Managing cultural diversity: implications for organizational competitiveness

TLDR

Globalization and growing ethnic and gender diversity are prompting managers to focus on cultural differences, yet the explicit connection between diversity management and organizational competitiveness remains underexplored. The article reviews evidence that managing diversity can generate competitive advantage and proposes ways to enhance organizational capability in this area. The authors examine six performance dimensions—cost, talent attraction, marketing success, creativity, problem‑solving quality, and flexibility—to illustrate how diversity management directly influences business outcomes.

Abstract

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.