The interplay between leadership, diversity, creativity, and innovation: a mediation model of team processes

Purpose This study investigates the relationship between teams’ cultural diversity (CD) and transformational leadership (TL) as inputs, and team creativity and innovation as outputs. The mediation effects of team processes are tested. A supplementary analysis examines the robustness of the results in predominantly virtual collaborative settings. Design/methodology/approach This study uses a conceptual model based on the input-mediator-output (IMO) framework. It quantitatively analyses data from 220 team members involved in innovation and new product development. Data were collected via an online survey, and the hypotheses were tested using PLS-SEM. Findings The full mediation hypothesis was empirically supported for the relationships linking CD and TL to creativity, and CD to innovation. Team processes partially mediate the association of TL on innovation. Additionally, a small sample hints at potential variations in the significance of trust and cohesion as mediators in virtual collaboration. Practical implications Our findings clarify the effects of CD and TL on teams’ creativity and innovation. They offer managers a better understanding of relevant team processes. This deeper understanding enables managers to develop teams and leadership approaches that foster innovation. Originality/value This novel conceptual model shows that knowledge sharing, trust, task conflict, and cohesion mediate the combined effects of CD and TL on team creativity and innovation. It also provides preliminary evidence of how virtual collaboration may alter the relevance of these key team processes as mediators.