Duality in Diversity: Cultural Heterogeneity, Language, and Firm Performance

85 Pages Posted: 18 Jul 2017 Last revised: 17 Aug 2018

See all articles by Matthew Corritore

Matthew Corritore

McGill University - Desautels Faculty of Management

Amir Goldberg

Stanford Graduate School of Business

Sameer B. Srivastava

University of California, Berkeley - Haas School of Business

Date Written: August 18, 2018

Abstract

How does cultural heterogeneity in an organization relate to its underlying capacity for execution and innovation? Existing literature often understands cultural diversity as presenting a trade-off between task coordination and creative problem-solving. This work assumes that diversity arises primarily through cultural differences between individuals. In contrast, we propose that diversity can also exist within persons such that cultural heterogeneity can be unpacked into two distinct forms: interpersonal and intrapersonal. We argue that the former tends to undermine coordination and portends worsening firm profitability, while the latter facilitates creativity and supports greater patenting success and more positive market valuations. To evaluate these propositions, we use unsupervised learning to identify cultural content in employee reviews of nearly 500 publicly traded firms on a leading company review website and then develop novel, time-varying measures of cultural heterogeneity. Our empirical results lend support for our two core propositions, demonstrating that a diversity of cultural beliefs in an organization does not necessarily impose a trade-off between operational efficiency and creativity.

Keywords: Organizations, Culture, Innovation, Performance, Creativity

Suggested Citation

Corritore, Matthew and Goldberg, Amir and Srivastava, Sameer B., Duality in Diversity: Cultural Heterogeneity, Language, and Firm Performance (August 18, 2018). Stanford University Graduate School of Business Research Paper No. 17-52. Available at SSRN: https://ssrn.com/abstract=3000402 or http://dx.doi.org/10.2139/ssrn.3000402

Matthew Corritore (Contact Author)

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

HOME PAGE: http://www.mattcorritore.com/

Amir Goldberg

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Sameer B. Srivastava

University of California, Berkeley - Haas School of Business ( email )

2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-643-5922 (Phone)

HOME PAGE: http://faculty.haas.berkeley.edu/srivastava

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