns the traditional pyramid structure upside down forming a flat organization with sales and sales support on the top level making the key decisions. The belief is that salespeople should pay more attention to their customers’ needs rather than their bosses. Nordstrom retailer has one formal rule at organization “Use your own best judgement at all times” (Odgers, 2005, p. 92).

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The Cluster Organizational structure focuses on bringing together different groups of people with from various disciplines to work on semi-permanent basis shaping a structure as branches of grapes (Odgers, 2005, p. 92-93).

The Wagon wheel structure consist of three main parts - rim, the spokes and the hub. Where customers are represented by the hub and the spokes represents the different departments of functions in the organization and the outer rim is the top management keep the whole wheel together and making sure everybody is equipped with skills and resources to serve the customers’ needs as well as the middle managers purpose is as of supporters (Odgers, 2005, p.

92-93).

Virtual organizational structure is becoming popular due to the increased competition and technological improvements in the last few decades. The easy flexibility, network linkages which use the internet, email, and various communication channels when conducting business.

Cross-functional teams and reassignment is normal due to the speed of the nature of this type of businesses (Ibid).

Hourglass organizational structure includes three layers as the top part representing the executives working with formulation of vision for the organization. At the middle layers is the coordination of different functions for various lower level activities. while the bottom layer is represented by the function or activity specialists who are responsible for their own supervision.

The management’s task is to give challenging work assignments and motivate the employees (Odgers, 2005, p. 93-94).

Vertical Organizational Structure

The vertical organizational structure gives an overview of different levels of management from top to down. This way, it’s very easy to differentiate among all three organizational levels and scope where the objective at the top of the hierarchy is to consider mid and long-term strategy for the organization at large. Middle managers usually take a more specific aspect of this larger strategy and ensure a more detailed implementation. Managers on the front-line focus almost exclusively on effective execution and are often much more short-term oriented. This allows each class of management to narrow their focus enough for the work to be manageable.

Vertical organizational hierarchy showing a pyramid shape is widely used and most familiar and traditional organizational chart where upper management is on the peak directing the organizational. The chart broadens as it goes down to the middle management and lower level showing how work is divided in different levels and most important who reports to whom.

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(Odgers, 2005, p. 92). These managers are classified according to a hierarchy of authority and perform different tasks. In many organizations, the number of managers in each level gives the organization a pyramid structure. A vertical organization structure has both upsides and downsides.

On the plus side, it allows the management to look at organization from different angles.

Strategic and high return & risk choices and decisions are made at the top level, while the middle managers tasks consist of alignment of the work group towards organizations objectives.

The individuals working on the lower level of frontline management strive to achieve operational efficiency, identify and hire talented individuals on entry and mid-level and assess the performance.

The downsides however are the consolidation of to the top level, polarized income, steep organization ladder, a one-sided information flow and creation of plans by top management without understanding of the core process, the need for emergent as well as down-top strategy.

2.5.1. Top-Level Management

Top-level managers in a vertical organization structure focuses on the bigger picture. Its where most of the strategic changes and decisions for the long-term future of an organization is made.

Individuals working on this level of organization deal with various key tasks organizational strategy, strategic alliances, big financial decisions and management of relations with stakeholders and the board of directors. Everyone on this level possess several years of professional experience in their functions or industry.

2.5.2. Middle-Level Management

Middle management as clearly stated by its level works in the intermediate managerial level reporting to the top management while having the leadership responsibilities of frontline or lower level management. This level of management is the center of vertical or hierarchical organizations. They are accountable for the functions of their departments. They guide and inspire the operational staff in their departments and ensure effective and efficient performance.

They act as guide and teacher to advice and direct those less experienced. Middle management includes, general managers, branch managers and department managers. They focus on the organizational and directional functions in an organization. They are responsible for executing operational plans with accordance to the company's policies and objectives set at the top level. They are the system of information between the top and the lower management.

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Besides, the above tasks, they are also designing and implementing effective group work, define and monitor group level performance, problem solving among the work group, formulate and implement reward systems, support cooperative behavior, and reporting performance result to the top of the chain. Excellent interpersonal and communication skills, motivational behavior, mentoring and leadership skills are important skills required in this managerial level.

2.5.3. Frontline Management

The lower level of frontline management is individuals with functional expertise and strong interpersonal skills who try to optimize the specific operational processes. They are located at the bottom of hierarchical frame. Strong communication, leadership, mentoring, training, organizing, process optimization and prioritizing are the skills required in this level. However, the two most important skills needed at this level is interpersonal and technical expertise. These individuals need to be highly skilled in their functions and they can best perform when placed in a position to direct and guide a specific group of employees such as supervisors, team leaders and project managers.

We have looked at organizations from its hierarchical culture with clear rules, standards and requirements. to be able to have a better understanding of ‘organization and its level’ we have also shed some light into organizational culture. However, it's important to keep in mind that the further explanation of organizational culture is to add to the understanding of organization and does not concern our research topic ‘cultural diversity’ directly.

2.6 Culturally Diverse teams

Today, more and more companies use teams to manage increasingly complex and dynamic environments. The team is seen as a solution to problems of external adaptation, dealing with complexity by bringing together various perspectives while coping with dynamic changes. With the rapid development of information and communication technology, team members can now be found anytime, anywhere (Schneider, 2014 p. 207). In recent years, companies have increasingly used global virtual teams to connect and attract geographically dispersed workers, thereby reducing the costs associated with global collaboration, thereby increasing speed and responsiveness (ibid). This leads to creation and formulation of teams from different parts of the world. Where the origin or cultural origin of team members can be similar or very different.

Teams can be divided into homogeneous or heterogeneous teams. Teams with members from the same cultural background are considered homogeneous, and other members are considered heterogeneous. According to Nancy Adler, teams can be subdivided in three subgroups (Adler

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1986, p. 100). In a symbolic team, "all members are from the same background except one member"; in a bicultural team, "two or more members represent each of two different cultures";

in a multicultural team "Members represent three or more ethnic backgrounds". She further adds that the specific features of a multicultural organization are reciprocal acculturation where all cultural groups are respected valued and learn from one another, full structural integration of all cultural groups in all organizational levels, integration of minority culture group members in the informal networks of the organization, absence of prejudice and discrimination, equal identification of all group members with organizational goals and personal career development, and a minimum of intergroup conflict which is based on race, gender, nationality, and or any other group category ( Adler, 1986, p.103). Bringing together people who are different in all the above ways from one another has impact on organizations. we want to look at the impact which is caused by the cultural diversity in the organizations.

2.7 Impact of Cultural Diversity on organizations

As workforce today is composed of people of different races, ages, genders, religions and lifestyles. Many organizations and researchers recognize that people are gradually changing.

Organizations constantly try to create a new working environment in which diversity and difference become key elements, in order to promote the maximum potential of the workforce.

Organizational management's work tends to use a coordinated approach to bring people from different backgrounds together and maximize the ability and talent of each employee (Misoc, 2017). If managed properly, diversity can bring a competitive advantage to the organization, but if poorly managed, diversity can be negatively affected by an unwelcome work environment (ibid).

The core issue of the study of cultural diversity effects is on how it affects individual efficiency and group efficiency (Thomas, 1999). As previous studies have shown that culture diversity has both positive and negative effects on organizations. First, individual efficiency is the basis of group efficiency. If the research level is single, it will limit our understanding of the effects of diversity. Cultural diversity is a multilevel construct including individual level, team level and organization level (Thomas, 1999). In the study of the impact of cultural diversity on organizations, researchers have gradually formed two research paradigms in the process of research development: individual-level cultural diversity is the impact of individual differences on individual outcome variables. Team-level cultural diversity is the effect of team heterogeneity on team outcome variables. At the individual level, employee diversity is

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conceptualized as Perceived Dissimilarity; from an information decision perspective, at the team level, employee diversity is conceptualized as Team Heterogeneity (Ibid).

At the individual level, relative to the objective measurement of the degree of difference in certain cultural characteristics between employees and other members of the work team, perceived difference refers to the subjective feelings of employees about this degree of difference, in terms of their influence. The effect of diversity is more significant than objective measurement. People will classify themselves as a specific group of people, and other people as outsiders or other groups. People will prefer or treat members of their own groups in a special way and may make judgments based on the characteristics of special groups when dealing with other people. These views suggest that diversity has a negative impact on the team's because it makes the social process more difficult. If an individual perceives a greater difference from a team member, the easier it is to feel negative evaluations and emotional responses, including anxiety, lower levels of self-identity, and psychological safety (Cox et al, 2016).

In this case, it is difficult to participate in interactive learning, such as effective use of information, seek the help of team members and team reflection, etc., which will result in a lower level of employee learning performance; At the same time, in the interactive working process, there may be uncooperative or even negative feedback from team members who also perceive differences Rejection results in awkward interpersonal relationships and even conflicts (Mitchell et al, 1998). Therefore, there are certain risks in the process of interacting with team members to obtain working performance improvement in a team with heterogeneous characteristics (Corritore et al, 2018)

According to the information processing theory (George Miller,1950), diversity brings different results to the team. At the team level, team heterogeneity is defined as the differences between team members and the different combinations of such differences. The heterogeneity formed by factors such as religion, language, and cultural background will affect the interaction, communication, and social integration among individuals (McGrath et al, 1995). With the support of social cognitive theory, the work team provides a wider range of cognitive resources for all members of the team (Bandura, 2002). Many studies have suggested that team heterogeneity brings a broader perspective, cognitive style and logic to team members way of thinking. Cultural diversity benefits organizations in many ways, especially in terms of productivity and efficiency. If culture diversity is properly managed, everyone will feel cherished and consider themselves important, regardless of what their differences (Pieterse et

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al, 2010). In the process of working with people with different skills and cultural backgrounds, it will help them realize that everyone is valued for different reasons. The feeling of being valued will have a positive impact and can increase employee’s motivation, thereby encouraging organization motivation and productivity. Therefore, employees with different cultural backgrounds can bring multiple solutions (Misoc, 2017). When people from different backgrounds and cultures work together, they will face a variety of viewpoints, and they will tend to listen to different voices, thereby encouraging them to share different opinions and ideas.

In this way, there are more opportunities to find the best solution by choosing more ideas. Not only that, in a team with a high degree of heterogeneity, the individual's ability and the overall coordination ability is stronger, all this provides richer resources for the interactive work behavior of team members, thereby improving team performance. At the same time, teams with a higher degree of heterogeneity are more likely to produce differentiated team performance evaluations (Stahl et al, 2007).

Therefore, diverse teams can touch different information fields, and more powerful information systems can provide a wider perspective, which can enhance the creativity and adaptability of problem solving. (O'Reilly et al, 1998) the creative benefits of heterogeneous team compositions have been supported by numerous studies (O'Reilly et al, 1998). Because cultural differences are related to differences in thinking patterns, conceptual patterns, and problem- solving methods, they are likely to provide powerful inputs for creativity. The creative benefits of heterogeneous teams come from the new ideas that members bring to the team, and multiple perspectives. And different problem-solving styles (O'Reilly et al, 1998).

The impacts on intercultural teams can be positive and negative. According to Nancy Adler,

“Diversity augments potential productivity while also greatly increasing the complexity of the process that must occur in order to realize the team’s potential. Multicultural teams have more potential for higher productivity than do homogeneous teams, but they also bear the risk of greater losses due to faulty process” (Adler, 1986 p. 105). Adler argues that diversity permits increase creativity, it enhances the concentration and can lead to team productivity and effectiveness. While on the other hand cultural diversity have challenges such as lack of cohesion, mistrust, miscommunication and can lead to less efficiency and productivity in the team (Adler 1986, p. 106).

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3 Conceptual Framework

The exploration and analysis of the level of organization where cultural diversity is advantageous, is informed in this study by Social Cognitive Theory, Similarity-Attraction Theory and Social Capital Theory. A combination of the aspects of the above theories helps us understand the employees’ perspective on cultural diversity in teams. As Social Capital Theory promotes the expansion of social capital or building relationships in the following ways, we can see that people are either attracted to bond with people from our own cultural or other similar backgrounds or are also interested to bridge our social relationship with others from different cultural backgrounds. We can see whether they favor cultural diversity in their teams and or tend to be in favor of similarities teams. It is s further clarified by the individual preferences with according to similarity attraction theory which states that we are attracted to others who are alike us or social cognitive theories which believes that we need to bring our cognitive resources together in order to create a mutual benefit, thus we tend to connect with people from other backgrounds. As the theories explain the reasons behind our preferences if we are either interested to build social relationship with our own group or a different group, it provides us with the clear map to see where in organizations employees see it more possible to bridge with other from diverse cultural backgrounds. As per the previously mentioned sources, we now know that bringing people from diverse cultures together can benefit organizations, thus we want to find out if on which organizational level is it easier to do so.

3.1 Social Capital Theory

The Social Capital Theory (SCT) can inform us in terms of employee’s attraction in their work teams. That is which kind of ties do they see value in similarities or see value in differences in workforce. According to Pierre Bourdieu: capital is not only economic and that social exchanges are not purely self-interested and need to encompass ‘capital and profit in all their forms’ (Bourdieu, 1986, p. 241). Thus, social capital can be seen as the social networking, shared values and understandings that a person builds and can benefit from either within his social group or outside (among other groups). It's the effective functioning of social settings through these shared values, interpersonal relationships, shared understanding, common norms

& values, trust, cooperation and reciprocity. Lyda Hanifan (1916) describes social capital as the goodwill, fellowship, sympathy and social interaction among people who make a social unit. It refers to the collective value of social networks and the tendency which arises from these networks to do things for others. Others see social capital as a resource embedded in social relationships (Lin, 1999).

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Social Capital Theory focuses on building networks and relationships. Individuals network with people within and beyond of their social circles for mutual benefits. The networking approach can be done through bonding “social ties between individuals between the same social group or with others who are primarily like them”, whereas bridging “social ties that link people together with others across a cleavage that typically divides society (like race, class, religion, culture)”, and linking “ social tie (often a bridging social tie) to those with power that provides one with the capacity to gain access to resources, ideas, and information from formal institution beyond the community” (Claride, 2018, p. 2-3).

Both, relationship with people within their groups (bonding) and outside of their groups (bridging) are mutually beneficial for people. Robert Putnam argues that social capital facilities capital facilitates action and cooperation for mutual benefit’ (Putnam, 1993, Claride, 2018).

This networking and relationship have different dimensions such as: structural (association in networks, groups and organizations), cognitive (shared emotional connections, values, norms) and relational ( social interaction, neighborhood cohesion, togetherness), (ibid).

According to American sociologist James Coleman (1925-1995): Individuals take rational action to engage in social interactions, relationships and networks for as long as there is benefits that not only benefit the individuals themselves but also account for the development of social organizations. In other words, social capital can be said to be both private and public good benefiting not only those who take rational action but everyone in the group (Claride, 2018).

3.2 Social Cognitive Theory

Social Cognitive Theory; is the cognitive formulation of social learning theory introduced by Albert Bandura (1986) which adopts an agentic perspective to human development, adaptation, and change. To be an agent is to influence intentionally one’s functioning and life circumstances (Bandura, 2002). People tend to see others as a form or resources. thus, they prefer to bridge ties with others who represent better resources. This theory informs if why do people like to connect and build relationships with others.

The theory distinguishes among three modes of agency: personal agency, proxy agency and collective agency (Bandura, 2002). The theory explains that we not only learn and act by personal judgment of our capability if how well can we accomplish a task in a given time (self- efficacy), but we are also influenced by other socially mediated modes of agencies where we

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try to get access to resources, expertise, influence, and power to get to the desired outcome of shared agencies. The belief is that many of the things we want to achieve are possible through a collective interdependent effort. thus, we must provide mutual support, pool our knowledge, skills, and abilities together and form alliances to achieve what cannot be achieved individually.

To function successfully, we need an agentic mix of these different modes. (Bandura, 2002).

“Cognitive diversity is believed to negatively affect cohesion and cohesion believe to negatively effective comprehensiveness and extensiveness thus resulting in an overall positive linkage between diversity and comprehensiveness and an overall positive linkage between cognitive diversity and extensiveness. It shows that cognitive diversity is positively affects comprehensiveness and extensiveness” in a team (Finkelstein et al, 1996; cited by Miller et al, 1998, p. 2).

Bantel et al (1989), suggests that “higher levels of diversity lead to executive creativity, more effective executive decision-making and more positive organizational outcomes” (Bantel et al, 1989: cited by Miller et al, 1998, p. 39). This theory will assist us in understanding the perspective of employees of multicultural organizations. It will further explain if why employees in multicultural organizations are interested in bridging across their social networks based on the mentioned mutual benefits.

3.3 Similarity Attraction Theory

Similarity Attraction Theory (Byrne, 1971), also provides a direction to understand the perspective of organizations members who works in culturally diverse groups. This theory explains why certain individuals prefer to bond ties with those who have similar backgrounds and what are the reasons that they do so. As theory suggests that people are attracted to similarities in others and tend to report more positive interactions compare to those, they are dissimilar (ibid). According to this theory “implicit preferences often lead to homosocial reproduction in which individuals promote those most similar to themselves in terms of demographic characteristics and cultural and social background” (Byrne, 1971, p. 8).

individuals are more attracted to companies which had images and statements reflecting their own identity group (Lambert, 2015).

These similarities can be either of surface-level demographic factors (race, age, gender, educational level, etc.) or deep-level perceptions of values, attitudes, and beliefs. “Recent studies, however, have reported a much stronger effect of dissimilar than similar attitudes,

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which corresponds to the similarity–dissimilarity asymmetry hypothesis” (Singh et al, 2000;

Singh et al, 1992; Tan et al, 1995: cited by Josselson et al, 2012, p. 24).

An organization must understand key dynamics existing in the team environment where each member of the team brings in individual characteristic differences. Individual assessment of similarities in others might result in important impacts for the organizations such as; work outcome, organizational commitment, perceived discrimination, leader-member exchange quality, employee turnover, and group cohesion. (Josselson et al, 2012). Both of the theories (Social Cognitive & Similarity-Attraction) have very contradictory suggestions supported by various studies. In our research question formulation, we have considered both the positive and negative impact of cultural diversity to be something existing in organizations. However, on specific organizational level is the positive impact in its peak was not clarified in the previous literature. Although both positive and negative impact are mentioned here, it is mentionable that in this study we will mainly focus on the positive impact. However, we will also shed light on the negative impact to be able to get a proper answer to our research question. The use of Social Capital Theory has helped to understand this specific phenomenon (cultural diversity) by looking into the social aspects of workforce diversity and further understanding its bonding/bridging aspects through Social Cognitive & Similarity Attraction theories. Thus, these theories inform the following conceptual frame to better understand and make sense of the phenomenon considering the experiences of different individuals working in multicultural teams, in this study.

3.4 Relation Building Framework

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Relation building framework. Source: Authors

This conceptual frame would summarize employee’s perception and see whether those who are attracted to similarities bond stronger with those who are alike them based on the facts that there are challenges (communication, connecting, different opinions) existing in networking with people from other groups, or the perceived values in differences (cognitive resources, developing and learning opportunities), would help to understand preferences of bridging relationships with those to whom they are dissimilar.

4 Methodology

4.1 Philosophical Positioning

Research philosophy refers to the system of basic philosophical assumptions about knowledge development and the process of selecting methods. It concerns the structure on which the research assumptions and beliefs of the development of knowledge are based. (Saunders et al,2016, p. 130). It can be well understood as the concept of research. In this way, the research philosophy is what you think: what should be studied, what should not be studied, and how to study. Therefore, by studying the basic concepts of philosophy, starting from understanding the concept of the world, collecting knowledge of social phenomena, analyzing their sources and drawing new insights that constitute strategies, data collection and analysis in research.

Understanding research philosophy is important because the purpose is to develop new knowledge, but there is no best or most correct research philosophy because the research direction and goals are different. The two main ways of thinking in research philosophy are ontology and epistemology (Saunders et al, 2016, p. 129). To be able to construct the meaning of experiences of individuals working in a culturally diverse environment, we have based our study on social constructivism.

Social constructivism is a way to build social knowledge about self, society, behavior, and experience, which mainly relies on reflection and meaning creation (Shor, 1992). One of the main goals of social constructivism is to provide a democratic and critical learning experience.

It also emphasizes that conclusions are drawn through surveys and inquiries, rather than accepting mainstream knowledge and maintaining neutrality in the process. Social constructivism as a part of epistemology, the core of social constructivism requires researchers to cite evidence, add claims, explain the literature to support their views and solve problems

Cultural diversity from perspective of individual employees: On which organizational level is cultural diversity advantageous for an organization.