Beyond the mean : Understanding firm‐level consequences of variability in diversity climate perceptions

Abstract

We develop and test an organizational‐level model of the consequences of diversity climate for company performance. Drawing from affective events theory and the organizational climate literature, we highlight the role of idiosyncrasies in employees' diversity climate perceptions. Specifically, we consider diversity climate strength (i.e., agreement in employees' climate perceptions) as a boundary condition of diversity climate's organizational‐level effects and expect high climate strength to be particularly beneficial in demographically diverse organizations. Moreover, we introduce collective positive affect as an underlying mechanism of diversity climate's conditional effects on company performance. Hypotheses are tested in a study of 82 German small‐and‐medium‐sized companies with 13,695 surveyed employees. Results show a moderated mediation relationship where diversity climate is only positively related to organizational performance (via collective positive affect) at relatively high diversity climate strength. Although this finding holds for both demographically diverse and homogeneous organizations, post hoc analyses provide initial evidence that a strong climate only helps to realize the effects of diversity climate on collective positive affect when members of age‐ and gender‐related demographic subgroups converge in their climate perceptions. Our study contributes to a better understanding of diversity climate as an effective lever for managing diversity.