The effect of cultural diversity on employees’ trust in their teammates: transformational leadership as a moderator

Purpose: Global organizations employ workers from dispersed geographical locations and diverse cultures who collaborate in virtual work teams. To prevent interpersonal conflicts that may arise in culturally diverse teams, especially when communication is virtual, employees must trust one another. The current study has two main objectives: First, to investigate the relationship between cultural diversity (CD) and trust among global team members. Second, to examine the moderating role of transformational leadership in mitigating the effects of CD on trust within these teams. We hypothesized that CD is negatively related to trust in teammates, while the direct manager’s transformational leadership moderates this relationship. Design/methodology/approach: We surveyed 384 employees from global organizations who primarily communicate with their team members virtually. Cultural diversity scores were calculated across six dimensions based on Hofstede’s cultural value scores for countries, using employee-reported data on their team composition and locations. Findings: The six CD dimensions positively correlated with a self-reported perceived CD, validating our measurement approach. The effect of CD on employees’ trust in their teammates was significantly negative in two CD dimensions: individualism and indulgence (and moderately in power distance). The team manager’s Transformational leadership moderated the impact of CD on trust in three CD dimensions: individualism, indulgence, and long-term orientation. Originality/value: Contributing to the growing body of literature on global team dynamics, our study reveals that the impact of CD on employee trust within global teams is nuanced and significantly influenced by leadership practices. The study provides practical insights for organizations seeking to improve team effectiveness in diverse virtual work environments.