Effects of Racial Diversity Congruence Between Senior Management & Middle Management on Performance

Abstract

We introduce the middle echelons concept to the management domain by examining how matching levels of racial diversity in middle management and senior management (i.e., upper echelons) impacts firm performance. In a sample of high tech firms, we found evidence supporting knowledge-based view perspectives on the racial diversity congruence–firm performance relationship. Specifically, congruence between senior management racial diversity and middle management racial diversity positively impacts firm performance. Furthermore, organizations with high levels of racial diversity in both senior and middle management (i.e., high-high racial diversity congruence) realized superior performance compared to organizations with low levels of racial diversity in both senior and middle management (i.e., low-low racial diversity congruence). Results also revealed differences across levels of racial diversity incongruence between senior management and middle management (i.e., asymmetry effects) whereby firms with a more racially diverse senior management than middle management outperformed firms with a more racially diverse middle management than senior management. A supplemental study of Fortune 500 firms enhanced generalizability, as the pattern of findings was very similar to the high tech study. The study implications are discussed as well as a call for future research that considers the upper echelons’ and the middle echelons’ joint effects.