Asia Pacific Management Review 13(3) (2008) 625-634 625 The Impact of Cognitive Conflict on Team Performance Rebecca Mitchell * , Stephen Nicholas, Brendan Boyle School of Business and Management, University of Newcastle, Australia Accepted 27 February 2008 Abstract The results of research on diversity in teams suggest that it offers both a great opportunity for organisations as well as an enormous challenge. However, current research is plagued by a lack of overall consistency, indicating that the relationship between diversity and team performance is not well understood. This study examines the components of cognitive conflict in order to assess whether construct operationalisation may explain this inconsistency. Analysis of the existing operationalisations of cognitive conflict reveals that it incorporates both disagreement about information and reasoning, and debate of rival hypotheses or recommendations. We propose that functional diversity leads to cognitive disagreement but not debate, and that debate enhances knowledge creation, with which cognitive disagreement shows no relationship. Our results support these hypotheses, which provide a powerful explanation for the contrary results found by researchers investigating cognitive conflict. Given that extant measures of cognitive conflict include scale items which measure both debate and cognitive disagreement, cognitive conflict may be viewed as an aggregate measure of these two distinct constructs. This study contributes to research on diversity and conflict by providing an explanation for contrary results, and by providing and a detailed operationalisation of cognitive conflict and its component constructs. It also contributes to research into creativity and innovation by providing insight into the dynamics underpinning knowledge sharing and creation. Keywords: Knowledge creation, teams conflict 1. Introduction 1 The results of research on diversity in teams suggest that it offers both a great opportunity for organisations as well as an enormous challenge. Numerous studies have suggested that more diverse teams have the potential to consider a greater range of perspectives and to generate more innovative and higher-quality solutions than less diverse teams (Austin, 1997). For example, in a study of the top management teams of banks, Bantel and Jackson (1989) found that the more heterogeneous the team was in terms of functional background, the greater the number of innovations the bank had made. However, the mechanism through which diversity affects performance is not straightforward. Ancona and Caldwell’s (1992) study of 45 product teams indicated that diversity had a negative direct effect on innovation and team-related performance, but it had a countervailing positive indirect effect on innovation through its association with an increased frequency of communication with those outside the product team. In contrast, meta-analyses have revealed a negative relationship, inconsistent or no relationship between team heterogeneity and innovation (van Knippenberg et al., 2004; Webber and Donahue, 2001). What stands out in this literature is a lack of overall consistency, indicating that the * Corresponding author. E-mail: Rebecca.mitchell@newcastle.edu.au www.apmr.management.ncku.edu.tw