Journal of Strategic Human Resource Management

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Diversity and its Effect on Firm Performance: a Critical Review


Affiliations
1 Research Scholar, IIM Lucknow
2 Professor & Dean (Noida Campus), IIM Lucknow
     

   Subscribe/Renew Journal


This article seeks to review the literature on 'diversity and its effect on firm performance'. Based on the extant literature of diversity, we present a framework which analyzes the effect of diversity in attributes, values, skills and knowledge and cohort membership on firm performance through group processes and its consequences. The consequences of Group processes involve decision quality, decision commitment, strategic consensus and knowledge management. We measure firm performance by financial, customer, internal processes and growth perspective.

Keywords

Diversity in Attributes, Values, Skills, Knowledge And Cohort Membership, Decision Quality, Decision Commitment, Strategic Consensus And Knowledge Management, Firm Performance
Subscription Login to verify subscription
User
Notifications
Font Size


  • Ancona, D.G., & Caldwell, D.F. (1992). Demography and design: Predictions of new product team performance. Organization Science, 3, 321-341.

  • Bourgeois, L. J. (1980). 'Performance and consensus' , Strategic Management Journal, 1(3), 227–248.

  • Bourgeois, L. J. (1985). Strategic goals, perceived uncertainty, and economic performance in volatile environments, Academy of Management Journal, 28(3), 548–573.

  • Bunderson, J. S., (2003), Team member functional background and involvement in management teams :direct effects and moderating role of power centralization, Academy of Management formal 200:i, 46( 4), 458-474.

  • Bunderson, J.S., & Sutcliffe, K.M.,(2002). Comparing alternative conceptualizations of functional diversity in management teams: Process and performance effects. Academy of Management Journal, 45, 875-893

  • Butler, J. K. 1991. Toward understanding and measuring conditions of trust: Evolution of conditions of trust inventory. Journal of Management, 17: 643-663.

  • Cannella Jr., Albert A., Jong-Hun Park and Ho-Uk Lee,(2008), Top management team functional background diversity and firm performance: Examining the Roles of Team Member Colocation and Environmental Uncertainty, Academy of Management Journal, 51(4), 768-784

  • Chaney, P.K., & Devinney, T.M. (1992). New product innovation and stock price performance. Journal of Business Finance and Accounting, 19, 677-695.

  • Cosier, R. A. and P. L. Rechner (1985). 'Inquire method effects on performance in simulated business environment' , Organizational Behavior and Human Decision Processes, 36(1), 79–95.

  • Cox, T. H., Lobel, S. A., & McLeod, P. L. (1991). Effects of ethnic group cultural differences on cooperative and competitive behavior on a group task. Academy of Management Journal, 34, 827–847.

  • Cyert, R.M., & March, J.G. (1963). A Behavioral Theory of the Firm. Prentice-Hall, Englewood Cliffs, NJ.

  • Dess, G. 1987. Consensus on strategy formulation and organizational performance: Competitors in a fragmented industry. Strategic Management Journal, 8: 259-277.

  • Dess, G. G. and N. K. Origer (1987). 'Environment, structure and consensus in strategy formation: A conceptual integration' , Academy of Management Review, 12(2). 313–330.

  • Dooley, R.S., & Fryxell, G.E.(1999). Attaining decision quality and commitment from teams. Academy of Management Journal, 42, 389-402.

  • Dwyer S, Richard OC, Shepherd CD. 1998. An exploratory study of gender and age matching in the salesperson– prospective customer dyad: testing similarity–performance predictions. Journal of Personal Selling and Sales Management 18(4): 55–70.

  • Eisenhardt, K. M. 1989. Agency theory: An assessment and review. Academy of Management Review, 14: 57–74.

  • Finkelstein, S. & Hambrick, D.C. (1996). Strategic Leadership: Top Executives and their Effects on Organizations. West, St. Paul, MN

  • Ford, J. D. and D. A. Baucus (1987). 'Organizational adaptation to performance downturns: An inter-pretationbased perspective' , Academy of Management Review, 12, 366–380.

  • Gist, M. E., E. A. Locke and S. A. Taylor (1987). 'Organizational behavior: group structure, process and effectiveness' , Journal of Management, 13(2), 237–257.

  • Guzzo, R., & Dickson, M. (1996). Teams in organizations: Recent research on performance and effectiveness. Annual Review of Psychology, 47, 307–338

  • Hambrick, D.C. & Mason, P.A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9, 193-206

  • Hambrick, D.C., Cho, T.S., & Chen, M. (1996).The influence of top management team heterogeneity on firms' competitive moves. Administrative Science Quarterly, 41, 659-684

  • Harrison, D.A., Price, K.H., Gavin, J.H., & Florey, A.T. (2002). Time, teams, and task performance: Changing effects of surface-and deep-level diversity on group functioning. Academy of Management Journal, 45, 1029- 1045.

  • Hoffman, L Richard, and Norman R. F. Maier 1961 “Quality and acceptance of problem solutions by mem-bers of homogeneous and heterogeneous groups.” Journal of Abnormal and Sociai Psychology, 62: 401-407.

  • Jackson, S. E. (1992). Team composition in organizational settings: Issues in managing an increasingly diverse workforce. In S. Worchel, W. Wood, & J. A. Simpson (Eds.), Group processes and productivity,136–180. Newbury Park, CA: Sage.

  • Jehn, K. A., Northcraft, G. B., & Neale, M. A. (1999). Why differences make a difference: A field study of diversity, conflict, and performance in workgroups. Administrative Science Quarterly, 44, 741–763.Kedia, B.L. (2002). International business outlook 2002. Business Perspectives, 14, 22-25.

  • Kiesler, S., & Sproull, L. 1982. Managerial response to changing environments: Perspectives on problem sensing from social cognition. Administrative Science Quarterly, 27: 548–560.

  • Knight D., Pearce, C.L., Smith, K.G., Olian, J.D., Sims, H.P., Smith, K.A., & Flood, P. (1999). Top management team diversity, group process, and strategic consensus. Strategic Management Journal, 20, 445-465.

  • Knippenberg, Dreu, D. and Homan,(2004), Work Group Diversity and Group Performance: An Integrative Model and Research Agenda, Journal of Applied Psychology,2004, 89(6), 1008–1022

  • Langfield-Smith, K. (1992). 'Exploring the need for a shared cognitive map' , Journal of Management Studies, 29, 349–368.

  • Lawless, Michael W., Anderson, Philip C.,(1996), Generational technological change :Effects of Innovation and local rivalry on performance, Academy of Management Journal,39 (5), 1185-1217

  • Lyles, M. A. (1981). 'Formulating strategic problems: Empirical analysis and model development' , Strategic Management Journal, 2(1), 61–75.

  • McLeod, P. L., & Lobel, S. A. 1992. The effects of ethnic diversity on idea generation in small groups. Academy of Management Best Paper Proceedings: 227-231.

  • McMahon, A. M. (2010), Does Workplace Diversity Matter? A Survey of Empirical Studies On Diversity And Firm Performance-2000-09, Journal of Diversity- Management - Second Quarter, 5

  • Mcmahon, A. M. (2010). Does Workplace Diversity Matter? A Survey of Empirical Studies On Diversity And Firm Performance, 2000-09. Journal of Diversity Management, 5(2).

  • Milliken, F.Z. & Martins, L.L. (1996), Searching for common threads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21, 402-433.

  • Mintzberg, H., Duru R., and Andre T. (1976 ),The structure of 'unstructured' decision processes. Administrative Science Quarterly. 21, 246-275.

  • Murray A. (1989), Top management group heterogeneity and firm performance. Strategic Management Journal, Summer Special Issue 10, 125–141.

  • Nielson, R. P. (1981), Towards a method of building consensus during strategic planning, Sloan Management Review, 22(4), 28–40.

  • Olson, B. J., & Twigg, N. W. (2006). Mediating Role of Strategic Choice Between Top Management Team Diversity and Firm Performance: Upper Echelons Theory Revisited. Journal of Business and Management, 12(2), 111-127.

  • Olson, B. J., Parayitam, S., & Twigg, N. W. (2006). Mediating Role of Strategic Choice Between Top Management Team Diversity and Firm Performance: Upper Echelons Theory Revisited. Journal of Business and Management, 12(2), 111-127.

  • Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. (1999). Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44, 1–28.

  • Peterson, R.S., Smith D.B., Martorana, P.V.,& Owens, P.D. (2003). The impact of chief executive officer personality on top management team dynamics: one mechanism by which leadership affects organizational performance. Journal of Applied Psychology, 88, 795-808.

  • Pfeffer, J. (1983). Organizational demography. In Cummings, L.L. and Staw, B. (eds), Research in Organizational Behavior, Vol. 5. Greenwich, CT: JAI Press, 299–357.

  • Priem, R. L., D. A. Harrison and N. K. Muir (1995). Structured conflict and consensus outcomes in group decision making, Journal of Management,21(4), 691–710.

  • Rahim, M. A. (1982). Measurement of organizational conflict. Journal of General Psychology, 109: 189-199.

  • Ravenscraft, D.J., & Scherer, F.M. (1987). Mergers, Sell offs, and economic efficiency. Brookings Institution,Washington, DC.

  • Sampson, R.C. (2007), R&D alliances and firm performance: the impact of technological Diversity and alliance Organization on innovation, Academy of Management Journal 2007, 50 (2), 364–386.

  • Schweiger, D. M., W. R. Sandberg and J. W. Ragan (1986). 'Group approaches for improving strategic decision making: A comparative analysis of dialecti-cal inquiry, devil's advocacy, and consensus' , Academy of Management Journal, 29(1), 51–71.

  • Schweiger, D. M., W. R. Sandberg and P. Rechner (1989). 'Experiential effects of dialectical inquiry, devil's advocacy and consensus approaches to strategic decision making' , Academy of Management Journal, 32, 745–772.

  • Simsek, Z., Veiga, J.F., Lubatkin, M.H., & Dino, R.N. (2005). Modeling the multilevel determinants of top management team behavioral integration. Academy of Management Journal, 48, 69-84.

  • Smith, K. G., Smith, K. A., Olian, J. D., Sims, H. P., O' Bannon, D. P., & Scully, J. A. (1994). Top management team demography and process: The role of social integration and communication. Administrative Science Quarterly, 39, 412–438.

  • Smith, Ken G., and Curtis M. Grimm (1991) "A communication- information model of competitive response timing." Journal of Management. 17: 5-23.

  • Stalk, George, Jr. 1988 "Time - The next source of competitive advantage." Harvard Business Review, 88: 41-51.

  • Sutcliffe, K. M. (1994). What executives notice: Accurate perceptions in top management teams. Academy of Management Journal, 37: 1360-1378.

  • Triandis, H. C., Kurowski, L. L., & Gelfand, M. J. (1994). Workplace diversity. In H. C.

  • Triandis, M. P. Dunnette, & L. M. Hough (Eds.), Handbook of industrial and organizational psychology (2nd ed., Vol. 4, 769–827). Palo Alto, CA: Consulting Psychologists Press.

  • Tsui, A. S., Egan, T. D., & O' Reilly, C. A. (1992). Being different: Relational demography and organizational attachment. Administrative Science Quarterly, 37, 549–579.

  • Vermeulen, Patrick A. M.; Curseu, Petru L., eds, (2005), Entrepreneurial Strategic Decision- Making: A Cognitive Perspective, pp. xiv, 245Cheltenham, U.K. and Northampton, Mass.: Elgar

  • Wagner, G. W., Pleiier, J., & O' Reilly, C. A. 1984. Organizational demography and turnover in top-management groups. Administrative Science Quarterly, 29: 74- 92.

  • Watson, W. E.. Kumar, K., & Michaelsen, L. K. 1993. Cultural diversity' s impact on interaction process and performance: Comparing homogeneous and diverse task groups. Academy of Management Journal, 36: 590-602.

  • West, C.T., &.Schwenk, C.R. (1996). Top management team strategic consensus, demographic homogeneity and firm performance: A report of resounding nonfindings. Strategic Management Journal, 17, 571-576.

  • Williams K, O' Reilly C. 1998. Forty years of diversity research: a review. In Research in Organizational Behavior, Staw BM, Cummings LL (eds). JAI Press:Greenwich, CT; 77–140.

  • Williams, K. Y., & O' Reilly, C. A. (1998). Demography and diversity in organizations: A review of 40 years of research. Research in Organizational Behavior, 20, 77–140.

  • Zhang, Y., & Rajagopalan, N. (2003). Explaining new CEO origin: Firm versus industry antecedents. Academy of Management Journal, 46, 327-338.


Abstract Views: 593

PDF Views: 6




  • Diversity and its Effect on Firm Performance: a Critical Review

Abstract Views: 593  |  PDF Views: 6

Authors

Swati Chaurasia
Research Scholar, IIM Lucknow
Archana Shukla
Professor & Dean (Noida Campus), IIM Lucknow

Abstract


This article seeks to review the literature on 'diversity and its effect on firm performance'. Based on the extant literature of diversity, we present a framework which analyzes the effect of diversity in attributes, values, skills and knowledge and cohort membership on firm performance through group processes and its consequences. The consequences of Group processes involve decision quality, decision commitment, strategic consensus and knowledge management. We measure firm performance by financial, customer, internal processes and growth perspective.

Keywords


Diversity in Attributes, Values, Skills, Knowledge And Cohort Membership, Decision Quality, Decision Commitment, Strategic Consensus And Knowledge Management, Firm Performance

References