Multicultural collaborations are temporary entities that are not embedded in a single organizational context but yet complete tasks such as building a house or making a film with the involvement of people from multiple cultures. Although they share characteristics of multicultural teams, they lack many of the mechanisms that teams embedded in organizations have at the ready to enable navigation of key challenges. Not much is known about how they cope. Using an inductive approach, this study addresses four critical questions with respect to multicultural collaborations. First, we sought to identify the most common challenges that multicultural collaborations face. Second, we wanted to understand how multicultural collaborations react to those challenges. Third, we examined the role of collaboration heterogeneity in the adjustment process. Finally, we wanted to know whether adjustment facilitates collaboration performance. We examined these issues using comprehensive field data from 16 multicultural humanitarian home‐building collaborations that ranged in their degree of cultural heterogeneity. Our analysis highlights many important aspects of multicultural collaborative work. First, adjustment processes were critical in coping with their lack of organizational embeddedness. Second, collaborations utilize a range of both internal and external strategies for adjusting. Third, when collaborations experience challenges related to the way members work with each other, cultural differences may contribute to the ability to make important adjustments. Finally, when significant challenges existed, adjustment processes were related to performance in multicultural collaborations, yet overadjustment was detrimental, suggesting the importance of careful calibration of adjustment strategies to the magnitude and nature of challenges that exist. Our findings have implications for theories of team processes and culture, as well as practical implications for working across cultures. Copyright © 2013 John Wiley & Sons, Ltd.