The Role Of Cultural Diversity On The Performance Of Telecommunication Firms In Kenya

Abstract

The objective/purpose of the study was to determine if cultural diversity significantly affects the performance of telecommunication firms in Kenya. Organizations are increasingly hiring employees of diverse cultures from the global marketplace. Cultural diversity of employees can affect an organization's competitiveness in various ways. A combination of employees drawn from diverse cultures, nationalities and religious backgrounds could bring to an organization diverse beliefs, work ethics, values, cultures, work approaches and perspectives that may ultimately influence team cohesiveness, synergy, innovation, communication and other organizational outcomes. Secondary and primary data is collected and analyzed from a sample of 270 managers in the14 telecommunications firms for a period of five years (2010-2014). We use Blau's index (measure of heterogeneity) to operationalize cultural diversity as represented by employees of diverse nationalities. Financial measures of performance and in particular growth in sales is used to measure firm performance due to its holistic nature and popularity as a measure of performance among the targeted firms. Descriptive analysis, Correlation analysis, Analysis of Variance and Regression analysis are the statistical techniques used for measuring the level and direction of correlation between the variables. The study found out that cultural diversity of employees as represented by their nationality backgrounds has a weak but statistically significant relationship with performance (p<0.01), (R 2 =6.6%) implying that cultural diversity explained 6.6% variation in the performance of telecommunication firms in Kenya.