Diversity and leadership: transformational leadership and its role in managing diversity Diversity and leadership: transformational leadership and its role in managing diversity G. De Vries & A.C. Homan, Gedrag & Organisatie, volume 21, August 2008, nr. 3, pp. 295-309 The effect of diversity on performance in work-groups can both be positive and negative. The social categorization perspective assumes a negative effect because members of a diverse work-group are more positively inclined towards members who are similar to them than to members who are dissimilar. In contrast, the information/decision-making perspective states that people who are not alike benefit from an extended network and variety in perspectives. We argue that leadership may be very important in profiting from the positive effects and diminishing the negative effects of diversity. By integrating the dimensions of transformational leadership (Burns, 1978; Podsakoff, Mackenzie, Moorman & Fetter, 1990) with the categorization-elaboration model of Van Knippenberg, De Dreu and Homan (2004) we describe how leaders can make teams profit from their diversity. Practical and theoretical suggestions are given.