Workforce diversity in manufacturing companies and organizational performance: the role of status-relatedness and internal processes

This study investigates workforce diversity at the organization level, which has been relatively overlooked. We focus on status-related processes that complement the ambiguities involving social categorization and information processing perspectives. We further identify the theoretically meaningful mediators (i.e. innovative climate, employee competence and employee satisfaction) of the diversity–performance relationship at the organization level. We empirically validate our hypothesis using time-lagged, multi-source data collected from 256 Korean manufacturing companies at 2 time points over a 2-year period. Results indicate that hierarchical position diversity is negatively related to employee competence and satisfaction, which in turn negatively affects operational performance. Education diversity positively affects innovative climate, employee competence and employee satisfaction, thus increasing the innovation and operational efficiency of an organization. This study elaborates the distinct implications of diversity dimensions with different levels of status-relatedness, and offers empirical contributions that highlight the mediating mechanisms through which diversity enhances different forms of organizational performance.