How to achieve benefits from diversity in international alliances: Mechanisms and cultural intelligence

Research Summary: Despite interest in alliance management in the global strategy field, we have only limited insights into how firms can manage diversity-related conflicts in international alliances. By referring to the conflict literature, our study introduces task discourse as a crucial mechanism allowing task conflict resolution. We further describe conflict resolution via socializing practices, including social events, joint workshops, and interorganizational teams. Socializing practices and discourse take advantage of cultural intelligence, empowering managers to interact efficiently in intercultural settings. Data on 148 international alliances in the photonics and biotechnology industries reveal that managerial cultural intelligence improves task discourse, thus enhancing performance, especially in young alliances. Socializing practices, however, decrease performance with increasing cultural distance and without sufficient levels of managerial cultural intelligence. Managerial Summary: International alliances face a dilemma. Cross-national differences offer valuable complementarities, but they can also spark a negative spiral of dysfunctional conflict. Our study shows that task discourse is an important mechanism for achieving advantages from the different perspectives offered by international alliances. Interestingly, our results further reveal that socializing practices including interorganizational teams, social events, and joint workshops do not per se have beneficial effects for international alliances. Putting people together who are unable to perform in intercultural settings is damaging to alliance performance. Our study indicates the specific conditions under which socializing practices have negative and positive effects and, thus, provokes a discussion about the appropriate application of these practices.