The environmental determinants of diversity management: Competition, collaboration and clients

Date01 December 2019
Published date01 December 2019
AuthorLing Zhu,Austin M. McCrea
The environmental determinants of diversity
management: Competition, collaboration
and clients
Austin M. McCrea
| Ling Zhu
Department of Public Administration and
Policy, American University, Washington,
Department of Political Science, University
of Houston, Houston, TX, USA
Ling Zhu, Department of Political Science,
402 PGH University of Houston, Calhoun
Rd. 4800, Houston, TX 77204, USA.
Diversity management has received considerable attention
in public management research. Most existing research,
however, analyses the effects rather than the determi-
nants of diversity management. Using panel data on
American hospitals from 2008 to 2011, we probe how
market competition, inter-organizational collaboration and
clientele diversity affect diversity management adoption.
We find that all three environmental factors increase
diversity manage ment adoption. Hos pitals in competit ive
markets are more likely to adopt diversity management
strategies when they engage in extensive service collabo-
ration and serve a diverse pop ulation. Monopolies in less
collaborative environments lag behind in adopting diversity
management, especially when they serve ethnically homog-
enous populations. Our finding s broaden understandings
about what drives diversity man agement practices and add
to the literature on the external co ntingency of managerial
Diversity management has received considerable attention in both the practice and research of public administration.
The existing literature defines diversity management as a multifaceted concept encompassing managerial activities
that promote workforce diversity, recognize diversity as an important organizational goal, build cultural awareness
and ultimately adopt and implement formal diversity programmes (Pitts 2005, 2006; Sabharwal et al. 2018). Diversity
management is an essential strategy, which promotes equitable and inclusive human resource management in both
private sector firms (Thomas 2001; Everly and Schwarz 2015; Konrad et al. 2016; Mullins 2018; Shi et al. 2018) and
public organizations (Metz and Kulik 2008; Choi et al. 2018). Moreover, diversity management provides a more
Received: 31 August 2018 Revised: 25 April 2019 Accepted: 19 June 2019
DOI: 10.1111/padm.12616
942 © 2019 John Wiley & Sons Ltd Public Administration. 2019;
equitable representation of clients (Pedersen et al. 2018). Most existing research analyses how diversity manage-
ment affects work group performance, job satisfaction, workforce stability, and organizational performance (Pitts
2005; Horwitz and Horwitz 2007; Choi 2009; Choi and Rainey 2010; Ashikali and Groeneveld 2015; Andersen and
Moynihan 2016; Ritz and Alfes 2018). However, only limited research has been directed at unpacking the drivers of
diversity management (Pitts et al. 2010).
We provide an external contingency perspective on diversity management by examining three environmental
factors: market competition, inter-organizational collaboration and the racial/ethnic diversity of the clientele, as they
relate to diversity management. Drawing from the contingency theory (Scott 1981; Donaldson 2001) and the theory
of contextual public management (Meier and OToole 2015), we theorize that organizations under
highly competitive pressures will prioritize diversity management to address uncertainty in the environment. Second,
inter-organizational collaboration helps reduce costs of adopting diversity programmes. Third, client demographic
characteristics significantly affect organizational priorities in diversity management. A service market with a diverse
client population requires personnel that are culturally competent. Organizations in diverse areas also have more
experience in serving citizens from different ethnic and cultural backgrounds.
Using panel data for 4,000+ American hospitals from 2008 to 2011, we validate empirical measures of market
competition in hospitalslocal service market, inter-hospital collaboration, and ethnic diversity of the county-level
population. These external environmental conditions are then linked to hospital-level data on diversity management.
Analysis reveals that market competition, inter-organizational collaboration and racial diversity all exhibit positive
effects on the likelihood of adopting diversity management programmes.
Our study makes several important contributions to the public management literature. First, our study comple-
ments prior research on diversity management that focuses on internal organizational factors (Andersen and
Moynihan 2016) and leaderstraits (Johansen and Zhu 2017). We show that the external environment can signifi-
cantly affect organizational activities in diversity management. Second, unlike many existing studies that focus on
public organizations, our study is one of the few that applies a panel data design to organizations in public, private
and nonprofit sectors. Unlike federal agencies that conform to the same set of political goals in promoting workforce
diversity, hospitals in different sectors are not governed by uniform rules. As such, our study accounts for heteroge-
neous organizational characteristics and thus yields more generalizable conclusions about the external contingencies
of diversity management.
Diversity management is as an important strategy to improve the representation of minority groups in public work-
force and organizational performance (Pitts et al. 2010; Ashikali and Groeneveld 2015). As diversity programmes
have diffused across public organizations, public administration scholars have become interested in examining the
drivers of diversity management. The existing research on diversity management offers some helpful insights, albeit
primarily focusing on factors internal to organizations. Research on public sector human resource management
reports that commitment to diversity management is driven by strategic motivations to improve the implementation
of Equal Employment Opportunity laws (Riccucci 2002; Selden 2006). Recent studies also find that diversity manage-
ment practices are associated with organizationsinternal characteristics such as resource capacity, agency size and
personnel diversity (Richard 2000; Pitts 2006; Crumpacker and Crumpacker 2008). Others turn their attention to
how leadership characteristics affect diversity management practices. For example, Johansen and Zhu (2017) find
that managerial gender affects priorities on diversity issues, with women leaders more likely to give priority to diver-
sity issues than their male counterparts. The literature on firm management also finds that leadership expertise in
human resource management (Mullins 2018) and leadership inclusiveness (Mitchell et al. 2015) both increase organi-
zational commitment to diversity management.

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