Institute for Research on Labor and Employment

Building on diversity literature, the present study examines the distinct effects of workforce diversity in various attributes on internal processes and performance at the organization level. Focusing on the status-relatedness of diversity dimensions, we propose thenegative effects of diversity in hierarchical position, and the positive effects of diversity in gender, age and education. We further identify innovative climate, employee competence, and employee satisfaction as the mediating mechanisms that account for the relationships between workforce diversity and organizational performance. The present hypotheses were empirically validated using time-lagged, multi-source data collected from 256 Koreanmanufacturing companies at two time points over a two-year period. Hierarchical position diversity was negatively related to employee competence and satisfaction, thus negatively affecting operational performance. Education diversity showed positive effects on innovativeclimate, employee competence, and employee satisfaction, which in turn increased the innovation and operational efficiency of the organization. A series of structural equation models also confirmed the negative direct effect of age diversity and the positive direct effect of education diversity on innovative performance. The present study elaborated the distinctimplications of diversity dimensions with different levels of status-relatedness, and offered empirical contributions that highlight mediating mechanisms between workforce diversity and performance at the organization level.