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PurposeBesides diversity's positive effects, groups of “we” against “them” may form in accordance with social categorization theory, showing diversity's negative consequences. The authors aim to reconcile these results and examine their boundary conditions.Design/methodology/approachThe authors studied 584 working professionals from five contexts (transnational companies dealing with multicultural interactions) and analyzed data using moderated-mediation procedures.FindingsA leader-promoting diversity climate plays a crucial role in moderating the negative relationship between perceived dissimilarity and group identification, which is mediated by value dissimilarity.Originality/valueThis study mainly contributes by treating dissimilarity as a multicomponent construct, emphasizing the crucial differences embodied in various conceptualizations of dissimilarity – namely visible and value dissimilarity. For dissimilarity to result in group identification, the results highlight leaders' crucial role, beyond that of organizations and individuals, in stimulating a diversity-embracing climate in work units.

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