When and how does functional diversity influence team innovation? The mediating role of knowledge sharing and the moderation role of affect-based trust in a team

Findings from prior research on the relationship between functional diversity and team innovation have been inconclusive. This study aims to reconcile the mixed findings in the literature by investigating how functional diversity may influence team innovation and when such influence may or may not occur. The view of teams as information processors suggests that functionally diverse teams may capitalize on their knowledge benefits to produce innovations through knowledge sharing. However, knowledge sharing and subsequent team innovation do not necessarily occur in functionally diverse teams. Drawing on the motivated information processing in groups theory, we propose that affect-based trust in a team moderates the effects of functional diversity on team innovation (via knowledge sharing). The results based on a sample of 96 research and development teams indicate that functional diversity had a negative indirect relationship with team innovation via knowledge sharing when affect-based trust in a team was low, and this relationship became less negative as the level of affect-based trust in a team increased. The relationship was not significant when affect-based trust in a team was high.