An empirical study on functional diversity and innovation in SMEs

Abstract

Literature suggests that functional diversity among managerial teams can foster innovation. Functional diversity within a group can be found either in the specialization of each individual or in the range of functions that each individual can handle. Functional diversity management involves strategic choices which will depend on the human resources specificities of the firm. This empirical study conducted among 500 small and medium enterprises in Singapore considers two different concepts of functional diversity - dominant function diversity and intrapersonal functional diversity- and analyzed their impact on the firm innovative performance according to the firmsa?? size and growth.Our findings show that intrapersonal diversity has a positive impact on innovation. Besides, small and growing firms are more dependants on intrapersonal functional diversity than big and stable firms to be innovative. Finally, dominant function diversity affects positively growing firms but the effect becomes negative for firms which reduce the size of their human resources.