Ethnic diversity on boards and its interaction with gender diversity: should they have any beneficial effects on HRM?

Abstract

PurposeThis study deals with the issue of how ethnic diversity on boards in a given firm may influence its performance in human resource management (HRM). Moreover, the study also tests the interaction between ethnic diversity and gender diversity and examines their joint effect on HRM.Design/methodology/approachBased on prior research, we predict that, with increasing demographic diversity in organizations today, ethnic diversity on boards should have a positive effect on HRM. Moreover, gender diversity, as a most visible dimension of demographic diversity, should have both a direct positive effect and an indirect moderating effect on the relationship between ethnic diversity and HRM. Hierarchical regression analysis was conducted to test the hypotheses.FindingsOur data analyses show empirical evidence supporting our predictions. First, our study shows that employer–employee relationship can be influenced by ethnic diversity on boards. Second, the foregoing analyses highlight the importance of considering the interaction between different dimensions of demographic diversity, such as that between ethnic and gender diversity. With a higher level of gender diversity on boards, the positive effect of ethnic diversity on HRM can become more salient.Originality/valueThis research tests the benefits of ethnic diversity on boards for improving firms’ performance in HRM, thus making a contribution by helping to understand the effects of ethnic diversity in a more comprehensive way. We also document the beneficial moderating effects of gender diversity on boards for the first time.