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A model of cross-functional project groups was developed and hypotheses were tested in a study of 93 research and new product development groups from four companies. The results showed that functional diversity had indirect effects through external communication on one-year-later measures. Technical quality and schedule and budget performance improved, but group cohesiveness diminished. Functional diversity also had an indirect effect through job stress on group cohesiveness, which was again reduced. Implications for the development of conceptual models of cross-functional groups and their effective management are discussed.
Competitive forces have made the cross-functional project group or team the method of choice by which high-technology organizations generate and deploy new products and processes (Aldridge & Swamidass, 1996; Denison, Hart, & Kahn, 1996; Hauptman & Hirji, 1996). Cross-functional groups consist of members from different functional areas, such as various research disciplines (like chemistry, electronics, and metallurgy), engineering, manufacturing, or marketing. The cross-functional makeup provides the advantages of multiple sources of communication, information, and perspectives; contacts outside a particular project group; inclusion of downstream concerns in upstream design; a clearer line of sight to the customer; and speed to market, which is critical for success in globally competitive, high-technology markets. The upshot is better new product quality and shorter development times when cross-functional groups are used (Brown & Eisenhardt, 1995; Kessler & Chakrabarti, 1996). But the use of cross-functional groups can result in such negative outcomes as increased costs (AitSahlia, Johnson, & Will, 1995), felt stress, and lower group cohesiveness (Donnellon, 1996; Jehn, 1997; Swamidass & Aldridge, 1996). And although the use of cross-functional groups has proliferated in research and product development settings, Denison and colleagues (1996) noted that empirical research on the subject has lagged considerably.
Lawrence (1997), moreover, critiqued the model development and research on functional diversity (the mix of group members from different functional specialties) and other organizational demography variables as placing a "black box" between a demographic variable and outcomes. She argued that intervening subjective or process variables would add explanatory variance to theory about functional diversity and outcomes. Hence, in the present study I sought to answer two basic research questions that focused on theoretically plausible variables intervening between functional diversity and relevant outcomes, as suggested by Lawrence. First, do communications intervene between...