This paper empirically investigates the relationship between cultural and gender diversity and performance in groups of business students working on complex assignments. The study finds that gender diversity in student groups has a positive influence on group outcomes, while cultural diversity, irrespective of its conceptualisation, leads to negative group outcomes. Process variables such as communication, conflict and effectiveness of problem solving were found not to be influenced by demographic diversity or to have any effect on group outcomes. While the non-finding in group process investigation might be attributed to methodological difficulties, the negative influence of cultural diversity in student groups on performance indicates the further need for facilitation of coaching students in intercultural communications and cross-cultural understanding among educators. (Contains 4 tables.)