In this study, we try to explore the concept of “Multicultural Diversity” in a holistic context. This research investigates the question, if multiculturalism and diversity benefits often presumed to increase organizational creativity, critical thinking, and problem-solving capabilities can be unanimously substantiated and quantified within the context of typical business-oriented organizational performance indicators, such as sales-to-goal achievement, new customer acquisition, diversification, and return on capital. This research first outlines the psychological underpinnings of multicultural diversity integration, and then discusses the prevalent conflict of positions in current scientific literature on its positive and negative effects on organizational performance. Only one study was found to indirectly relate quantifiable economic outcomes to positive or negative effects of multiculturalism and diversity. It is concluded that, any performance effects predominantly consist in an organization's improved cognitive and psychological functioning, and that the qualitative direction of both positive and negative effects greatly depends on the organizational and industrial contexts, strategy, corporate culture, and resultant human resource policies.
Diversity and Multicultural Effects on Organizational Performance13
Operational Selection of Factors Influencing Organizational Performance14
Effects on Financial Key Performance Indicators14
Effects on Creativity, Innovation, and Competitive Advantages15
Effects on Group Cohesion and Performance15
Cost-Benefit Analysis of Diversity and Multicultural Management in Organizations16
Cost Factors of Diversity and Multiculturalism17
Leveraging Benefits of Diversity and Multiculturalism18
Associated With Multicultural Diversity
Merriam Webster (2010) defines diversity as the inclusion of a variety of individuals differing in race, gender, or culture in a group or organization. Variety constitutes some inherent degree of uniqueness; a noticeable difference from others, which allows for new, potentially unconventional problem evaluation, constructive disagreement, and the deriving of new solutions and approaches to persistent challenges. Herein lies diversities greatest strength, as it closely resembles. Fassinger (2008) definition of an organization's competitive advantage; namely, a product or organizational attribute that is unique, defendable over time, and important in the eyes of external stakeholder of a firm's relevant market. Diversity, therefore, can become the engine behind creativity, allowing new voices to be heard, and thereby increasing an organization's critical thinking capabilities, as well overall job satisfaction and commitment.
While most organizations will acknowledge the importance of diversity in business considerations, the full potential of a diverse workforce appears to have not yet been leveraged and exploited. Such suboptimal utilization may stem from organization's general level of uncertainty of how to best quantify diversity-related advantages within the context of typical business-oriented key performance indicators, such as ROI, employee turnover, level of innovation and product development, etc. The following pages will therefore investigate personnel psychology's scientific position on the existence and type of quantifiable effects of diversity on organizational performance. Beginning with an outline of the psychological underpinnings of multicultural diversity integration, this research will discuss the prevalent conflict of positions in current literature on the positive and negative effects relative to performance, and concludes with a quintessential cost-benefit analysis.
Moreover, no similar studies have examined multicultural groups where openness ...