Relational Coordination of Workforce Diversity and Firm Performance: The Moderating Effects of Workgroup Autonomy and Multisource Feedback

Abstract

Organizations have become increasingly diverse in the composition of their workforce, but we still have a limited understanding of the effects of workforce diversity such as differences in age and education on performance at the firm level. As an important step in revealing the underlying processes and moderators for the effects of diversity, most importantly, relational coordination is proposed as an intervening process at the firm level through which diversity in age and education indirectly affects firm performance. Furthermore, I highlight the importance of individual HR practices, particularly workgroup autonomy and multisource feedback, as critical contingencies that moderate the effects of diversity on relational coordination. Lastly, relational coordination is suggested to enhance both objective financial performance and subjective performance ratings. I tested my theoretical arguments using data from 189 Korean firms in the manufacturing sector, and my hypotheses were generally supported. The present findings offer novel practical and theoretical insights into the effect of workforce diversity on firm performance.