Do expats have an advantage in managing culturally diverse teams?

Do Expat Leaders Have an Advantage in Managing Culturally Diverse Teams in International Business?

Numerous studies have affirmed that teams with cultural diversity possess the potential to surpass culturally homogenous teams in performance. The diverse range of perspectives and experiences can significantly enhance problem-solving, decision-making quality, creativity, and innovation within teams. Simultaneously, cultural diversity can also present challenges such as miscommunication and interpersonal conflicts that hinder effective team dynamics.

Research from Katja Raithel, Daan Van Knippenberg, and Daan Stam underscores the advantage expat team leaders, individuals of a nationality different from the team’s host country, possess in guiding culturally diverse teams. These leaders have a distinctive edge due to their extensive exposure to intense cross-cultural experiences. This experience provides them with ample practice in working with and navigating cultural differences. Essentially, working in a foreign country serves as an intensive “crash course” in managing cultural diversity. Consequently, expat leaders may be better positioned to steer culturally diverse teams within the realm of international business compared to their locally based counterparts.

The findings are based on a study conducted within the context of an international airline. The researchers surveyed 66 airline teams, encompassing a total of 270 team members and their respective leaders, located across various countries worldwide. Data concerning team members’ nationalities were gathered to calculate a team cultural diversity index, a common approach in team diversity research. Additionally, the researchers solicited team leaders’ evaluations of team performance using a set of survey items, from which we derived an average team performance score. The observations revealed that team performance exhibited a more positive correlation with team cultural diversity, indicating that teams could harness the potential inherent in their cultural diversity, particularly when led by an expatriate team leader as opposed to a local one.

It is crucial to emphasize that this does not imply local leaders have no change to compete. While local leaders may lack the immediate “crash course” exposure to working with cultural differences that expat leaders possess, they can gradually accumulate this experience over time by leading culturally diverse teams.

In light of our study, three key insights emerge for effectively managing culturally diverse teams in the realm of international business:

1. Expat Leadership Advantage: Assigning expat leaders to spearhead international teams yields a discernible advantage in cross-cultural leadership, especially in the short term. Expat leaders can swiftly adapt to and effectively lead culturally diverse teams.
2. Time and Learning for Local Leaders: Leading culturally diverse teams necessitates time, particularly for local leaders. Over time, local leaders can develop the requisite expertise and experience to effectively lead culturally diverse teams.
3. Learning from Experience Matters: At the core of these insights lies the significance of experiential learning. Learning and adapting from diverse experiences are vital for successfully managing culturally diverse teams in the domain of international business.

Download the full study on Team Leadership and Team Cultural Diversity: The Moderating Effects of Leader Cultural Background and Leader Team Tenure from Journal of Leadership & Organizational Studies. Or read the related article“The Advantage of Expat Leaders for Culturally Diverse Teams in International Business” in Californian Business Review.