Ethnic diversity on boards and its interaction with gender diversity: should they have any beneficial effects on HRM?
| Date | 22 October 2024 |
| Pages | 1689-1705 |
| DOI | https://doi.org/10.1108/ER-02-2023-0069 |
| Published date | 22 October 2024 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Ji Li,Wanxing Jiang,Mengli Liu,Jun Huang,Xiaolong Tao |
Ethnic diversity on boards and its
interaction with gender diversity:
should they have any beneficial
effects on HRM?
Ji Li
Hong Kong Baptist University, Hong Kong, China and
Shandong University, Jinan, China
Wanxing Jiang
Shanghai Lixin University of Accounting and Finance, Shanghai, China
Mengli Liu
Shandong University, Jinan, China
Jun Huang
Southwest University, Chongqing, China and
Faculty of Business, City University of Macau, Macau, China, and
Xiaolong Tao
Yunnan University, Kunming, China
Abstract
Purpose –This study deals with the issue of how ethnic diversity on boards in a given firm may influence its
performance in human resource management (HRM). Moreover, the study also tests the interaction between
ethnic diversity and gender diversity and examines their joint effect on HRM.
Design/methodology/approach –Based on prior research, we predict that, with increasing demographic
diversity in organizations today, ethnic diversity on boards should have a positive effect on HRM. Moreover,
gender diversity, as a most visible dimension of demographic diversity, should have both a direct positive
effect and an indirect moderating effect on the relationship between ethnic diversity and HRM. Hierarchical
regression analysis was conducted to test the hypotheses.
Findings –Our data analyses show empirical evidence supporting our predictions. First, our study shows
that employer–employee relationship can be influenced by ethnic diversity on boards. Second, the foregoing
analyses highlight the importance of considering the interaction between different dimensions of demographic
diversity, such as that between ethnic and gender diversity. With a higher level of gender diversity on boards,
the positive effect of ethnic diversity on HRM can become more salient.
Originality/value –This research tests the benefits of ethnic diversity on boards for improving firms’
performance in HRM, thus making a contribution by helping to understand the effects of ethnic diversity in a
more comprehensive way. We also document the beneficial moderating effects of gender diversity on boards
for the first time.
Keywords Human resource management, Ethnic diversity, Gender diversity,
Employer/employee relationship
Paper type Research paper
1. Introduction
Many studies have been conducted in recent years on the issue of demographic diversity,
which include several sub-diversities or dimensions, such as ethnic diversity (e.g. Hicks-
Clarke and Iles, 2000;Leonard and Levine, 2006;Syed and Kramar, 2009;Verbeek and
Groeneveld, 2012;Giuliano and Ransom, 2013) and gender diversity (e.g. Tiessen, 2004;
Muzio and Tomlinson, 2012;Bendl and Schmidt, 2013; ; Reddy and Jadhav, 2019;Biswas
et al., 2023). According to research (e.g. Li et al., 1999;Richard, 2000), ethnic diversity can be
Employee
Relations: The
International
Journal
1689
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 7 February 2023
Revised 14 June 2024
5 September 2024
Accepted 6 September 2024
Employee Relations: The
International Journal
Vol. 46 No. 8, 2024
pp. 1689-1705
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-02-2023-0069
defined as the extent to which a group or organization is heterogeneous with respect to ethnic
backgrounds and culture. Similarly, gender diversity can be defined as the extent to which a
group or an organization is heterogeneous with respect to the gender of its members. Indeed,
the majority of studies on demographic diversity today focus on two most visible differences,
i.e. gender difference and ethnic difference, both of which may influence firms’ performances,
including the performance in HRM. Consistent with this practice, our current study focuses
on the effects of gender and ethnic diversities as well as their interactive effects on firm
performance in HRM. Specifically, our study focuses on a relatively less-studied team or
group, i.e. boards of directors, which is an important element of top management team
(TMT). According to upper echelon theory (Hambrick and Mason, 1984), any organizational
improvement efforts, such as that to improve management in demographic diversity, must
come from a firm’s most senior or top executives (Ng and Wyrick, 2011). Accordingly, it can
be assumed that the improvement of managing demographic diversity on boards, in turn,
should influence HRM in terms of such dimensions as good employer–employee relationship.
According to prior research, employer–employee relationship can be defined as “how well
firms take care of and build long-term relationships with internal stakeholders of employee”
(Luo et al., 2014, p. 499). Based on this definition, we regard employer–employee relationship
as one of the important dimensions of HRM performance that can affect the mutual
understanding and cooperation between a firm’s management and its employees. While most
scholarship focuses on the effect of demographic diversity on organizational outcomes in
terms of financial performance (Liu et al., 2014;Reguera-Alvarado et al., 2017), corporate
social performance (Jouber, 2022), corporate governance performance (Wang, 2020) and
corporate innovation (Jin et al., 2024), insufficient empirical research has been done to test
how demographic diversity may influence firm performance in HRM. Additionally, although
some empirical studies have tested the effect of ethnic diversity on boards on such behaviors
as decision-making and communications (e.g. Giuliano and Ransom, 2013), they did not test
directly how ethnic diversity may influence employer–employee relationship. In other words,
it still remains unclear whether and how demographic diversity, including ethnic and gender
diversity on boards may influence firm performance in HRM, especially on the dimension of
employer–employee relationship.
Further, prior research provides evidence of the effectiveness of diversity management
from increasing the representation of women and ethnic minority directors on board to
enhance firm outcomes including employee attitudes, corporate reputation and firm financial
performance (e.g. Konrad and Linnehan, 1995;Konrad et al., 2016;Richard et al., 2013;Arora,
2022;Duppati et al., 2020). A majority of the diversity management literature only centers on
gender and ethnic diversity exclusively/independently (Bin Khidmat et al., 2020;Simionescu
et al., 2021), rather than taking a more integrative view that simultaneously considers the
impact of female and ethnic minority board members together on a range of organizational
outcomes. For instance, although ethnic diversity and gender diversity often co-exist in an
organization, prior research often focuses on only one of them and ignores the other, which
makes it difficult to tell whether the observed outcome or performance should be attributed to
only one sub-diversity or to the joint effect of the sub-diversities (Landwehr, 2016;Owodiong-
Idemeko, 2020;Shore et al., 2009). In other words, it is not clear whether there is any
interaction between ethnic diversity and gender diversity, both of which are arguably the
most visible and important sub-diversities or dimensions of demographic diversity, which
may exert joint influence on organizational outcomes (Fern
andez-Temprano and Tejerina-
Gaite, 2020). Our current study fills the research gap by testing the interactive effect of ethnic
and gender diversity on boards on firm performance in HRM.
It would be of theoretical importance to study the relationship between ethnic diversity
and gender diversity on boards and HRM performance. First, this study would extend the
research on firms’ performance in HRM by arguing and finding ethnic and gender diversity
ER
46,8
1690
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