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Archives of Business Research – Vol. 9, No. 7
Publication Date: July 25, 2021
DOI:10.14738/abr.97.10481. Emmanuel, N., & Dze, B. N. (2021). Does Employee Performance Mediate the Effect of Workforce Diversity on Organisational
Performance? Evidence from Small and Medium Enterprises (SMEs) in the Buea Municipality. Archives of Business Research, 9(7).
79-94.
Services for Science and Education – United Kingdom
Does Employee Performance Mediate the Effect of Workforce
Diversity on Organisational Performance?
Evidence from Small and Medium Enterprises (SMEs) in the Buea
Municipality
Dr. Nwahanye Emmanuel
Senior Lecturer of Management, University of Buea, Cameroon.
Baninla Nicholas Dze
M.Sc in Management, University of Buea, Cameroon.
Graduate Teaching Assistant, Department of Management Sciences
ABSTRACT
The objective of this study was to examine the mediating role of employee
performance in the effect of workforce diversity on organisational performance.
Data used was collected through questionnaires from 306 SMEs operating in the
Buea Municipality. Four variants of workforce diversity were retained (age, gender,
ethnicity and educational background). Data was analysed using the Baron and
Kenny (1986) approach of mediation and the MacKinnon et al. (2002) extension in
ascertain the existence of mediation. The findings show that employee performance
mediates the effects of gender, age, ethnic and educational background diversities
and organisational performance. This mediation is full for gender and educational
background diversities, and it is partial for age and ethnic diversities. The study
recommends that the management of SMEs should develop a culture of workforce
diversity in terms of gender, age and educational background in staffing and
managing their human resources.
Key Words: Workforce Diversity, Employee Performance, Organizational Performance,
SMEs, Buea.
INTRODUCTION
Globalisation has reduced the world to a global village thereby increasing competition in every
field across the world. The competition within industries is growing stronger and firms
regardless of their sectors of activities are searching for ways of improving their performances.
In this regard, organisations explored the inclusion of workforce diversity as a determinant of
organisational performance. Some of these organisations came to believe a blend of diverse
competencies, skills and experiences as a result of workforce diversity will offers a range of
opportunities and competitive advantage to the organisations. Globally, implementing
workplace diversity has become a major focus in many Human Resource departments.
Workforce diversity which means “employees with differences in terms of age, academic
backgrounds, ethnic backgrounds, cultural backgrounds, nationalities, physical abilities and
disabilities, race, religion, gender, sexual orientation, and social class”, can contribute to the
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Archives of Business Research (ABR) Vol. 9, Issue 7, July-2021
Services for Science and Education – United Kingdom
organisation’s success by enabling access to a changing marketplace via the organisation’s
multicultural employees.
It should be noted that there is an increasing trend of workforce diversity along nationality,
ethnic, gender, age and educational background. This makes managing diversity in the
workforce a concern of every organisation. In fact, in order to perform well, a company should
be able to manage and utilize its diverse workforce effectively. For Anderson (2012), managing
diversity in the workplace should be a part of the culture of the entire organisation. Saxena
(2014) critically analyzed literature and various research papers on workforce diversity and its
impact on the productivity of an organisation, and concluded that workforce diversity is a
strength for any organisation.
Researchers have devoted much efforts in recent years to studying the link between workforce
diversity and organisational performance. Though the literature shows that workforce
diversity dimensions significantly affect the performance of organisations, the idea that there
is a direct relationship between workforce diversity variables and organisational performance
has been questioned and is still questionable. A demand to study the indirect link by giving
more attention to mediating variables was launched few year ago (Richard et al., 2007). This
call to integrate intermediate variables in this relationship is still at its embryonic level. Just
some authors responded to it. For instance, Kunze et al. (2011) established perceived age
discrimination on the company level as a decisive mediator in the age diversity/performance
link. Kim and Lee (2014) explored the mediating effect of perceived organisational support on
the relationship between workplace diversity management and turnover intention. Odita and
Egbule (2015) in assessing the effects of workforce diversity on organisational effectiveness in
the brewery industry, also revealed that team building & group training mediates between
workforce diversity and organisational effectiveness. Riffat and Malik (2019) studied the
mediating role of perceived organisational justice on the effects of perceived diversity on
perceived organizational performance. Khan and Jabeen (2019) investigated the effects of
workplace diversity on organisational citizenship behavior with the mediating role of inclusion.
Adopting an intellectual capital perspective, Li et al. (2019) studied the relationship between
age diversity and organizational performance, and posit that age diversity affects organizations’
performance via shaping their human capital and social capital. Their results indicated that age
diversity promoted human and social capital, which in turn enhanced organizational
performance.
There is a need to further investigation by considering other mediating variables such as
employees’ performance one of the direct outcome of workforce diversity as shown in recent
studies (Chandhdry & Sharma, 2015; Kyalo, 2015; Kowo & Akimbola, 2018; Kerga & Asefa,
2018; Amir et al., 2019; Ayat Mohammad, 2019; Ahmad & Rahman, 2019; Ogunsanwo,
Adelugba & Obarfo, 2020), and antecedent to organisational performance.
This research aligns to the above call by investigating the mediating role of employee
performance in the effects of workforce diversity on organisational performance. It is applied
to Small and Medium Sized Enterprises (SMEs) in the Buea Municipality (a zone declared
economically sinister by the State) which are operating in an intensive competitive
environment and are seeking for means to increase their performances considering the
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Emmanuel, N., & Dze, B. N. (2021). Does Employee Performance Mediate the Effect of Workforce Diversity on Organisational Performance? Evidence
from Small and Medium Enterprises (SMEs) in the Buea Municipality. Archives of Business Research, 9(7). 79-94.
URL: http://dx.doi.org/10.14738/abr.97.10481
negative effects of the “Anglophone crisis” in their business activities. In addition, there has
been an increase in the diversity of workforce in these SMEs due to the nature of labour supply
in terms of gender, age, educational background and ethnicity.
The rest of the paper is structured as follows. Firstly, the literature is reviewed and hypotheses
developed. Secondly, the methodology is disclosed. Thirdly, the findings are provided and
discussed. Finally, a conclusion will be provided.
LITERATURE REVIEW
Workforce Diversity and Organisational Performance
A number of authors researched on workforce diversity and organizational performance. This
sub-section aims at reviewing some of these studies. Using data collected from 120 banks
operating in Nigeria, Ehimare and Ogaga-Oghene (2011) found that gender, age and tenure
diversity were positively correlated to organisational effectiveness, while ethnicity was not
correlated to organizational effectiveness. Saxena (2014) after critically examining a number of
research papers related with workforce diversity and its impact on productivity, found that as
an organisation’s major objective is to earn profit and to enhance its productivity, hiring a
diversified workforce will definitely leads to improved productivity. But it may also lead to
disaster if not managed properly because not only the management but employees may also
face some problems like language problem, attitude clashes, and difference in perceptions,
which is directly related to human behaviour which ultimately affects the productivity of any
organization. Odita and Egbule (2015) assessed the effects of workforce diversity on
organizational effectiveness in the Nigerian Brewery industry, and revealed that there is a
significant positive relationship between the variables of workforce diversity (gender, ethnic
and culture) and organizational effectiveness.
Muasa, Egondi and Mathuva (2017) using data from a survey of Cargo Freight Stations in
Mombasa County Kenya found that age and gender diversities positively affected
organizational performance while ethnicity and racism diversities negatively affected
organizational performance. Subhash and Mor (2017) assessed the effect of workforce
diversity on organizational performance in the IT industry in India using data collected from
90 IT companies from Chennai and Delhi-NCR regions, and found that gender diversity
positively affect organizational performance captured by market share, productivity, return on
equity, profitability, customer service and quality. Azam (2018) in his study examined the effect
of some workforce diversity dimensions on organizational performance in Karachi and found
that age diversity, gender diversity, educational diversity, religion diversity, income diversity
and geographical diversity have no significant effect on the performance of organisations. In a
study conducted in the National Police Service in Nakuru County Kenya, Kathimba and Anyieni
(2018) showed that ethnic, gender, education and age diversities positively and significantly
affect organisational performance. Joy Onyinye and Eketu (2018) investigated the extent to
which workforce diversity (professional diversity, Age diversity, Ethnic diversity) relate to
organizational survival of manufacturing firms in Rivers State, and found that there is a positive
significant relationship between the dimensions of workforce diversity and measures of
organizational survival and leadership climate significantly moderates the relationship
between the two variables in manufacturing firms in Rivers State.