Multicultural Teams: Increasing
Creativity and Innovation by Diversity
Oliver Gassmann
The internationalization of industrial research and development has tended to be regarded as
a necessary evil. However, in conjunction with project management attuned to different
cultures, multicultural teams can increase the rate of creativity and innovation. Many
examples of this are demonstrated, together with specific reference to a competence-based
network developed within Schindler Elevator Ltd.
Introduction
T
he environment of European business
organizations is characterized by globa-
lization of competition, more demanding
customers, increasing complexity and variety
of products, together with escalating costs
and greater technical risks. In this environ-
ment the significance of innovation and R&D
increase disproportionately, as customer-
oriented products must be brought to market
in ever shorter cycles. ‘‘Customization’’ of
innovation processes, concentration on core
competencies, and internationalization of
R&D are pursued with vigour. Between 1989
and 1992 domestic spending on R&D by
Swiss companies rose by 4%, whereas their
R&D spending in foreign countries increased
by almost 35%. In the USA in 1993 Swiss
companies had the highest R&D spending of
non-US companies, amounting to US$ 2.5
billion, which was higher than that of
Germany, Great Britain, Canada or Japan. In
the same year Swiss companies employed
15,000 technical professionals on such work in
the USA, which is equivalent to 45% of the
total number of private industry R&D em-
ployees in Switzerland (Vorort, 1994). In view
of the extensive acquisition by Swiss com-
panies of American pharmaceutical and
chemical companies with intensive R&D
activities a further increase in this R&D
investment can be expected.
In spite of a high level of education, the
number of highly qualified industrial re-
searchers and developers in Switzerland is
limited. Large countries such as the USA and
Japan have several times as many R&D
employees (Figure 2). Therefore, technology-
based companies such as ABB, Hoffmann-
La Roche,orNovartis increasingly tap the
resources of this foreign know-how. Tradi-
tional innovation processes in which a prod-
uct is developed in the company’s home
country and then manufactured in low-wage
countries occur less frequently. Instead, trans-
national projects with teams distributed
around the world are becoming more sig-
nificant.
Low Acceptance of Technology Can
Stimulate Innovation
In highly-developed industrial countries, a
decline in public acceptance of certain tech-
nologies, and the low regard of society for
technological achievements in general, can
lead to the transfer of R&D to other countries.
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Figure 1. Environmental change frequently forces
internationalization of innovation processes
CREATIVITY AND INNOVATION MANAGEMENT88

Low acceptance of technology can result in
restrictive legislation in relation to R&D
activities or, indirectly, in conditions which
do not stimulate innovation. The dangers of
R&D as perceived by society include high
costs within the company, with levels which
vary from country to country. Genetic en-
gineering and experiments on animals are
currently at the centre of public debate.
However, when discussing where to locate
R&D it is often forgotten that a critical public
attitude to technology can actually encourage
innovation. China has the most stringent
environmental regulations for foreigners,
which can lead to rapid nationwide conver-
gence on these standards. This encourages the
development of dominant designs which
become a de facto standard. Germany’s strict
environmental regulations are one of the
reasons for its leading position in the field
of environmental technology. Californian ex-
haust gas regulations have worldwide accept-
ance as the target standard for exhaust gas
emission in the automobile field (Boutellier,
2000).
California’s strict safety and environmental
regulations have turned the USA into ABB’s
key market for the development of trans-
formers. The resistance to earthquakes and
freedom from oil required in California
caused ABB to base their development of a
transformer suitable for the ‘‘triadic’’ Amer-
ican, European, and Japanese markets there.
A high level of technological awareness, and
timely criticism of a specific technology, can
prevent a subsequent cost-intensive change-
over to a different technology. It is therefore
only at a superficial level that a lack of
technological acceptance appears to put
highly-developed industrial countries at a
disadvantage to emerging countries in rela-
tion to the location of R&D. A low degree of
acceptance of technology can also stimulate
innovation.
Technology Alone is no Guarantee
of Project Success
In many companies, transfer of technical
activities abroad has led to duplication of
development and global inefficiency. To
reduce this effect, R&D locations must con-
centrate more on their individual core com-
petencies and cooperate more closely between
locations. Each location must focus on the
components or technologies for which it
possesses the highest level of competence in
the R&D network. The greater division of
work, in which each location no longer
develops everything itself, permits concentra-
tion of resources. At the same time, however,
this leads to an internationalization of inno-
vative processes. To develop a new system
resources from several locations must be
pooled. Within a project, there must be more
interdisciplinary cooperation than there has
been in the past. Process-oriented teams must
be able to overcome boundaries of location
and specialism. These teams form an over-
laying organizational structure which en-
courages a company’s long-term innovative
capability. At the same time, however, they
create conflicts with classical line organiz-
ation structures. Open communication and
common values (vision/mission) can reduce
these conflicts.
Process structures and information technol-
ogies which extend beyond national bound-
aries are essential prerequisites. However,
tailor-made processes and extensive use of
state-of-the-art communications technologies
Figure 2. R&D employees in selected OECD countries
MULTICULTURAL TEAMS 89
# Blackwell Publishers Ltd 2001 Volume 10 Number 2 June 2001