Date of Award

Spring 2003

Document Type


Degree Name

Doctor of Business Administration (DBA)



First Advisor

Mark Kroll


The primary purpose of this dissertation is to test the hypothesized relationships between cultural diversity and firm performance. Specifically, this dissertation examines whether or not socialization tactics and diversity initiatives moderate the relationship between diversity and firm performance. This dissertation uses ROA, ROE, and employee productivity in order to capture an accurate picture of firm performance.

My second purpose is to test competing hypotheses that are based on different theories. Theories relating to diversity suggest that there may be both positive and negative effects of a heterogeneous workforce. Therefore, it is necessary to isolate those instances in which diversity can be a competitive advantage. This dissertation uses competing hypotheses to test these theories.

All of the hypotheses were tested using hierarchical regression analysis. According to Cohen and Cohen (1983: 120) “it is one of the most useful tools for extracting information from a data set.” Hierarchical regression analysis allows for the testing of hypothesized contingency relationships. In addition, this technique is considered to be a conservative method for testing interaction effects because the interaction terms are tested after the other independent variables are entered into the equation. Therefore, significant changes in adjusted R2 provide support for the hypotheses (Delery & Doty, 1996).

This study offers several contributions to the diversity management literature. In particular, empirical support is provided for the relationship between diversity and firm performance. By testing competing hypotheses, limited support was found for the social identity theory framework in diversity research. Limited support was also found for the contingency theory framework combined with the resource based view of the firm. In other words, left alone, racioethnic diversity can have a negative impact on performance. However, if managed properly, the negative impact can be lessened and a positive impact can be achieved.