Distance matters! : The role of employees' age distance on the effects of workforce age heterogeneity on firm performance

Abstract

Age heterogeneity in Western workforces is increasing, generating potential informational benefits as well as harmful age‐based social categorizations. When can firms benefit from age heterogeneity? Building on the categorization‐elaboration model, we propose the average age distance between employees as a fundamental contingency. Using a longitudinal archival sample of 3,336 Belgian firms (2012–2015), we find that firms with a high level of age heterogeneity are less productive when employees' average distance is great (Study 1). Through an online experiment with 260 US participants, we show that employees in age‐heterogeneous workforces are less willing to engage in inter‐age cooperative contact and knowledge exchange under a great level of average age distance (Study 2). Our findings support that great distances foster age‐based social categorizations that undermine the productive information elaborations between employees of different ages. This broadens our knowledge on the implications of workforce age diversity and helps organizations understand when they can(not) reap the productivity benefits of their age‐diverse workforce. Moreover, this study's theory and implications are relevant to other types of diversity for which both heterogeneity and distance are meaningful constructs. We also discuss the practical implications of this study.