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Organizational diversity programs across cultures

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The International Journal of Human Resource Management, 2015
Vol. 26, No. 6, 875–903, http://dx.doi.org/10.1080/09585192.2014.991344
Organizational diversity programs across cultures: effects on
absenteeism, turnover, performance and innovation
Hilla Peretza*, Ariel Levib and Yitzhak Friedc†
a
Department of Industrial Engineering and Management, Ort Braude College, Karmiel, Israel;
School of Business Administration, Wayne State University, Detroit, MI, USA; cWhitman School of
Management, Syracuse University, Syracuse, NY, USA
b
This study examined data from over 5000 organizations in 22 countries to address three
complementary issues: (1) the influence of national culture on the adoption of diversity
programs aimed at recruiting, training and promoting individuals from specific target
groups; (2) the moderating effect of national cultural practices on the relationship
between these diversity programs and the organizational outcomes of absenteeism and
turnover; and (3) the mediating effect of absenteeism and turnover on the relationship
between diversity programs and organizational performance and innovation. National
cultural values and practices were taken from the GLOBE study and assigned
respectively to the organizations in our sample. A multilevel path analysis supported
the hypothesized effects of national cultural values on organizational diversity
programs. Moreover, cultural practices were found to moderate the relationship
between diversity programs and absenteeism and turnover. Our hypotheses on the role
of absenteeism and turnover as mediators of the relationship between diversity
programs and organizational performance and innovation were also supported. Our
findings may help guide managers’ decisions on the adoption of diversity programs in
units operating in different national cultures. We discuss the implications of our
findings for scholars and practitioners concerned with diversity management issues in a
global context.
Keywords: absenteeism; diversity programs; GLOBE dimensions; international HRM;
national culture; turnover
Over recent decades, scholars have shown increasing interest in the characteristics and effects
of workforce diversity across the globe (e.g. Ferdman & Sagiv, 2012; Jackson & Joshi, 2011;
Kim, 1999; McMahon, 2010; Shen, Chanda, D’Netto, & Monga, 2009; van Knippenberg &
Schippers, 2007). Workforce diversity is the degree to which the organizational workforce
consists of people with different background characteristics. Diversity programs refer to the
programs organizations adopt to enhance and maintain workforce diversity. This growing
attention to organizational diversity and diversity programs has resulted from the expansion of
the global economy across national boundaries, and the growth in workforce diversity related
to characteristics such as ethnicity, race, gender, age and disability (e.g. Ferdman & Sagiv,
2012). The increased focus on diversity has been associated with organizational efforts to
recruit and maintain through training and promotion a diverse workforce in the USA (Kalev,
Dobbin, & Kelly, 2006; Levi & Fried, 2008) and other nations across the globe (e.g. Combs,
Nadkarni, & Combs, 2005).
While research on workforce diversity is rich and extensive, there are two key
questions for which information is lacking in this area. One question is under what
*Corresponding author. Email: [email protected]
†
Current address: Rawls College of Business, Texas Tech University, Lubbock, TX, USA.
q 2015 Taylor & Francis
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H. Peretz et al.
conditions organizations are more likely to adopt diversity programs to enhance workforce
diversity.
The second question is under what conditions workforce diversity programs will be
positively versus negatively related to organizational outcomes such as absenteeism,
turnover, performance and innovation. This is an important question because the research
has yielded mixed results on the effects of diversity on performance (e.g. cf. Chua, 2013;
Cunningham & Sagas, 2004; Ely, 2004; Kochan et al., 2003; Lynch, 2002, 2005;
McMahon, 2010; cf. Sowell, 2004).
A major contribution of our study is that we address these questions from a global
perspective. Most research on diversity has been based in the USA and other
Anglophone countries (England, Canada, Australia), leading to a focus on the diversity
dimensions, programs and practices that are characteristic of the USA. Furthermore, the
cultural and institutional contexts of the research settings have typically been limited to
those common within the USA. As Jonsen, Maznevski and Schneider (2011) have noted,
there has been a relative neglect of how national values might affect the acceptance and
implementation of diversity management efforts in non-US contexts. Jonsen et al. (2011)
suggested how different values across societies may influence, how diversity is defined
and how diversity management programs are justified and implemented. They also
presented examples of how different national values and assumptions regarding ethnic
differences and multiculturalism affected the extent and type of diversity management
practices in these nations. For example, within several European countries, the
widespread view that immigrants and ethnic minorities are outsiders who cannot be
assimilated into the national ‘stock’ has prevented or slowed the adoption of diversity
programs. Nevertheless, the steady increase in ethnic diversity in most European
countries has led both to debates about multiculturalism and to organizational attempts
to address the challenges posed by ethnic and cultural diversity (Combs et al., 2005;
Ferdman & Sagiv, 2012). Because the ways in which countries and organizations within
them address diversity will be affected by the prevailing values in these countries,
Jonsen et al. (2011) suggested that researchers take a less US-centric perspective in
assumptions about and research in diversity. The major way we do this is by taking into
account value dimensions along which the similarities and differences across nations can
be assessed.
We focus on national cultural values (i.e. the aspirational, ‘should be’ cultural values
in the society) as antecedents of organizational adoption of workforce diversity programs,
and national cultural practices (i.e. the current ‘as is’ practices prevailing in the society) as
moderators of the relationship between workforce diversity programs and organizational
outcomes (e.g. absenteeism, turnover, performance and innovation). While national
cultural values have been shown to affect human resource practices such as selection,
training and performance appraisal (e.g. Aycan, 2005; Aycan et al., 2000; Mendonca &
Kanungo, 1994; Peretz & Fried, 2012; Ryan, McFarland, Baron, & Page, 1999), there is
little research on the effect of such national cultural values and national cultural practices
on workforce diversity programs. We focus on seven national cultural values and
practices: individualism/collectivism, power distance, uncertainty avoidance, future
orientation, gender egalitarianism, humane orientation and performance orientation. These
values and practices have theoretical relevance to organizational diversity programs and
organizational outcomes, as discussed below. Here we focus on organizational programs
aimed at increasing workforce diversity in such categories as race, gender, age and
disability by means of the human resource practices of recruitment, training and career
progression.
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Theoretical background
National cultural values and diversity programs
Values at the national level are the means by which behaviors and beliefs of members of the
larger society can be coherently interpreted. Researchers have made several attempts to
define and classify national values (e.g. Aycan et al., 2000; Aycan, Sinha, & Kanungo, 1999;
Hofstede, 1991; Hofstede & Peterson, 2000; House, Hanges, Javidan, Dorfman, & Gupta,
2004; House, Javidan, Hanges, & Dorfman, 2002; Javidan, House, Dorfman, Hanges, &
Sully de Luque, 2006; Schwartz, 1999). There is general agreement that cultural values are
typically shared by members of society, are passed from older to younger members and
shape a collective perception of the world (Hofstede, 1991). Researchers have proposed that
national cultural values are associated with organizational practices (Aycan, 2005; Fischer,
Ferreira, Assmar, Redford, & Harb, 2005; Kwantes & Dickson, 2011).
We argue that national cultural values will affect the likelihood that organizations will
adopt diversity programs (Wood, 2003). According to value-belief theory (Hofstede,
1980; Triandis, 1994, 1995), prevailing societal values and beliefs affect the types of
programs organizations within the society will adopt and see as legitimate. Thus,
organizations operating in countries with national cultural values that are supportive of the
values of diversity are more likely to adopt diversity programs than are organizations in
nations with opposite values.
Our focus on aspirational values as likely to affect the adoption of diversity programs rests
on two findings from the Global Leadership and Organizational Behavior Effectiveness
(GLOBE) project. First, within nations, aspirational values (‘should be’) often diverge from
actual practices (‘as is’). Second, aspirational values are substantially more predictive of
preferred leadership behaviors and characteristics than are actual practices (House et al.,
2004). Given this linkage between aspirational values and leadership behaviors, it is likely that
organizational leaders will support programs consistent with the aspirational values held by
their society at large, especially if these programs enable their organizations to adapt to a
changing environment and become more competitive and successful. Developing and
implementing diversity programs is one way of addressing the changing demographics and
meeting future challenges. In the following sections, we present our rationale for the effect of
seven aspirational values on the adoption of diversity programs.
Individualism/collectivism
According to GLOBE (House et al., 2004), two interrelated dimensions (institutional and
in-group) make up the construct of individualism/collectivism. Societies high in
institutional collectivism encourage and reward collective action and distribution of
resources. Societies high in individualism (i.e. low in institutional collectivism) emphasize
individual uniqueness and rights, even at the expense of group loyalty. In-group
collectivism is characterized by pride, loyalty and commitment to the organization or
family. In contrast, individualism (i.e. low in-group collectivism) is characterized by an
emphasis on the importance of personal needs and attitudes as determinants of social
behavior. These distinctions suggest that organizations in collectivistic societies are more
likely to emphasize group commonality, especially of the majority or dominant group or
ethnicity, and de-emphasize the unique needs of individuals. In these societies, diversity
programs focused on increasing the ratio of minority or nondominant groups is likely to be
perceived as damaging to the commonality of the collective. On the other hand, because
individualistic societies emphasize individual rights, and place less emphasis on
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distinctions between in-groups and out-groups, organizations in these societies are more
likely to adopt diversity programs to help integrate diverse individuals into the workforce.
Given the emphasis on equal rights, as well as on more rational, merit-based decisionmaking, individualistic societies are likely to view diversity programs as a means of
promoting equal opportunity for those who are disadvantaged by being members of
minorities or nondominant groups.
Hypothesis 1:
Organizations in societies low in institutional and in-group collectivism (i.e.
high in individualism) will be more likely to adopt diversity programs than
organizations in societies high in institutional and in-group collectivism.
Power distance
Power distance is the degree to which members of a collective expect power to be
distributed equally (House et al., 2002, 2004). In high power distance societies, hierarchy
is rigidly adhered to and privileges are distributed unequally. In such societies, higherlevel members are expected to preserve their relative advantage in status and power and
maintain strong in-group relationships, thereby discouraging the inclusion of new and
diverse groups. Consequently, organizations in such societies will typically be more
concerned with maintaining the status quo by restricting the social mobility of groups
traditionally lower in power and status. Diversity programs, which entail the increased
inclusion of groups traditionally lower in power and status, wide sharing of information
and the recognition of the legitimacy of groups that may be opposed to the status quo, are
much more consistent with low power distance than high power distance societal values.
In summary, diversity programs imply willingness on the part of those higher in power to
include others or share power with them.
Hypothesis 2:
Organizations in societies low rather than high in power distance will be
more likely to adopt diversity programs.
Uncertainty avoidance
Uncertainty avoidance is defined as the extent to which a society, organization or group
relies on social norms, rules and procedures to alleviate the unpredictability of future
events (House et al., 2002, 2004). Organizations embedded in high uncertainty-avoidance
societies are more likely, relative to organizations embedded in low uncertainty-avoidance
societies, to develop practices that avoid ambiguity, and are therefore less likely to adopt
diversity programs. This is so for two reasons. First, societies high in uncertainty
avoidance are resistant to change, and diversity programs imply a challenge to the status
quo as well as the recognition of the legitimacy of alternative perspectives and values.
Second, diversity programs raise the chances of conflict and unpredictable and negative
social interactions among different groups, which can threaten the formal, and predictable
patterns of interaction preferred in high uncertainty avoidance societies (Bassett-Jones,
2005; Chua, 2013).
Hypothesis 3:
Organizations in societies low rather than high in uncertainty avoidance
will be more likely to adopt diversity programs.
Future orientation
Future orientation is the degree to which organizations engage in future-oriented behaviors
such as planning, investing in the future and delaying gratification (House et al., 2004).
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High future orientation entails investment and development by the organization to prepare
the workforce to meet future organizational needs. Low future orientation, in contrast, is
associated with the propensity to spend now rather than later, implying less willingness to
invest for long-term prospects. Diversity programs, which tend to challenge the status quo
and can create discomfort in the short run, go counter to the tendency of low futureoriented societies to prefer expediency in the near term and reject difficult programs that
might improve long-term outcomes. Consequently, organizations embedded in futureoriented societies are more likely, relative to organizations embedded in present- or less
future-oriented societies, to pursue workforce diversity to elicit a broader range of
perspectives to facilitate organizational growth and development.
Hypothesis 4:
Organizations in societies high rather than low in future orientation will
be more likely to adopt diversity programs.
Gender egalitarianism
Gender egalitarianism refers to the degree to which societies or organizations minimize
differences in gender roles. Gender egalitarianism includes acceptance of women in
positions of authority, less occupational sex segregation and willingness to afford women
greater decision-making in society. Societies low in gender egalitarianism are
characterized by more rigid sex roles, higher occupational sex segregation and lower
acceptance of women as decision-makers or authority figures (House et al., 2004).
It follows that diversity programs, which typically aim to increase the voice, discretion and
respect accorded women, are more consistent with high than low gender egalitarianism.
By implication, societies that minimize gender role differences will also promote values
that enhance acceptance of diversity in the workplace, resulting in the incorporation of
different perspectives and insights positively related to organizational outcomes.
Hypothesis 5:
Organizations in societies high rather than low in gender egalitarianism
will be more likely to adopt diversity programs.
Humane orientation
Humane orientation refers to the extent to which individuals in societies or organizations
encourage and reward individuals for being fair, altruistic, friendly, generous, caring and kind
to others. Societies high in humane orientation are likely to promote sensitivity to all forms of
racial discrimination, whereas societies low in humane orientation place little emphasis on
being sensitive to racial discrimination (House et al., 2004). Consequently, societies high in
humane orientation will be more likely to promote acceptance and tolerance of people with
diverse backgrounds, making the adoption of diversity programs more likely.
Hypothesis 6:
Organizations in societies high rather than low in humane orientation
will be more likely to adopt diversity programs.
Performance orientation
Performance orientation refers to the extent to which a community encourages and
rewards innovation, high standards, excellence and performance improvement. Societies
high in performance orientation value competitiveness are likely to emphasize training
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and development and view feedback as important for performance improvement.
In contrast, societies low in performance orientation emphasize social relationships and
harmony over performance improvement and tend to view performance feedback as
overly judgmental. It is likely that societies high in performance orientation will be more
accepting of programs that challenge the status quo, as well as programs that may increase
competitiveness and effectiveness in the long run, even at the expense of short-term
discomfort. In addition, leaders who are successful in high performance orientation
societies tend to set ambitious goals, have high expectations and intellectually challenge
their subordinates (House et al., 2004). It follows that diversity programs, which tend to
challenge the status quo and increase the potential for discomfort in intergroup relations,
are likely to be more accepted in societies high rather than low in performance orientation.
Hypothesis 7:
Organizations in societies high rather than low in performance
orientation will be more likely to adopt diversity programs.
Diversity programs and organizational outcomes: the moderating effect of national
cultural practices
The literature has shown mixed results on the effect of diversity on organizational
outcomes (Cunningham & Sagas, 2004; Ely, 2004; Jackson & Joshi, 2011; McMahon,
2010). For example, some studies found that diverse groups outperformed homogeneous
groups, while other studies failed to show this pattern (see, e.g. Baringa, 2007; BassettJones, 2005; Chua, 2013; Cox, Lobel, & McLeod, 1991; Ely, 2004; Homan, van
Knippenberg, Van Kleef, & De Dreu, 2007; Mannix & Neale, 2005; O’Reilly, Caldwell, &
Barnett, 1989; Stahl, Maznevski, Voigt, & Jonsen, 2010; Watson, Kumar, & Michaelsen,
1993). Two schools of thoughts have served as the basis for investigating the effects of
diversity. The first is based on social identity and self-categorization (Tajfel, 1981; Turner,
1987), which posit that people have a need to maintain high self-esteem that, in part, is
achieved by comparing the self to others. People who are similar to the self are considered
in-group members while people who are different from the self are considered out-group
members. By maximizing perceived group differences, people can strengthen their
experience of in-group superiority, resulting in increased self-esteem. When diversity is
high, this process will result in stronger in-group –out-group distinctions, leading to
negative social processes that compromise group performance (Chua, 2013; Cunningham
& Sagas, 2004; Ely, 2004; Stahl et al., 2010). The second approach argues, on the basis of
information and decision-making theories, that diversity is likely to provide a broad range
of skills, perspectives and insights, resulting in increased group creativity, problemsolving abilities and consequently performance outcomes (Cox, 1993; Cox & Blake, 1991;
Ely 2004; Page, 2007; Thomas & Ely, 1996).
The theoretical conflict and mixed findings suggest the potential role of moderators
(Rousseau & Fried, 2001). One such moderator is cultural practices (‘as is’ practices), as
distinguished from cultural values (aspirational values) in the GLOBE research program
(House et al., 2004). Because aspirational values and cultural practices can diverge,
programs adopted on the basis of an aspirational value will not necessarily elicit
acceptance among employees or have the desired effects on behavior or other outcomes.
In fact, cultural practices may constrain the effects of programs adopted on the basis of
aspirational values. Examples of this constraining effect have been observed in the context
of organizational diversity programs in the USA. Many firms express support for diversity
in their mission statements, and have developed diversity initiatives involving hiring,
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881
promotion, career development, education and training, performance and accountability
and work –life balance. However, the intended effects of such efforts (e.g. increased
representation and advancement of women and minorities) are often limited by the
prevailing skeptical attitudes and nonsupportive behaviors of employees and managers
(Kossek & Lobel, 1996; Kossek & Zonia, 1993; Mor Barak, 2000, 2005). Thus, the
prevailing nonsupportive practices of many organizational members often constrain the
potential of diversity programs, even when the aspirational values of top leaders support
such programs. Moreover, given the prevalence of nonsupportive attitudes and behaviors,
diversity programs may also elicit resistance and backlash (Thomas & Plaut, 2008).
Consequently, we suggest that cultural practices will moderate the effects of
organizational diversity programs on organizational outcomes. Hypotheses 1– 7 pertained
to the main effects of aspirational values, stating in essence that certain national cultures
(those characterized by high individualism, low power distance, low uncertainty
avoidance, high future orientation, high gender egalitarianism, high humane orientation
and high performance orientation) would be more likely to promote attention to diversity
and support the adoption of diversity programs. However, national cultures having the
same or a similar set of aspirational values may differ in their cultural practices, thereby
moderating the effects of diversity programs on organizational outcomes (Kwantes &
Dickson, 2011). In particular, societies with cultural practices opposite those listed above
are expected to reduce acceptance of out-groups and diversity more generally, as such
societies tend to be low in inclusion. Inclusion refers to the extent to which differences are
respected and valued, and the participation and opportunities of diverse groups in the
workplace are actively supported (Mor Barak, 2005; Roberson, 2006). Organizations may
be high in diversity but low in inclusion (Mor Barak, 2005). Because programs aimed at
increasing diversity generally are accompanied by organizational attempts to promote
inclusion of out-groups, we suggest that such programs will produce tension in societies
low in inclusion (i.e. those with values opposite those favoring diversity). Thus, we argue
that if diversity programs are not congruent with the national cultural practices,
employees’ satisfaction and commitment with their organization will be lower, and
consequently they will tend to engage in withdrawal behaviors such as increased
absenteeism and turnover (e.g. Arvey, McKay, Wilson, & Tonidandel, 2007; Hom &
Kiniki, 2001; Mowday, Porter, & Steers, 1982). In summary, we expect that national
cultural diversity practices will moderate the relationship between organizational diversity
programs and the withdrawal behaviors of absenteeism and turnover.
Of course, the withdrawal behaviors of absenteeism and turnover are potentially
affected by a variety of additional work-related variables such as compensation, leadership
and career opportunities (e.g. Hom & Griffeth, 1995; Johns, 2011). We therefore control
for a number of these variables in order to more clearly reveal the effect of diversity
programs on these withdrawal outcomes (see Method section).
On the basis of this reasoning, we propose:
Hypothesis 8a:
Hypothesis 8b:
The relationship between diversity programs and absenteeism will be
moderated by national cultural practices, such that when these are
supportive of diversity, the relationship between diversity programs
and absenteeism will be stronger than when cultural practices are not
supportive of diversity.
The relationship between diversity programs and turnover will be
moderated by national cultural practices, such that when these are
supportive of diversity, the relationship between diversity programs
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H. Peretz et al.
and turnover will be stronger than when cultural practices are not
supportive of diversity.
Furthermore, absenteeism and turnover are expected to adversely affect the
workforce’s effectiveness, resulting in reduced organizational performance and
innovation (cf. Biron & De Reuver, 2013; Bycio, 1992; Glebbeek & Bax, 2004;
Ostergaard, Timmermans, & Kristinsson, 2011; Roth, Huffcutt, & Bobko, 2003;
Westwood & Low, 2003). Thus, we propose that absenteeism and turnover will mediate
the relationship of diversity programs with performance and innovation. We consider
absenteeism and turnover as mediators to performance and innovation because these
withdrawal indicators have been long used as indicators of employee morale, satisfaction
and commitment (Hom & Griffeth, 1995; Mowday et al., 1982; Navrbjerg & Minbaeva,
2009; Somers, 1995; Ybema, Smulders, & Bongers, 2010). These psychological
experiences, in turn, affect behavioral outcomes such as work performance and innovation
(Bukchin & Cohen, 2013; Hom & Griffeth, 1995). Thus, we propose:
Hypothesis 9a:
Hypothesis 9b:
The relationship between diversity programs and performance and
innovation will be mediated by employee absenteeism, such that stronger
diversity programs will be related to lower employee absenteeism, which
in turn will be related to higher organizational performance and
innovation.
The relationship between diversity programs and performance and
innovation will be mediated by employee turnover, such that stronger
diversity programs will be related to lower employee turnover, which in
turn will be related to higher organizational performance and innovation.
The conceptual model guiding our study is presented in Figure 1.
Method
Sample
The study was conducted using a sample drawn from the 2009–2010 Cranfield Network on
Comparative Human Resource Management (Cranet) project data-set. The Cranet project
was established in 1989 by a network of universities and business schools in five European
countries, with the purpose of promoting international comparative research on HRM.
Currently, universities from 39 countries around the world participate in the project, with
each country represented by one university. National Cranet representatives collect data in
their respective countries using a standardized questionnaire. The data are then pooled into a
single database. Each country questionnaire is back-translated (Brislin, 1970) and its
contents are carefully reviewed by local HR experts to ensure equivalency of terms.
Questionnaires are addressed to the most senior HR/personnel specialist in each
organization. Cranet partners are required to send the questionnaire to a representative
sample of organizations with over 100 employees. Questions cover major areas of HRM
policies and practices at the organizational level. Rather than tapping personal opinions,
questions are designed to seek factual answers (numbers or percentages) or a yes/no
response to factual questions (e.g. do you use panel interviews for selection of managers?).
(For more on the Cranet project, see Brewster, Mayrhofer, & Morley, 2004.)
The criterion for selecting organizations for the present study was the availability of
data on cultural values and practices (see below). Our overall sample consisted of 5000
organizations from 22 countries: Australia (110), Austria (203), Denmark (362), Finland
The International Journal of Human Resource Management
National
Level
Organizational
Level
National Cultural
Values:
Institutional
collectivism,
In-group
collectivism,
Power distance,
Uncertainty
avoidance,
Future
orientation,
Gender
egalitarianism,
Humane
orientation,
Performance
orientation
Diversity
Programs
Cultural Practices:
Institutional
collectivism,
In-group
collectivism,
Power distance,
Uncertainty
avoidance,
Future orientation,
Gender
egalitarianism,
Humane
orientation,
Performance
orientation
Withdrawal
Behavior:
Absenteeism
and Turnover
883
Covariates:
Unemployment rate
Labor force
participation rate
Innovation
Performance
Covariates:
Size
Industry
Sector
Male/female proportion
Union density
Training
Benefits
Career development
Compensation
Figure 1. Conceptual model.
(136), France (157), Germany (420), Greece (214), Hungary (139), Ireland (103), Israel
(114), Italy (157), Japan (389), the Netherlands (116), Philippines (33), Russia (56),
Slovenia (219), South Africa (192), Sweden (282), Switzerland (99), Taiwan (229), the
USA (1052) and the UK (218).
We present more information about the sample’s organizational background in our
description of the control variables (see below).
Variable measurement
Absenteeism was captured by a single item asking about the average annual absenteeism,
measured as annual number of days absent per employee (mean ¼ 7.91; SD ¼ 6.51).
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H. Peretz et al.
Turnover was captured by a single item asking about average yearly turnover
percentage in the organization (mean ¼ 11.52; SD ¼ 12.14). Because of the non-normal
distribution of the absenteeism and turnover variables, we applied a square root
transformation to them before the analysis.
Organizational outcomes: respondents were asked to compare their organization to
other organizations in the same sector with regard to its (1) innovation level, (2) service
quality level, (3) productivity level, (4) profitability level and (5) innovation level, and to
rate them on a five-point scale with labels 1 ¼ poor or at the low end of the industry, 2
¼ below average, 3 ¼ average or equal to the competition, 4 ¼ better than average and 5
¼ superior. Confirmatory factor analyses (CFAs) indicated that the two-factor model, in
which service quality, productivity and profitability loaded on one factor, and innovation
loaded on a second factor, fit the data well (x 2 ¼ 43.5, NFI ¼ 0.97, RMSEA ¼ 0.04,
SRMR ¼ 0.03, GFI ¼ 0.98) and significantly better than an alternative model in which all
four items loaded on a single factor (x 2 ¼ 78.7 p , 0.01, NFI ¼ 0.91, RMSEA ¼ 0.08,
SRMR ¼ 0.06, GFI ¼ 0.92). Consequently, innovation was captured using an assessment
of innovation rate (mean ¼ 3.41; SD ¼ 0.98). To capture organizational performance, we
created a performance index, which was a composite index based on the mean of three
separate performance outcomes variables. The index included assessments of (1) level of
service quality (mean ¼ 3.86; SD ¼ 0.78), (2) level of productivity (mean ¼ 3.55;
SD ¼ 0.86) and (3) level of profitability (mean ¼ 3.37; SD ¼ 0.97). Each item (innovation,
service quality, productivity and profitability) was rated on a scale from 1 to 5. The
reliability of the performance index was a ¼ 0.74 (mean ¼ 3.62; SD ¼ 0.71). Table 1
presents reliabilities, means and SD of this index by country.
Table 1.
country.
Reliabilities, means and SDs of performance index and diversity programs index by
Performance index
Country
Australia
Austria
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Israel
Italy
Japan
The Netherlands
Philippines
Russia
Slovenia
South Africa
Sweden
Switzerland
Taiwan
UK
USA
Total/overall
Diversity programs index
N
Cronbach’s a
Mean (SD)
Cronbach’s a
Mean (SD)
110
203
362
136
157
420
214
139
103
114
157
389
116
33
56
219
192
282
99
229
218
1052
5000
0.63
0.69
0.67
0.63
0.68
0.64
0.70
0.71
0.64
0.61
0.66
0.77
0.60
0.75
0.83
0.69
0.77
0.54
0.65
0.87
0.71
0.74
0.77
3.75 (0.59)
3.78 (0.63)
3.58 (0.66)
3.56 (0.64)
3.54 (0.66)
3.67 (0.59)
3.96 (0.68)
3.55 (0.71)
3.77 (0.65)
3.65 (0.59)
2.61 (0.55)
3.29 (0.73)
3.55 (0.48)
3.63 (0.72)
3.60 (0.94)
3.67 (0.61)
3.65 (0.75)
3.48 (0.52)
3.75 (0.58)
3.72 (0.79)
3.27 (1.12)
3.90 (0.72)
3.62 (0.71)
0.94
0.90
0.86
0.86
0.83
0.83
0.94
0.89
0.95
0.94
0.86
0.91
0.87
0.97
0.92
0.92
0.94
0.83
0.87
0.92
0.95
0.94
0.91
3.07 (4.85)
3.89 (5.05)
4.41 (3.38)
3.26 (3.26)
2.30 (3.00)
2.67 (2.89)
2.46 (4.58)
2.39 (4.92)
2.28 (4.92)
5.20 (6.08)
3.75 (3.83)
2.14 (5.62)
2.59 (3.50)
3.00 (7.05)
2.92 (4.37)
2.70 (4.36)
3.31 (7.10)
2.90 (2.44)
4.27 (4.35)
3.40 (5.03)
2.10 (4.41)
4.91 (5.85)
3.62 (4.86)
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885
Our independent variable, diversity programs, was measured by an index consisting of
three items asking whether the organization had programs regarding (1) recruitment, (2)
training and (3) career progression. Each of these items contained sub-items asking
whether the program entailed special efforts in employment for the following groups (yes
or no): (1) ethnic minorities, (2) older workers (aged 50 plus), (3) people with disabilities,
(4) women, (5) mothers returning to work, (6) low-skilled labor and (7) younger workers
(under 25 years old). CFAs indicated that a one-factor model (a single index consisting of
the three diversity dimensions) fit the data well (x 2 ¼ 48.3, NFI ¼ 0.96, RMSEA ¼ 0.04,
SRMR ¼ 0.04, GFI ¼ 0.97) and significantly better than alternative models (e.g.
x 2 ¼ 88.6. p , 0.01, NFI ¼ 0.88, RMSEA ¼ 0.07, SRMR ¼ 0.08, GFI ¼ 0.89 for the
model in which each dimension loaded on a separate factor). In addition, the consistent
correlation between the different diversity dimensions also justified their incorporation
into one scale, as measured by the diversity programs index. The reliability of this index
was a ¼ 0.91 (mean ¼ 3.62; SD ¼ 4.86, range 0– 21). Table 1 presents reliabilities,
means and SDs of this index by country. Because of the non-normal distribution of the
diversity programs index, we applied a square root transformation to it before the analysis
(mean ¼ 1.36, SD ¼ 0.54). Using the Shapiro – Wilk test, we confirmed that the
distribution was normal after the transformation. In addition, for both performance index
and diversity programs index variables, we assessed measurement invariance (MI) by
goodness of fit index (GFI) using structural equation modeling (SEM). The results for the
performance index were NFI ¼ 0.995, IFI ¼ 0.902 and CFI ¼ 0.895. The results for the
diversity programs index were NFI ¼ 0.897, IFI ¼ 0.901 and CFI ¼ 0.892, indicating
there were no MI issues.
Cultural values and cultural practices were obtained from the GLOBE database
(House et al., 2004). GLOBE is a multi-phase, multi-method project, in which
investigators spanning the world examine interrelationships between societal culture,
organizational culture and organizational leadership. The GLOBE project was founded in
1993; today, scholars from 61 countries, representing all major regions of the world, are
engaged in this long-term programmatic series of cross-cultural leadership studies (House
et al., 2004).
The GLOBE culture-level data were collected using surveys from middle managers
(an average of 251 per country). Individual respondents were aggregated to the country
level. All respondents indicated that they had an average full-time work experience of 19.2
years, of which an average of 10.5 years were spent as managers. The GLOBE data-set
limits its sampling to three industries (food processing, financial services and
telecommunications services) because these industries were present in all countries of
the world. Multinational corporations were excluded because their members would be
from multiple cultures. A total of 62 countries were included in the GLOBE sample, with a
total of 17,730 individuals from 951 organizations. (For more information about the
GLOBE sample, please see House et al., 2004, Chapter 6, Research Design.)
Survey items measured seven national cultural values and seven national cultural
practices: collectivism (both institutional and in-group), power distance, uncertainty
avoidance, future orientation, gender egalitarianism, humane orientation and performance
orientation, on a 1 (low) to 7 (high) scale. National cultural values refer to the society’s ideal
(aspirational) values, while national cultural practices indicate current perceptions of
practices within the society. An example of a collectivism cultural value was ‘I believe that the
economic system in this society should be designed to maximize . . . ’ The corresponding
cultural practice item was ‘The economic system in this society is designed to maximize . . . ’.
886
H. Peretz et al.
Controls: We included several control measures to remove the influences of other
variables related to the outcomes in our model. First, we controlled for five organizational
background variables, taken from the Cranet data: (1) organizational size (the total number
of employees in the organization). Because of the non-normal distribution of this variable,
we divided the distribution into three categories based on percentage: small (scored 1,
33.4%), medium (scored 2, 33.2%) and large (scored 3, 33.4%); (2) industry (whether the
organization provided services (health, education, research, finance, transportation,
political, entertainment and communication, totaling 69.4%) or products (food, chemical
products, textile, machinery, knowledge-based products, totaling 30.6%); (3) sector (public
and private, 20% and 80%, respectively); (4) male/female proportion (the percentage of
male employees in a given organization divided by the percentage of female employees;
mean ¼ 2.99; SD ¼ 4.66); and (5) union density (extent to which trade unions influence the
organization; mean ¼ 1.29; SD ¼ 1.18). In addition, we controlled for four more HR
practice that can potentially affect withdrawal behavior: (1) training (annual spending on
training, mean ¼ 15.23; SD ¼ 14.83); (2) benefits in excess of statutory requirements
(index based on the sum of workplace childcare, childcare allowance, career break schemes,
maternity leave, paternity leave, pension schemes, education/training break and private
health care schemes, mean ¼ 3.15; SD ¼ 1.19); (3) career development (index based on the
sum of participation in project team work, networking, formal career plans, development
centers, planned job rotation, leadership development programs, expatriate assignments,
coaching, mentoring, e-learning, mean ¼ 3.02; SD ¼ 1.15); and (4) compensation (index
based on the sum of bonus based on individual performance, bonus based on team
performance, flexible benefits, mean ¼ 1.22; SD ¼ 1.04).
Benefits, opportunities for career development and compensation are important
contextual variables that have been shown to influence absenteeism and turnover (e.g.
Hom & Griffeth, 1995). Training also was found to affect absenteeism and turnover
(Sieben, 2007) because it contributes to career development (e.g. Whitely & Coestier,
1993). Organizational size may also be related to diversity, such that large organizations
may have more opportunities and resources to invest in diversity programs. Similarly, high
representation of unions (union density) may be related to stronger diversity programs.
Finally, because labor market conditions can have a major influence, data on two
national-level background variables were taken from each country’s official bureau of
statistics database: unemployment rate (mean ¼ 8.93; SD ¼ 6.22) and labor force
participation rate (ratio between the labor force and the overall size of the same age range,
mean ¼ 66.19; SD ¼ 8.13). The literature demonstrates strong support for the relationship
between those two variables and diversity (e.g. Izraeli & Murphy, 2003; Simon &
Nardinelli, 1992).
Analytic procedure
The present data contained a hierarchical structure in which organizational-level variables
were nested within countries. In addition, we have multilevel mediation and moderation
hypotheses (i.e. Hypotheses 8a, 8b, 9a and 9b). The covariance among the Level 1 (i.e. the
organizational-level) random effects had to be estimated in order to estimate random indirect
effects and corresponding standard errors (Bauer, Preacher, & Gil, 2006). Therefore, we
used multilevel modeling to estimate the hypothesized multilevel relationships using Mplus
7.2 (Muthen & Muthen, 2007). We used the Monte Carlo method recommended by
Preacher, Zyphur and Zhang (2010) to estimate confidence intervals for the hypothesized
multilevel mediated relationships to determine their significance. To avoid giving
The International Journal of Human Resource Management
887
disproportionate weight to countries with larger sample sizes, we counterweighted the
indicators by sample size (see Cullen, Parboteeah, & Hoge, 2004).
Results
Means, standard deviations and correlations among the variables are presented in Table 2.
Model estimation
To estimate the hypothesized model (see Figure 1), we specified the Level 1 (i.e.
organizational level) diversity, absenteeism, turnover, performance, innovation and
organizational level controls slopes to be random. At Level 2 (i.e. country level), we
specified cultural values, cultural practices and country level controls. To facilitate the
interpretation of the findings, Level 2 variables were all grand-mean centered. Level 1
variables were group-mean centered to obtain an unbiased estimate of the cross-level
interactions (Enders & Tofighi, 2007; Hofmann & Gavin, 1998). Finally, although it is
difficult to estimate precise effect sizes in cross-level models, we report Snijders and
Bosker’s (1999) overall pseudo R 2 (, R 2) and incremental pseudo R 2 (D , R 2) for the
models; these estimates are based on proportional reduction of Level 1 and Level 2 errors
owing to predictors in the model (Recchia, 2010).
Tests of hypotheses
Hypotheses 1 –7
Hypotheses 1–7 predicted that national cultural values would be associated with the diversity
index. The results (see Table 3) indicated that institutional collectivism and in-group
collectivism were negatively related to the diversity programs index (20.28** and 20.23**,
respectively), confirming Hypothesis 1. Power distance was negatively related to the diversity
programs index (20.17**), confirming Hypothesis 2, and uncertainty avoidance was also
negatively related to the diversity programs index (20.21**), confirming Hypothesis 3.
In addition, the future orientation, gender egalitarianism and performance orientation values
were positively related to the diversity programs index (0.18**, 0.19**, 0.21**), confirming
Hypotheses 4, 5 and 7, respectively. In contrast, Hypothesis 6, which predicted that humane
orientation would be positively related to the diversity programs index, was not confirmed
(0.07, ns). In addition, the covariates of organizational size, career development (at the
organizational level) and labor force participation rate (at the country level) were also
associated with the diversity programs index (see Table 3).
Hypotheses 8a and 8b
Hypothesis 8a predicted that cultural practices would moderate the relationship between
the diversity programs index and absenteeism, and Hypothesis 8b predicted that cultural
practices would moderate the relationship between the diversity programs index and
turnover. The multilevel modeling results related to Hypothesis 8a found positive effects
of future orientation and performance orientation practices on the random slope between
diversity programs index and absenteeism (0.26**, 0.11*), and negative effects of power
distance and uncertainty avoidance practices on the random slope between the diversity
programs index and absenteeism (2 0.24**, 2 0.21**). Other practices (institutional
collectivism, in-group collectivism, future orientation and gender egalitarianism) did not
1 Diversity
(transformed)a
2 Absenteeism
3 Turnover
4 Innovation
5 Performance
6 Institutional
collectivism
value
7 In-group
collectivism
value
8 Power distance
value
9 Uncertainty
avoidance value
10 Future
orientation value
11 Gender
egalitarianism
value
12 Humane
orientation value
13 Performance
orientation
value
14 Institutional
collectivism
practice
15 In-group
collectivism
practice
16 Power distance
practice
17 Uncertainty
avoidance
practice
18 Future
orientation
practice
Variable
2
3
4
6.51 20.15**
12.19 20.31** 0.05
0.98 0.19** 20.18** 20.11**
0.71 0.17** 20.23** 20.20** 0.55**
0.41 20.31** 20.38** 20.19** 20.03
1
20.04
0.02
5
0.37**
6
7
20.09*
20.02
0.26** 20.34** 20.31**
0.10* 20.12** 20.16** 20.06
20.07
20.07
0.12** 20.06
5.37 0.26
4.46 0.71
4.48 0.63
5.01 0.40 20.18** 20.05
0.14**
0.23** 20.38**
0.09*
0.04
20.01
4.70 0.56 20.16** 20.22** 20.40** 20.08
4.21 0.41
0.04
0.05
0.32**
9
20.18**
0.14**
0.17**
0.39**
11
0.21**
0.05
20.29** 20.49**
20.12** 20.18** 20.26** 20.39**
13
20.21** 20.18**
20.42**
14
0.19**
15
16
0.03
20.05
20.07
20.58** 20.63**
17
0.17** 0.45**
0.21** 20.63** 20.40** 20.63** 20.17** 20.18**
0.04
0.07
0.31** 20.47**
0.21**
12
0.25** 20.44** 20.64** 20.49**
0.13** 20.44** 20.42** 20.03
20.05
20.61** 20.11*
0.04
10
0.26** 20.12** 20.15** 20.25** 20.31**
0.26**
0.15**
20.33** 20.18**
20.04
0.23**
0.39**
0.47**
20.06
20.01
20.16** 20.25** 20.31** 20.62**
0.10**
0.09* 20.07
20.08*
8
0.34** 20.24** 20.06
0.09* 20.17** 20.05
20.05
20.03
0.11**
0.03
0.11** 20.03
5.52 0.17
20.02
0.04
0.22** 20.39** 20.18**
4.84 0.33
0.02
0.13** 20.14**
20.03
0.21** 20.20** 20.09*
20.05
5.25 0.30
4.28 0.48 20.25** 20.08* 20.03
3.07 0.76 20.21** 20.25** 20.23** 20.09* 20.13** 20.35** 20.25**
5.66 0.23 20.25** 20.27** 20.13** 20.04
7.91
11.52
3.41
3.62
4.48
1.36 0.54
Mean SD
Table 2. Descriptive statistics and correlations.
18
20
(Continued)
19
888
H. Peretz et al.
3
0.25** 20.16** 20.08
0.08
3.34 0.43
0.07
0.31**
3.98 0.45
0.20** 20.08
2
0.23**
1
3.50 0.37
Mean SD
0.13**
0.04
0.03
4
8
9
10
0.26** 20.40**
0.21**
0.17**
20.17** 20.12** 20.26** 20.27**
7
20.53** 20.28** 20.31** 20.43**
20.05
6
0.09* 20.10** 20.15**
0.03
0.02
5
Note: N ¼ 5000. Country-level means assigned down to organizational level.
*p , 0.05; **p , 0.01. Two-tailed test.
a
Square root transform.
19 Gender
egalitarianism
practice
20 Humane
orientation
practice
21 Performance
orientation
practice
Variable
Table 2 – continued
0.17**
0.16**
0.44**
11
0.14**
14
0.04
0.03
0.04
15
18
0.21** 0.22**
17
19
0.48** 0.42** 0.41** 0.42**
0.04
16
20
0.17** 20.15** 20.63** 0.26** 0.69** 0.15** 0.23**
0.08
0.10* 20.51**
13
0.52** 20.16*
0.21*
12
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H. Peretz et al.
Table 3. Analysis of the relationship between cultural values and diversity programs.
Diversity programs
Variables
Level 1 main effects
Size
Industry
Sector
Male/female proportion
Union density
Training
Benefits
Career development
Compensation
Level 2 main effects:
Unemployment rate
Labor force participation rate
Institutional collectivism value
In-group collectivism value
Power distance value
Uncertainty avoidance value
Future orientation value
Gender egalitarianism value
Humane orientation value
Performance orientation value
,R 2
D , R2
Model 1a
Model 2b
0.13** (0.07)
2 0.02 (0.06)
0.05 (0.10)
0.04 (0.02)
2 0.07 (0.04)
0.04 (0.03)
0.06 (0.05)
0.17** (0.08)
0.06 (0.06)
0.12** (0.06)
2 0.02 (0.06)
0.02 (0.04)
0.01 (0.03)
2 0.06 (0.04)
0.03 (0.02)
0.06 (0.05)
0.16** (0.07)
0.05 (0.06)
2 0.07 (0.03)
0.24** (0.08)
2 0.06 (0.02)
0.22** (0.07)
2 0.28** (0.06)
2 0.23** (0.04)
2 0.17** (0.04)
2 0.21** (0.03)
0.18** (0.05)
0.19** (0.08)
0.07 (0.08)
0.21** (0.06)
0.23
0.11
0.12
Note: N ¼ 5000 organization (Level 1) in 22 countries (Level 2). Unstandardized estimates (are reported, with
standard errors in parentheses. Pseudo R 2 values (,R 2) estimate the amount of total variance (both Level 1 and
Level 2) in the dependent variable captured by predictors in the model.
*p , 0.05; **p , 0.01.
a
Model includes controls only.
b
model includes controls and predictors.
have moderating effects on the relationship between the diversity programs index and
turnover. Thus, Hypothesis 8a was partially supported. Regarding Hypothesis 8b, the
results demonstrated a positive effect of future orientation and humane orientation
practices on the random slope between the diversity programs index and turnover (0.18**,
0.28**), and negative effects of institutional collectivism, power distance and uncertainty
avoidance practices on the random slope between the diversity programs index and
turnover (2 0.19**, 2 0.29**, 2 0.22**). Other cultural practices (in-group collectivism,
gender egalitarianism and performance orientation) did not have moderating effects on the
relationship between the diversity programs index and turnover. Thus, Hypothesis 8b was
partially supported (see Table 4).
Following Cohen, Cohen, West and Aiken’s (2003) recommendations (Preacher,
Curran, & Bauer, 2006), we plotted this interaction at conditional values of the cultural
practices (1 SD above and below the means) (see Figures 2 and 3)
When future orientation, humane orientation and performance orientation were
higher, and institutional collectivism, power distance and uncertainty avoidance
practices were lower, the relationship between the diversity program index and turnover
and absenteeism was stronger. For example, the diversity program index was more
strongly and more negatively related to turnover and absenteeism when power distance
Level 1 main effects
Size
Industry
Sector
Male/female proportion
Union density
Training
Benefits
Career development
Compensation
Diversity programs
Level 2 main effects
Unemployment rate
Labor force participation rate
Institutional collectivism practice
In-group collectivism practice
Power distance practice
Uncertainty avoidance practice
Future orientation practice
Gender egalitarianism practice
Humane orientation practice
Performance orientation practice
Cross-level interactions
Diversity £ institutional collectivism practice
Diversity £ in-group collectivism practice
Diversity £ power distance practice
Diversity £ uncertainty avoidance practice
Diversity £ future orientation practice
Diversity £ gender egalitarianism practice
Variables
0.11* (0.03)
2 0.02 (0.01)
2 0.04 (0.02)
2 0.02 (0.01)
2 0.10** (0.04)
2 0.12** (0.05)
2 0.12** (0.06)
2 0.09* (0.05)
2 0.01 (0.00)
2 0.34** (0.13)
2 0.05 (0.04)
0.02 (0.01)
2 0.15** (0.09)
2 0.05 (0.03)
2 0.07 (0.05)
2 0.38** (0.07)
2 0.36** (0.08)
2 0.06 (0.04)
0.08 (0.06)
2 0.06 (0.04)
20.06 (0.04)
0.02 (0.01)
Model 2b
0.13** (0.05)
20.02 (0.01)
20.04 (0.02)
20.02 (0.01)
20.12** (0.04)
20.14** (0.06)
20.13** (0.06)
20.10* (0.07)
20.01 (0.00)
Model 1a
Turnover
2 0.19** (0.08)
2 0.07 (0.09)
2 0.29** (0.14)
2 0.22** (0.07)
0.18** (0.09)
0.06 (0.08)
2 0.05 (0.04)
0.02 (0.01)
2 0.14** (0.08)
2 0.03 (0.02)
2 0.06 (0.03)
2 0.36** (0.05)
2 0.34** (0.08)
2 0.06 (0.04)
0.08 (0.06)
2 0.06 (0.04)
0.11* (0.03)
2 0.02 (0.01)
2 0.04 (0.02)
2 0.02 (0.01)
2 0.09* (0.04)
2 0.12** (0.05)
2 0.12** (0.06)
2 0.09* (0.05)
2 0.01 (0.00)
2 0.31** (0.11)
Model 3c
20.05 (0.03)
0.10* (0.06)
0.18**(0.04)
0.01 (0.00)
20.12* (0.06)
20.02 (0.01)
20.01 (0.00)
20.14** (0.06)
20.11* (0.03)
20.12** (0.04)
20.01 (0.03)
Model 1a
2 0.05 (0.03)
0.10* (0.06)
2 0.12** (0.04)
2 0.06 (0.05)
2 0.05 (0.05)
2 0.29** (0.07)
2 0.33** (0.06)
2 0.19** (0.05)
0.07 (0.06)
2 0.16** (0.05)
0.17**(0.04)
0.01 (0.00)
2 0.10* (0.05)
2 0.02 (0.01)
2 0.01 (0.00)
2 0.13** (0.06)
2 0.10* (0.03)
2 0.11** (0.04)
2 0.01 (0.03)
2 0.13** (0.05)
Model 2b
Absenteeism
Table 4. Analysis of the moderator effects of cultural practices on the relationship between diversity programs and turnover and absenteeism.
(Continued)
2 0.08 (0.06)
2 0.06 (0.07)
2 0.24** (0.13)
2 0.21** (0.11)
0.26** (0.14)
0.07 (0.09)
2 0.04 (0.03)
0.09* (0.04)
2 0.12** (0.04)
2 0.05 (0.04)
2 0.04 (0.05)
2 0.21** (0.05)
2 0.22** (0.08)
2 0.18** (0.05)
0.06 (0.04)
2 0.15** (0.04)
0.17**(0.04)
0.01 (0.00)
2 0.10* (0.05)
2 0.02 (0.01)
2 0.01 (0.00)
2 0.13** (0.06)
2 0.10* (0.03)
2 0.11** (0.04)
2 0.01 (0.03)
2 0.12**(0.06)
Model 3c
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891
0.08
Model 1
a
0.21
0.13
Model 2
b
Turnover
0.28** (0.12)
2 0.03 (0.04)
0.32
0.11
Model 3
c
.12
Model 1
a
Note: N ¼ 5000 organization (Level 1) in 22 countries (Level 2). Unstandardized estimates are reported, with standard errors in parentheses.
*p , 0.05; **p , 0.01.
a
Model includes controls only.
b
Model includes controls and main effects.
c
Model includes controls, main effects and cross-level interactions.
Diversity £ humane orientation practice
Diversity £ performance orientation practice
,R 2
D , R2
Variables
Table 4 – continued
.23
0.11
Model 2b
Absenteeism
0.06 (0.07)
0.11* (0.05)
.30
0.07
Model 3c
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H. Peretz et al.
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893
Figure 2. Interaction effect of future orientation practice and diversity program on turnover
(average yearly turnover percentage).
was low rather than high. More specifically, as shown in Figure 3, in high power distance
societies (mean þ 1 SD ¼ 5.41), adoption of diversity programs (mean þ 1 SD ¼ 1.90)
led to 7.8 annual absent days per employee and low adoption of diversity programs
(mean þ 1 SD ¼ 0.82) led to 8.4 annual absent days per employee (0.6 days difference).
However, in low power distance societies (mean 2 1 SD ¼ 4.61), high adoption of
diversity programs led to 6.6 annual absent days per employee and low adoption of
diversity programs led to 8.5 annual absent days per employee (1.9 days difference).
These results support Hypothesis 8b.
In addition to the moderator effects, we found negative main effects of the diversity
programs index on absenteeism (20.12**) and turnover (20.31**), such that the higher the
diversity programs index, the lower the absenteeism and turnover. We also found main effects
of the cultural practices of institutional collectivism, uncertainty avoidance and future
orientation on turnover (20.14**, 20.34**, 20.36**), and institutional collectivism,
uncertainty avoidance, future orientation, gender egalitarianism and performance orientation
practices on absenteeism (20.12**, 20.21**, 20.22**, 20.18**, 20.14*), such that the
higher those cultural practices, the lower the absenteeism and turnover rate (see Table 4).
Hypotheses 9a and 9b
Hypotheses 9a and 9b predicted, respectively, that turnover and absenteeism would
mediate the relationship between the diversity program index and between innovation and
894
H. Peretz et al.
Figure 3. Interaction effect of power distance practice and diversity program on absenteeism
(average annual days per employee).
organizational performance. In order to examine the hypotheses we utilized parametric
bootstrapping using the Monte Carlo method, which is appropriate in a multilevel
modeling context (see Preacher & James, 2012). As shown in Table 5, the diversity
program index was negatively related to turnover and absenteeism (2 0.36**, 2 0.10*),
and turnover and absenteeism were negatively related to innovation (2 0.09**, 2 0.17**)
and performance (2 0.15**, 2 0.19**). Regarding Hypothesis 9a (indirect effects via
absenteeism), with 20,000 Monte Carlo replications, results showed that there was a
positive indirect relationship between the diversity programs index and innovation via
absenteeism (indirect effect 0.09*, 95% bias-corrected bootstrap CI [0.06, 0.11]) and
between the diversity programs index and performance via absenteeism (indirect effect
0.11*, 95% bias-corrected bootstrap CI [0.06, 0.13]), supporting Hypothesis 9a.
Concerning Hypothesis 9b (indirect effects via turnover), the results showed a positive
indirect relationship between the diversity programs index and innovation via turnover
(indirect effect 0.18**, 95% bias-corrected bootstrap CI [0.13, 0.21]), and between the
diversity programs index and performance via turnover (indirect effect 0.13**, 95% biascorrected bootstrap CI [0.07, 0.14]). Therefore, Hypothesis 9b was supported. We should
note that after adding the indirect effects to the model, the coefficients of most of the direct
effects (turnover to performance and absenteeism to innovation and performance) were
reduced (2 0.07*, 2 0.10**, 2 0.09, respectively), suggesting partial mediation, and only
Model 1
Model 1
a
b
Model 2
Absenteeism
0.10* (0.06)
0.12
0.02 (0.01)
0.17
0.09
0.18
0.06
0.10* (0.06)
2 0.05 (0.03)
2 0.05 (0.03)
2 0.05 (0.04)
2 0.01 (0.00)
2 0.13** (0.06)
2 0.10* (0.06)
2 0.11** (0.07)
2 0.01 (0.03)
2 0.13** (0.06)
2 0.01 (0.00)
2 0.14** (0.06)
2 0.11* (0.03)
2 0.12** (0.04)
2 0.01 (0.00) 2 0.01 (0.03)
2 0.34** (0.13)
2 0.10** (0.07)
2 0.12** (0.05)
2 0.12** (0.06)
2 0.09* (0.05)
0.11* (0.03)
0.18**(0.04)
0.17**(0.04)
2 0.02 (0.01)
0.01 (0.00)
0.01 (0.00)
2 0.04 (0.02) 2 0.12* (0.06) 2 0.10* (0.05)
2 0.02 (0.01) 2 0.02 (0.01) 2 0.02 (0.01)
Model 2
b
Model 2
b
Innovation
Model 3
c
Model 1
a
0.07
0.09* (0.06)
0.04 (0.03)
0.02 (0.01)
0.03 (0.02)
0.08* (0.05)
0.04 (0.03)
0.21** (0.12)
0.02 (0.01)
0.03 (0.02)
0.08* (0.05)
0.03 (0.03)
0.20** (0.11)
0.17
0.10
0.09* (0.06)
0.04 (0.03)
0.03 (0.02)
0.07 (0.04)
0.08* (0.03)
0.07 (0.04)
0.11* (0.05)
0.12** (0.05)
0.21
0.04
0.18
0.11
0.23
0.05
0.11* (0.06)
0.05 (0.04)
0.03 (0.02)
0.18** (0.09)
0.06 (0.04)
0.03 (0.02)
0.13** (0.06)
0.07
0.07 (0.04)
0.08* (0.03)
0.07 (0.04)
0.11* (0.05)
0.12** (0.05)
0.01 (0.01)
0.03 (0.02)
0.09* (0.06)
0.04 (0.03)
‘Model 3c
2 0.19** (0.08) 2 0.09 (0.04)
2 0.15** (0.06) 2 0.07* (0.03)
0.07 (0.04)
0.08* (0.03)
0.07 (0.04)
0.11* (0.05)
0.12** (0.05)
0.01 (0.01)
0.03 (0.02)
0.09* (0.06)
0.04 (0.03)
Model 2b
Performance
0.09* (0.04)
0.08* (0.05) 0.06 (0.04)
0.03 (0.03)
2 0.17** (0.06) 2 0.10** (0.03)
2 0.09* (0.04) 2 0.04 (0.05)
0.02 (0.01)
0.03 (0.02)
0.08* (0.05)
0.03 (0.03)
0.20** (0.12)
2 0.11* (0.05) 2 0.11* (0.05) 2 0.10* (0.03) 0.01 (0.01)
2 0.09* (0.03) 2 0.08* (0.03) 2 0.08* (0.03) 0.03 (0.02)
0.10* (0.07)
0.10* (0.07)
0.09* (0.05) 0.09* (0.06)
0.04 (0.04)
0.04 (0.04)
0.04 (0.04) 0.04 (0.03)
Model 1
a
Note: N ¼ 5000 organizations (Level 1) in 22 countries (Level 2). Unstandardized estimates are reported with standard errors in parentheses.
*p , 0.05; **p , 0.01.
a
Model includes controls only.
b
Model includes controls and direct effects.
Level 1 main effects
Size
0.13** (0.05)
Industry
2 0.02 (0.01)
Sector
2 0.04 (0.02)
Male/female
2 0.02 (0.01)
proportion
Union density 2 0.12** (0.04)
Training
2 0.14** (0.06)
Benefits
2 0.13** (0.06)
Career
2 0.10* (0.07)
development
Compensation 2 0.01 (0.00)
Diversity
programs
Absenteeism
Turnover
Level 2 main effects
Unemployment 2 0.06 (0.04)
rate
Labor force
0.02 (0.01)
participation
rate
Indirect effects
Diversity
programs via
absenteeism
Diversity
programs via
turnover
,R 2
0.08
D , R2
Variables
a
Turnover
Table 5. Analysis of the mediation effects of turnover and absenteeism on the relationship between diversity programs and innovation and performance.
The International Journal of Human Resource Management
895
896
H. Peretz et al.
the direct effect of turnover on innovation become nonsignificant (2 0.04, ns), suggesting
full mediation (see Table 5, Model 3).
Integrative model
In summary, we found that (1) national cultural values (collectivism, power distance,
uncertainty avoidance, future orientation, gender egalitarianism and performance
orientation) were associated with the diversity programs index; (2) the diversity programs
index was more strongly related to turnover in societies characterized by lower levels of
the cultural practices of power distance, collectivism and uncertainty avoidance, and
higher levels of performance orientation and humane orientation; (3) the diversity
programs index was more strongly related to absenteeism in societies characterized by
lower levels of the cultural practices of power distance and uncertainty avoidance, and
higher levels of performance orientation; and (4) the diversity programs index was related
to outcomes (both innovation and performance) via the indirect effects of turnover and
absenteeism. Taken together, these findings suggest that the indirect (i.e. mediated) effect
of the diversity programs index on innovation and performance varies as a function of the
moderators. Specifically, cultural practices, owing to their moderating influence on the
relationship between the diversity programs index and between turnover and absenteeism,
hold the potential to enhance or diminish the indirect effect of the diversity programs index
on innovation and performance.
Thus, to more fully evaluate the results, we also examined a moderation-mediation model,
an integrative approach in which mediated and moderated relationships are examined
simultaneously (see Bauer et al., 2006). This integrative approach allowed us to accurately
estimate how the relative sizes of the indirect effect of the independent variable on the
dependent variable via the mediators varied under differing levels of the moderators.
To account for the large number of variables in our study (total of 31), and to simplify the
complex integrated model, for each set of national-level measures (cultural values and cultural
practices) we created an index, using the average score, after reverse-scoring items for
consistency with items worded in standard fashion. The model fit indexes indicates high fit
(RMSEA ¼ 0.03, NFI ¼ 0.96) of the integrated model. Specifically, addition of the
moderator (i.e. cultural practices index) indicated that the indirect effect of the diversity
programs index on innovation and performance through turnover and absenteeism differed as
a function of this moderator. That is, the indirect effect of the diversity programs index on
innovation and organizational performance via turnover was stronger at high (þ1 SD)
cultural practices index level (0.22** and 0.15**, respectively) compared to low (21 SD)
cultural practices index level (0.16** and 0.06, ns, respectively). Similarly, the indirect effect
of the diversity programs index on innovation and organizational performance via
absenteeism was stronger at high cultural practices index level (0.15** and 0.16**,
respectively) compared to low cultural practices index level (0.04, ns, and 0.10*,
respectively). In sumary, this integrative analysis of both our mediation and moderation
hypotheses provided additional support for our overall theoretical model (Figure 1) and
provided specific estimates of the indirect effect of the diversity program index on innovation
and performance (via turnover and absenteeism) at different levels of the moderator variable.
Discussion
This study addressed three key issues: (1) the effect of national cultural values on the
adoption of organizational diversity programs; (2) the moderating effects of national
The International Journal of Human Resource Management
897
cultural practices on the relationship between diversity programs and organizational
outcomes; and (3) absenteeism and turnover as mediators of the relationship between
diversity programs and performance and innovation.
With respect to the first issue – national cultural values and adoption of diversity
programs – our results reveal that national culture is indeed related to the likelihood that
organizations will adopt diversity programs in an effort to increase the employment
prospects of women, minorities and potentially disadvantaged groups in the workforce.
A particular set of national aspirational values (high individualism, low power distance,
low uncertainty avoidance, high future orientation, high gender egalitarianism and high
performance orientation) was associated with a greater likelihood that organizations
would adopt diversity programs. A straightforward interpretation of this finding is that
national cultures that are more open, individualistic, egalitarian and future- and
performance-oriented are more favorable toward the prospect of furthering the integration
of minorities and other underrepresented groups into the workplace.
Concerning the second issue – the moderating effects of cultural practices – our
results supported the notion that the level of congruency between organizational diversity
programs and national cultural practices is an important contributor to the employee
withdrawal behaviors of absenteeism and turnover. This finding is consistent with
previous findings comparing the effects of US-based diversity programs under different
organizational conditions. Studies have shown that diversity programs are unlikely to
produce their intended outcomes (e.g. greater representation of women and minorities in
positions of authority) when the prevailing values of employees or managers do not match
the values of the organizational leaders who implemented the programs, or when
employees’ or managers’ behavior reflects a prevailing noninclusive attitude (e.g. Cox,
1993; Cox & Blake, 1991; Kossek & Lobel, 1996; Mor Barak, 2000, 2005). In such cases,
diversity programs and their aims may be acknowledged grudgingly at best, or may elicit
passive or even active resistance that can reduce commitment to the organization (e.g.
Lynch, 2002, 2005; Mobley & Payne, 1992; Thomas & Plaut, 2008). Such findings are
also consistent with Chua’s (2013) recent findings on the effects of intercultural diversity
on creativity in organizations. Chua (2013) found that workplaces with high levels of
cultural diversity often produce feelings of ‘ambient cultural disharmony’ that can inhibit
or disrupt creativity and problem solving within the organization. This disharmony is
especially likely when individuals perceive conflict or tension between their own values
and those of individuals from different cultures. In our study, differences (lack of fit)
between the national culture (essentially the aspirational values) and the values that
actually guided practice (the cultural practice values) similarly led to negative outcomes
such as higher absenteeism and turnover. Our results extend these findings to the global
context, showing that incongruence between the values that support diversity programs
and the prevailing cultural practices may have deleterious effects on employee reactions.
Concerning the third issue – the role of absenteeism and turnover as mediators of the
relationship between diversity programs and performance and innovation – our results
help elucidate the process by which diversity programs affect organizational outcomes.
To the extent that the values that support diversity programs are in tension with the
practices that guide employees’ behavior in the workplace, employees are likely to
withdraw psychologically and behaviorally from their organization. This withdrawal is
likely to have negative effects on the ‘distal’ variables of performance and innovation.
The theoretical and practical contributions of our study are extensive, especially given
the significant growth in the global economy. From a theoretical standpoint, the results
help advance our understanding of the boundary conditions for the successful adoption of
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H. Peretz et al.
diversity programs in the global environment, in particular as these are influenced by
cultural values and practices. The study also supports the distinction between cultural
values and cultural practices proposed by the GLOBE studies. Our study supports the
notion that cultural values are antecedents to diversity programs, while cultural practices
serve as moderators of the effect of diversity programs on organizational outcomes.
From a practical standpoint, the study has important implications for organizational
performance and competitiveness. Because of increased globalization and the
extensiveness of international business operations, corporations would likely benefit
from research findings concerning the adoption of diversity programs in different cultures
and under different organizational conditions, and their relative effects on important
organizational outcomes. The findings enable managers who are responsible for global
operations, or who are employed by organizations competing in global markets, to
determine more accurately and effectively when to establish diversity programs in
organizations that are based in or operating in different countries, so as to improve
organizational competitiveness. Moreover, potentially, in the longer run, managers may
enhance acceptance of diversity programs in organizations located in nations with cultural
values that are less supportive of diversity. Specifically, managers could emphasize a more
sustained effort to increase their organizational members’ acceptance of, and appreciation
for, diversity and related diversity programs of various kinds. For example, managers
could provide evidence from units in their own organization or from other comparable
organizations, to illustrate the contribution of diversity and diversity programs to
important organizational outcomes (e.g. number of patents, process improvements).
Managers might also emphasize the potential contributions of diversity to organizational
outcomes in their onboarding or orientation programs, signaling the importance of the
values of openness and inclusion. Such an approach has been advocated by Mor Barak
(2005) in her analysis of inclusion as a separate and behaviorally oriented dimension
related to diversity. As the number of organizations adopting such an approach to diversity
increases, it may in the long run bring about a change in the overall value accorded
diversity in the larger society (cf. Erez, 2000; Kozlowski, Chao, Grand, Braun, &
Kuljanin, 2013).
Future research should replicate the study in other countries, as well as expand on its
scope. For example, a worthwhile direction for future studies would be to investigate the
optimal level of diversity considered effective in different cultures. The key issue here is
whether the tipping point at which diversity becomes less effective varies across different
cultures. This would have direct implications for the optimal number and type of diversity
programs that organizations should adopt. In this context we note that research has shown
that stronger diversity programs pursued by affirmative action programs (AAPs) elicit
much stronger, and often more polarized, reactions from employees than do weaker AAPs
(e.g. Harrison, Kravitz, Mayer, Leslie, & Lev-Arey, 2006; Kravitz & Klineberg, 2000;
Levi & Fried, 2008). Future research should also explore, in addition to national culture,
the effect of organizational contingencies such as organizational culture or managerial
practices (e.g. Donaldson, 2001), on the prevalence of diversity programs and their effects
on organizational outcomes. While national culture has been shown to affect
organizational culture and organizational practices, (e.g. Kwantes & Dickson, 2011),
there are organizations with cultures that do not reflect the national norms or might even
depart substantially from these norms (Kwantes & Dickson, 2011). Thus, it would be
valuable to study how organizational differences mitigate the effects of national cultures.
The study has some potential limitations that should be addressed in future studies.
Specifically, some measures (diversity programs, employee withdrawal behaviors of
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899
absenteeism and turnover, and organizational performance) were provided by the same
source, although the absenteeism and turnover measures were derived from objective data
within the organizations. In addition, while the Cranet data were collected in 2009, the
GLOBE data on culture were published in 2004. However, it is likely that cultural values
and practices remained stable over this time period (2004 –2009). Finally, the measure of
diversity programs provides information on the prevalence of diversity programs, but not
on their strength. Future studies could develop and use more detailed measures of diversity
program characteristics and strength.
We note that countries may differ in the prevalence of diversity programs not only
because of their national culture, as we examined in our study, but also because of other
factors such as the countries’ legal system, degree of governmental enforcement or
economic growth level. For example, in the USA, antidiscrimination laws and strong
enforcement of regulations tend to contribute to the prevalence of programs to increase
diversity on the basis of race, sex and disability. Nevertheless, even taking these other
factors into account, our study supports the importance of national culture in predicting
organizations’ adoption of diversity programs.
Our findings on cultural values and their effects, as well as our research methods, will
likely be applicable in research concerning cross-cultural organizational processes such as
globalization, outsourcing and expatriate behavior. In particular, our results confirm the
importance of examining the main and interactive contributions of both national- and
organizational-level variables.
Disclosure statement
No potential conflict of interest was reported by the authors.
Funding
This study was funded by a grant from the SHRM Foundation. However, the interpretations,
conclusions and recommendations are those of the authors and do not necessarily represent the
view of the SHRM Foundation.
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