Diversity-focused HR practices and perceived firm performance: mediating role of procedural justice

Date21 March 2019
Pages214-239
Published date21 March 2019
DOIhttps://doi.org/10.1108/JABS-02-2018-0032
AuthorSubhash C. Kundu,Archana Mor,Jahanvi Bansal,Sandeep Kumar
Subject MatterStrategy,International business
Diversity-focused HR practices and
perceived rm performance: mediating
role of procedural justice
Subhash C. Kundu, Archana Mor, Jahanvi Bansal and Sandeep Kumar
Abstract
Purpose The purpose of this paper is to investigate the relationship between diversity management
(i.e. diversity-focusedhuman resource (HR) practices related to recruitment and selection,training and
development, performance appraisal and compensation) and perceived firm performance, and the
mediatingeffect of procedural justice.
Design/methodology/approach Primary data based on 400 respondents of 162 organizations
operating in India were analysed using statistical tools such as factor analysis, analysis of variance
(ANOVA)and multiple regression analysis.
Findings Multiple regression analysis indicated that diversity-focused HR practices had a positive
association with perceived firm performance. Further, it was found that procedural justice played a
partially mediating in the relationship between diversity-focused HR practices and perceived firm
performance.
Research limitations/implications This paper relied on self-report surveys for data collection, and
there laid a possibility of common method variance in the result findings. Hence, future studies should
collectdata from multiple sources by using multiple methods(e.g. interviews, surveys, peer reports,etc.).
Practical implications The first implication highlights that senior management’s support is a
prerequisite to execute justice-based diversity management processes, which in turn aid in harvesting
the true potentials of diversity. Second, organizations should adopt an egalitarian approach while
formulating and implementing diversity management initiatives to accentuate the fair and just
perceptibilityof procedures among employees.
Originality/value This study sheds new light onthe effects of diversity-focused HR practices on firm
performance(perceived) in Indian context.
Keywords India, Procedural justice, Perception, Firm performance, HR practices,
Diversity management
Paper type Research paper
1. Introduction
Diversity is a multifaceted reality, with substantial competitive and ethical implications
(McMahon, 2010). In the wake of globalization and changing nature of workforce,
organizations are faced with an ambitious task of identifying effective ways to manage
diversity to achieve organizational goals (Ghosh, 2016). As also argued by Gilbert et al.
(1999), increased diversity implies a “new organizational paradigm”, which requires
systematic and planned change efforts. This way, mere focusing on the diversity
management approach will not provide fruitful results for the organizations (D’Netto et al.,
2014), rather they need to cautiously link diversity management to the key areas of human
resource management (HRM) (D’Nettoand Sohal, 1999;Shen et al.,2009). Stressing on the
importance of this link, Kochan et al. (2003) established that HR practices nurture and
facilitate the creation of a workforce that has the skills needed to turn diversity into an
Subhash C. Kundu,
Archana Mor,
Jahanvi Bansal and
Sandeep Kumar are all
based at the Haryana
School of Business, Guru
Jambheshwar University of
Science and Technology,
Hisar, India.
Received 6 February 2018
Revised 26 September 2018
Accepted 15 October 2018
PAGE 214 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 13 NO. 2 2019, pp. 214-239, ©EmeraldPublishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-02-2018-0032
opportunity. Kirton (2003) argued that HRM plays an imperative role in managing diversity
through its proactive policy in reducinginequalities as well as to attract, develop, retain and
motivate diverse workforce.
While an escalating number of studies have emerged across the world investigating the
HRMdiversity linkage (D’Nettoand Sohal, 1999;Richard and Johnson, 2001;Kochan et al.,
2003;Choy, 2007;D’Netto et al.,2014), there is a dearth of studies that specifically
addressed the relationshipbetween the adoption of diversity-focused HR practices and firm
performance in Indian context (Cookeand Saini, 2010). Besides, studying diversity in Indian
context is of particular significance, owing to several pertinent reasons. First, India is a
heterogeneous country with an incredible amount of natural diversity in terms of gender,
language, ethnicity, thoughts, beliefs and creeds (Cooke and Saini, 2012) and,
subsequently, exhibits a rich ground for studying diversity (Cooke and Saini, 2010).
Second, while considerable research has been undertaken on diversity in Western
countries (mostly the USA and other Anglophone countries, i.e. England, Canada, Australia
(Peretz et al.,2015), which may not represent the situation of culturally diverse Asian
countries (Magoshi and Chang, 2009), the topic has received relatively little research
attention in India (Woodard and Saini, 2006). Third, in an internationally comparative index
of diversity readiness compiled by the Society for Human Resource Management (SHRM)
and the Economist Intelligence Unit (EIU) (2009), India ranked 41 out of 47 countries
(Donnelly, 2015). This indicates that the efforts made by the Indian Government to promote
diversity (by passing equal opportunities and anti-discrimination laws) are not sufficient to
bring significant differences (Wang and McLean, 2016). The same has been true at the
organizational level. For instance, Indian organizations tend to adopt a pragmatic or
problem solving approach to manage their workforce diversity (Cooke and Saini, 2010;
Donnelly, 2015).
At the same, to understand the complexities of HRMdiversity linkage, it becomes pertinent
to understand whether diversity-focused HR practices are adopted equally by all ownership
forms and nature of organizations or does any significant difference exit depending on
these organizational factors (Ali et al.,2011;Brewster et al., 2008;Cooke and Saini, 2010).
This is because firms in different ownership forms and nature are subject to different
business environments and may interact with institutional environments in diverse ways
(Cooke and Saini, 2010). Further, the characteristics of the firms’ ownership and industrial
sector help in defining managerial behaviour and choices of HRM practices. For instance,
firms operating in knowledge-intensive industries and MNCs tend to more fervent in
adopting strategic HRM practices to remain competitive (Boxall and Purcell, 2008;Cooke
and Saini, 2010). Thus, the current study has used these two significant organizational
factors to explore the differences in the adoption of diversity-focused HR practices among
various organizations operating in India, that are widely used and investigated in previous
researches as well (Cooke and Saini, 2010;Patrick and Kumar, 2012;Singal, 2014). To
check the variations in adoption of HR-focused diversity practices based on nature, a
comparison will be made between manufacturing and services organizations (Patrick and
Kumar, 2012). While considering the form of ownership, a comparison will be made
between Indian organizations and multinational companies (MNCs) (Cooke and Saini,
2010). Indian organizations refer to the organizations originated and operating in India,
while MNCs refer to the organizations originated outside India but currently operating in
India (Venkata Ratnam, 1998).
Above and beyond, diversity-focused HR practices are a long-term investment and an
organization attains a level of advancement equivalent to that achieved through a major
technological change or deregulation (McEnrue, 1993) when organizational policies and
procedures are judged and perceived fairly by the employees (Richard and Johnson,
2001). Analogous to this, Magoshi and Chang (2009) purported that when a company
efficaciously exercises its diversity management practices, employees may perceive that
VOL. 13 NO. 2 2019 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 215

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