Contingent effects of workforce diversity on firm innovation: high-tech industry and market turbulence as critical environmental contingencies

Abstract

This study investigates the effects of firm-level workforce diversity on firm innovation. Instead of focusing on the main effects of diversity, we adopt contingency theory and propose that the demographic and status diversity of an entire organizational workforce promote or impede firm innovation depending on firm environmental contingencies. Analysis of multisource, multiwave data collected from 178 Korean companies indicates that gender and status diversity contribute to firm innovation in highly turbulent markets. However, having the same status diversity is detrimental to the innovation of firms under low market turbulence. Age diversity in high-tech firms with a relatively young workforce increases firm innovation. This conceptual and empirical analysis offers novel practical and theoretical insights into the role of demographic and status diversity toward firm innovation by identifying critical environmental contingencies that shape the implications of workforce diversity on firm innovation.