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 tradeoff 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. * We thank Glassdoor for providing the employee review data and Lee Fleming for sharing the patent data that we used in this study. We also thank seminar participants at University of Illinois School of Labor and Employment Relations; University of Chicago, Booth School of Business; IESE Business School; Kellogg School of Management, Northwestern University; Arison School of Business at IDC Herzliya, Israel; and participants at the Lugano Organizations Conference, the Stanford/Berkeley Organizational Behavior Student Conference, the Consortium on Competitiveness and Cooperation Conference for Doctoral Student Research at the Wharton School, University of Pennsylvania, the Carnegie School of Organizational Learning Conference, and the International Conference on Computational Social Science. We are also grateful to Lara Yang for the research support she provided. The usual disclaimer applies.
1Whether deliberatively cultivated or naturally arising, every organization develops a culture-a system of meanings and norms shared by its members. An organization's culture can influence the success of its members and the organization as a whole through its effects on individual motivation and commitment, interpersonal coordination, and group creativity and innovation (Chatman and O'Reilly, 2016). Although organizational scholars often ask how the content or intensity of culture relates to performance-for example, how shared beliefs and norms about the importance of crossfunctional collaboration can boost or diminish firm profitability-a growing literature has focused instead on the consequences of cultural heterogeneity for organizational productivity and vitality.Research in this vein asks: When is a diversity of ideas and beliefs conducive to organizational success and when is it instead detrimental? Different li...