Contingent Effects of Workforce Diversity on irm Performance

Abstract

Despite the substantial strategic implications of workforce diversity on firm performance, minimal attention has been given to this issue. The present study investigates the effects of firm-level workforce diversity in various attributes, including gender, age, hierarchical status, and education, on the innovative performance of firms. Drawing on the contingency perspective, the current study proposes that the effects of workforce diversity on firm innovation are moderated by several firm-level contingencies, including firm size, high-tech industry setting, and environmental turbulence. Analysis of data collected from 187 Korean companies revealed that education diversity is the only significant and positive predictor of firm innovative performance. The positive effect of education diversity is stronger in large firms. However, increased firm size tends to aggravate the negative effects of demographic diversity (gender and age) on innovative performance. Diversity in gender and hierarchical status is not beneficial for firm innovation in a high-tech industry setting. In contrast, high environmental turbulence offers a positive contingency for diversity in gender and hierarchical status, which makes these positive predictors of innovative performance. The present findings offer novel practical and theoretical insights on the role of workforce diversity on firm innovative performance by revealing critical firm-level contingencies that shape the implications of workforce diversity for innovation.