Organizational Demographic Faultlines: Their Impact on Collective Organizational Identification, Firm Performance, and Firm Innovation

Abstract

In this study, we seek to understand the consequences of demographic faultlines at the organizational level. Drawing from the faultline and cross-categorization literature, we suggest that organizational demographic faultlines (based on age and gender) have the potential to either reduce or enhance employees' collective organizational identification and, thereby, indirectly influence firm performance and innovation. Whether organizational demographic faultlines have detrimental or beneficial effects depends on the functional heterogeneity within faultline-based demographic subgroups, where heterogeneity is defined as the extent to which subgroup members belong to different functional departments. We theorize that this functional heterogeneity alters the degree of social integration between demographic subgroups. Results from a multisource field study of demographic faultlines among 5,495 employees in 82 small and medium-sized firms (<250 employees) support our model. We demonstrate that organizational demographic faultlines have important consequences, and we show that functional heterogeneity changes whether these consequences are negative or positive.

Theorizing Diversity in Management Studies: New Perspectives and Future Directions

“…Konrad and her colleagues' work open the door to investigate causes and implications of the interplay between organizational diversity and inclusion policies and practices and diversity-related ideologies for the effectiveness of diversity management in the organizations. Leicht-Deobald et al (2021) examine the role of organizational demographic fault lines in reducing or enhancing employees' collective organizational identification, whereby organizational demographic fault lines have detrimental or beneficial effects depending on the functional diversity within fault line-based demographic subgroups. Although organizational demographic fault lines have important consequences, functional diversity, acting as a 'trigger', changes whether these consequences are negative or positive.…”

“…Leicht‐Deobald et al (2021) examine the role of organizational demographic fault lines in reducing or enhancing employees’ collective organizational identification, whereby organizational demographic fault lines have detrimental or beneficial effects depending on the functional diversity within fault line‐based demographic subgroups. Although organizational demographic fault lines have important consequences, functional diversity, acting as a ‘trigger’, changes whether these consequences are negative or positive.…”

“…These alternative sources of diversity have the potential to generate novel fault lines within organizations. As Leicht‐Deobald et al (2021) show, such fault lines may not only impede some teams’ performance but may also alter the performance of an entire organization. These emerging diversity dimensions may require new methodological approaches to adequately quantify them.…”

“…Narayan et al (2020) establish a further team‐level moderator of diversity – top management team longevity – in the context of business model innovations. The study of Leicht‐Deobald et al (2021), in turn, shows how the direction of the diversity effect may depend on subgroup characteristics: functional heterogeneity in the subgroup can alter the effect of organizational demographic fault lines (based on age and gender). With low functional heterogeneity, the impact of demographic fault lines on organizational outcomes (organizational identification, firm innovation, performance) is negative.…”

“…Several articles in this special issue illustrate how theorizing context yields rich insights into the workings and possibilities of diversity. These papers tackle the influence of contexts such as multinational corporations (MNCs) (Vaara and Tienari, 2021), organizational ideologies (Konrad et al, 2021), and organizationallevel demographic faultlines (Leicht-Deobald et al, 2021). Vaara et al (2021) integrate cross-cultural management into diversity research in response to growing calls for studying 'global diversity management'.…”