Li et al.

: Team Leadership and Diversity Management in Information Systems D

Research Paper doi: 10.17705/1pais.14501 Volume 14, Issue 5 (2022)

Team Leadership and Diversity Management in

Information Systems Development Project Teams

Yuzhu Li1, Jack Shih-Chieh Hsu2, Hua Sun3,*, Neeraj Parolia4

1
University of Massachusetts Dartmouth, USA, [email protected]
2
National Sun Yat-sen University, Taiwan, [email protected]
3,*
Shandong University, China, [email protected]
4
Towson University, USA, [email protected]

Abstract

Background: The interplay of diversity and leadership produces mixed findings in

the literature. Based on the categorization-elaboration model (CEM) and diversity
management (DM) literature, this study investigates the role of team leadership in a
diverse ISD team. Further, this study examines the moderating roles of DM practices
in the relationships between group diversity, team leadership, and project
performance.
Method: This study selected a paired survey method to test the hypotheses. Eighty-
two valid paired questionnaires were received from project managers and team
members in ISD projects. In addition, this study used partial least squares (PLS) with
a bootstrapping technique to examine the proposed model.
Results: The results show that group diversity has mixed impacts on team
leadership. Furthermore, DM practices positively moderate the effect of value
diversity on team leadership, as value diversity is positively related to team
leadership when DM practices are more robust. At last, DM practices negatively
moderate the relationship between team leadership and project performance as the
effect of team leadership has weaker effects on project performance when DM
practices are strong than when the practices are weak.
Conclusion: This study adds to the literature by examining team leadership in a
heterogenous ISD team and providing empirical evidence for the moderating roles of
DM practices in team leadership processes.
Keywords: Group Diversity, Diversity Management Practices, Team Leadership, ISD
Project Team, Project Performance.
This research article was submitted on April-2022 and under three revisions, accepted on September-2022.

Citation: Li, Y., Hsu, J. S.-H., Sun, H., & Parolia, N. (2022). Team Leadership and Diversity
Management in Information Systems Development Project Teams. Pacific Asia Journal of the
Association for Information Systems, 14(5), 1-29. https://doi.org/10.17705/1pais.14501
Copyright © Association for Information Systems.

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Team Leadership and Diversity Management in ISD Project Teams / Li et al.

Introduction
Socio-cultural change, employee mobility, and globalization increase human resource
heterogeneity in traditional and project-based work environments. Information system
development (ISD) project teams tend to be more diverse than other work units because of the
need for cross-functional skill sets, various stakeholders, highly interdependent tasks, and a
general geographic distribution (Pinjani & Palvia, 2013). Diversity is instrumental in facilitating
the software development process in ISD project teams (Olsen & Martins, 2012). The unique
nature of ISD teams requires cross-domain knowledge and cooperation of members from
different departments or organizations (Liang et al., 2012). Work-related diversities, such as
value diversity (Jehn et al., 1999), informational diversity (Liang et al., 2010), and demographic
diversity such as social category diversity (Jehn et al., 1999), are critical in building teams and
during project execution because of ISD projects' task focus and goal orientation.

Leadership plays a crucial role in team success. In addition to traditional vertical leadership
from appointed project managers, team members take leadership roles to contribute their
expertise and guide others to solve problems in ISD projects. Team leadership refers to the
distribution of leadership influence across multiple team members who are not official team
leaders but exercise leadership functions during certain team activities (Carson et al., 2007).
The importance of team leadership has been widely recognized recently, especially in diverse
organizations (Hoch, 2013; Homan et al., 2020; Pearce et al., 2008; Zhu et al., 2018). Team
leadership in ISD teams brings people together, enhances communication of task-related
information, and leverages team members' expertise in task completion (Hsu et al., 2017;
McCarthy et al., 2019). Diversity in leadership brings depth and breadth of backgrounds,
experiences, and perspectives together, potentially stimulating problem-solving and
performing well on creative tasks. However, the cross-functional ISD team with heterogeneity
in various aspects also creates unique and complex challenges for team leadership and
substantially impacts team processes (Hsu et al., 2017; Liang et al., 2010).

To reconcile the mixed effects of diversity on work group processes, the categorization-
elaboration model (CEM) integrates group information processing and considers contextual
moderators. Social categorization fosters affective reactions and evaluations evoked by
diversity (Van Knippenberg et al., 2004). Group information perspective focuses on building
an information pool for decision making (Van Knippenberg et al., 2004). Aligned with the CEM,
past studies found that diversity’s effects differ because of the contingency factors such as
task interdependence, senior managers' leadership behaviors, and people management
practices to influence the effects of diversity on group outcomes (Guillaume et al., 2013).

Managerial interventions to promote the benefits of diversity and ease its negative impact are
described as diversity management (DM) practices. Fundamentally, diverse ISD project teams
demand active DM effort to elicit the positive benefits of diversity and stimulate team
leadership emergence (Guillaume et al., 2017). DM practices have been implemented at
multiple levels (Guillaume et al., 2013). DM practices can be proactive with the practices such
as team staffing and diversity training or reactive when managers actively manage it for better
work performance by exercising specific DM practices (Homan et al., 2020). Homan et al.
(2020) call for "empirical research on reactive leadership of team diversity." In the ISD context,
project managers (vertical leaders with formal titles and positions) manage diversity with DM
practices such as committing to workplace inclusion, thoughtful interactions with people with
different backgrounds, and customized performance measurements tied to diversity (Yadav &
Lenka, 2020). However, the effects of DM practices are mixed (Nadiv & Kuna, 2020). Jonsen
et al. (2011) suggest that cultural contextualization of diversity is the research direction that
the diversity field should consider. Context-specific diversity management approaches need
investigation in the Asia-Pacific regions (Chen et al., 2021; Mousa et al., 2020). In response
to these calls, this study aims to study the effect of DM practices on team leadership and
project outcomes in diverse Asian ISD project teams.

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Past studies reveal a positive relationship between the level of diversity and team leadership
(Kukenberger & D'Innocenzo, 2020). Experts' different ideas, opinions, and information
facilitate the identification of feasible solutions and creative problem-solving (Chen et al.,
2018). Conversely, the adverse effects of diversity are related to conflict and poor
communication reducing cooperative efficiency, which sabotages the leadership distribution
in the team (Jehn et al., 1999; Van Knippenberg & Mell, 2016). The mixed effect of team
diversity calls for managerial interventions such as DM practices. Following the CEM and past
studies, this study investigates the moderating role of DM practices on the relationship
between team diversity and leadership. As a result, the first research question is, "How do DM
practices moderate the impact of team diversity on team leadership in diverse ISD teams?"

In addition to promoting the benefits of diversity to team leadership, DM may also affect team
leadership on team performance. Team leadership positively affects group outcomes (Gupta
et al., 2010; Santos et al., 2015). DM practices foster a safe environment for diverse members
to interact with each other towards a shared goal of project success. Individuals who feel
psychologically safe are more likely to take leadership roles and contribute to team
performance (Yadav & Lenka, 2020). In addition, DM practices empower cross-functional ISD
team members to take responsibility and opportunities to satisfy team needs and accomplish
team tasks (Hsu et al., 2017; Morgeson et al., 2010). Therefore, the second research question
is, "How do DM practices affect team leadership on project outcomes in diverse ISD teams?"

This study contributes to the leadership literature and ISD project team research by exploring
team leadership in a diverse environment based on the CEM model. Furthermore, this study
explains the role of DM practices in ISD in Asia-Pacific by empirically testing a set of DM
practices project managers exercise in the ISD process. Finally, support for the model would
indicate the intended practical reasons for implementing DM practices specific to a team
environment like the ISD context and Asian context.

The rest of the study is organized in this way. We present a brief literature review on group
diversity, the Categorization-Elaboration (CEM) model, DM practices, and team leadership in
diverse groups in the "Literature Review" section. Then we propose the research model and
develop the hypotheses in the "Conceptual Model and Hypotheses Development" Section.
Next, we report the "Research Method" and "Results." At last, we discuss the empirical results,
the limitations, and theoretical and practical contributions.

Literature Review
Group Diversity

Group diversity is a characteristic of social grouping that reflects the degree to which objective
or subjective differences exist between group members (Van Knippenberg & Schippers,
2007). Team members with diverse backgrounds, tenure, education, and functional
departments bring various perspectives into group work processes. Diversity includes surface-
level differences (e.g., social category diversity, including gender and age) and deep-level
differences (e.g., value diversity and informational diversity) (Jehn et al., 1999). While several
studies have examined a particular type of diversity, multiple dimensions of diversity have
compound effects on elaboration, resulting in the mixed effects of diversity in the literature
(Van Knippenberg et al., 2004).

ISD teams inherently have high levels of group diversity regarding social categories,
information, and value. The variance in team members' demographics, including gender,
tenure, and employment status (social category diversity), brings various perspectives on
group outcomes (Shemla et al., 2016). Informational diversity refers to variations in knowledge
bases, educational backgrounds, and functional departments (Liang et al., 2007). Team

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members with highly disparate informational backgrounds may spark integrative insight,
creativity, and innovation (Scott et al., 2011). However, different knowledge bases may also
provoke conflict, division, and dissolution (Harrison & Klein, 2007) and bring conflicting views,
information asymmetry, and perception differences into the development process (Liang et al.,
2007). People from different functional backgrounds may have other goals and find it hard to
achieve consensus and prioritize development goals, leading to conflicts (Jehn et al., 1999).
Value diversity refers to the degree of differences members have regarding their perceived
project and system development goals. Members with different project goals will not align their
work and effort with the team's project goals to produce positive project outcomes (Joshi &
Roh, 2009; Liang et al., 2012).

Three distinct features of diversity in ISD project teams make them unique. First, ISD project
teams are characterized by information and knowledge creation. For knowledge-intensive
groups, creating knowledge and innovative solutions depends on diverse input and viewpoints
and integrating different perspectives related to problems and tasks. Second, the cross-
functional nature of ISD project teams results in informational and value diversity (Liang et al.,
2007; Liang et al., 2012). ISD project performance relates to the project team's efficiency in
utilizing the resources to deliver expected project outputs (Nidumolu, 1995). Group diversity
in ISD project teams creates relational and task conflicts detrimental to project performance
(Liang et al., 2010). Since information system development is a knowledge-driven process,
team sensemaking and problem-solving are crucial for project success. Group diversity brings
distinct perspectives and knowledge to project teams for creative solutions in teams. Last,
diverse group composition in ISD teams has an instrumental value that enables its positive
benefits on information elaboration and team creativity. In contrast, organization-level diversity
often focuses on terminal value to avoid legal costs or achieve affirmative action goals (Olsen
& Martins, 2012).

There have been no consistent results on how diversity affects group outcomes (Harrison &
Klein, 2007; Liang et al., 2015; Shen et al., 2010; Van Knippenberg & Mell, 2016). Several
possible reasons for the inconsistent results have included different measures of group
outcomes without considering group work processes, different types of diversity (e.g.,
informational, demographic, tenure, and culture diversity), and mixed studies of the meditating
and moderating effects of diversity on group outcomes (Scott et al., 2011; Van Knippenberg
& Mell, 2016).

The Categorization-Elaboration Model (CEM) Model

The theoretical perspectives of diversity at the group and individual levels include social
categorization theory and information/decision-making perspectives (Van Dijk et al., 2017).
Social categorization theory, stemming from social identity theory, holds that people classify
themselves and others into groups and then only tend to trust in-group people (Van
Knippenberg et al., 2004). As a result, homogenous groups tend to have a high commitment
from their members and perform better than heterogeneous groups. In decision-making,
diverse groups with large pools of ideas, information, and knowledge outperform homogenous
teams (Shemla et al., 2016). Integrating the two perspectives, the Categorization-Elaboration
Model (CEM) emphasizes group information processing, consideration of critical contextual
moderators, and integration of the social categorization and elaboration processes (Van
Knippenberg et al., 2004). The CEM suggests that diversity can evoke elaboration processes
(Van Knippenberg et al., 2004). From the information-processing/decision-making
perspective, diverse groups with large pools of ideas, information, knowledge, and resources
outperform homogenous teams (Ancona & Caldwell, 1992; Kearney & Gebert, 2009; Shemla
et al., 2016). Integrative insight, creativity, and innovation spark among team members with
highly disparate informational backgrounds (Scott et al., 2011). The elaboration processes will
lead to positive team outcomes (Van Knippenberg et al., 2004).

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The effect of diversity on the elaboration processes is also affected by social categorization
that influences members' in-group identification (Van Knippenberg et al., 2004). The perceived
differences may result in a stereotype or intergroup bias (see gender stereotype in ICT
(McGee, 2018; Trauth et al., 2016); country stereotypes in global software development
(Wang & Zhang, 2019); age stereotypes in developer's performance evaluation in agile
software development (Schloegel et al., 2018). In a collectivist society, diversity in an
organization is more likely to engender intergroup bias, resulting in adverse effects on
teamwork outcomes (Fischer & Derham, 2016). Diverse informational and value bases may
provoke conflict, division, and dissolution, bringing conflicting views, information asymmetry,
and perception differences into the development process (Cheung et al., 2016). Members with
different project goals will not align their work and effort with the team's goals to produce
positive project outcomes (Joshi & Roh, 2009; Liang et al., 2012).

While the CEM acknowledges the direct effects of diversity on group outcomes, it further posits
that contingency factors should be considered to create synergy from diversity and motivate
members to process and learn information (Van Knippenberg & Mell, 2016). Multiple
contingency factors and moderators have been examined to reduce the effects of social
categorizations and promote integration in the literature (Guillaume et al., 2017). Van
Knippenberg and Mell (2016) review research on team diversity and point out that diversity
research has developed common findings on the diversity-performance relationship and
grown consensus on moderating influences such as contextual factors. The common
moderators are related to the shared perception of psychological safety and trust that promote
social integrations and information sharing.

Diversity Management (DM) Practices

While the CEM posits the crucial roles of moderators in the diversity-performance relationship,
DM practices, as a moderator representing managerial interventions, have been applied and
tested from various theoretical perspectives to promote the positive benefits of diversity on
workplace outcomes (Olsen & Martins, 2012; Yang & Konrad, 2011). As a subset of human
resources management (HRM) practices, DM practices represent a complex system within
which companies manage intellectual and social capital that creates unique values (Köllen,
2021). The instrumental value of employment statistics and diversity for information collection
and decision-making explains the reasons for adopting DM (Köllen, 2021; Olsen & Martins,
2012). The assimilation and integration of employees with diverse information, demographics,
and backgrounds provide directions for specific DM practices.

Based on institutional theory, firms institutionalize formal HR practices to comply with diversity-
related and equity-related laws and meet the regulations by monitoring employment statistics
(Yang & Konrad, 2011). Many companies make diversity a part of the strategy to address
diverse employees, customers, and market stakeholders based on a resource-based view
(Yang & Konrad, 2011). Organization-level DM practices have been the primary focus of
diversity literature (Dennissen et al., 2020). Kreitz (2008) summarized the best practices for
managing organizational diversity, including top leadership commitment, diversity as part of
an organizational strategy, and diversity linked to performance, recruitment, and employee
involvement. Additionally, diversity training targets mitigating diversity-related biases and
improving collaboration effectiveness among diverse employees (Köllen, 2021). From the
psychological lens, Olsen and Martins (2012) denote that DM sets organizational norms and
values. Studies have shown that effective DM practices lead to positive outcomes such as
organizational citizenship behaviors and affirmative commitment (Ashikali & Groeneveld,
2015; Shen et al., 2010).

DM practices embody the national, cultural, and organizational contexts (Köllen, 2021). While
DM has originated in western countries, DM practices get customized and localized for
different tasks, industries, organizations, and nations (Köllen, 2021). In a literature review of

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workplace diversity in the Asia-Pacific region, Chen et al. (2021) identify six generic themes
corresponding to different types of diversity and its impacts on organizational, team, and
individual levels. For future research directions, Chen and colleagues (2021) point out that
context-specific diversity management approaches should be explored. Consistent with this
call, this paper aims to study the specific DM practices that IS project managers can adopt to
promote the benefits of diversity and mitigate the adverse effects. Finally, context-specific
factors such as culture and power distance affect diversity management (Chen et al., 2021;
Mousa et al., 2020).

Most literature has focused on organization-structure-oriented DM practices (Yadav & Lenka,

2020). Few studies have focused on project-task-oriented DM practices and examined how
DM affects project outcomes. The essential role of leadership in DM has been recognized in
the literature (Jin et al., 2017). Leaders set diversity policies and procedures to ensure
diversity. Further, DM requires long-term commitment, demands changes in practices, and
generates bureaucratic control (Nadiv & Kuna, 2020). Most of the research on leadership in
diverse teams focuses on the role of leaders in diversity management, such as what motivates
leaders to manage diversity (Ng & Wyrick, 2011) and how they make a decision about the
diverse team composition (Homan et al., 2020), and how they value diversity (Olsen & Martins,
2012). Recently, Homan et al. (2020) advocated the vital role of formal leaders' competencies
in understanding the needs of diverse teams and managing diverse teams. This study
examines the DM practices project managers can control to manage team diversity. Software
project teams have aimed to leverage the positive effects of diversity (Liang et al., 2007; Liang
et al., 2012). ISD project managers actively practice DM to promote social inclusions and build
team cohesion. Inclusive leadership has been found to predict employee performance more
strongly than diversity policies (Jin et al., 2017). High-quality leader-member exchange and
DM are pivotal for employees' health and job satisfaction (Vito & Sethi, 2020). In addition, a
diverse group of team leaders has presented new challenges and advantages in team
functioning and group outcomes (Homan et al., 2020).

Team Leadership in Diverse Groups

Leadership has been examined as a source to alleviate the adverse effects of diversity or
bring out the positive benefits of diversity. Traditional leadership has been found to stimulate
diversity climate and create a sense of inclusion to encourage team members' group
processes (Homan et al., 2020). Appropriate leadership can integrate different members with
unique identities into the team by reducing communication shorthand (Thompson & Matkin,
2020).

With the flat structure and cross-functional nature of teams, team members have opportunities
to lead a team. Team leadership refers to team members' exercising the leadership functions
to satisfy team needs and enhance team effectiveness collectively (Morgeson et al., 2010).
Diversity provides a new stimulus for team leaders to manage the project teams and tasks. In
ISD projects, team members' informal leadership frequently replaces or supplements
traditional leadership from project managers with designated authority because of intense
interactions among team members with expert-level knowledge and high demand for quality
communication and decision-making (Hsu et al., 2017; Scott-Young et al., 2019).

As a team process, team leadership has been identified as one of the critical antecedents of
performance outcomes (Carter et al., 2020; Homan et al., 2020; Morgeson et al., 2010). In a
diverse team, members with diverse backgrounds and backgrounds collectively make sense
of emergent situations and ambiguous problems and develop a shared understanding
(Hekkala et al., 2018). Problem-solving and sensemaking are critical task-oriented leadership
functions in the ISD project context (Morgeson et al., 2010). Past studies found that the ISD
team's problem-solving capability is essential for successful project performance (Li et al.,
2010). Additionally, the supportive social climate reduces intergroup biases from social

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categorizations and develops a supportive social environment to address interpersonal issues

and highlight positive social interactions. In addition, a favorable climate enhances high team
satisfaction and leads to successful team outcomes (Morgeson et al., 2010).

Past studies have examined the effect of diversity on the emergence of team leadership. For
example, Wellman (2017) suggests that solid group identity initiates relational model
convergence influencing team leadership emergence. When a team with high diversity
perceives solid individual identity, this group is more likely to resort to the emerging authority
ranking relational model in leadership, leading to formal individual leadership. By contrast,
collective leadership is more likely to emerge if group members perceive similarity and develop
shared cognition. Diverse team composition produces mixed impacts on shared leadership
and team performance, and a cooperative climate plays a crucial moderating role in the
diversity-performance relationship (Kukenberger & D'Innocenzo, 2020).

Conceptual Model and Hypotheses Development

The CEM model posits that group diversity triggers the elaboration of task-relevant
information, knowledge, and insights from team members and social categorization, such as
intergroup biases in a workgroup (Van Knippenberg et al., 2004). In turn, this task-relevant
information elaboration positively affects group performance. Team leadership is an
elaboration process in which team members exchange information and perspective,
collaborate and provide feedback, integrate knowledge and discussion, and develop solutions
(Zhou et al., 2015). This study proposes that group diversity affects team leadership, including
task-oriented and relation-oriented behaviors, leading to project performance.

Past studies have recognized the moderating influences, such as contextual factors, on the
social categorization and elaboration processes (Van Knippenberg & Mell, 2016). DM
practices build a context and promote positive beliefs for social categorization and elaboration
processes in diverse teams (Olsen & Martins, 2012). Following the CEM and DM literature
(Olsen & Martins, 2012), this paper proposes that DM practices deliver the instrumental value
of diversity and assimilate differences by moderating the effect of group diversity on team
leadership. Additionally, DM practices from project managers create a context for team
leadership and play a moderating role in the relationship between team leadership and project
outcomes (see Figure 1).

Diversity
Management
Practices

H3 H4

Team Diversity
- Informational Diversity Team Project
- Social Category Diversity Leadership Performance
- Value Diversity H1 H2

Figure 1 – The Proposed Research Model

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Previous leadership research has demonstrated that team composition, such as diversity, is
related to the emergency of team leadership (Hoch, 2013; Homan et al., 2020; Scott-Young
et al., 2019). According to the CEM, group diversity triggers the information elaboration
process for group task processing and social categorization processes that may disrupt group
performance (Van Knippenberg et al., 2004). The specific diversity effects may be contingent
on the types of diversity, the nature of the tasks, and other contextual conditions.

Social category diversity often receives attention because it refers to the surface-level
differences in social category memberships that group members belong to, such as gender
and age (Van Knippenberg et al., 2004). Social categorization theory posits that team
members categorize themselves into groups based on demographic differences. The groups
with high in-group/out-group differences engender less trust and intention to cooperate than
those with similar social categories (Van Knippenberg et al., 2004). However, in the high-
power distance culture, Asian team members respect authorities, which is often linked to
elders or even the male gender. Some sub-groups with seniority have more influence than
junior sub-groups, creating opportunities for senior members without official titles to lead the
group (Schneid et al., 2016). As a result, a group with heterogeneous categories tends to
identify the authorities, and then team leadership is more likely to emerge than that in
homogenous groups. Therefore, we propose that:

H1a: Social category diversity will have a positive effect on team leadership.

High informational diversity represents a high heterogeneity in terms of members' experience

with a function, such as education, functional departments, and employment status (Cheung
et al., 2016; Jehn et al., 1999). People with distinct functional backgrounds are more likely to
produce process conflicts because of disagreements regarding task content and the methods
of task completion than a group in similar functional areas (Jehn et al., 1999). As a result,
cross-functional project teams have adopted multiple techniques to break functional
boundaries and stimulate collaboration, such as increasing the frequency of communication
and interactions and building a cooperative climate (Horwitz, 2005; Kukenberger &
D’Innocenzo, 2020). From the decision-making perspective, diverse groups with high
informational diversity bring a large pool of ideas, information, and knowledge and outperform
homogenous teams (Shemla et al., 2016), and increase communication and interaction.
Additionally, informational or knowledge diversity facilitates the construction of a transactive
memory system among team members resulting in social support that encourages and
recognizes members' abilities and contributions (Carson et al., 2007; Zhang & Guo, 2019).

Furthermore, information exchange shapes a shared team goal and increases an individual's
willingness to share leadership responsibilities (Carson et al., 2007). Consequently, informational
diversity will facilitate information sharing that team members need to collaborate and make sense
of problems collectively for high performance. Thus, the following hypothesis is proposed:

H1b: Informational diversity will have a positive effect on team leadership.

Value diversity represents deep-level different beliefs that determine people's attitudes,
motivations, and behaviors (Jehn et al., 1999). People tend to trust others who share similar
values. When an ISD team is confronted with threats to the value of group identity, the team
members distance themselves from the ones or the subgroups that differ in value or
educational background. Value diversity often leads to task conflicts, process conflicts, and
relational conflicts that negatively impact project performance (Liang et al., 2012). In the Asia-
Pacific region, the national culture is categorized as collectivist, which means people are apt
to be involved in solid and cohesive in-groups (Hofstede, 2007). Social categorization leads
to intergroup bias with those threats or challenges to their in-group values, suppressing team
leadership's emergence (Van Knippenberg et al., 2004). Because of intergroup bias, members
focus on communicating and problem-solving with members in the same subgroups, impeding

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information or knowledge sharing in the whole project team and leading to conflicts (Wu et al.,
2019). From the information processing perspective, team members interpret information
based on different values and find it challenging to develop shared understanding. Perceived
diversity reduces the comprehensiveness of strategic decision processes and team social
integration (Harrison et al., 2002; Shemla et al., 2016). It is difficult for members to perform
team leadership behaviors when the salience of social categorization is strong. Team
leadership cannot function when no shared understanding and consensus forms.
Consequently, the following hypothesis is proposed:

H1c: Value diversity will have a negative effect on team leadership.

The CEM model suggests that the information elaboration will positively impact group
outcomes (Van Knippenberg et al., 2004). The heterogeneous team composition builds a
richer information pool for problem-solving and sensemaking for successful project outcomes.
Task-oriented team leadership behaviors increase the range of relevant information and
resources, causing the selection of high-quality solutions, and leading to positive group
performance (Van Knippenberg et al., 2004). Relation-oriented team leadership facilitates
trust and enhances group cohesion and commitment (Mathieu et al., 2015) and knowledge
sharing (Liu et al., 2012). When team members make sense of ambiguous situations and
search for feasible solutions to solve problems together, the issues are more likely to be
addressed. The project is more likely to adhere to the project plan. Simultaneously, the social
support climate enables team members to exchange ideas and generate innovative solutions
(Boies et al., 2015) Hence,

H2. Team leadership will have a positive effect on project performance.

The CEM model posits that group diversity does not always lead to the elaboration process,
and the salience of social categorization may change the effects of diversity on elaboration
processes (Van Knippenberg et al., 2004). Conflicts arise when the categorization processes
become prominent. For example, bias and stereotypes prevent team members from
appreciating different perspectives and trusting others' opinions and inputs. Schloegel and
colleagues (2018) examined age stereotypes in agile software development teams and found
a complex interplay between age and job role. McGee (2018) reviewed the role of gender
within race groups on women's career advancement toward ICT leadership and found the
adverse effects of gender and race stereotypes on career mobility.

When project managers implement DM practices in ISD teams and consistently promote
inclusiveness, team members in diverse teams can eliminate identity threats, lower the
salience of all social categorizations, and outperform the homogeneous groups (van
Knippenberg et al., 2004). DM practices focus on supporting each member and team
engagement. These practices reduce the intergroup biases from social categorization and
motivate team members to participate in information elaboration processes (Homan et al.,
2020). Consequently, every member is allowed to participate, make decisions, and support
other team members. Therefore, we propose that

H3a. Social category diversity will positively increase team leadership when DM practices are
stronger than when DM practices are weaker.

ISD teams have the inherent characteristic of informational diversity. The cross-functional
nature of knowledge work in ISD requires team members from diverse backgrounds to
collaborate to reach project goals. Miscellaneous information and backgrounds present a large
pool of ideas and perspectives for comprehensive software requirements and solutions.
Informational diversity brings team wisdom to solve complex problems and deliver successful
performance (Akgün, 2020). However, ISD teams often experience task and relational
conflicts. For example, when people from diverse functional backgrounds try to agree on

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software requirements, disagreements about task issues and requirement priorities cause
conflicts (Liang et al., 2012). The ISD team cannot establish effective team leadership
processes to handle diverse information and generate constructive discussions.

Consequently, task-relevant elaboration processes cannot happen for task completion. In this
scenario, DM practices play a crucial moderating role in bringing team members together.
Social inclusion and cooperative climate from DM practices stimulate information sharing and
the development of shared understanding, leading to team leadership. Kukenberge and
D'Innocenzo (2020) provide empirical supports that functional diversity is positively related to
shared leadership when the cooperative climate is high. As a result, we propose the following
hypothesis.

H3b. Informational diversity will positively increase team leadership when DM practices are
stronger than when DM practices are weaker.

The diverse functional backgrounds, information sources, and expectations of project team
values often result in conflicting project goals. Value diversity can motivate beneficial and
detrimental conflicts in project teams (Liang et al., 2012). When team members focus on group
similarities and form into sub-groups, intergroup biases will enlarge the differences in terms of
project goals and create task and relational conflicts (Jehn et al., 1999). When team members
have different goals and hidden agendas, the consensus towards solutions takes a long time
to reach and disrupts the team leadership processes. However, diverse perspectives promote
comprehensive solutions to customers' problems.

When DM practices are high, project managers promote inclusiveness, respect, and trust
among team members. Team members are encouraged to assume leadership roles when
problems and tasks emerge. In addition, DM practices foster the group's information
processing and increase the utility of information to facilitate the development and enhance
the quality of team leadership processes (Zhou et al., 2015). Thus, we hypothesize the
moderating role of DM practices in the relationship between value diversity and team
leadership.

H3c. Value diversity will be positively related to team leadership when DM practices are
stronger than when DM practices are weaker.

Team leadership is oriented around team needs and project performance, emerging from team
members' behaviors and then assembling at the team level (Morgeson et al., 2010). Team
leadership incorporates diverse perspectives and values in the project processes, promotes
collaboration, and minimizes relational conflicts and hidden agendas. Innovative ideas and
solutions are generated to solve challenging problems, leading to team creativity.
Nevertheless, vertical leaders' behaviors co-exist with team leadership, impacting group
performance (Hsu et al., 2017). Team leaders strive to achieve project goals and adopt
necessary DM practices in reducing the threats and eliciting the value of diversity (Ashikali &
Groeneveld, 2015). In addition, they create an inclusive climate for team members to promote
their concerted efforts for the project goals. Müller et al. (2018) suggest that a project team
needs to achieve the balance of managers' formal leadership and team leadership and
manage the transitions between the two types of leadership. Drouin et al. (2018) found that
managers deploy preferred leadership styles such as autocratic and democratic to make
decisions about delegating tasks to team members. The task delegation decisions depend on
managers' perceptions and evaluations of the situations and team competencies. Groggin and
Ryan (2013) provided empirical evidence that a robust positive climate supported by leaders
advocates accommodation, respects differences and inclusiveness, and then translates
diversity into team members' open attitudes and competencies of interacting with diverse
members. DM practices focus on inclusion and engagement, connecting with a vital aspect of
the democratic leadership style.

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We suggest that the interplay between team leadership and DM practices is complex in ISD
teams. DM practices from leaders and team leadership from members aim to achieve project
goals. When team members are empowered, they leverage diverse expertise in the team and
perform informal leadership functions to achieve high group performance (White & Lafayette,
2013). However, team leadership emerges when team members have autonomy and trust in
each other's capabilities. Robust DM practices from managers may pursue inclusion and
engagement and suppress the development of distributed leadership because team members
increasingly focus on engaging everyone in the team processes and achieving consensus. As
a result, team leadership functions become weak because of the pursuit of a high level of team
consensus and social inclusions in this context. The collectivist culture in Asia and the
advocates of social inclusion steer team members to achieve high consensus, which may
adversely affect team leadership functions (Koo & Park, 2018). For example, self-
transcendent values like enhancing others' happiness may enlarge the effect of DM practices
and slow down the functioning of team leadership. In other words, team members are more
likely to maximize their abilities and expertise and lead each other to task completion and
achieve project outcomes when DM practices are weak than when DM practices are robust.
Consequently, we hypothesize as follows.

H4. Team leadership will positively increase project performance when DM practices are
weaker than when DM practices are stronger.

Research Method
Sampling

The research design of this study is a survey approach with cross-sectional data. Cross-
sectional data has been widely adopted to test causal relationships in contemporary studies
(e.g., Han et al., 2018; Liang et al., 2015; Ohunakin et al., 2019; Stock et al., 2021). This study
focuses on software development project teams. First, a software development project is a
temporary endeavor to build software with a defined beginning and end. Group diversity is the
given condition of the project team. Even though certain attrition and replacement may happen
during the project, team diversity has a small likelihood of changing dramatically during the
project duration. The members of software project teams are recruited in the beginning stage.
Based on the input-process-output model proposed by McGrath (1984), most studies argue
that group diversity is a characteristic of the project team and treat it as an input element in
their models (Horwitz & Horwitz, 2007). Therefore, we can treat group diversity as a variable
that describes the early condition of teamwork.

Second, project performance is the overall outcome of teamwork. It captures whether the
predefined goal is accomplished within budget and schedule. Therefore, project performance
results from project teams' work at the last stage of software development. When the
respondents rated the project's performance, they were instructed to recall, at the end of the
project, whether all the tasks were done and whether the project was on time and under
budget. Third, team leadership can be considered an emergent state in teamwork (Marks et
al., 2001). Leadership takes place in the middle of teamwork and is neither a given condition
at the beginning of the project nor a final state of teamwork. Respondents tend to recall what
happened during the teamwork process when they answered the questions on team
leadership. In short, our research design with cross-sectional data is considered appropriate
for this study because it conceptually satisfies the temporal need for proving a causal
relationship.

Since the objective of this study was to examine group diversity and DM practices in the ISD
project team context, the targeted survey respondents included project managers and team
members who recently completed an ISD project. A project manager was asked to provide

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information on DM practices and project outcomes. Additionally, the project manager was
asked to provide their team leadership observations to avoid self-rating bias (Sherman &
Cohen, 2006). To prevent the single-informant bias, a core team member from the same
project team, familiar with the teamwork and dynamics, was identified to provide the team's
demographic questions and diversity and task interdependence (Ernst & Teichert, 1998). The
unit of the analysis was a project team.

The alums of a prestigious IT Project management (ITPM) program from a comprehensive

university in China was contacted. The ITPM program had a high reputation and recruited full-
and part-time students from the local IT industry. Many graduates from the program have
worked as senior IT managers. The University provided a list of alums from the IT program.
An email invitation with a survey link was then sent to each alum. The survey was a part of a
large research project focusing on comprehensively understanding ISD project teams. Multiple
rounds of personal phone calls were made. Once the alumnus agreed to participate in the
study, they were asked to identify another appropriate person (a project manager and a team
member) from the ISD project to respond to the survey invitation. To ensure the representative
of the data points, we strived to ensure that a core team member participated in the study.

Two hundred thirty-five survey invitations were sent to the contacts who agreed to participate.
One hundred twenty-six survey packages were returned. The returned survey packages were
reviewed for completeness, and responses were paired with commonly referred project names
or codes. Project names and codes were provided for identification purposes and would not
be used for other purposes. Out of the returned packages, 44 were removed due to incomplete
responses or unpaired data points, yielding a valid response rate of 34.89%. In total, 82 sets
of paired data were collected. Table 1 provides detailed information on the sample
organizations' demographics.

Table 1 – General Characteristics of the Sample Organizations (N=82)

Variables Categories No. %
Industry types Financial/Legal Services 7 8.5
Retail/Wholesale 2 2.4
Manufacturing 5 6.1
Hospitality 8 9.8
Telecom and Networking/ IT Products/Services 37 45.1
Chemical/Petroleum/Mining/Agriculture/
14 17.1
Construction
Government/ Education/ Not-for-profit/Social
5 6.1
services
Others 4 4.8
Company size <50 22 26.8
(number of 50-500 21 25.6
employees) 500-1000 24 29.3
>5000 15 18.3
Team size <7 53 64.6
8-15 22 26.8
>16 7 8.5
IT project duration <1 year 45 54.88
1-2 year 35 42.68
>2 years 2 2.44

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Constructs and Measurement

A 5-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree) was used to
measure all the constructs.

Group diversity includes informational diversity, social category diversity, and value diversity.
Informational diversity refers to variations in knowledge bases, educational backgrounds, and
functional departments (Liang et al., 2010). Informational diversity is a first-order formative
construct measuring the heterogeneity of education, functional departments in the
organization, and employment status (i.e., full-time and part-time). Social category diversity
refers to differences in the social categories that group members belong to, such as race,
gender, and ethnicity (Jehn et al., 1999). Social category diversity is a first-order construct
comprising gender and age diversity indexes. Previous research measured diversity with
categorical variables using Blau's and the entropy indexes of diversity (Choi, 2009). This study
employed the entropy-based index1 for these categorical variables (e.g., male or female, and
different departmental areas, etc.) to calculate the aggregate measure of each type of diversity
within the teams (Ancona & Caldwell, 1992; Jehn et al., 1999). Value diversity refers to the
extent to which members differ regarding their perceived project and system development
goals (Jehn et al., 1999). Three reflective items were used to measure value diversity (Jehn
et al., 1999).

Diversity management (DM) practices are a reflective construct consisting of three items. This
study aimed to examine DM practices in ISD project teams and measure DM practices' general
observations. This study derived the measures of DM practices from previous research
(Ashikali & Groeneveld, 2015; Choi, 2009). A group of practitioners and researchers with rich
project management experience and expertise in HR practices were identified from the
authors' professional networks. In addition, they were interviewed to discuss widely adopted
practices related to diversity and inclusion and identify relevant DM practices in the ISD project
context. Three items capture crucial DM practices.

Team leadership is measured by examining the extent to which team members performed
vital leadership functions, including sensemaking solving problems, and supporting the social
climate. As a result, team leadership is a second-order reflective construct. Consistent with
other research (Carson et al., 2007; Hoch & Kozlowski, 2014), team members do not
necessarily perform leadership functions the same way as project managers do. Therefore,
team members can engage in team leadership to prompt critical team processes underlying
team performance. The survey items were adopted from Morgeson et al. (2010).

Project performance with four items adapted from Nidumolu (1995) measures the ISD project's
schedule, budget, task completion, and goal achievement. This paper used four items from
Rego et al. (2007) to measure this construct.

At last, considering the ISD project's nature, this study used task interdependence and
requirement uncertainty as control variables. Task interdependence was measured with three
items from Janz and Prasarnphanich (2009). Last, requirement uncertainty had three items
from Nidumolu (1995).

1 The diversity index is the sum of the products from each category’s proportion of the team and the natural log of
its proportion (diversity index = -Pi(ln Pi)) (Jehn et al., 1999). For example, if there are eight project team
members, six males and two females, the gender diversity index is 0.562. For example, if a project team has 12
members and all have bachelor’s degrees, the educational diversity index is 0. The higher the diversity index, the
greater the distribution of each category within the team.

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Data Analysis

Partial least squares (PLS) with a bootstrapping technique were used to examine the proposed
model (Chin et al., 2003). PLS is a component-based structural equation modelling (SEM) tool
that maximizes the explained variance of endogenous constructs (Hair et al., 2016). PLS-SEM
was adopted because of prominent factors such as non-normal data, small sample sizes, and
the use of formative indicators (Hair et al., 2016). Specifically, this study utilized SmartPLS 3.0
with bootstrapping. The bootstrapping technique is a resampling technique of 1000 random
samples to test the structural model and the significance of the path coefficients (Ringle et al.,
2015). The interaction effect was calculated using the standardized product indicator approach
(Becker et al., 2018). Latent variable scores were also used in the subsequent analysis of
predictive performance.

Results
Measurement Model

The measurement model's item reliability, convergent validity, and discriminant validity were
evaluated. The researchers checked composite reliability (CR), Cronbach's alpha, item-total
correlation (ITC), and factor loading to ensure reliability. The cut-off value of CR, Cronbach's
alpha, and factor loading was 0.7, and the ITC should not have been lower than 0.3. Table 2
shows that these values met the cut-off criteria. Convergent validity should be examined by CR
and the average variance extracted (AVE) by the constructs (Fornell & Larcker, 1981). The value
of AVE should have been higher than 0.5. For discriminant validity, the correlation between
construct pairs should have been lower than 0.90, and the square root of AVE should have been
higher than the inter-construct correlation coefficients (Fornell & Larcker, 1981). As shown in
Table 3, all the value requirements were met. The correlations' heterotrait-monotrait (HTMT)
ratio was tested for discriminant validity (Henseler et al., 2015). Discriminant validity was
assessed by comparing each construct's average variance extracted with its squared consistent
construct correlations (Henseler et al., 2016). The criteria for the HTMT ratio are below 0.85,
and the calculated ratios using the coefficients of the model results meet the requirements.

Since informative diversity and social category diversity are formative constructs, we tested
them to confirm their formative nature. First, there is no collinearity concern between the
measurement items and the outcome variables. Table 4 shows that all the VIF values are
below 3. Second, we checked whether formative indicators' path weights are significant (Hair
et al., 2019). Table 4 shows that several formative indicators' path weights are insignificant.
For example, the age diversity index's path weight to social category diversity is 0.654 and not
significant (T value = 1.78). We kept this indicator because of the solid conceptual basis and
the outer loading (0.795) of age diversity higher than the outer weight (0.654). Similar
decisions were made for other formative indicators.

The paired respondents rated the constructs in the relationship between diversity and team
leadership. Common method variance (CMV) may jeopardize the validity of the relationships
(Podsakoff et al., 2003; Tehseen et al., 2017). We conducted two approaches to detect potential
CMV. First, Harman's single factor test for the variables that the team members rated showed
that five factors were extracted, and the variance explained by the first factor was 36.58%.
Harman's single factor test for the variables rated by the project managers showed that three
factors were extracted, and the variance explained by the first factor was 48.19%. In addition,
the measured latent marker variable (MLMV) approach suggested by Chin et al. (2003) and
Tehseen et al. (2017) was adopted to examine the effect of CMV. A marker variable,
sponsorship, was employed (Bryde, 2008). Since there was no significant difference in the
tested direct relationships before and after including the marker variable, we concluded that
CMV is not a severe issue. The reported results are from the model without the marker variable.

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Table 2 – Reliability and Validity of the Reflective Constructs

Constructs Items Loadings ITC
Team leadership - My team members facilitate the team's
0.85 0.74
sensemaking and understanding of events or situations.
solving problems My team members assist the team in interpreting
0.89 0.77
Alpha: 0.89; things that happen inside or outside the team.
AVE:0.69; CR:0.92 My team members assist the team in defining
0.80 0.62
uncertain (ambiguous) situations or problems.
My team members implement or help the team
0.82 0.69
implement solutions to problems.
My team members seek multiple perspectives
0.80 0.62
when solving problems.
Team leadership - My team members help the team develop solutions
0.81 0.55
support social to tasks and relationship-related problems.
climate My team members respond promptly to other team
0.87 0.68
Alpha: 0.82; members' needs or concerns.
AVE:0.65; CR:0.88 My team members engage in actions that
demonstrate respect and concern for every team 0.80 0.54
member.
My team members go beyond their own interests
0.72 0.51
for the good of the team.
Diversity Team leaders show commitment to workplace
management inclusiveness and harmony through what they say 0.86 0.54
practices and do.
Alpha: 0.75; Team members are encouraged to improve their
AVE:0.66; CR:0.85 ability to work with employees of different 0.83 0.64
backgrounds.
Team leaders are encouraged to set
developmental goals and monitor results tied to the
effectiveness with which they manage and promote 0.74 0.56
workplace inclusiveness and harmony within their
teams.
Project To date, the projects finished on schedule. 0.92 0.85
performance At the end of the project, the project teams
0.91 0.84
Alpha: 0.92; accomplished all of the tasks they set out to do.
AVE:0.80; CR:0.94 At the end of the project, the projects came in on or
0.84 0.73
near the budget.
The project's goals were achieved in the end. 0.90 0.82
Value diversity The values of all project members were NOT
0.78 0.71
Alpha: 0.86; similar at the beginning.
AVE:0.76; CR:0.90 When the project started, the project team, as a
0.95 0.76
whole, did NOT have similar goals.
In the beginning, all members did NOT agree on
0.87 0.73
what was important to the project.
Task Our performance evaluations depend in part on
0.84 0.58
interdependence how well all members perform.
Alpha: 0.82; We have to make sure other team members
0.91 0.83
AVE:0.72; CR:0.88 perform well if we want to do well on the project.
We have to share work resources in order to
0.83 0.80
complete the project.
Note: ITC-Item-Total Correlation, AVE – Average variance extracted, CR- Composite Reliability.

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Table 3 – Construct Descriptive Statistics and Correlation Matrix

Std.
Constructs Mean Skewness Kurtosis ID SD VD DMP PS SC PP TI
Deviation
Informational Diversity (ID)* - - - - -
Social Category Diversity (SCD)* - - - - 0.35 -
Value Diversity (VD) 3.89 0.45 -0.04 1.20 0.19 0.21 0.87
Diversity Management Practices (DMP) 3.94 0.51 -0.30 0.85 -0.11 -0.11 -0.28 0.81
Problem Solving (PS) 3.77 0.58 -1.58 2.24 0.01 0.05 -0.20 0.34 0.83
Social Climate (SC) 3.62 0.61 -1.02 1.18 -0.13 -0.06 -0.23 0.43 0.70 0.81
Project Performance (PP) 3.52 0.87 -0.73 -0.07 -0.20 0.00 -0.39 0.29 0.38 0.40 0.89
Task Interdependence (TI) 4.20 0.51 0.15 -0.17 0.13 -0.05 0.01 0.06 0.05 0.08 0.12 0.85

Table 4 – Construct Reliability and Validity of Formative Constructs

Formative Constructs(1st-order) Formative indicators Weights T-values VIF values
Educational Diversity Index 0.355 1.208 1.260
Informational Diversity Functional Diversity Index 0.591 1.947 1.189
Employment Status Diversity Index 0.426 1.679 1.099
Age Diversity Index 0.654 1.78 1.049
Social Category Diversity
Gender Diversity Index 0.627 2.383 1.049

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Structural Model

Figure 2 shows the results of the structural model. In total, this model explains 42.0% of the
variance in team leadership and 40.3% variance in project performance. Table 5 shows value
diversity has negatively affected team leadership significantly (= -0.218 and p <0.05), while
informational and social category diversity are not significantly related to team leadership.
Consequently, H1a and H1b are not supported, but H1c is supported. Furthermore, team
leadership positively impacts project performance in a significant way (= 0.315 and p <0.05)
(see Table 5). As a result, H2 is supported. Although the mediating effect of team leadership
is not proposed, the data analysis results show that team leadership partially mediates the
relationship between value diversity and project performance. The mediation test results are
based on the one-tailed test of 5000 samples. The significant direct effect (VD → PP) and
indirect effect indicate partial mediation.

Following Aiken et al. (1991), this study tested a structural model for the moderating effects.
The model tested the effect of the moderator (DM practices) on TL first (Model 1 in Table 5).
Next, the direct effects (IV, SCD, and VD) are added to the model (Model 2 in Table 5). Last,
the full effect, including the direct effects of team diversity and DM practices (DMP) and the
interaction terms, are examined (Model 3 in Table 5). The moderating effects of DMP on the
relationships between ID and TL and SCD and TL are insignificant. Therefore, H3a and H3b
are not supported. DM practices positively moderate the relationship between VD and TL
( = 0.323, t = 3.714, p<0.001, one-tailed). As a result, H3c is supported. According to
Aiken et al. (1991), the direct effects are not interpreted with the moderating effect's presence.
The full-effect model (Model 3 in Table 5) increased R2 to 42.2%, with a change of 11.1% from
model 2 in Table 5. The effect size is calculated using the R2 change (Mathieson et al., 2001).
The effect size (f2) is 0.192 representing a medium effect size (Cohen, 2013). The chart in
Figure 2 shows that the negative effect of value diversity becomes weaker on TL when DM
practices are exercised. As the degree of DM practices increases, the negative impact of VD
on TL declines.

A similar test has been conducted for H4. A stepwise PLS test has been performed to test the
moderating effect (Table 5). Table 5 shows that DM practices and VD have direct effects on
project performance in a significant way (Model 4 in Table 5). When TL comes into the picture,
DM practices have no significant effect on project performance, while VD still negatively affects
project performance (Model 5 in Table 5). The full effect, including diversity, DM practices, TL,
and interaction terms, are examined (Model 6 in Table 5). Model 6 shows that DM practices
negatively moderate the relationship between TL and PP (= -0.124, t = 1.652, p<0.05,
p=0.049, one-tailed), supporting H4. The full effect model (Model 6 in Table 5) increased the
R-square to 40.7%, and the R-square change from Model 5 to Model 6 was 2.4%. The effect
size (0.024) is small (Cohen, 2013). Figure 3 shows that TL has positive effects on project
performance. TL's effect on PP is higher (the slope is bigger) when DMP is weak than when
DMP is strong. Although this interaction effect may sound counterintuitive, the literature has
some supporting evidence for this result. Ishikawa (2012) found that the "norm for maintaining
consensus" may suppress team members' leadership processes in Asian R&D teams. We
argue that DM practices promote inclusions and diversity and positively impact project
performance. However, the strong effect of DM practices may intervene in team leadership
dynamics. Additionally, the Asian culture with high-power distance may enlarge the effects of
DM practices from IS managers to impact team leadership functions adversely.

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Table 5 – Stepwise PLS Results

Variables Team Leadership (TL) Project Performance (PP)
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Control Variables
Task Interdependence
0.254* 0.241+ 0.253+
(TI)
Team Size 0.126 0.083 0.071 ns
Diversity Management
0.497*** 0.468*** 0.454*** 0.270* 0.123 ns 0.120 ns
Practices (DMPs)
Independent
Variables
Informational Diversity
-0.031 -0.040 -0.231 -0.227 -0.205
(IV)
Social Category
0.110 0.176 0.099 0.091 0.091
Diversity (SCD)
Value Diversity (VD) -0.218** -0.166* -0.317*** -0.243* -0.218*
Team Leadership (TL) 0.315** 0.264**
Interaction effects
ID x DMPs -0.125
SCD x DMPs -0.007
VD x DMPs 0.323***
TL x DMPs -0.124*
R-square 0.247 0.311 0.422 0.317 0.383 0.407
R-square change --- 0.064 0.111 - 0.066 0.024
F (p-value) 2.253+ 4.682** - 8.312 ** 2.074 ns
Effect Size (f2) 0.093 0.192 - 0.107 0.041
Note that +P<0.1, *P< 0.05, **P<0.01, ***P<0.001, ns= not significant, (based on t (4999), one-tailed test).
Effect size is calculated by using the R-square change (R square of full effect – R square of direct effect) divided by
(1-R square of full effect) (Mathieson et al. 2001). Based on Cohen (2013), the effect sizes are in the small range.

Figure 2 – The Moderating Effect of DMP on the Relationship between Value Diversity
and Team Leadership

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Figure 3 – The Moderating Effect of DMP on the Relationship between Team

Leadership and Project Performance

At last, the predictive relevance of the model was tested. Stone-Geisser's predictive relevance
(Q2) was assessed to see if the model could accurately predict the data points (Geisser, 1974).
The blindfolding procedures in SmartPLS were performed. A good model predictive relevance
is assured when the Q2 value is higher than 0 (Chin et al., 2003). Hair et al. (2019) suggest
that 0 indicates small predictive relevance, 0.25 indicates medium predictive relevance, and
0.50 indicates considerable predictive relevance. The Q2 values in this study represent the
medium predictive relevance (Q2 for TL is 0.194 with R2 = 0.422 and Q2 for PP is 0.277 with
R2 = 0.407). Additionally, the R2 statistics measure the model's in-sample predictive power.
This study carried out PLSpredict in SmartPLS 3.0 to test the model's out-of-sample predictive
power (Shmueli et al., 2016). In comparison with the naïve linear modelling (LM) benchmark,
this research model yielded lower prediction errors in terms of RMSE (or MAE) (Hair et al.,
2019), confirming the model's predictive power.

Discussion
The objective of this study is to study the impact of team heterogeneity on team leadership
and the role of DM practices as managerial interventions on the team leadership process and
project performance in the ISD context. Based on the CEM and DM literature, this paper
proposes that DM practices have crucial moderating effects on the relationships of diversity -
team leadership and team leadership - performance.

Before we discuss the research contributions and implications, we identify several limitations
of this study. First, the data was collected through a university alumni list. A random selection
of the participants is preferred to generalize the study results. Future researchers are
encouraged to conduct a generalized sample selection and test the research model. Second,
this study used cross-sectional retrospective data to test the proposed model. Future
researchers may consider using longitudinal studies to test the proposed research model.
Third, paired data were used to test the model. Although paired data avoided the potential
bias of a single respondent and self-reporting bias, it might not have captured every team
member's perception. In future research, an effort to collect everyone's perception of DM

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practices and team leadership in ISD teams is strongly encouraged. Fourth, because ISD
project teams have fluid membership, the diversity index was calculated based on the core
team members. Future research may consider collecting the demographics of ISD members
at different stages of ISD development.

Implications for Academia

This study makes several contributions to the literature. First, this study supported the ELM
with empirical evidence of diversity's effects on team leadership in the Asian ISD context.
Previous research has investigated the mixed results of diversity on team processes and
outcomes (Homan et al., 2020; Shemla et al., 2016; Van Dijk et al., 2017). This study
empirically tested and confirmed the effect of diversity on team leadership in Asian ISD project
teams. The results show that while social category diversity (H1a) and informational diversity
(H1b) are not related to team leadership significantly, value diversity has a significantly
negative effect on team leadership (H1c). The mixed results are consistent with the findings
of past studies (Jehn et al., 1999; Klein et al., 2011; Liang et al., 2012). The results imply that
value diversity needs particular attention in ISD projects (Liang et al., 2012). The emergency
of leadership in ISD teams depends on how members' beliefs and plans align in the groups
(Fransen et al., 2018). If members have different perceptions of the team's goal or mission or
principles (cases of value diversity), limited social confirmation of their potential leadership
behaviors will happen in the groups, which results in a low probability of team leadership
emergence (Fransen et al., 2018). Although this study did not find evidence for significant
effects of informational diversity or social category diversity on team leadership, it does not
mean that these two types of diversity are not crucial for ISD project teams. The potential
explanation for the findings is that this study does not consider mediating processes such as
conflicts between group diversity and team leadership. Diversity often negatively impacts
interpersonal relations and requires more communication and coordination to produce positive
group performance (See Acar, 2010; Liu et al., 2012; Wu et al., 2019). Another potential
explanation is that multiple types of diversity together may generate mixed effects when they
are measured in different ways (Jackson & Joshi, 2004; van Knippenberg et al., 2004). Lastly,
perceived value diversity and objective informational and social category diversity may impact
group outcomes differently (Shemla et al., 2016).

Second, this study adds to the literature by showing the positive moderating role of DM
practices on team leadership in diverse ISD project teams. This study confirms that DM
practices positively moderate the relationship between value diversity and team leadership
(H3c). This effect suggests that DM practices bring out the positive aspects of value diversity
for team leadership. The findings support the framework for understanding team leaders'
behaviors on DM, especially in the Asia-Pacific context of collectivist culture (Homan et al.,
2020). People with diverse backgrounds, values, and knowledge can take responsibility and
generate positive influence when appropriate conditions emerge. In other words, value
diversity can benefit team leadership when DM practices are strong than when DM practices
are weak. DM practices play a vital role in building an inclusive atmosphere within the project
team, giving everyone opportunities and psychological safety to speak up. Even though
diversity is needed for contemporary project teams to accomplish the tasks, the likelihood for
the project team to reap the benefits of diversity is low when effective DM practices are
missing. With the availability of established DM practices, project managers can choose them
based on the characteristics of the project, team, and conditions. Future research is
recommended to identify the most effective DM practices for these contexts. In contrast, DMP
moderating effects on the relationships between informational diversity and team leadership
(H3a) and between social category diversity and team leadership (H3b) are insignificant. A
potential explanation of the findings is that this study considers diversity management
practices that IS project managers can control and exercise. The DM practices at the team
level are limited since the contextual factors at the organizational or professional level are not
considered, weakening the moderating effects of DM practices (Joshi & Roh, 2009; Schloegel

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et al., 2018). Additionally, team-level DM practices focus on engaging people and connecting
diversity with performance evaluations. The DM practices impact more work-related diversity
than nonwork-related diversity (Chen et al., 2021; Magoshi & Chang, 2009). When people
have rich work experience with teams, understand the crucial role of shared goals, and
motivate for high performance, the salience of cognitive fit based on shared values motivates
people to reduce the effects of social categorizations and promote integration in the literature
(Guillaume et al., 2017).

Third, this study finds the complex interaction between DM practices and team leadership in
Asian ISD project teams. The empirical results confirm a negative moderating effect of DM
practices on the relationship between team leadership and project performance in the Asian
ISD context (H4). The positive impact of team leadership from team members on project
performance is likely to be subdued when DM practices from team leaders are decisive. In
other words, DM practices may suppress the effects of team leadership on project
performance when it is stronger. Specifically, the impact of team leadership on project
performance is more pronounced when the level of DM practices is low or moderate. This
result shares another similar study by Ishikawa (2012), who observed that transformative
leadership did not significantly affect shared leadership in Japanese R&D teams. Asian culture
may play a critical role in the interaction between DM practices among managers and team
leadership. For example, Ishikawa (2012) suggests that collectivist culture leads team
members to maintain consensus instead of engaging in leadership and transformative
leadership reinforces the importance of team consensus. The negative moderating effect of
DM practices on team leadership and project performance implies that in diverse teams, a
team leader's behaviors towards managing diversity should adapt to the levels of team
members' leadership behaviors (Hoch, 2013). In addition, managers in ISD teams utilize DM
practices to realize the potential benefit of diversity, improving team leadership's emergence.
At the same time, those practices may adversely affect the relationship between team
leadership and project performance. Managers should balance the use of DM practices to
instigate team leadership. When team leadership works properly, leaders should reduce the
interventions of managing diversity. This result helps understand the relationship between
team leadership and project performance with various statistical significance levels
(Nicolaides et al., 2014).

Implications for Practitioners

Our study generates several significant implications for project managers. First, managers in
the Asia-Pacific region develop strategies to initiate team leadership in diverse ISD teams.
Managers should furnish team members with opportunities to exercise task-oriented
leadership functions and build a supportive social climate. This study's empirical results show
that value diversity has solid adverse effects on team leadership. Managers should pay
sufficient attention to value diversity and find effective tactics to minimize the value differences
among team members.

Second, this study recommends that managers understand when and how DM practices are
instrumental to achieving successful project outcomes. This study's empirical results show
that DM practices can elicit positive social categorization to capture the positive effects of
diversity on team leadership. Managers can adjust their DM practices depending on the type
of diversity. Managers should proactively or reactively consider DM practices to bring out the
positive effects of group diversity on team leadership. To diminish or impede the adverse
effects and motivate the positive process of diversity, managers may consider the diversity
practices such as showing commitment through what managers do and say, improving team
members' ability to work in diverse teams and giving team leaders incentives to manage and
promote inclusiveness and harmony in their teams. Managers are encouraged to leverage
these DM practices and capitalize on the benefits of group diversity in facilitating team
leadership development.

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Third, the complex interaction between DM practices and team leadership should warrant
managers' attention to managing interaction with team members in the ISD processes.
Applying DM practices is especially important when team leadership cannot function well in
the team. Nevertheless, managers should give team members autonomy and trust when team
leadership functions effectively. Managers in Asian ISD teams should be cognizant of the
important cultural role in team leadership processes. Finally, project managers are
recommended to customize their managerial intervention on team leadership depending on
the specific situations.

Conclusions
Although IS studies have examined the effects of different types of diversity on ISD project
outcomes, there has been limited understanding of the interplay of team leadership and group
diversity and how to manage it (Homan et al., 2020). This study aimed to understand the role
of team leadership in diverse teams and explore how DM practices impact the processes and
project outcomes in the context of Asian culture. The empirical results of this study supported
most of the hypotheses. The empirical evidence of types of diversity in team leadership
deepens our understanding of team leaders' operational mechanisms through task-oriented
and relation-oriented behaviors in a heterogenous team. The findings of the moderating roles
of DM practices contribute to the literature on when and how DM practices affect ISD project
team processes with high team heterogeneity. These results add to the literature by identifying
the conditions under which team leadership and diversity have mixed effects on project
outcomes.

Acknowledgments
This work was supported by the China Social Sciences and Humanities Youth Foundation of
Ministry of Education under Grant [18YJC630150]; the National Natural Science Foundation
of China under Grant [72071123].

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Team Leadership and Diversity Management in ISD Project Teams / Li et al.

About the Author

Dr. Yuzhu (Julia) Li is a Professor at the Department of Decision and Information Sciences,
the University of Massachusetts Dartmouth. She received her Ph.D. in Management
Information Systems (MIS) from the University of Central Florida. Her research area includes
project management, particularly project teamwork processes, technology-mediated learning,
and digital transformation projects. Her work has been published in several journals, such as
Information and Management, International Journal of Project Management, Journal of
Systems and Software, and others.

Dr. Jack Shih-Chieh Hsu is a Professor at the Department of Information Management,

National Sun Yat-sen University, Taiwan. He received his Ph.D. in management information
systems from the University of Central Florida. He has published articles in Information
Systems Research, Decision Sciences, Information Systems Journal, Information &
Management, Decision Support Systems, and others. His research interests include various
behavioral issues in electronic commerce, information security, and software project
management.

Dr. Hua Sun is an Associate Professor at the School of Management, Shandong University,
China. She received her Ph.D. in the Department of Management Science and Engineering
from Southeast University. Her research interests include project management, team
management, behavioral issues in IT projects, and innovation projects. She has had articles
published in the International Journal of Project Management, Journal of Management in
Engineering, Project Management Journal, Journal of Computer Information Systems, etc.

Dr. Neeraj Parolia is an Associate Professor at the Department of Business Analytics and
Technology Management Department, Towson University. He received his Ph.D. in
Management Information Systems (MIS) from the University of Central Florida. His research
area includes software development project teams, program, and project portfolio
management. His work has been published in several journals, such as Information and
Management, International Journal of Project Management, Information and Software
Technology, etc.

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