Abstract
Embracing racial diversity in the workplace is an important strategic decision for many firms to achieve a competitive advantage. While previous studies report conflicting consequences of workforce racial diversity, this study examined its effects on firm performance in a less researched large corporate law firm context. Furthermore, the study investigated the moderating role of human resource management practices (i.e., lateral hiring, temporary employment, and dual career ladder practice) related to employment and career management aspects. Our hypotheses were tested based on the longitudinal datasets of 232 large U.S.-based corporate law firms for the period 2000-2008. Initially, no significant relationship was found between workforce racial diversity and firm performance. However, further analyses indicated that human resource management practices determined the performance effect of workforce racial diversity. Specifically, workforce racial diversity had a negative impact on performance for firms that relied more on temporary employment and actively utilized dual career ladders.
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