Companies Can Lose Time Over Conflicts: An Analysis of Internal Indirect Conflict Costs

Abstract

Consequences of conflict are widely researched qualitatively, but quantitative data on the costs of conflict are lacking. This study aims to explore conflict costs by categorizing and testing them and providing preliminary quantitative data. The focus lies on internal indirect conflict costs, which are measured in terms of lost time. This research is based on self-reports of 675 survey participants, who evaluated the amount of time they spent on internal indirect conflict costs of a personal conflict. The costs are analysed in form of their explanatory power, as well as the extent to which they are affected by conflict duration and strength. All identified internal indirect conflict costs were positively correlated. The duration and intensity of the conflict affect the amount of time wasted, meaning that groups with shorter duration or weaker intensity differ from higher groups. The results indicate that conflict costs lead to remarkable costs for organizations. To remain competitive, managers need to balance the opportunities and difficulties of conflicts and carefully manage their costs. This study contributes to the unexplored research area of conflict costs and is one of the first research findings to scientifically analyse the topic.

Conflict Costs in National and International Business: A Comparative Analysis

“…This results in less organizations measuring or knowing these costs. External direct and indirect costs are caused by external stakeholders (Dirrler and Podruzsik, 2022). Despite different clustering approaches, the conflict costs comprise mostly the same variables that are also predominantly included in Table 1 (Dirrler and Podruzsik, 2022).…”

“…Despite the positive effects, task conflict is expected to negatively affect group characteristics such as trust and group commitment by increasing anxiety and tension (Jehn and Bendersky, 2003). A distinct approach to determine conflict outcomes is the measurement of conflict costs (Buss, 2011;Freres, 2013;Dirrler and Podruzsik, 2022). In this research, conflict costs are defined as costs that are triggered by conflict and have a negative effect on the overall financial performance of an organization.…”

“…In this research, conflict costs are defined as costs that are triggered by conflict and have a negative effect on the overall financial performance of an organization. A company can either achieve its desired results, but with lower revenues, or the outputs themselves are lower (Insam, et al, 2009;Dirrler and Podruzsik, 2022). There is no one method for measuring conflict costs holistically, which leads scholars to cluster conflict costs (see figure 1) and focus on the measurement of only individual cost variables (Dirrler and Podruzsik, 2022).…”

“…A company can either achieve its desired results, but with lower revenues, or the outputs themselves are lower (Insam, et al, 2009;Dirrler and Podruzsik, 2022). There is no one method for measuring conflict costs holistically, which leads scholars to cluster conflict costs (see figure 1) and focus on the measurement of only individual cost variables (Dirrler and Podruzsik, 2022). The focus of this study is on internal indirect conflict costs, measured in terms of lost time, because a profound measurement approach has already been established.…”

“…First, the average amount of time lost on a conflict was determined for each group and then analyzed for potential differences. In addition, previous research has identified different cost amplifiers, which are the number of conflicts per year, the conflict strength, and conflict duration (Dirrler and Podruzsik, 2022). Second, it was, therefore, compared if culturally diverse groups scored higher on the individual cost amplifiers, which would in return also contribute to higher costs.…”