Diversity and Group Performance in a Complex Real Estate Project Situation

Project work is a fact of modern work environments. Especially given the increasingly complex nature of real estate projects, group interaction and communication is essential to develop innovative solutions for customers. Therefore, many researchers have hypothesized that mixed working groups yield better results than uniform groups.Scientists of different social sciences have developed two opposing theories, how group diversity might impact the group’s performance: One group of researchers argues that work-group diversity may have a positive effect (information/decision making theory), while the opposing group argues that a negative effect is more likely (social categorization theory and similarity/attraction theory). The information/decision-making theory conjectures that within heterogeneous groups the variety of perspectives and the broader range of knowledge and skills fosters creativity and innovation as well as the quality of decision-making and consequently group performance (Cox und Blake, 1991; Jehn et. al., 1999).This view is challenged by the proponents of the social categorization theory as well as by the similarity/attraction theory: These researchers argue that homogenous teams show a greater social cohesion, which enables better communication. Then, significant work-group diversity would lead to more conflict situations, lower job satisfaction and higher staff turnover, and this would lower group performance (Thurner, 1987; Williams and O’Reilly, 1998).In this study we investigate the relationship between group diversity and group performance in real estate projects. As real estate projects are highly complex and distinct they usually require diverse qualifications and personal qualities from the relevant parties as well as good communication skills. The question, whether group diversities lead to better group performance is therefore highly relevant for the specific nature of real estate projects.We test the impact of group diversity on overall group performance with a unique data set: We collected the results of 200 project works of real estate executive education students at the IREBS Real Estate Academy from 2010 until 2015. Several group-relevant factors are controlled for, including age, sex, educational and professional background of the team members as well as the group size and the academic performance of the team.