Managing cultural diversity: implications for organizational competitiveness

Executive Overview The recent business trends of globalization and increasing ethnic and gender diversity are turning managers' attention to the management of cultural differences. The management literature has suggested that organizations should value diversity to enhance organizational effectiveness. However, the specific link between managing diversity and organizational competitiveness is rarely made explicit and no article has reviewed actual research data supporting such a link. This article reviews arguments and research data on how managing diversity can create a competitive advantage. We address cost, attraction of human resources, marketing success, creativity and innovation, problem-solving quality, and organizational flexibility as six dimensions of business performance directly impacted by the management of cultural diversity. We then offer suggestions for improving organizational capability to manage this diversity.