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Lau and Murnighan's faultline theory explains negative effects of demographic diversity on team performance as consequence of strong demographic faultlines. If demographic differences between group members are correlated across various dimensions, the team is likely to show a "subgroup split" that inhibits communication and effective collaboration between team members. Our paper proposes a rigorous formal and computational reconstruction of the theory. Our model integrates four elementary mechanisms of social interaction, homophily, heterophobia, social influence and rejection into a computational representation of the dynamics of both opinions and social relations in the team. Computational experiments demonstrate that the central claims of faultline theory are consistent with the model. We show furthermore that the model highlights a new structural condition that may give managers a handle to temper the negative effects of strong demographic faultlines. We call this condition the timing of contacts. Computational analyses reveal that negative effects of strong faultlines critically depend on who is when brought in contact with whom in the process of social interactions in the team. More specifically, we demonstrate that faultlines have hardly negative effects when teams are initially split into demographically homogeneous subteams that are merged only when a local consensus has developed.

How to get the timing right. A computational model of the effects of the timing of contacts on team cohesion in demographically diverse teams