Adapting to the Future Workforce:

Combining Diversity and Organizational Climate Research

DI SSERTATI ON
of the University of St. Gallen
School of Management,
Economics, Law, Social Sciences,
and International Affairs
to obtain the title of
Doctor of Philosophy in Management

submitted by
David J. G. Dwertmann
from
Germany

Approved on the application of
Prof. Dr. Heike Bruch
and
Prof. Lisa H. Nishii, Ph.D.

Dissertation no. 4075

Shaker Verlag GmbH, Aachen, 2013

The University of St. Gallen, School of Management, Economics, Law, Social
Sciences, and International Affairs hereby consents to the printing of the present
dissertation, without hereby expressing any opinion on the views herein expressed.

St. Gallen, October 29, 2012

The President:


Prof. Dr. Thomas Bieger














Dedicated to my family and friends








Acknowledgements
This dissertation would not have been possible without the significant support of
numerous people. First of all, I would like to thank my two referees, Prof. Dr. Heike
Bruch and Prof. Dr. Lisa H. Nishii, who supported me throughout my doctorate.
Especially I would like to express my gratitude to Heike Bruch for her trust in my
abilities and for opening access to data. To Lisa Nishii, thanks for setting the standard
and raising my research ambitions to match her own.
Second, I thank my former and current colleagues at the Center for Disability and
Integration and the Institute for Leadership and Human Resource Management at the
University of St. Gallen, especially Dr. Eva Deuchert, Lukas Kauer, Helge Liebert, Dr.
Nils Jent, Regula Dietsche, Ursula Wrmli, Dr. Florian Kunze, Dr. Simon DeJong, and
Dr. Anneloes Raes for creating a supportive and inspirational work atmosphere.
Third, I want to thank my direct colleagues Dr. Stephan Bhm and Miriam
Baumgrtner! It was my great pleasure to form with you the micro team of business
administration, to develop a research path, and to take first steps along this path. I
would not be where I am standing today without you!
Fourth, there were several friends who encouraged me to work hard on this
dissertation, but who also managed to provide me with the right amount of distraction
when necessary. These were Linda Mller, Johannes Luger, Tobias Dehlen, Markus
Schwenke, Maximilian Schellmann, Daniel Albert, Martina Schmid, Melanie, Susi,
and Jrg Mller, Ben MacKenzie, Alexander Stich, Thomas Dyllick, Manuel Vlkle,
Christian Herder, Tim Herder, Tina Haas, Bastian Buhlmann, Stefan Kampa, Fabian
Will, and Daniel Gowitzke.
Finally, my family supported me throughout this dissertation as they did throughout
my life. My love goes to Ingeborg and Luca Dwertmann, Jrgen, Lothar, and Gisela
Chudy, as well as Franz, Herta, Armin, Karin, Kerstin, and Jan Kpper.

St. Gallen, July 2012 David J. G. Dwertmann
I
Overview of Contents
1 Introduction ............................................................................................................ 1
1.1 Diversity .................................................................................................................... 2
1.2 Organizational Climate ............................................................................................ 12
1.3 Diversity Climate/Climate for Inclusion .................................................................. 21
1.4 Outline of the Dissertation ....................................................................................... 27
2 Study 1 Explaining the Gap in the Amount of Empirical Research on
Disability and Other Diversity Facets: Methodological Challenges and Possible
Solutions ...................................................................................................................... 29
2.1 Abstract ................................................................................................................... 29
2.2 Introduction ............................................................................................................. 30
2.3 Identifying Challenges of Disability Research ......................................................... 36
2.4 Summary of Solutions.............................................................................................. 52
2.5 Concluding Thoughts ............................................................................................... 54
3 Study 2 Organizational Identity Strength and Transformational Leadership
Climate as Mediators of the Relationship between CEO Charisma and
Organizational Performance ..................................................................................... 56
3.1 Abstract ................................................................................................................... 56
3.2 Introduction ............................................................................................................. 57
3.3 Theory and Hypotheses Development ...................................................................... 61
3.4 Methods ................................................................................................................... 75
3.5 Results ..................................................................................................................... 79
3.6 Discussion ............................................................................................................... 86
4 Study 3 Expanding Insights on the Diversity Climate-Performance Link:
The Role of Work Group Discrimination and Group Size ..................................... 91
4.1 Abstract ................................................................................................................... 91
4.2 Introduction ............................................................................................................. 92
4.3 Theory and Hypotheses Development ...................................................................... 94
4.4 Methods ................................................................................................................. 102
4.5 Results ................................................................................................................... 107
II
4.6 Discussion ............................................................................................................. 117
5 Overall Conclusion ............................................................................................. 124
References ................................................................................................................. 126
Curriculum Vitae ..................................................................................................... 173

III
Table of Contents
Overview of Contents .................................................................................................... I
Table of Contents ....................................................................................................... III
List of Figures ........................................................................................................... VII
List of Tables............................................................................................................ VIII
List of Abbreviations .................................................................................................. IX
Abstract ....................................................................................................................... XI
Zusammenfassung .................................................................................................... XII
1 Introduction ............................................................................................................ 1
1.1 Diversity .................................................................................................................... 2
1.1.1 Defining Diversity ................................................................................................................2
1.1.2 Importance of Diversity .......................................................................................................2
1.1.3 Relevant Theoretical Considerations ...................................................................................5
1.1.4 Current State of Diversity Research .....................................................................................9
1.2 Organizational Climate ............................................................................................ 12
1.2.1 Defining Organizational Climate .......................................................................................12
1.2.2 Importance of Organizational Climate ...............................................................................13
1.2.3 Relevant Theoretical Considerations .................................................................................14
1.2.4 Current State of Organizational Climate Research ............................................................19
1.3 Diversity Climate/Climate for Inclusion .................................................................. 21
1.3.1 Defining Diversity Climate/Climate for Inclusion .............................................................21
1.3.2 Importance of Diversity Climate/Climate for Inclusion ....................................................22
1.3.3 Relevant Theoretical Considerations .................................................................................22
1.3.4 Current State of Diversity Climate/Climate for Inclusion Research ..................................24
1.4 Outline of the Dissertation ....................................................................................... 27
2 Study 1 Explaining the Gap in the Amount of Empirical Research on
Disability and Other Diversity Facets: Methodological Challenges and Possible
Solutions ...................................................................................................................... 29
2.1 Abstract ................................................................................................................... 29
IV
2.2 Introduction ............................................................................................................. 30
2.2.1 Review of Top Tier Quantitative Publications in the Past 16 Years..................................32
2.3 Identifying Challenges of Disability Research ......................................................... 36
2.3.1 The Construct of Disability ................................................................................................37
2.3.1.1 Definition of Disability ..................................................................................................... 38
2.3.1.2 Heterogeneity of the Construct .......................................................................................... 38
2.3.1.3 Comorbidity ...................................................................................................................... 39
2.3.1.4 Alterability ........................................................................................................................ 39
2.3.1.5 Individual Perception ........................................................................................................ 40
2.3.2 Measurement ......................................................................................................................40
2.3.2.1 Measurement of Disability ................................................................................................ 41
2.3.2.2 Lack of Disclosure ............................................................................................................ 42
2.3.2.3 Visibility ........................................................................................................................... 43
2.3.2.4 Justification Bias ............................................................................................................... 43
2.3.2.5 Data Protection .................................................................................................................. 44
2.3.2.6 Social Desirability ............................................................................................................. 45
2.3.2.7 Measuring Instruments (scales) ......................................................................................... 46
2.3.3 Sample ................................................................................................................................47
2.3.3.1 Employment Status ........................................................................................................... 48
2.3.3.2 Comparable Study Subjects ............................................................................................... 48
2.3.3.3 Accuracy versus Generalizability ...................................................................................... 51
2.3.3.4 Cross-national Comparisons .............................................................................................. 52
2.4 Summary of Solutions.............................................................................................. 52
2.5 Concluding Thoughts ............................................................................................... 54
3 Study 2 Organizational Identity Strength and Transformational Leadership
Climate as Mediators of the Relationship between CEO Charisma and
Organizational Performance ..................................................................................... 56
3.1 Abstract ................................................................................................................... 56
3.2 Introduction ............................................................................................................. 57
3.3 Theory and Hypotheses Development ...................................................................... 61
3.3.1 CEO Charisma and Firm Performance...............................................................................61
3.3.2 CEO Charisma and Organizational Identity Strength ........................................................63
3.3.3 Organizational Identity Strength and Firm Performance ...................................................67
3.3.4 CEO charisma and Transformational Leadership Climate ................................................70
V
3.3.5 TFL Climate and Firm Performance ..................................................................................73
3.3.6 TFL Climate and Firm Identity Strength............................................................................74
3.4 Methods ................................................................................................................... 75
3.4.1 Sample ................................................................................................................................75
3.4.2 Procedure ............................................................................................................................75
3.4.3 Measures .............................................................................................................................76
3.4.4 Company Level Data Analysis ...........................................................................................78
3.4.5 Data Analysis .....................................................................................................................79
3.5 Results ..................................................................................................................... 79
3.5.1 Descriptive statistics ...........................................................................................................79
3.5.2 Measurement model ...........................................................................................................82
3.5.3 Structural model .................................................................................................................82
3.6 Discussion ............................................................................................................... 86
3.6.1 Limitations and Future Research Directions ......................................................................88
3.6.2 Managerial Implications .....................................................................................................89
4 Study 3 Expanding Insights on the Diversity Climate-Performance Link:
The Role of Work Group Discrimination and Group Size ..................................... 91
4.1 Abstract ................................................................................................................... 91
4.2 Introduction ............................................................................................................. 92
4.3 Theory and Hypotheses Development ...................................................................... 94
4.3.1 Diversity climate defined ...................................................................................................94
4.3.2 Main effect of diversity climate on work group performance ...........................................95
4.3.3 Effect of diversity climate on work group discrimination .................................................97
4.3.4 Effect of work group discrimination on group performance .............................................98
4.3.5 Mediation effect of discrimination .....................................................................................99
4.3.6 Group size as a moderator of the diversity climate-discrimination relationship .............100
4.3.7 Group size as a moderator of the mediated diversity climate-performance relationship .101
4.4 Methods ................................................................................................................. 102
4.4.1 Sample ..............................................................................................................................102
4.4.2 Procedure ..........................................................................................................................103
4.4.3 Measures ...........................................................................................................................103
4.4.4 Group Level Data Analysis ..............................................................................................105
4.4.5 Data Analysis ...................................................................................................................105
VI
4.5 Results ................................................................................................................... 107
4.5.1 Descriptive statistics .........................................................................................................107
4.5.2 Measurement model .........................................................................................................109
4.5.3 Structural model ...............................................................................................................112
4.6 Discussion ............................................................................................................. 117
4.6.1 Managerial Implications ...................................................................................................119
4.6.2 Limitations and Directions for Future Research ..............................................................121
5 Overall Conclusion ............................................................................................. 124
References ................................................................................................................. 126
Curriculum Vitae ..................................................................................................... 173


VII
List of Figures
Figure 1.1 Pictorial representation of types and amount of three meanings of within-
unit diversity (from Harrison & Klein, 2007, p. 1202) ........................................ 10
Figure 2.1 The three main challenges for management research in disability ............. 37
Figure 3.1 Organizational level model of antecedents and the performance outcome of
identity strength including data sources ............................................................... 60
Figure 4.1 Diagram of paths in the proposed moderated mediation model ............... 113
Figure 4.2 The moderation effect of group size on the relationship between diversity
climate and discrimination ................................................................................. 117

VIII
List of Tables
Table 1.1 Operationalizations of within-unit diversity types (from Harrison & Klein,
2007, p. 1210)....................................................................................................... 12
Table 1.2 A typology of composition models (from Chan, 1998, p. 236) ................... 17
Table 2.1 Empirical journal articles on the topic of disability since 1996 ................... 34
Table 3.1 Descriptive Statistics and Correlations among the Variables in this study .. 81
Table 3.2 Model comparison ........................................................................................ 85
Table 4.1 Descriptive statistics and correlations among the variables in this study .. 108
Table 4.2 Measurement model comparison ............................................................... 111
Table 4.3 Structural model comparison ..................................................................... 114

IX
List of Abbreviations
beta-coefficient
ASA attraction-selection-attrition
CEO chief executive officer
CFA confirmatory factor analysis
CFI comparative fit index

2
chi square value
CI confidence interval
delta
DEOCS DEOMI organizational climate survey
DEOMI defense equal opportunity management institute
df degrees of freedom
Ed./Eds. editor/editors
e.g. example gratia/for example
et al. et alii
etc. et cetera
F f-test value
H hypothesis
HLM hierarchical linear model
HR human resource
ICC intraclass correlation coefficient
i.e. id est/that is
IMCD interactional model of cultural diversity
k average group size
X
M mean
MEOCS military equal opportunity climate survey
MSB mean square between groups
MSW mean square within groups
N number of observations
n.s. not significant
OIDS organizational identity strength
p level of significance
p. page
R
2
squared multiple correlation coefficient
RMSEA root mean square error of approximation
r
wg
index of interrater agreement
SD standard deviation
SE standard error
SEM structural equation modeling
SRMR standardized root mean square residual
t t-test value
TFL transformational leadership
TLI tucker lewis index
USA united states of america

XI
Abstract
Today, the workforce is becoming increasingly diverse. This is caused by some major
trends. Amongst them are: globalization, increasing labor force participation of
women, and significant demographic changes. Due to the associated challenges,
companies are searching for answers on how to react to this development. However,
research findings are inconsistent and fragmented. Organizational climate research,
which is particularly important for todays work environments that are centered around
workgroups, offers important insights to diversity research. Therefore, this dissertation
links the fields of diversity and organizational climate in its focus on diversity climate
or climate for inclusion. By doing so, it offers important insights in how to manage
organizations more effectively.
Study 1 identifies a significant gap in the amount of high quality empirical research
that has been conducted on disability versus other diversity dimensions such as age,
gender and culture. Through expert interviews it identifies methodological challenges
in the field of disability research as a cause of this gap and offers possible solutions to
these obstacles. Ultimately, it urges scholars to recognize that disability is an important
yet often neglected dimension of diversity and calls for more research on the topic.
The second study investigates the top-management leadership-performance relation-
ship in a sample of 20,639 employees from 157 companies. Transformational
leadership climate as one form of organizational climate and organizational identity
strength are identified as mediators through which top managers leadership can
influence their firms performance. It is the first study to show the connection between
identity strength and performance at the organizational level. Furthermore, it is one of
the rare studies that examine cascading effects of leadership.
Study 3 combines the fields of diversity and organizational climate by assessing the
effects of diversity climate on performance at the group level of analysis. In a sample
of 7,689 employees from 211 work groups, work group discrimination is identified as
a mediator of the relationship. In addition, it is shown that this relationship is
pronounced in larger work groups. Although discrimination is often cited as an
important mediating mechanism between group climate and performance, empirical
tests of these relationships have been lacking until now.
XII
Zusammenfassung
Die Vielfalt in der heutigen Erwerbsbevlkerung steigt zunehmend an. Hierfr sind
verschiedene globale Trends wie die Globalisierung, eine ansteigende Erwerbs-
ttigenquote unter Frauen und der demographische Wandel verantwortlich. Aufgrund
der Herausforderungen die mit diesen Vernderungen einhergehen, suchen
Unternehmen nach Mglichkeiten um auf den Wandel zu reagieren. Die wissenschaft-
lichen Ergebnisse hierzu sind bislang jedoch oftmals widersprchlich und unvoll-
stndig. Forschung zu organisationalem Klima, die in der heutzutage oftmals in
Gruppenarbeit organisierten Arbeitswelt besonders relevant erscheint, bietet hierbei
vielversprechende Anstze. Aus diesem Grund werden in dieser Dissertation die
Forschungsfelder Diversity (Vielfalt) und organisationales Klima zum Konstrukt
Diversity Klima oder Klima fr Inklusion verknpft. Aus den so erlangten Befunden
ergeben sich wichtige Hinweise zum effizienten Management von Organisationen.
Studie 1 identifiziert einen signifikanten Unterschied in der Menge an qualitativ
hochwertiger empirischer Forschung zum Thema Behinderung und anderen Diversity
Dimensionen wie beispielsweise Alter, Geschlecht, oder Kultur. Mittels Experteninter-
views werden methodische Herausforderungen in der Forschung zum Thema
Behinderung als ein mglicher Grund identifiziert und mgliche Lsungen aufgezeigt.
Hierdurch werden Forschern Anstze aufgezeigt, um Behinderung als eine wichtige
und bisher oft zu wenig beachtete Dimension von Diversity zu untersuchen. Die
zweite Studie untersucht den Zusammenhang zwischen Top-Management Fhrung
und Performanz in einer Stichprobe von 20.639 Mitarbeitern aus 157 Firmen. Trans-
formationales Fhrungsklima, als eine Form des organisationalen Klimas, und orga-
nisationale Identittsstrke werden als Mediatoren identifiziert, durch welche Manager
die Leistung der gesamten Firma beeinflussen knnen. Es ist die erste Studie, die den
Zusammenhang zwischen Identittsstrke und Performanz auf dem Organisationslevel
zeigt und eine der wenigen Studien, die die kaskadierenden Effekte von Fhrung auf-
zeigt. Studie 3 kombiniert die Felder Diversity und organisationales Klima, indem sie
den Einfluss von Diversity Klima auf Performanz auf dem Gruppenlevel zeigt. In einer
Stichprobe von 7.689 Mitarbeitern aus 211 Gruppen wird Diskriminierung als ein
Mediator dieses Zusammenhangs identifiziert. Hierdurch wird ein oftmals postulierter,
bisher jedoch nicht empirisch geprfter, Mechanismus getestet. Der Zusammenhang
von Diversity Klima und Diskriminierung ist zudem strker in grsseren Gruppen.
Introduction 1
Civilization is the encouragement of differences.
Mohandas Karamchand Gandhi (1869-1948)
1 Introduction
There is no doubt that the workforce is undergoing a dramatic change. Workforce
diversity is one of the key issues for practitioners (Robbins & Judge, 2010) and has
garnered considerable research attention by scholars (Harrison & Klein, 2007). This is
because organizations want to foster the potential positive effects of diversity such as
increased problem-solving, better understanding of customer needs, and more
creativity while preventing the possible negative effects, such as discrimination,
decreased performance, and employee turnover (McKay et al., 2007; Van
Knippenberg & Schippers, 2007).
Work on organizational climate is another stream of research that has attracted
considerable scholarly attention lately (Kuenzi & Schminke, 2009). This may be
caused by recent advances in the field of data aggregation (Schneider, Erhart, &
Macey, 2011), the increasing amount of group work in organizations which has
highlighted group-level phenomena (Chen, Donahue, & Klimoski, 2004), or simply
climates importance for various outcomes (e.g., Colquitt, Noe, & Jackson, 2002; K.
D. Martin & Cullen, 2006). It seems as if work climates are related to almost every
aspect of organizational life (Kuenzi & Schminke, 2009).
This dissertation investigates these two streams of research: diversity and
organizational climate, and links them together. Reasons to do so are manifold. On the
one hand, the field of diversity has created mixed findings concerning the diversity-
outcome relationship. Therefore, scholars repeatedly called for the examination of
boundary conditions and climate influences have been identified as an important
aspect (Nishii, in press). On the other hand, scholars in the field of organizational
climate have highlighted the potential misfit between a broad predictor such as
organizational climate and rather specific outcomes. Therefore, they pointed toward
the importance of matching outcomes and climate by investigating specific forms of
climate (Schneider, et al., 2011). When investigating the outcomes associated with
diversity, the climate construct of focus is diversity climate or climate for inclusion
(Avery, 2011).
2 Introduction
1.1 Diversity
1.1.1 Defining Diversity
Diversity is a relatively new field of research (Ashkanasy, Hrtel, & Daus, 2002),
which emerged from the anti-discrimination movement in the United States of
America (USA) during the 1960s (Ivancevich & Gilbert, 2000). In the scientific
literature, diversity began receiving attention in the 1990s (Nishii & Mayer, 2009).
Definitions of diversity substantially differ in terms of content and broadness (for
further details see Ashkanasy, et al., 2002). However, constructs need to be defined
conceptually or constitutively since they are abstractions or ideas that help to organize
a domain of study (Kerlinger, 1990). Otherwise it seems impossible to generate
knowledge in the domain (Harrison & Sin, 2006). Clear definitions ensure the
comparability of empirical research findings (Schwab, 1980) and therefore, allow the
accumulation of knowledge and the sense making of patterns of findings across studies
(Hunter & Schmidt, 1990). Thus, it seems inevitable to define the term diversity as it is
used in this dissertation.
Throughout this dissertation, I will use the term diversity in the sense of Harrison and
Klein (2007). They () use diversity to describe the distribution of differences
among the members of a unit with respect to a common attribute, X, such as tenure,
ethnicity, conscientiousness, task attitude, or pay (Harrison & Klein, 2007, p. 1200).
Thus, diversity is measured on the group or organizational level as a compositional
construct. In addition, diversity is attribute specific. A unit is not diverse per se.
Rather, it is diverse with respect to one or more specific features of its members.
(Harrison & Klein, 2007, p. 1200).
1.1.2 Importance of Diversity
A statement concerning diversity should always refer to a certain facet such as age,
gender, culture, and disability. A group cannot be diverse per se, because there is an
infinite number of possible diversity dimensions (Harrison & Klein, 2007). However,
it seems reasonable to say that diversity in general is on the rise (Ashkanasy, et al.,
2002). This is due to some major workforce trends which affect various dimensions of
diversity.
Introduction 3
Economies worldwide are becoming increasingly globalized (Rodrik, 2008; Wiersema
& Bowen, 2008). Companies sell their products all around the globe, firms corporate
with suppliers from various regions of the world, and organizations recruit
internationally. Therefore, customers, business partners, and coworkers are becoming
increasingly diverse with respect to culture and ethnicity (Sonnentag & Frese, 2002).
In times of shortening product life cycles (Saaksvuori & Immonen, 2008), companies
are extensively deploying heterogeneous and cross-functional teams to produce
creative and better products and solutions (Jackson & Alvarez, 1992; Robinson &
Dechant, 1997). Therefore, in everyday work employees are increasingly collaborating
with colleagues who are diverse in regard to their functional and educational
background.
The labor force participation rate of women has increased significantly during the last
decades (Iversen & Rosenbluth, 2008; Juhn & Potter, 2006). One of the reasons could
be the change of family structures (McLanahan & Percheski, 2008), another one the
rising interest of companies to employ women. However, the percentage of women
participation in the workforce is expected to rise continuously (Toossi, 2009), leading
to more gender diversity in companies.
Most developed countries today are facing a significant demographic change (UN,
2011). People are getting older, fertility rates are low, and immigration rates in most
countries cannot compensate for these effects. Therefore, companies have to come up
with solutions for a potential talent shortage (Kunze & Bruch, 2010). By focusing on
so far neglected groups of employees (e.g., older workers), they contribute to a
growing diversity in organizations. Governments are trying to buffer the effects of the
demographic change as well. On the one hand, they increase the retirement age, on the
other hand they try to shorten the duration of academic studies. These two initiatives
extend the workforces age range, resulting in a higher variance and, thus, diversity
(Bhm, Baumgrtner, Dwertmann, & Kunze, 2011). Linked to the demographic
change is also an increase in disability diversity (a so far underrepresented dimension
of diversity in research). This is due to the clear correlation between age and disability
(UN, 1993). Therefore, the demographic change adds to the increasing diversity in the
workforce.
4 Introduction
All the mentioned trends led to an increasingly diverse workforce and companies have
perceived the need to actually learn about the challenges that come along with this
change. As the Society for Human Resource Management (1997; UN, 1993) analyzed,
75% of Fortune 500 organizations applied diversity programs. According to Konrad
(2003), this is due to three main outcomes that companies are hoping for when dealing
with diversity.
First, due to the mentioned megatrends, classical recruitment pools (e.g., young, white,
male) will shrink in relative size. Many companies even expect a general labor
shortage (for a more detailed elaboration see, Cappelli, 2005). Therefore, companies
will have to rely more on so far neglected workgroups (Dwertmann & Kunz, 2012).
By making diversity a priority in their people strategy, companies hope to attract and
retain talented employees from various demographic groups. Therefore, diversity
initiatives can be one aspect of a broader employer branding strategy (Backhaus &
Tikoo, 2004).
Second, not only are the employees becoming increasingly diverse, but so are the
customers. On the one hand, companies expect that customers have more trust and
ultimately will buy more products from an employee who shows comparable
demographic characteristics (e.g., Gutek, 1999; Tsui & Gutek, 1999); on the other
hand, companies also assume that employees who are similar to their clients will have
a better understanding for their needs and will therefore be able to deliver better
services and design better products (De Ruyter, Van Birgelen, & Wetzels, 1998;
Jackson & Alvarez, 1992; Jehn & Bezrukova, 2004). In fact, both views have gained
some support in the literature (Juni, Brannon, & Roth, 1988; Kulik & Holbrook, 2000;
Laroche, Kalamas, & Cleveland, 2005; Witkowski & Wolfinbarger, 2002).
Third, it seems as if more diverse groups are able to outperform homogeneous groups
when it comes to problem solving, complex tasks, and creative solutions (Konrad,
2003). In these groups, members can capitalize on their various backgrounds,
knowledge, networks, and cognitive styles for enhanced performance (see Chapter 6
for a more detailed description of the information-decision making perspective).
The combination of these three arguments clearly states the business case for diversity
(Konrad, 2003; Robinson & Dechant, 1997) and thus, explains the importance of
diversity research on various facets to help companies dealing with this major future
Introduction 5
workforce trend. This is especially important, since research on global diversity at
present lags behind practice, even though global diversity practice is still relatively
undeveloped (Nishii & zbilgin, 2007, p. 1883 f.).
1.1.3 Relevant Theoretical Considerations
1

Broadly speaking, scholars expect diversity to have three different kinds of
performance consequences. Most researchers expect positive outcomes but there is
also the opposing view of negative consequences. A third group expects diversity to
have no relationship with performance. Even though research has shown that both
views can be true, depending on the context (e.g., Van Knippenberg, De Dreu, &
Homan, 2004), these basic views of positive or negative consequences base their
argumentation on different theoretical considerations.
Authors who have argued for positive (performance) consequences of diversity in the
workplace, refer to the effects of variety or the so-called information/decision-making
perspective (Van Knippenberg & Schippers, 2007, p. 518) to describe why a team or
workgroup can be understood as an information processing instrument for an
organization (Harrison & Klein, 2007, p. 1205; Hinsz, Tindale, & Vollrath, 1997).
The basic idea is that diverse team members typically possess different knowledge
bases, experiences, or skills, which might help them to come up with a better solution
to a problem than employees with more homogenous characteristics. This larger pool
of resources often stems from different backgrounds, including a variety of
demographic attributes (e.g., age, education). In addition to their own cognitive
resources, diverse members also tend to possess different external and internal
networks and have access to non-redundant information important for the groups
performance (Austin, 2003).
When dealing with non-routine problems, it seems to be especially beneficial when
diverse team members can use this additional sociocognitive horsepower (Carpenter,
2002, p. 280). Moreover, diverse teams seem to be more adaptive to environmental
changes and might have a better understanding of their diverse customers (De Ruyter,
et al., 1998; McCuiston, Wooldridge, & Pierce, 2004). In addition, employees with
different experiences and skill sets are likely to be more creative (Burt, 2002; Jackson,

1
Chapter 1.1.3 is based on (Bhm, Dwertmann, & Baumgrtner, 2011)
6 Introduction
May, & Whitney, 1995) and less imperiled by the effects of groupthink (Janis, 1972)
through more intense discussions and the prevention of premature consensus. In
summary, scholars adopting a variety of perspectives infer a higher performance level
of diverse teams, workgroups, or even organizations (Bantel & Jackson, 1989).
However, as both research and practice have shown, increasing levels of diversity can
also result in negative outcomes, such as higher levels of conflict and withdrawal, as
well as lower levels of cohesion and performance (Sacco & Schmitt, 2005). Possible
explanations for the negative effects of diversity can be derived from the concepts of
separation and disparity.
With regard to separation, which focuses on potential differences in employees
demographic attributes, opinions, or attitudes, scholars have identified at least two
underlying psychological processes to explain the exclusion and potential
discrimination of certain groups of employees: the similarity-attraction paradigm
(Byrne, 1971) and the social identity approach (Tajfel & Turner, 1986).
The similarity-attraction paradigm describes the tendency of individuals to prefer
contact and collaboration with others that are comparably similar to themselves
(Byrne, 1971). This actual, or perceived, similarity can comprise demographic
characteristics (e.g., age, ethnicity, disability), as well as similar opinions, attitudes, or
beliefs. As the underlying psychological motivation, for people to seek similar others
has to do with the desire to engage in uncertainty reduction by means of consensual
validation (Hinds, Carley, Krackhardt, & Wholey, 2000). Individuals seem to get more
affirmative feedback from people they feel are similar to them, and therefore prefer to
interact with them and tend to trust them more.
Interpersonal heterogeneity may lead to decreased levels of communication as well as
more communication errors within teams or workgroups. From an empirical point of
view, the effects of similarity-attraction have been shown in both friendships and
voluntary interactions (Blau, 1977; McPherson & Smith-Lovin, 1987), as well as in
professional environments (e.g., Hinds, et al., 2000).
The similarity-attraction paradigm is complemented by a second psychological
process, which may also lead to the exclusion of diverse employees. Theories of social
identity (Tajfel & Turner, 1986) and self-categorization (J. Turner, 1987) suggest that
individuals tend to classify themselves and others into certain groups on the basis of
Introduction 7
dimensions that are relevant for them. These dimensions often include demographic
categories, such as gender, ethnicity, or disability status.
Individuals make use of these group classifications to differentiate between potentially
similar in-group members and different out-group members. Such group
categorizations are of high importance for individuals, as they derive a large part of
their social identity from membership in particular groups. Following a basic human
need to maintain and strengthen their self-esteem, individuals strive to perceive their
own group as superior to others (Abrams & Hogg, 1988). As a consequence,
individuals tend to favor members of their own group (in-group) and exhibit higher
levels of trust, communication, and cooperation with them. Members of other groups
(out-groups), may face certain forms of stereotyping and discrimination (Brewer &
Brown, 1998).
Two concepts explain why certain demographic categories have a potentially stronger
effect on individuals self-definition and discriminative behavior than others: the
permeability of the attribute and the salience of the attribute. Permeability is defined as
the degree to which that attribute can be altered moving a person from one social
category to another social category (Pelled, Eisenhardt, & Xin, 1999, p. 5). Salience
refers to the degree of visibility of the attribute. For example, for gender the potential
for in-group-out-group formation should consequently be fairly high, as it is both
visible (high salience) and irreversible (low permeability).
In addition to the outlined mechanisms, people belonging to a certain demographic
group may also experience a so-called token status (Kanter, 1977; Young & James,
2001) which describes how minorities (typically less than 15% of the total group) in
organizations are perceived as symbols of a certain category and less as individuals.
Typical examples are people with disabilities and women in male dominated industries
(e.g., engineering). Kanter (1977) described the negative outcomes of a token status,
including increased levels of stereotyping, unfair performance pressure, and the
creation of interpersonal boundaries that might, in turn, lead to the formation of in- and
out-groups. In summary, feelings of detachment and exclusion (separation) may arise
no matter if similarity-attraction, social identity or tokenism mechanisms cause them.
Finally, the concept of diversity will be analyzed from a disparity perspective,
highlighting the underlying key assumptions. In contrast to both the variety and the
8 Introduction
separation perspective, scholarly work on the disparity perspective is surprisingly
limited (Harrison & Klein, 2007, p. 1206). It has its theoretical source in the
sociological literature, in which it is discussed under the term inequality (Blau, 1977;
Kreckel, 2004). In the organizational psychology-related literature on diversity, the
concept of disparity is used in a similar, yet distinct, way. Scholars typically use it to
analyze and describe the effects of unevenly distributed, valued or desired resources,
such as power, status, or prestige (Harrison & Klein, 2007). It is assumed that
individuals within teams, or workgroups, tend to differ in the extent to which they
possess a share of the relevant resource. As a consequence of the unequal distribution,
certain processes might be triggered within the group. For example, individuals with a
disadvantaged status within the team (e.g., missing influence) might experience
feelings of dissatisfaction and a desire to leave the group.
Again, members of certain demographic groups may be more likely to experience a
potentially negative effect stemming from disparity issues. The glass ceiling effect
(e.g., Hoobler, Wayne, & Lemmon, 2009) for women is one example. The glass
ceiling refers to problems for women to move upward the hierarchy in organizations.
Therefore, men are often overrepresented in higher positions and women may not have
equal power or influence as their male coworkers. The same holds true for people with
disabilities, for whom it is also more likely to be in low-status jobs (Schur, Kruse,
Blasi, & Blanck, 2009) and to possess less power and social influence than other
organizational members. If such a lack of power is perceived as being unfair, a drop in
commitment, satisfaction, and ultimately performance, may result.
Whereas research in the field of diversity has usually focused on the group level of
analysis, recently scholars have begun to examine the effects on the organizational
level (e.g., Kunze, Bhm, & Bruch, 2011). However, the theoretical reasoning in these
studies stays the same. The organization is seen as an entity of smaller groups where
the described effects can take place. In fact, especially the negative effects of diversity
stemming from separation may be more likely to occur among members of different
departments within companies than among colleagues from the same department. This
is because the department affiliation might work as an identity and therefore, trigger
experiences of being different than colleagues from other departments.
Introduction 9
1.1.4 Current State of Diversity Research
Which assumption about the effects of diversity is true? Does it lead to better
outcomes, worse outcomes, or does it have no effect at all? Studies about diversity
have often led to inconsistent results regarding various outcomes, especially
performance (Jehn, Northcraft, & Neale, 1999; King et al., 2011; Van Knippenberg &
Schippers, 2007; K. Y. Williams & O'Reilly, 1998). Therefore, Jackson and colleagues
concluded that () the literature offers few conclusive findings about the effects of
diversity in the workplace (Jackson, Joshi, & Erhardt, 2003, p. 807). Even more
provocative, due to the possibility of diversity to create positive and negative effects
and so far mixed results, Milliken and Martins (1996, p. 403) called diversity a ()
double-edged sword increasing the opportunity for creativity as well as the likelihood
that group members will be dissatisfied and fail to identify with the group.
A recent meta-analytic review of Horwitz and Horwitz (2007) shed some light on the
effects of task-related (e.g., cognitive resources, personal characteristics) and
demographic (e.g., gender, age) group diversity on performance. They reported a
small, but significant effect ( = .13) of the influence of task-related diversity on the
quality of team performance (e.g., decision making, creativity, problem solving) and
the relationship between task-related diversity and the quantity of team performance (
= .07). No significant results were found for demographic diversity.
A second meta-analysis by Joshi and Roh (2009) investigated the role of contextual
factors on the diversity-performance relationship at the team level. Two forms of
diversity, relations-oriented and task-oriented where examined. The results indicate
small effects of diversity (negative for relations-oriented, positive for task-oriented)
which doubled or tripled in size, when the authors accounted for occupation, industry,
and contextual moderators on the team level. Industry- and occupation-level
moderators also explained differences in the results across studies. The results by Joshi
and Roh (2009) clearly indicate that scholars need to take contextual variables into
account when assessing the effects of diversity on performance.
However, whereas these meta-analytic results help to clarify the findings about
diversity, individual study results are still contradictory. Beneath the call for opening
the black box of the diversity-outcome relationship, by examining moderator variables
(Lawrence, 1997; Nishii & Mayer, 2009; Van Knippenberg & Schippers, 2007), and
10 Introduction
the importance of the type of diversity (i.e. surface-level versus deep-level, or different
dimensions such as age, gender, disability, ethnicity, etc.), Harrison and Klein (2007)
stated multiple reasons for the mixed results within the field of diversity research.
Besides the already mentioned lack of a clear definition of the diversity construct, they
highlighted the fact that diversity is a very broad topic that includes various forms of
being diverse (e.g., age, ethnicity, gender, educational background). Therefore, results
from different facets of diversity are difficult to integrate. All these reasons led to the
understanding that diversity is a murky construct (Harrison & Klein, 2007, p. 1201).
To help clarify the construct and measurement of diversity, Harrison and Klein (2007)
argued for the existence of not one, but three distinctive types of diversity: separation,
variety, and disparity (see Figure 1.1). Each of these types implies a different form of
maximum diversity, leading to varying group processes, and therefore, different
outcomes.
Figure 1.1 Pictorial representation of types and amount of three meanings of
within-unit diversity (from Harrison & Klein, 2007, p. 1202)

Separation occurs when team members hold opposing positions on a task- or team-
relevant issue (e.g., educational background). Regarding educational background, a
Introduction 11
group consisting of three people who studied business administration, and one with a
background in engineering could lead to separation if group members focus on
educational background as a team-relevant issue. Thus, separation could result from
the composition of diverse groups. Maximum diversity exists if group members are
equally split at opposing endpoints of the continuum (i.e., two people with a degree in
business administration and two people with a degree in engineering; Harrison & Sin,
2006).
Variety exists if group members have different knowledge (which might be based on
demographics, e.g., age), resulting in a fruitful pool of information regarding various
tasks. A diverse educational background could lead to variety as well. People with
different demographic backgrounds could have different experiences. Therefore, they
could have different information or even skills. For example, an older person could
have a lot of experience whereas a younger person could be more familiar with
information technology. Thus, variety is another possible effect arising from diverse
work groups. Maximum variety would result if every group member comes from a
unique category and holds unique information or skills (Harrison & Klein, 2007).
Finally, disparity captures constellations in which there is a difference in the
distribution of social assets (e.g., influence, money) among group members.
Differences in the power of group members results from these unequal distributions.
One example is the already mentioned glass ceiling (e.g., Hoobler, et al., 2009). Since
men are often overrepresented in higher positions, women may not have equal power
or influence (social asset) as their male coworkers. Thus, disparity can develop within
diverse work units. If one unit member outranks all others in regard to the social asset
in question, maximum disparity exists (Harrison & Klein, 2007).
The outlined classification partly explains the contrasting effects of diversity.
Diversity can lead to all three types of diversity. While variety tends to result in
positive outcomes, separation and disparity rather cause detrimental group processes
and losses in effectiveness (Harrison & Klein, 2007). In addition, as summarized in
Table 1.1, the conceptualization of diversity implies different ways of operationalizing
and computing diversity (Harrison & Sin, 2006). The same group can be defined as
highly, moderate, of low diverse depending on the applied calculation formula (for
further details see Harrison & Klein, 2007; Harrison & Sin, 2006). Thus, it is essential
for researchers to think carefully about the kind of diversity they refer to, the expected
12 Introduction
effects of diversity, and based on that the way in which they conceptualize and
compute diversity.
Table 1.1 Operationalizations of within-unit diversity types (from Harrison &
Klein, 2007, p. 1210)
Diversity
Type
Index Formula
Minimum to
Maximum
Assumed
Scale of
Measurement
Separation (on
attribute S)
Standard
deviation
[(S
i
S
mean
)
2
/n] 0 to [(u l)/2] Interval
Mean Euclidean
distance
[(S
i
S
j
)
2
/n]/n 0 to [(u l)/2] Interval
Variety (on
attribute V)
Blau 1-p
k
2
0 to (K 1)/K Categorical
Teachman
(entropy)
-[p
k
* ln(p
k
)] 0 to -1 * ln(1/K) Categorical
Disparity (on
attribute D)
Coefficient of
variation
[(D
i
D
mean
)
2
/n]/D
mean
0 to (n 1) Ratio
Gini coefficient (D
i
- D
j
)/(2*N
2
*D
mean
) 0 to 1 (1/n) Ratio
Note. For separation (S) and disparity (D) the diversity attribute is continuous and can
range from a lower bound of l to an upper bound of u. Theoretically, l can be for
separation attributes and (commonly) 0 for disparity attributes, while u can be + in
either case. Operationally, l and u are limited by the instrument used to measure the
attribute in question. For variety (V), the attribute is nominal or discrete. It can take k
= 1,K possible categories.
In sum, there are three important directions for future research on diversity: First,
scholars should pay attention to the way how they conceptualize and operationalize
diversity to help clarifying the so far mixed results. Second, boundary conditions that
influence the diversity-outcome relationship should be considered (e.g., diversity
climate). Third, more research on so far under researched dimensions of diversity (e.g.,
disability) is needed. This dissertation tries to follow these directions.
1.2 Organizational Climate
1.2.1 Defining Organizational Climate
Organizational climate research can be traced back to the late 1930s (Schneider, et al.,
2011), when Lewin, Lippitt, and White (1939) studied aggressive behavior in groups
Introduction 13
under various conditions of social climate. The construct was initially constructed on a
molar level, focusing on various aspects of peoples experiences at work. Examples
include: role stress and lack of harmony; job challenge and autonomy; leadership
support and facilitation; and work group cooperation, friendliness, and warmth (J. J.
Campbell, Dunnette, Lawler, & Weick, 1970; L. A. James & James, 1989); degree of
risk taking; warmth, support, and innovativeness (Payne & Pugh, 1976); affective;
cognitive; and instrumental (Ostroff, 1993); and up to 17 dimensions identified by
Patterson and colleagues (2005). Whereas the early research was mainly focused on
perceptions of individual workers and individual respondents behavior, as the field
developed the focus switched towards shared, collective perceptions
2
and
organizational outcomes (Schneider, et al., 2011).
This dissertation follows this development and conceptualizes this molar
organizational climate as a group-level phenomenon. In this regard, climate concerns
the policies, practices, and procedures as well as the behaviors that get rewarded,
supported, and expected in a work setting and the meaning those imply for the
settings members (Schneider, et al., 2011, p. 373).
1.2.2 Importance of Organizational Climate
The topic of organizational climate seems to become more and more important in
practice and in research. There are multiple reasons for this trend. On the one hand,
companies are increasingly utilizing teamwork (Chen, et al., 2004; Sonnentag & Frese,
2002). This fact raises the question of how to manage teams effectively in order to
gain superior performance. Therefore, group processes and patterns of group
interactions are important. Organizational climate as a group-level construct
emphasizes such group phenomena. More specifically, the etiology of climates, the
outcomes of certain climates, and the question of how to influence a team climate are
central topics within climate research. Organizational climate provides a logical
expansion to more individual centered motivational perspectives (Schneider &
Reichers, 1983), because it acknowledges the importance of contextual factors in
explaining attitudes and behavior. On the other hand, recent progress in the work on
statistical issues of data aggregation has made the field more interesting for scholars
(Schneider, et al., 2011). Finally, it seems as if work climates are related to almost

2
See Chapter 1.2.3 for a more detailed elaboration of the implications concerning the level of analysis.
14 Introduction
every aspect of organizational life (Kuenzi & Schminke, 2009). All these facts may
have contributed to the recent development: Compared to the 1990s, the amount of
published articles on organizational climate in top management journals has more than
tripled between 2000 and 2008 (Kuenzi & Schminke, 2009).
1.2.3 Relevant Theoretical Considerations
Early climate research emerged due to the need to complement existing motivation
theories by a rationale on how work contexts affect behavior, attitudes and as
explanations for just about everything that happens to people at work (Schneider &
Reichers, 1983, p. 20). Two important theoretical questions concerning the construct
of organizational climate refer to the etiology of climates and the appropriate level of
analysis in climate research.
First, since organizational climate is defined as a group-level construct, the question is:
How do climates emerge? How can people in organizations process a vast variety of
stimuli in such a way that they form more or less homogeneous perceptions of these
stimuli? Three approaches try to explain the formation of climates (Schneider &
Reichers, 1983).
Payne and Pugh (1976) chose a structural approach. Here, objective aspects of the
organization are thought to influence the attitudes, values, and perceptions of events.
These objective aspects of organizational structure like organization size should
influence all employees in a comparable way (even if there are some interindividual
differences) and thus, lead to a coherent climate. This structural approach assumes that
most influences are similar within organizations and therefore that climate emerges at
the organizational level. However, considerable differences between the climates of
teams in the same organization (which often exist) cannot be explained with this
approach. In addition, the empirical results do not seem to be consistent enough to
retain the structural approach as a single explanation for the etiology of climates
(Berger & Cummings, 1979).
The so called ASA approach to the etiology of climate was introduced by Schneider
(Schneider, 1983, 1987). He argues that attraction-selection-attrition (ASA) processes
lead to a homogeneous climate. Selection refers to the fact that individuals prefer to
hire similar others. People are also attracted to individuals, groups, or companies that
Introduction 15
they believe to be similar to them. Finally, the homogeneity of climates increases over
time as those who do not fit, leave (i.e. attrition). While the structural approach is not
able to explain climate differences between groups within one organization, the same
holds true for the ASA approach. In addition, the approach mainly emphasizes the
importance of individuals in creating and reinforcing the meanings that people attach
to workplace events. If people in a company share a high level of strain tolerance, it
does not matter how much importance the organization puts on work-life balance,
breaks, holidays, and overtime regulations. However, this does not seem to be the case.
For example, the employees level in the hierarchy seems to influence climate
perceptions (e.g., Schneider & Snyder, 1975).
The third approach is based on symbolic interactionism as it is described by Mead
(1934) and Blumer (1969). Here, the basic assumption is that events, objects, and
practices do not have meaning in themselves. Instead, the reactions of colleagues,
supervisors, and others attach meaning to something. Each individual checks, refines,
and adapts its own perceptions based on the experiences it has with others. Schneider
and Reichers (1983) adopt this perspective and argue that interactions which
individuals have with each other lay the foundation for the etiology of climates. In this
regard, the approach is strongly connected to the literature on newcomer socialization
(e.g., Griffin, Colella, & Goparaju, 2000; Li, Harris, Boswell, & Xie, 2011; Reichers,
1987). This term describes the process of adapting to the organization when new
members arrive. Newcomers learn what behavior is expected of them and what
benefits organizational membership offers. In their seminal work, Schneider and
Reichers (1983) state that the social interactions with other individuals in the work
place form the basis for the emergence of similar perceptions of that context an
organizational climate. This approach is able to overcome a weakness of the structural
and ASA approach. It is able to explain how different climates within the same
organization can arise, because individuals will more likely have a lot of contact with
people from the same team and the same hierarchical level, than with other members
of the organization. Furthermore, it can also explain why climates change over time.
Because, as newcomers are being acted upon and (are) changing their social selves
and perceptions of the context, they are also contributing to the meanings that arise in
that context. In this way, the individual and the environment mutually determine each
other and are not, strictly speaking, differentiable (Schneider & Reichers, 1983, p.
32).
16 Introduction
In sum, whereas the structural approach assumes that climates emerge due to certain
objective features of the environment, and therefore places meaning in events,
practices, procedures, etc., the ASA approach assumes the individual him/herself to be
the source of meaning. Finally, the symbolic interactionist approach locates
interactions as the source of meaning. The adoption of one of those approaches has
important consequences for the answer to the second theoretical question of
organizational climate research: What is the appropriate level of analysis?
Research in the social sciences and particularly in management, often has to deal with
multilevel data und multilevel models. Organizations are structured in teams or
departments and include different levels of hierarchy. Whereas early climate research
focused on the individual level as the level of analysis (sometimes referred to as
psychological climate, L. R. James et al., 2008; L. R. James & Jones, 1974), as the
field developed, scholars started to treat organizational climate more as a group-level
phenomenon (Ashforth, 1985; Glick, 1985). In this case, the higher-level construct of
organizational climate is often formed by aggregating data from lower levels (Chan,
1998). However, the question regarding the appropriate level of analysis is still
present.
From a theoretical point of view, I agree with Schneider and colleagues (Schneider,
1975; Schneider, et al., 2011; Schneider & Reichers, 1983): employee perceptions of
their work and work world constitute, in the aggregate, the psychology of the
organization and are as real as any other attribute of the organization (e.g., structure,
size). As a result, when climate survey items target how the organization functions
(), then they will typically have a significant level of consensus within organizations
and a significant level of variance between organizations (). In the language of
Kozlowski and Klein (2000), even though the level of measurement is the individual,
the level of the construct is the organization. In other words, climate is a property of
the unit-it is the organizations climate, not the individuals. (Schneider, et al., 2011,
p. 277 f.).
From an empirical point of view, certain questions arise from this decision: When is it
appropriate to aggregate individual responses and what metric should represent
agreement (Ashkanasy, Wilderom, & Peterson, 2000)? An aggregation of individual
level responses to a higher level has to follow a specific form of composition models.
Composition models provide a logical basis for transforming constructs across
Introduction 17
different levels by specifying the relationships between these variables at different
levels (Chan, 2011). The two most often used forms of composition models in research
on organizational climate are direct consensus models or referent-shift models (see
Table 1.2).
Table 1.2 A typology of composition models (from Chan, 1998, p. 236)
Functional
relationships
Typical operational
combination
Empirical support
Example from
climate research
Additive model
Higher level unit is a
summation of the
lower level units
regardless of the
variance among these
units
Summing or averaging
lower level scores
Validity of additive index
(e.g., mean of lower level
units)
From psychological
climate to orga-
nizational climate
(Glicks 1985
conceptualization)
Direct consensus model
Meaning of higher
level construct is in
the consensus among
lower level units
Within-group
agreement to index
consensus and justify
aggregation
Value of within-group
agreement index (e.g.,
r
WG
); validity of
aggregated scores
From psychological
climate to orga-
nizational climate
(James, Demaree,
& Wolfs 1984
conceptualization)
Referent-shift consensus model
Lower level units
being composed by
consensus are con-
ceptually distinct
though derived from
the original indi-
vidual-level units
Within-group
agreement of new
referent lower level
units to index
consensus and justify
aggregation
Value of within-group
agreement index (e.g.,
r
WG
); validity of
aggregated scores
From psychological
climate to
organizational
collective climate
Dispersion model
Meaning of higher
level construct is in
the dispersion or
variance among lower
level units
Within-group variance
(or its derivative) as
operationalization of
the higher level
construct
Absence of multimodality
in within-group
distributions of lower
level scores; validity of
dispersion index
From psychological
climate to climate
strength
Process model
Process parameters at
higher level are
analogues of process
parameters at lower
level
No simple algorithm;
ensure analogues exist
for all critical
parameters
Nomological validity for
source and target con-
structs at their respective
levels to distinguish
shared core content from
level-specific aspects
From psychological
climate
development to
organizational
climate emergence

18 Introduction
In a direct consensus model, which is usually used to form organizational climate from
psychological climate, consensus of lower level responses is used to validate the
aggregation to the higher level (Kozlowski & Hattrup, 1992; Ostroff & Rothausen,
1997). Referent-shift models imply a different focus at different levels of analysis.
Chan (1998) provides self-efficacy as an example. Individuals perceptions of their
efficacy cannot be aggregated to measure group-efficacy. The two concepts require a
different frame of mind. People can view themselves as highly efficient, but their
colleagues as not efficient, and therefore, the whole group as low efficient. However,
the technical procedure for aggregating the data in direct consensus and referent-shift
models is the same. Agreement or consensus on the lower level is the necessary
precondition for the aggregation.
There are various measures for the level of agreement on the lower level, with the
most often used one being the interrater agreement statistic r
WG
or r
WG(J)
by James,
Demaree, and Wolf (1984). The r
wg(J)
index compares the average variance of multiple
items belonging to one scale, with the expected variance resulting from a random
distribution over the categories (see Equation 1, taken from Newman & Sin, 2009). J
represents the number of items,
2
j
x
s is the itemwise variance across judges, averaged
over all items, and
2
E
is the null distribution. Even if this index is not without criticism
(see, R. D. Brown & Hauenstein, 2005; LeBreton & Senter, 2008; Newman & Sin,
2009) , it is still commonly used.

2 2
( )
2 2 2 2
1 /
1 / /
j
j j
x
E
WG J
x x
E E
J s
r
J s s

(
| |
| (
\ .

(
| | | |
| | (
\ . \ .

=
+
(1)
The values of the r
wg(J)
index can range from 0 to 1 (Lindell & Brandt, 1999).
According to James et al. (1984), a value of .70 and above indicates sufficient
agreement. Further recommendations based on a simulation study for varying group
sizes were provided by Kozlowski and Hattrup (1992). In addition to one of the
presented interrater agreement indices, scholars usually also report two interrater
reliability measures. Most commonly used are the intraclass correlation coefficient
(ICC) 1 and 2 (Bliese, 2000). Calculated with the results from a one-way analysis of
variance (ANOVA), where scale values are used as dependent variables and group
Introduction 19
membership as independent variable, the ICC(1) compares the amount of variance
explained by the work group (between group) with the total variance in scores (see
Equation 2, Bliese, 2000). The ICC(2) estimates the reliability of the group means for
every scale (see Equation 3). MSB equals the mean square between groups, MSW the
mean square within groups, and k the average group size.

( )
(1)
1
MSB MSW
ICC
MSB k MSW

=
+
(2)
(2)
MSB MSW
ICC
MSB

= (3)
For the appropriateness of the data aggregation to a higher level, it is most important
that the results of the one-way ANOVA are significant. In addition, whereas ICC(1)
values should be low, ICC(2) values should be high. Even if ICC(1) values tend to
range from .03 to .12 (Bliese, 2000), there exists no standard cutoff value for it
(Takeuchi, Shay, & Li, 2008). The ICC(2) is usually seen as acceptable if it exceeds
.70 (Bliese, 2000; Klein & Kozlowski, 2000).
The use of the presented cutoff values should not be the only indicator on which
scholars base their decision about the appropriate level of analysis. Theoretical
reasoning is always required. However, as outlined by Chan (1998), a low between-
group variability could indicate that the level of analysis is not appropriate. If all
groups in one company have comparable means, the organizational level might be the
correct level of analysis. For research on organizational climate, I agree with
Schneider and colleagues (2011) and would advise at least to demonstrate within-
group agreement.
1.2.4 Current State of Organizational Climate Research
As outlined, organizational climate was expected to cover a broad variety of
dimensions (see Chapter 1.2.1). Due to the multiple dimensions included in the climate
construct, it seems rather complicated to summarize the findings concerning
organizational climate (Carr, Schmidt, Ford, & DeShon, 2003). That is why Schneider
(1975) and Schneider and Reichers (1983) argued for the use of more specific or
20 Introduction
strategic climates
3
. However, in this broad version, two meta-analyses shed some light
on the effects of general organizational climate.
Carr et al. (2003) conceptualized organizational climate in its molar version in line
with Ostroff (1993). They argued for three higher-order facets: affective, cognitive,
and instrumental. In their path model, they expected that affective, cognitive, and
instrumental climate would influence individual-level work outcomes. However, this
relationship was argued to be mediated by the two cognitive and affective states of job
satisfaction and organizational commitment. The analysis of 51 studies revealed that
both propositions gained support. Further, Carr and colleagues (2003) found differing
effects of affective, cognitive, and instrumental climate.
The second meta-analysis by Parker et al. (2003) conceptualized climate on the
individual-level, often referred to as psychological climate, and adopted the five
dimensions from Jones and James (1974). Parker and colleagues (2003) tested whether
psychological climate would influence work attitudes (i.e., job satisfaction, job
involvement, and commitment), psychological well-being, subsequently motivation,
and ultimately performance. In their sample of 94 studies, they gained support for the
proposed relationships.
As mentioned, apart from these two meta-analyses, there are few consistent findings
on the effects of general organizational climate. This might be caused by a low validity
of the generic climate model (Ostroff, Kinicki, & Tamkins, 2003; Schneider, Bowen,
Ehrhart, & Holcombe, 2000). Therefore, Schneider (1975) raised the bandwidth
problem of organizational climate research: it is unlikely to predict concrete behaviour
as such a broad construct. This problem, which has been introduced to science before
(Brunswik, 1956; Wittmann, 1988), refers to the need for alignment between the
bandwidth of the predictor and criterion. A lack of criterion relevance yields lack of
criterion predictability (Schneider & Reichers, 1983, p. 23). The closer the overlap of
predicting and predicted variable the more likely is it that one will find effects. Thus,
Schneider (1975), Schneider and Reichers (1983), and Glick (1985) argued for a so
called climate for something, focused climate, or strategic climate approach.
Many different forms of climates emerged from this call. Examples include service
climate (e.g., Walumbwa, Hartnell, & Oke, 2010; Walumbwa, Peterson, Avolio, &

3
The findings of this approach (i.e. for diversity climate or climate for inclusion) will be outlined subsequently
(see Chapter 1.3.4).
Introduction 21
Hartnell, 2010), safety climate (e.g., Hofmann, Morgeson, & Gerras, 2003; Probst,
Brubaker, & Barsotti, 2008), procedural justice climate (e.g., Tangirala & Ramanujam,
2008; Walumbwa, Wu, & Orwa, 2008), climate for innovation (e.g., King, Chermont,
West, Dawson, & Hebl, 2007; Somech & Drach-Zahavy, in press), climate for fairness
(e.g., Colquitt, et al., 2002), climate for burnout (e.g., Moliner, Martnez-Tur, Peir,
Ramos, & Cropanzano, 2005), climate for ethics (e.g., K. D. Martin & Cullen, 2006),
and climate for inclusion (Nishii, in press) or diversity climate (e.g., Mor Barak,
Cherin, & Berkman, 1998). It would go beyond the scope of this manuscript to review
all the findings. Instead, the interested reader should refer to James and colleagues
(2008) or Schneider, Erhart, and Macey (2011) for recent reviews. However, in sum it
can be said that the climate for something approach and along with that, the deliberate
selection of the dimensions of climate and the matching between climate dimension
and outcome of interest, significantly improved the predictive validity in climate
studies. Therefore, future studies should aim at aligning the form of climate to the
specific outcome they want to predict. This recommendation will be followed in Study
2 and Study 3 of this dissertation.
1.3 Diversity Climate/Climate for Inclusion
1.3.1 Defining Diversity Climate/Climate for Inclusion
The perceived inclusiveness of the workplace concerning diversity has been named
diversity climate (e.g., McKay, Avery, & Morris, 2008; Mor Barak, et al., 1998) or
climate for inclusion more recently (e.g., Nishii, in press). This shift in rhetoric (Q. M.
Roberson, 2006) expresses the attempt to overcome approaches that mainly focus on
minority groups and instead, create environments where everyone is fairly treated,
valued for who he or she is, and included in important decision-making processes
(Holvino, Ferdman, & Merrill-Sands, 2004; Shore et al., 2011). For the sake of
simplicity, the two terms will be used interchangeably in this dissertation.
Diversity climate has been defined by various scholars (e.g., Gonzalez & DeNisi,
2009; Kossek & Zonia, 1993; McKay, et al., 2008). However, all definitions follow a
common thread (Konrad, Cannings, & Goldberg, 2010, see Chapter 1.3.3). In this
thesis, I adopt the definition by Gelfand, Nishii, Raver, and Schneider (2005),
according to which diversity climate describes employees shared perceptions of the
22 Introduction
policies, practices, and procedures that implicitly and explicitly communicate the
extent to which fostering and maintaining diversity and eliminating discrimination is a
priority in the organization (p. 104).
1.3.2 Importance of Diversity Climate/Climate for Inclusion
Due to the rising diversity in the workforce, managing diversity became a strategic
imperative for companies (Konrad, 2003). Since diversity can lead to both, positive
and negative outcomes, it is key for companies to foster the positive effects, while
preventing the negatives. Therefore, Kochan and colleagues (2003) suggested that
more emphasis should be placed on how diversity is managed and its implications for
companies performance. In this regard diversity climate gained considerable attention
in the scientific literature (Cox, 1994). Multiple scholars have argued that the
development of strong positive climates for diversity is a critical factor in determining
whether organizations can realize the benefits of a diverse workforce (e.g., Avery,
2011; Cox, 1994, 2001; Herdman & McMillan-Capehart, 2010; Holvino, et al., 2004;
Robinson & Dechant, 1997).
However, not only the moderating effects of diversity climate in the diversity-outcome
relationship have gained attention in the literature, but also its predictive effects for
various outcomes. In his interactional model of cultural diversity, Cox (1994) argued
that diversity climate should relate to first-level (e.g., attendance, turnover, work
quality) and second-level (e.g., market share, profitability, organizational goal
achievement) outcomes. According to the model, the second level outcomes are
affected through individual outcomes such as enhanced job attitudes and job
performance. Thus, diversity climate is important to companies in multiple ways.
1.3.3 Relevant Theoretical Considerations
Throughout the literature, diversity climate is usually seen as a multidimensional
construct (e.g., Ely & Thomas, 2001; Kaplan, Wiley, & Maertz, 2011; Kim & Gelfand,
2003; McKay, Avery, Liao, & Morris, 2011; McKay, et al., 2008; Mor Barak, 2000;
Pless & Maak, 2004). Some scholars divide it into two dimensions (e.g., Hicks-Clarke
& Iles, 2000; Mor Barak, et al., 1998), others use three dimensions (e.g., Nishii, in
press), and some cover multiple dimensions by items and form a single overarching
Introduction 23
factor (e.g., McKay, et al., 2008). However, even if the approaches and labels slightly
change between different conceptualizations, content wise a common thread emerges
(Konrad, et al., 2010). Here, three dimensions will be presented that are often regarded
part of the overall diversity climate construct: fairness of employment practices,
inclusion in decision making, and integration of differences (taken from: Nishii, in
press).
Fairness of employment practices refers to the equal treatment of all employees,
without differentiating between different groups of gender, age, ethnicity, disability,
etc. Fair practices have been identified as important predictors of a positive diversity
climate (e.g., Hicks-Clarke & Iles, 2000). Examples of these practices include HR
procedures like: performance appraisals, promotions, benefits, recruitment and
selection, and the assignment of tasks (Arthur & Doverspike, 2005; Gelfand, et al.,
2005). If the supply of resources depends on a certain group membership, favored
groups will think of themselves as superior and foster the salience of their group
membership (Ridgeway, Boyle, Kuipers, & Robinson, 1998). In addition, members of
low status groups may engage less with their coworkers (Harris, Andrews, & Kacmar,
2007) and lower their efforts to perform well on the job due to principles of social
exchange (Wayne, Shore, & Liden, 1997).
The inclusion in decision-making dimension denotes the amount to which all members
of a company are included in the decision-making process (Ely & Thomas, 2001).
Executives, supervisors, and colleagues need to accept minority sentiments and
embrace them as a potential way to gain new knowledge in order to create a positive
diversity climate. This also helps majority group members to get to know their
colleagues from minority groups (Ensari & Miller, 2006). In addition, minority
sentiments can also prevent groups from engaging in group think (Janis, 1972).
Finally, the incorporation of these information, or its elaboration, is also one important
requirement for benefiting from workplace diversity (Van Knippenberg, et al., 2004).
Integration of differences refers to the extent to which employees of various
backgrounds are integrated in the social life at work (Ibarra, 1993). In companies
which integrate differences, minority group members do not have to adapt to the
norm. Instead, they can be themselves and act according to their identity (Ramarajan,
2009), without being afraid of negative consequences (Ragins, 2008). This openness
should lead to enhanced interaction between company members of various
24 Introduction
demographic groups. Based on the predictions of the contact hypothesis (Allport,
1954), these interactions might ameliorate negative attitudes against the individual and
against the group as a whole. Empirical findings support this prediction (Scarberry,
Ratcliff, Lord, Lanicek, & Desforges, 1997). A recent meta-analysis by Pettigrew,
Tropp, Wagner, and Christ (2011) revealed an average effect size of r = -.21. In
addition, in such an open environment role models and social support should be
equally available to all company members, regardless of their demographic
background (Dreher & Ash, 1990).
In his Interactional Model of Cultural Diversity (IMCD), Cox (1994) argued that four
individual-level factors, three intergroup factors, and four organizational factors form
diversity climate. These are personal identity structures, prejudice, stereotyping, and
personality at the individual level; cultural differences, ethnocentrism, and intergroup
conflict at the group level; and organizational culture and acculturation processes,
structural integration, informal integration, and institutional bias at the organizational
level (Cox, 1994). These factors are argued to influence individual-level outcomes
such as job satisfaction, organizational identification, job involvement, performance
ratings, and in turn, organizational effectiveness on the first level (e.g., attendance,
turnover, creativity, problem solving, etc.) and the second level (e.g., market share,
profitability, achievement of formal organizational goals, etc.).
1.3.4 Current State of Diversity Climate/Climate for Inclusion Research
Studies that assessed diversity climate as a criteria, found that different demographic
and organizational groups often report divergent levels. Members of racioethnic
minority groups and women tend to report lower levels of diversity climate than their
Caucasian, male colleagues (Kossek & Zonia, 1993; Mor Barak, et al., 1998). In
general, the racial composition of the employees seems to influence the diversity
climate throughout the company (Pugh, Dietz, Brief, & Wiley, 2008). Pugh and
colleagues further showed that the companys surrounding plays an important role. In
homogeneous communities workforce composition impacts the diversity climate
perceptions of organizations, whereas in heterogeneous communities it does not.
Diversity climate perceptions also seem to vary by employee age and hierarchy level
(Hicks-Clarke & Iles, 2000). The older and hierarchically higher a person is, the more
positive is the diversity climate rating. These varying diversity climate perceptions are
Introduction 25
also significantly associated with differences in organizational commitment, job
satisfaction, and career satisfaction (Hicks-Clarke & Iles, 2000). It seems as if
individual-level demographics predict a persons perceived climate for diversity.
Missing in the literature so far are studies which assess how to enhance diversity
climate in companies. An exception which points in the right direction, is a recent
study by King, Dawson, Kravitz, and Gulick (2012), who found that diversity training
reduces the amount of discrimination perceived by ethnic minorities.
When examined as a predictor, diversity climate was found to be related to various
outcomes. Kossek and Zonia (1993) were able to predict the heterogeneity of an
organization based on the organizations diversity climate. McKay, Avery,
Tonidandel, Morris, Hernandez, and Hebl (2007) found that diversity climate was
positively associated with organizational commitment and negatively with turnover
intentions. They provided support for organizational commitment as a mediator or
process in the diversity climate-turnover intentions link. These results varied by ethnic
groups, as the association between diversity climate and turnover intentions was
strongest for Blacks followed by White men and women and Hispanic employees. The
positive association of diversity climate and turnover intentions as well as the positive
link with organizational commitment was supported by Buttner, Lowe, and Billings-
Harris (2010). Both relationships were mediated by perceived interactional and
procedural justice. The link with commitment and job satisfaction, career commitment
and satisfaction, and satisfaction with managers was shown by Hicks-Clarke and Iles
(2000) before. In an hierarchical linear model (HLM), Avery et al. (2007) found
employee perceptions of the organizations support for diversity, which seems
conceptually equivalent to diversity climate, to positively predict organizational
commitment and to lower absenteeism of all employees. Finally, in another HLM
analysis McKay and colleagues (2011) showed that diversity climate is also related to
positive outcomes outside of the organization, in this case: customer satisfaction. In
sum, diversity climate has been shown to predict a companys diversity and was found
to be beneficial for attitudes and other outcomes on the individual-, group-, and
organizational-level of analysis.
Even if there is research on diversity climate as a criteria or predictor, most studies
tested its effects as a moderator in a diversity-outcome relationship. Recently, Nishii
(in press) applied HLM analyses to show that inclusive climates influenced groups in
26 Introduction
such way, that interpersonal bias was reduced. In addition, gender diversity is
associated with lower levels of task conflict than in non-inclusive climates. In addition,
the negative effect of group conflict on unit-level satisfaction disappeared. Gonzales
and DeNisi (2009) were also able to show that diversity climate attenuates the negative
influences of diversity on productivity and organizational commitment, and the
positive influence on relationship conflict as well as the intention to quit at the group
level. In the same study, diversity climate also moderated the association between
diversity and company productivity and company return on profit. Additional research
on the moderating role of diversity climate stems from McKay and colleagues (2008;
2009). In the 2008 study, they found that there are differences in sales between White,
Black, and Hispanic employees. However, these differences were significantly
moderated by unit-level diversity climate. In a second group-level study, McKay et al.
(2009) differentiated the diversity climate perceptions between subordinates and
managers. Diversity climate ratings among both groups were significantly related to
store unit sales performance. Furthermore, both groups diversity climate ratings
interacted with each other in such a way, that sales growth was the greatest in stores
where both diversity climate assessments were high (positive consistency). In stores
with negative consistency (i.e. negative diversity climate ratings of subordinates and
managers), sales growth were worst. Thus, the positive moderating effects of diversity
climate in the diversity-outcome relationship gained some support in the literature.
Taken together, there is evidence for the positive effects of diversity climate as both a
predictor and a moderator in the diversity-outcome relationship. However, more
research is needed to support this research. For example, most studies which linked
diversity climate with performance were either qualitative in nature or focused on the
individual level (McKay, et al., 2011; McKay, et al., 2009). Furthermore, research on
effects of diversity climate for negative outcomes such as discrimination, harassment,
etc. is missing in the literature so far. In addition, research regarding the processes
through which diversity climate affects distal outcomes such as performance seems
scarce (Avery & McKay, 2010). Study 3 of this dissertation addresses these gaps by
investigating the mediating role of discrimination in the diversity climate-performance
link, a process that has often been proposed by scholars (e.g., Gelfand, et al., 2005) but
seems untested so far.
Introduction 27
1.4 Outline of the Dissertation
This dissertation contains five main chapters. These chapters are briefly summarized in
the following, in order to provide a better orientation for the reader.
Chapter 1: Introduction
The introduction chapter familiarized readers with the main constructs of the
dissertation. The chapter was divided into three main content parts on diversity,
organizational climate, and diversity climate. Each part consisted of a definition,
the importance/relevance of the topic, relevant theoretical considerations, and the
current state of research. Based on the current state of research there was also an
outline of the research gap and how this dissertation contributes to the field.
Finally, the fourth part of the chapter gives an overview of the chapter structure of
this dissertation.
Chapter 2: Study 1 - Explaining the Gap in the Amount of Empirical Research on
Disability and Other Diversity Facets: Methodological Challenges and Possible
Solutions
Chapter 2 consists of the first study about the gap in empirical research between
disability and other diversity dimensions. It provides a literature review of the last
16 years of disability research in top-tier management journals and compares the
results with studies on other diversity facets. In the authors opinion, the resulting
difference in the amount of research can be partly explained by specific
methodological challenges in the field of disability research. The last part of the
study outlines some possible solutions to the described problems.
Chapter 3: Study 2 - Organizational Identity Strength and Transformational
Leadership Climate as Mediators of the Relationship Between CEO Charisma and
Organizational Performance
This chapter contains Study 2 about the relationship between CEO charisma,
transformational leadership climate throughout the company, organizational
identity strength, and their impact on organizational performance. By investigating
the mediating effects of transformational leadership climate and organizational
identity strength, the study opens the black box between organizational leadership
and organizational performance. It further investigates the cascading effect of top-
28 Introduction
level leadership on leadership climate in the entire organization, by showing the
effects of CEO charisma on transformational leadership climate. Finally, it is the
first study to investigate the relationship between organizational identity strength
and performance at the organizational level of analysis.
Chapter 4: Study 3 - Expanding Insights on the Diversity Climate-Performance
Link: The Role of Work Group Discrimination and Group Size
Chapter 4 links the two main research domains of this dissertation, diversity and
organizational climate, by investigating diversity climate. It adds to prior research
by assessing a mechanism through which diversity climate affects performance.
Thereby, it extends the climate model of productivity by Kopelman, Brief, and
Guzzo (1990). To do so, it proposes and empirically tests a mediation model in
which work group discrimination, as a behavioral construct, mediates the
relationship between diversity climate and group performance. In addition, it
investigates group size as moderator upon which this mediated relationship
depends.
Chapter 5: Overall Conclusion
Finally, in addition to each studys individual conclusion, Chapter 5 consists of an
overall conclusion. It provides a short overview of the main goals of this
dissertation and how they were addressed. However, a more detailed discussion is
provided in the respective section of each individual study.

Explaining the Gap in Diversity Research 29
2 Study 1 Explaining the Gap in the Amount of Empirical
Research on Disability and Other Diversity Facets:
Methodological Challenges and Possible Solutions
Authors: David J. G. Dwertmann
Individual contribution: Responsible for the whole paper.
Presentations: A prior version of this paper was presented at the Academy
of Management Annual Conference 2011 in San Antonio,
TX. The title was Management research in disability:
Methodological challenges and possible solutions.
Current stage: In preparation for submission to Academy of Management
Review
2.1 Abstract
Compared to other diversity facets such as age, gender, and ethnicity, empirical
research in the area of disability is extremely underrepresented in top tier journals.
Although this gap in research has often been mentioned by scholars, little explanations
for it have been put forward. I believe that specific methodological challenges for
quantitative research in the field are an important contributor to this fact. The paper
identifies and outlines specific challenges through expert interviews and reviews the
disability literature published in 14 top tier journals of the last 15 years in the light of
these findings. Failure to think about the identified 16 challenges from three categories
(i.e., construct, measurement, and sample) lead to serious problems in research and
therefore, hinder the accumulation of knowledge in the field. A clear sample
description, studies in companies from the first labor market that specialize on the
employment of people with disabilities, the use of experimental and quasi-
experimental designs, the incorporation of knowledge from other areas of business
administration (e.g., marketing) or disciplines (e.g., psychology, medicine, sociology),
and the deliberate match of the sample, measures, study design, and data analyses to
the research question can help to overcome these challenges, increase the number of
30 Explaining the Gap in Diversity Research
high quality research and thereby, advance the testing and advancement of the theory
building process in the area of workplace integration of people with disabilities.
Keywords: disability, diversity, research challenges, quantitative methods, inclusion,
review, theory development
2.2 Introduction
It has been 16 years since Stone and Colella (1996) published their highly influential
article about the factors affecting the treatment of people with disabilities in
organizations in Academy of Management Review. In their publication, they clearly
outline the agenda for conducting research about the workplace integration of people
with disabilities. However, the number of publications which deal with this issue is
still limited (Stone-Romero, Stone, & Lukaszewski, 2006), a fact which is stated in the
introduction of many articles in this area (e.g., Dovidio, Pagotto, & Hebl, 2011;
Moore, Konrad, Yang, Ng, & Doherty, 2011).
Management scholars generally include the topic of disability in the diversity research
stream (e.g., Kulik & Bainbridge, 2006; Shore et al., 2009). However, whereas other
diversity facets such as gender, race, and age are often empirically examined (e.g.,
Ragins & Gonzalez, 2003; Van Knippenberg & Schippers, 2007), empirical research
concerning disability still limited (McLaughlin, Bell, & Stringer, 2004; D. L. Stone &
Colella, 1996), but to our knowledge so far there are no attempts to actually explain
this difference.
Identifying the underlying reasons for this gap and developing solutions on how to
close it are important for advancing much needed research on disability. The paucity
of research on disability is troublesome given the magnitude of the worlds population
that has, or is affected by someone who has, a disability. According to the World
Health Organization, about 15.6 per cent or one billion people of the worlds
population has a disability (WHO, 2011), representing the worlds largest minority
(UN, 2006). Concerning employment, the latest numbers of the International Labour
Organization (Murray, 2010) reveal that approximately 470 million people of the
worlds working-age population have a disability. In some countries, the
unemployment rate among them is up to 80 per cent (UN, 2006). High unemployment
rates of people with disabilities are not only a problem in less developed countries; in
Explaining the Gap in Diversity Research 31
the U.S., 54 per cent of the people with disabilities between 21 and 64 are unemployed
(U.S. Census Bureau, 2010). The European Union (EU, 2010) reports that the
unemployment rate in Europe is almost two times higher for people with disabilities
than for people without disabilities.
These numbers have important implications for at least three groups of stakeholders:
companies, individuals, and society. First, because of the demographic change in age,
companies in many countries will face problems in finding young and well educated
employees (Armstrong Stassen, 2008). Due to the clear correlation between age and
disability (UN, 1993; WHO, 2011), increasing the number of people with disabilities
and the general shortage of labour, companies cannot afford to overlook people with
disabilities as an important group of potential employees. Second, research has shown
that psychological as well as physical well-being and various other areas of a persons
life are related to employment status (McKee-Ryan, Song, Wanberg, & Kinicki, 2005).
Therefore, society has to pay attention to the unemployment problem of persons with
disabilities, especially since employment plays an even more important role for people
with disabilities who tend to be socially marginalized (Schur, 2002). The high
unemployment rates of people with disabilities lead to increasing costs and thus put
serious pressure on social security systems in many countries (Autor & Duggan, 2003,
2006). The urgency and criticality of addressing the individual and societal costs
associated with the high unemployment rates of persons with disabilities is what
underlies the Americans with Disabilities Act (1990), the Equality Act 2010 of the
United Kingdom (The National Archives, 2010) and other laws in various countries.
In view of the mentioned numbers and the resulting clear necessity for scholars to
provide companies and society with solid knowledge about the workplace integration
of people with disabilities, the gap in the amount of research between disability and
other diversity dimensions seems surprising. In this article, I propose and review
whether methodological challenges for quantitative research, resulting from specific
aspects of the disability construct (see, Beatty & Joffe, 2006; Bhm, Dwertmann, et
al., 2011; Jackson, Stone, & Alvarez, 1993), could cause this gap. The review is
organized along three broad categories: the construct of disability, measurement, and
sampling issues. Along with the review I provide insights from multiple disciplines, by
which I hope to sensitize scholars, stimulate quantitative research, advance the
knowledge in the field, and thereby enhance the theory building process in the area of
32 Explaining the Gap in Diversity Research
disability research. Following this, I provide some solutions to the mentioned
challenges and describe new directions to enhance research in the area of workplace
integration of people with disabilities.
2.2.1 Review of Top Tier Quantitative Publications in the Past 16 Years
As indicated by Colella and Varma (2001), and Stone-Romero et al. (2006) there is
little research about disability per se. In contrast, the volume of diversity literature in
general increased dramatically since 1988 (Harrison & Klein, 2007). To assess this
gap, I conducted a literature search for the last 16 years, after the publication of the
article by Stone & Colella (1996), using EBSCO for 14 top tier outlets in the fields of
management and applied psychology where I expected research (i.e. Academy of
Management Journal, Academy of Management Review, Administrative Science
Quarterly, Group and Organization Management, Human Resource Management,
Human Resource Management Review, Journal of Applied Psychology, Journal of
Management, Journal of Organizational Behavior, Journal of Vocational Behavior,
Leadership Quarterly, Organizational Behavior and Human Decision Processes,
Organization Science, and Personnel Psychology). First, disability, disabilities, and
accommodation/s were used as key words which had to appear either in the title or the
abstract. Then, I applied the same procedure for the term diversity. Results indicate
that 30 articles were published which dealt with the topic of disability. In contrast 440
manuscripts covered diversity in general. When focusing on empirical research (i.e.
excluding results from Academy of Management Review, Human Resource
Management Review, and one purely theoretical study from Personnel Psychology),
the results are 17 for disabilities and 376 for diversity (see Table 2.1). Thus, articles on
diversity in general were published approximately 22 times more often than articles on
disability in the restrictive sample of top tier journals. This is surprising since
disability is usually one of the main diversity dimensions mentioned in literature
overviews (e.g., Bell, 2007; Konrad, Prasad, & Pringle, 2006). For example, Shore and
colleagues (2009) included it in their review of diversity in addition to the five
dimensions of: race and ethnicity, gender, age, sexual orientation, and culture and
national origin. The underrepresented amount of disability research in the field of
diversity research is staggering. Due to the enormous number of people with
disabilities and their poor workplace integration, it seems as if a lot of research on this
Explaining the Gap in Diversity Research 33
topic would be justified to provide practitioners with solutions on how to change this
situation.
I believe that methodological aspects in the field of disability research are one aspect
that causes this lack of research. However, since a detailed elaboration of all existing
methodological problems regarding research on disability is beyond the scope of one
single paper, the focus of this paper is on quantitative research tackling the aspect of
disability in the area of business research. By doing so, I hope to provide guidance for
scholars and therefore, a starting point for intensified rigorous management research in
disability, which will show managers ways to overcome stereotypes and negative
perceptions of people with disabilities and their employability (Bell, 2007; Bricout &
Bentley, 2000) and thus, help practitioners to successfully include people with
disabilities into the workforce.

34 Explaining the Gap in Diversity Research
Table 2.1 Empirical journal articles on the topic of disability since 1996
Authors Year Journal Topic Kind of data Data source
Bainbridge, Cregan, & Kulik (2006) JAP caregiving quant survey
* Baldridge & Swift (in press) JOM accommodations quant survey
* Baldridge & Veiga (2006) JOM accommodations qual & quant interview & survey
* Colella, DeNisi, & Varma (1998) JAP bias quant experiment
Colella, Paetzold, & Belliveau (2004) PP accommodations theory
* Colella & Varma (2001) AMJ LMX quant experiment & survey
* Florey & Harrison (2000) AMJ accommodations quant experiment
* Good, Maisel, & Kriska (1998) JAP employee selection qual & quant survey & focus groups
Haynie & Shepherd (2011) JAP career transition qual & quant individual case study
Kulkarni & Lengnick-Hall (2011) HRM socialization qual interview
Lengnick-Hall, Gaunt, & Kulkarni (2008) HRM bias, stigma qual interview
* McLaughlin, Bell, & Stringer (2004) GOM stigma quant survey
* Moore, Konrad, Yang, Ng, & Doherty (2011) JVB well-being quant survey
Pomplun & Omar (2000) JAP accommodations at school quant math test
* Rohe & Krause (1998) JVB vocational interests quant test
* Stern, Mullennix, & Wilson (2002) JAP accommodations quant survey, experiment
* van Dierendonck, Schaufeli & Buunk (1998) JAP burnout intervention quant survey, experiment
Explaining the Gap in Diversity Research 35
* Westaby, Versenyi, & Hausmann (2005) JAP intention to work quant survey
* Studies which use mainly quantitative methodology and investigate aspects of the workplace accommodation with disabilities.

36 Explaining the Gap in Diversity Research
2.3 Identifying Challenges of Disability Research
There are many problems related to the research of disability that also apply to other
fields of management research (e.g., social desirability in survey research, issues of
data protection). However, in addition to these general issues, disability research
confronts scholars with some very specific challenges (e.g., justification bias). The
following review includes both cases. Nevertheless, special emphasis will be on the
specific problems rather than examining general methodological problems in detail.
For reviews of general methodological problems in management research, see for
example Echambadi, Campbell, and Agarwal (2006) for quantitative research, and
Gephardt (2004) or Shah and Corley (2006) for qualitative research.
To identify the methodological challenges in the field of disability research, I applied a
comparable procedure to Short, Ketchen, Combs, and Ireland (2010) in their review on
methods in entrepreneurship and interviewed scholars from the field. Participants were
expected to have a minimum of one year of experience in conducting research in the
field of workplace integration of people with disabilities. A total of 13 people with
different educational backgrounds (i.e., business administration, economics,
econometrics, psychology, and sociology) were asked for their experience with
performing research (e.g., What are problems that you are dealing with when doing
research about the workplace integration of people with disabilities in the labor
market?). Based on their answers about their research on disability issues in the
workplace, I identified sixteen distinct challenges.
In a second step, I wrote emails to the mailing lists of two Academy of Management
divisions. These lists were the mailing list of the Gender & Diversity in Organizations,
and the Organizational Behavior division. I chose these particular divisions because I
expect that scholars engaging in research on the workplace integration of people with
disabilities would mostly be represented here. I received answers from eight people.
However, all the mentioned challenges were already identified through the initial
interviews. Thus, the final 16 challenges equal those which I collected before.
To make it easier for the reader, I assigned the remaining 16 challenges to three main
categories (see, Figure 2.1). The categories, which I will outline in further detail
below, are the following: characteristics of the construct of disability that introduce
Explaining the Gap in Diversity Research 37
significant methodological complexities, measurement of the construct and attitudes
related to disability, and the challenges associated with sampling. The theoretical
rationale behind the grouping of the challenges will serve as the introduction to each
section. Each of the categories will be accompanied by recommendations that act as a
starting point to solve the mentioned problems.
Figure 2.1 The three main challenges for management research in disability

2.3.1 The Construct of Disability
The first group of challenges is subsumed under the term construct of disability.
There are certain specific characteristics of the disability construct itself (Bell, 2007)
that impose constraints on scholars engaging in research about disability compared to
other facets of diversity. These characteristics are the heterogeneity of the construct,
comorbidity or the alignment of different types of disability, the alterability of the
38 Explaining the Gap in Diversity Research
disability status over time, the individual perception of what constitutes a disability,
and resulting from these issues, a lack of a consistent definition of the construct.
2.3.1.1 Definition of Disability
What exactly is a disability? One of the most frequently used definitions stems from
the Americans with Disabilities Act of 1990 (Americans with Disabilities Act of 1990,
1990). It states that a disability is: An impairment that restricts the ability to perform
normal daily activities. Surely, the term normal daily activities would need a clearer
elaboration. For one, what is considered to be normal might be strongly affected by
cultural norms and the region of the world where someone lives. This is reflected in
the variability of definitions of disability across countries (Mayhew, 2003). Social
consensus about what constitutes a disability can vary strongly (e.g., Kapteyn, Smith,
& Van Soest, 2007). Even if the classification of a health condition as a disability
could be clarified on a case by case basis as required for insurance and pension claims,
this is not a viable procedure for clarifying the definition of what constitutes a
disability within broader quantitative studies (Blaschke & Plath, 1997). As a result,
there remains conceptual confusion (Colella & Stone, 2005); to date, there is no single,
consistently used definition of disability (M. K. Jones, 2008; Wolfe, 1984). Apart from
political aspects, this may be caused by two main reasons: the heterogeneity and the
often occurring comorbidity of the construct.
2.3.1.2 Heterogeneity of the Construct
First, disability is a complex, multifaceted construct (Baldridge & Veiga, 2001). There
are different categories of disabilities. According to Stone and Colella (1996), people
can be physically disabled, mentally disabled, sensory impaired, learning impaired,
neurologically impaired, or addicted. Obviously it makes a huge difference if a person
is physically disabled, mentally disabled, or addicted. However, even within these
different groups of disabilities, there is large variety (Ren, Paetzold, & Colella, 2008).
Imagine a person who has lost one arm in a car accident and a person that has a
spasticity from birth. Both persons would be classified as physically disabled, but the
impact of their disabilities is very different from each other. Their disabilities may be
viewed differently by employees, supervisors, and coworkers, and may impact their
Explaining the Gap in Diversity Research 39
productivity and need for an accommodation differently. Thus, disability is a very
heterogeneous construct and therefore, hard to capture and examine. A challenge that
is implicitly mentioned by Baldridge & Swift (in press) as well as Baldridge & Veiga
(2006). Westaby, Versenyi, & Hausmann (2005) offered one approach to solve this
issue by measuring the disability severity across their sample. By doing so, they are
able to better differentiate the effects even within a certain group of disabilities.
2.3.1.3 Comorbidity
Second, some groups of disabilities often occur in combination. Therefore, Feinstein
(1970) introduced the term comorbidity into medicine. According to Feinstein (1970,
p. 455), In a patient with a particular index disease, the term co-morbidity refers to
any additional co-existing ailment. People who obtain a disability from an accident
(e.g., car accident) might often attain various disabilities. Another example is
psychological disabilities. In many cases, people hold different psychological
disorders at the same time (Maj, 2005). The comorbidity of disabilities is another
challenge for researchers, since it is sometimes impossible to isolate the effects of a
disability from the effects of other disabilities, and therefore, to generalize findings.
However, this problem is not mentioned in the reviewed articles.
2.3.1.4 Alterability
Apart from the definitional problems, there are additional challenges linked to the
construct of disability. A main challenge is the alterability of the construct (D. L.
Stone & Colella, 1996). Unlike other demographic attributes like sex, race, and
ethnicity which are immutable (Jackson, et al., 1993), disability can change over time
(e.g., a person with cancer can go into remission; Beatty & Joffe, 2006; Benitez-Silva,
Buchinsky, Chan, Cheidvasser, & Rust, 2004; Skedinger & Widerstedt, 2007).
Imagine a person with a major depression. The person may have no restrictions and
therefore, be able to work for long periods of time (Kring, Johnson, Davison, & Neale,
2009). However, in a stage of acute depression, he or she might not be capable of
going to work. For research, such unstable conditions might be a serious threat to the
findings. Results rely on the period of time when the data are collected. If it would be
possible to find predictors for the inconsistent conditions, this issue could be solved,
40 Explaining the Gap in Diversity Research
because then scholars could control for the effects of the varying conditions. Another
option to tackle this challenge would be the use of longitudinal research designs
(Avey, Luthans, & Mhatre, 2008). Here, varying conditions over time and their
implications for the outcome under study can be examined. Rohe and Krause (1998)
provide one example for the use of longitudinal data.
2.3.1.5 Individual Perception
Finally, the perception of being disabled might be highly individualistic. Pain
sensitivity among humans varies substantially (Diatchenko et al., 2005); thus some
disabilities should be correlated with pain sensitivity (e.g., back pain), the status of
being disabled might be affected by the same mechanism for these disabilities.
Whereas some people might still be able to work, others might suffer too much pain to
do so. Since management scholars usually do not pay attention to these physiological
issues, they are an additional challenge to the study of disabilities. Results may only be
valid for a single individual, because every person perceives his/her pain and disability
different. Therefore, it can be hard to generate systematic knowledge.
It seems extremely challenging to overcome the presented problems. However, one
way to cope with them, is to pay attention to a clear definition of disability. Another
important solution lies in a detailed description of the sample (Linton et al., 2005). The
sharper the selection and description of the sample, the clearer the generalizability of
the results. For example, studies of people with hearing problems cannot be
generalized to people with disabilities in general (Baldridge & Swift, in press). Of
course, a sharp description of the sample calls for a reliable and valid measurement of
the characteristics of the sample. This point directly leads to the next cluster of
problems related to management research in disability, the measurement cluster.
2.3.2 Measurement
The second category consists of seven problems associated with measuring disability.
Five of these problems are directly associated with the assessment of the disability
construct itself: measurement of the disability status, lack of disclosure, visibility,
justification bias, and data protection. The remaining two issues are: social desirability
Explaining the Gap in Diversity Research 41
and the unsuitableness of standard measurement scales. These additional issues refer to
the measurement of other constructs in research concerning disability.
2.3.2.1 Measurement of Disability
The problem of measuring disability status is directly associated with the variance and
ambiguity in the way disability in general, as well as specific disability types, are
defined. If it is not clear what exactly constitutes a disability, how can it be measured
accurately? Even when scholars try to enhance precision by focusing on just one
disability type (e.g., depression), identifying those who fit a particular definition of a
disability can be complex given the variance in symptoms across individuals (Ren, et
al., 2008). The measurement of psychological disabilities is especially complex and
expensive, and is sometimes not sensitive enough (Sheehan, Harnett-Sheehan, & Raj,
1996). Sometimes a psychological disability may not be detected. Thus, many have
lamented that it simply is not clear how to measure disability accurately (Johansson &
Skedinger, 2009; M. K. Jones, 2008; S. Stern, 1989). The same holds true for health
where there is a long and ongoing debate in the literature about the comparability of
self-report measures and other, more objective alternatives (Baker, Stabile, & Deri,
2004; Benitez-Silva, et al., 2004; Bound, 1991; Currie & Madrian, 1999). Due to
criticisms concerning self-report measures (e.g., justification bias, unknown level of
comparability across individuals), scholars started to use more objective self-reports
(Bound & Burkhauser, 1999). As explained by Baker and colleagues (2004, p. 1068)
The argument is that these measures are based on very specific questions, which by
their nature constrain the likelihood that respondents rationalize their own behavior
through their answers. However, in their analysis Baker et al. (2004, p. 1067) still
detected a substantial response error which led to attenuation biases. There are other
ways to partially rectify measurement problems. One is to utilize official/register data
when it is available. For example in Germany, people with disabilities can apply for a
disability identification card which provides them with some special support (e.g.,
financial aid). To do so, people must consult a medical doctor. After a thorough
examination, the doctor indicates the degree of disability (percentage up to 100). This
is one way to increase the reliability of the measure. Even if this method does not
provide any information concerning the type of disability, researchers can capitalize on
this fact by asking respondents (in corresponding countries that have a comparable
42 Explaining the Gap in Diversity Research
system, e.g., South Korea, France, South Africa, Turkey, etc.) in surveys to indicate
whether they have an identification card. Thus, the reliability of the measure can be
partly increased and the problem of measuring disability status can at least be buffered.
However, related to this procedure is the fact that the incentive to get such a disability
identification card is different for various groups. People that are already employed
will benefit from a very strict policy concerning the protection against dismissal of
people with disabilities, whereas it could be much harder for unemployed people with
a disability identification card to be hired, thereby providing disincentives for them to
be registered as having a disability. Thus, this particular solution to clarifying
measurement has its problems as it can lead to biased sampling. This fact and related
influences might bias official/register data (Cullen, 2003; Johansson & Skedinger,
2009). Another problem that such a system is not able to cope with, is misreporting, as
described next.
2.3.2.2 Lack of Disclosure
The second challenge of measurement and one form of misreporting is lack of
disclosure. People with disabilities still face many negative attitudes or even stigmas
(e.g., Hebl & Skorinko, 2005; Ragins, Singh, & Cornwell, 2007; Wang, Barron, &
Hebl, 2010) where stigma refers to a negative discrepancy between actual or inferred
characteristics of an individual and the social expectations for typical or normal
individuals in that context (E. F. Stone, Stone, & Dipboye, 1992). Even though some
research shows that persons with disabilities are more committed workers and perform
comparably to colleagues without disabilities (Crow, 1993), stigmas continue to exist.
Research consistently shows that people with disabilities earn less than their
colleagues (e.g., Kidd, Sloane, & Ferko, 2000; Kruse & Schur, 2003). Therefore, even
if some positive benefits may result from disclosure (e.g., accommodations, see Clair,
Beatty, & MacLean, 2005), due to these mainly negative expectations towards, and
consequences, for people with disabilities, many persons do not disclose their
disability (Colella & Stone, 2005). Even the assurance of anonymity in studies might
not overcome this obstacle, thus the actual sample size of employees with disabilities
is often under-estimated. Compared to national databases which suggest that
somewhere between 10-20 per cent of the population has a disability, researchers
rarely capture more than 5 per cent in their sample. It is worth noting, however, that
Explaining the Gap in Diversity Research 43
not all persons with a disability have the option of hiding their disability status, as
some physical disabilities are highly visible (Ragins, 2008). Someone sitting in a
wheelchair does not have the choice to conceal the disability in an experiment, but in a
survey. Mental and psychological disabilities or drug-abuse, in contrast, can be
concealed in many situations. This is especially likely because they are seen more
negatively than physical disabilities (D. L. Stone & Colella, 1996). Therefore, it can be
expected that these more stigmatized groups (where disability is not visible) are even
more likely to conceal their disability status and be under-represented in research. This
is problematic for the advancement of our knowledge of disability issues in the
workplace to the extent that it makes it more difficult for researchers to more fully
explore how the experiences of people with invisible disabilities differ from those of
people with visible physical disabilities.
2.3.2.3 Visibility
The visibility of a persons disability may complicate research in other ways (Beatty &
Joffe, 2006). If scholars are interested in the performance differences of employees
with disabilities compared to their colleagues without disabilities and use supervisor
ratings of their subordinates to assess performance, the rating is likely to be influenced
by effects of social desirability if the disability is visible. The rating may be upward or
downward biased, depending on the kind of disability (Colella & Stone, 2005; G. E.
Jones & Stone, 1995). The same holds true for external raters in experimental settings.
Researchers need to keep this in mind when designing a study.
2.3.2.4 Justification Bias
Whereas it is possible that people with disabilities do not indicate that they have a
disability (especially if it is not visible), the opposite - people indicating that they have
a disability even if they do not - can occur as well. This is the fourth measurement
challenge directly associated with the disability construct itself. Research has shown
that the majority of men who retire before the age of 65 indicate that health is the
reason to do so (Reno, 1971; Sherman, 1985). Although Bound (1991) agrees that
health issues are an important determinant of the age at which men retire, he questions
findings from studies where people are asked to indicate their reasons to retire. He
44 Explaining the Gap in Diversity Research
argues that since health may represent one of the few legitimate reasons for a
working aged man to be out of work, men out of the labor force may mention health
limitations to rationalize their behavior (Bound, 1991, p. 107). The same mechanisms
are likely to influence people when they have to report a disability; because people
tend to exaggerate their work limitations to justify not working, this effect is called
justification bias (Baker, et al., 2004; Bound, 1991; Kapteyn, Smith, & Van Soest,
2009; Kreider & Pepper, 2007). Both the aforementioned lack of disclosure and the
effect of justification bias are forms of misreporting. They can have a strong impact on
results especially when scholars compare people with and without disabilities. Here,
people from the one group could actually belong to the other group and vice versa.
One way to tackle the misreporting issues is to use other measures than just self
reports. As outlined above, in countries that have a comparable system to the disability
identification cards in Germany, these official/register data can be used even in
surveys. If researchers ask respondents in surveys to indicate whether they have such
an identification card, they can overcome some of the problems associated with
justification bias and thus, increase the reliability of the measure. However, as
mentioned, official/register data is not without its own reliability problems, as there are
potential incentives associated with being classified as having a disability (Cullen,
2003; Johansson & Skedinger, 2009). Another way to cope with the problems of
misreporting is to use data from the human resources department. However, it can be
extremely challenging to gain access to these data because of data protection issues
and again, if people do not want to identify themselves as having a disability, they can
be biased.
2.3.2.5 Data Protection
The fifth measurement issue is data protection. As outlined above, the status of being
disabled may have certain negative implications for employees. For example, research
has shown that people with disabilities earn less than employees without disabilities
(Baldwin & Johnson, 2006; Schur, et al., 2009) and tend to have a less positive
relationships with their supervisor (Colella & Varma, 2001). Therefore, it seems
intuitive that some employees decide not to disclose their disability status. Often, data
from the human resources department is not accessible. This might be due to the
human resources department, or an intervention of the works council. Furthermore,
Explaining the Gap in Diversity Research 45
almost every large research interest group has implemented a code of ethics
concerning the procedure of doing research which mentions the importance of
confidentiality (Academy of Management, 2010). The sensitivity of the research topic
disability, and possible negative consequences for people with disabilities require
scholars to be even more careful about confidentiality issues than already expected. A
special case is at hand, if people with disabilities are involved in open claims about
financial support etc. (Krause, Frank, Dasinger, Sullivan, & Sinclair, 2001). Then,
researchers need to pay even more attention to issues of data protection to avoid an
impact of their research on the results of such a claim.
2.3.2.6 Social Desirability
I now turn to social desirability as the first additional measurement challenge to
management scholars in the field of disability research. Socially desirable responding
refers to presenting oneself favorably regarding current social norms and standards
(Zerbe & Paulhus, 1987, p. 250). There is a long and ongoing debate about the
influence of social desirability on measurement in management and the social sciences
(e.g., Doty & Glick, 1998; Paulhus, 1984; Podsakoff, MacKenzie, Lee, & Podsakoff,
2003; Spector, 2006). Spector (2006) is well known for emphasizing that social
desirability is not a threat to management research in general, and that scholars should
instead consider their respective research question and the measured construct to
decide whether their data and results could be affected by social desirability. However,
in disability research, social desirability seems to be an important issue. Expressing
negative attitudes about people with disabilities is not socially tolerated, and many
countries have laws that prohibit discrimination based on ones disability (e.g., during
selection). Therefore, asking managers or employees from the HR-department about
problems of employing people with disabilities might lead to heavily biased answers.
Of course, the same holds true for supervisors, coworkers, and all other people as well
(e.g., Hernandez, Keys, Balcazar, & Drum, 1998). Ways to cope with the threatening
problems of social desirability do not differ from those outlined elsewhere (e.g.,
measuring actual affect or behavior instead of relying on self-report data; D. L. Stone
& Colella, 1996). Promising suggestions to control for social desirability or common
method variance in general ex ante are presented by Podsakoff and colleagues (2003)
as well as by Spector (2006), and consist of prescriptions for how to design a study
46 Explaining the Gap in Diversity Research
and collect data. A review of ex post possibilities is also presented in the article by
Podsakoff et al. (2003) and includes for example partial correlation procedures and
controlling for the effects of an unmeasured latent methods factor.
2.3.2.7 Measuring Instruments (scales)
Finally, another measurement problem in the study of employees with disabilities is
the use of scales. Journals require scientists to use well-validated measures, if they
exist (e.g., the Academy of Management Journal explicitly highlights that the creation
of new, weakly validated measures when well-validated ones already exist is one of
the two most common sources of manuscript rejection (Academy of Management
Journal, 2010). However, most established and well-validated measures were
developed for people without disabilities. In many cases, this might not be a problem
but there are scales that may be inappropriate for use with employees with disabilities.
One out of many examples is the Satisfaction with Life Scale from Diener, Emmons,
Larsen, and Griffin (1985). A sample item is The conditions of my life are excellent
(Diener, et al., 1985, p. 72). In this case, floor effects that bias the findings might
occur. An additional, related threat to scholars comes from the possibility that some
people may experience difficulty understanding common scales due to their
disabilities. Especially in samples consisting of people with mental disabilities the
understanding of items might be challenging. This is why specific scales for people
with intellectual and learning disabilities have been developed (e.g., Weller &
Strawser, 1981, 1987). These challenges can be tackled in three ways. First, scholars
can rely on instruments that have already been validated in samples with people with
disabilities (e.g., Cummins, 1997). However, if cross-group comparisons are planned,
attention needs to be paid to issues of measurement invariance (Vandenberg, 2002;
Vandenberg & Lance, 2000). Second, standard scales can be adapted for use with
people with disabilities. Scales about a persons activity could for example be adapted
from pre-existing scales designed to assess the physical activity of aging individuals
who may be restricted in similar ways as people with certain mobility impairments
(e.g., back pain; Washburn, Zhu, McAuley, Frogley, & Figoni, 2002). Third,
researchers can develop new scales which are specifically tailored with regard to the
used sample. If scholars decide to apply the second or third solution, it would be best if
Explaining the Gap in Diversity Research 47
they test and validate their measures prior to their application to ensure an appropriate
psychometric quality (e.g., Pomplun & Omar, 2000).
2.3.3 Sample
The third group of challenges for research on disability refers to obtaining an
appropriate sample. Even if this problem is not unique to the field of disability (e.g.,
entrepreneurship; Short, et al., 2010), it is particularly challenging in this field. This is
due to at least four reasons. Management research is focused on topics related to
organizations and work. Therefore, the sample for most research questions (e.g.,
workplace inclusion, effects of disability-related diversity in work groups) has to
consist of people with disabilities who are employed. To start, individuals with
disabilities represent a smaller minority group than other diversity categories like
gender and age; only about 15.6% of the worlds population has a disability (WHO,
2011) compared with over 50% being female, and a rising percentage being over the
age of 40 (UN, 2009). The first major sampling challenge emerges from the fact that
of those individuals with disabilities, only a low percentage is actually employed (EU,
2010; UN, 2006). Even more challenging is finding a sample that consists of people
who have a comparable disability. This is the second challenge in the group of
sampling problems.
A third issue related to sampling is the challenge of balancing accuracy and
generalizability. Researchers might be able to realize larger sample sizes by either
using broader categories of disabilities for their research (e.g., physically disabled), or
by making use of firms that specialize in the employment of people with disabilities.
In the first case, results might not be very accurate due to the aforementioned
heterogeneity of the construct (having a hip fracture versus having muscular
dystrophy). In the second case, firms that specialize on the employment of people with
disabilities might not be comparable to other organizations because they are more open
to hiring people with disabilities, employ leadership personnel who is familiar with the
topic, etc. and thus, results might not be generalizable to firms in general. In addition
to these main sampling issues, varying regulations concerning the employment of
people with disabilities in different countries further impose limitations to the
appropriate sampling and generalizability of findings.
48 Explaining the Gap in Diversity Research
2.3.3.1 Employment Status
According to the Bureau of Labor Statistics, in the U.S. currently approximately 3.84
per cent of the current working-age population is disabled (BLS, 2010). The
unemployment rate among people with disabilities in the labor force was 12.9 per cent
in January 2012 (BLS, 2012). Worldwide, the employment rate of people with
disabilities between the age of 18 and 59 is about 40 per cent, compared to 60 per cent
for people without disabilities. For people older than 59, the rate for people with
disabilities is 10.4 per cent, whereas the rate for people without disabilities is 26.8 per
cent (WHO, 2011). These numbers clarify the difficulties in data collection for
research on disability in the management area. There are only very few people with
disabilities that are employed in the regular labor market. Out of the reviewed articles,
the sampling problem is for example prominent in the article by Moore et al. (2011).
The authors even use survey data from the Participation and Activity Limitation
Survey conducted by Statistics Canada, which gathers information about adults and
children whose daily activities are limited by a physical, mental, or other health-related
condition or problem (Statistics Canada, 2006). Thus, the sample is comprised solely
of individuals with disabilities, and therefore has the potential to yield a large usable
sample. The authors started with a sample size of 28,632, but after excluding people
for multiple reasons (e.g., under 18 or over 64, unemployed) their sample was reduced
to 2997. Their usable sample size of approximately 10% is still significantly larger
than that which scholars are able to obtain when they sample from the general working
population (i.e., working adults with and without disabilities).
2.3.3.2 Comparable Study Subjects
Further, if we take into account the need for a clear definition of disabilities and an
elaborated sample description, the challenge seems even more pronounced. Sampling
subjects who have comparable limitations is challenging. For some uncommon
disabilities, this is simply impossible. Reasonable numbers that allow for the use of
standard procedures to analyze quantitative data (e.g., Scherbaum & Ferreter, 2009;
Shieh, 2009), are often only feasible, if multiple fine-grained forms of disabilities are
combined to one broader category such as physical disabilities.
Explaining the Gap in Diversity Research 49
One way to cope with the issues of employment status and comparable study subjects
could be the use of experimental designs. This is because of the increased power
compared to non-experimental research that is very helpful for researchers (Cohen,
1988). Smaller sample sizes are sufficient to detect existing effects. Furthermore,
experiments are able to examine causal relationships between constructs. Management
scholars already applied experimental research designs successfully to the study of
people with disabilities in the workplace. Examples include studies about responses to
accommodation requests (Florey & Harrison, 2000), the impact of subordinates
disability status on leader-member exchange relationships (Colella & Varma, 2001),
perceptions of computer-synthesized speech (S. E. Stern, et al., 2002), and stigmas and
acceptance of coworkers towards colleagues with disabilities (McLaughlin, et al.,
2004). Another interesting option would be the use of discrete-choice experiments
(Louviere & Hensher, 1982; Louviere & Woodworth, 1983). This method was first
established in the marketing area but is now also used in other areas (for a detailed
description see, Street & Burgess, 2007), is designed to detect the relative importance
of attributes. An application in the field of disability research could be the
determination of the relative importance of several attributes of the person (e.g.,
intelligence, physical appearance, education, health status etc.) for the hiring process.
However, these experimental studies usually focus on the reactions of other employees
or supervisors to people with disabilities. It is not possible to apply experimental
designs to detect differences in the perceptions or experiences of people with versus
without disabilities, or between people with different types of disabilities since
disability status cannot be manipulated. Therefore, employees cannot be randomly
assigned to the various conditions (e.g., disabled versus non-disabled), which is one of
the main characteristics of an experiment (Cronbach, 1957). However, the use of
quasi-experiments is possible (Cook & Campbell, 1979; Grant & Wall, 2009; Stone-
Romero, 2011). Regrettably, the use of quasi-experimentation and experimentation in
the study of disability is limited so far (Colella, et al., 1998; Ren, et al., 2008). The
study by van Dierendock, Schaufeli, and Buunk (1998) is one of the rare exceptions.
The use of longitudinal studies which are usually more powerful than cross-sectional
studies (Echambadi, et al., 2006) is another way to avoid sampling problems in
management research on disability (Krause, et al., 2001). Questions regarding within-
person variance like changes in peoples experiences over time can be examined;
however, the focus of research is usually between-person variance (Avey, et al., 2008).
50 Explaining the Gap in Diversity Research
An added benefit of longitudinal studies is that questions concerning the causal
ordering of the constructs can be answered. After identifying an appropriate sample,
data collection in the field of disability can be handled more parsimoniously in
longitudinal designs than in cross-sectional designs because the primary hurdle of
identifying a suitable and sufficiently large sample would not have to be overcome
repeatedly. Instead, after the initial identification, the resulting sample can be
examined more thoroughly over a longer period of time. In contrast, for the study of
other diversity dimensions, such as age, gender, and race, the collection of cross-
sectional data should be associated with less effort, since every person has a certain
status concerning age, gender, and race and therefore, it is easier to realize an
appropriate sample size. An example of a research question that would be well suited
for testing using longitudinal data in the field of disability might involve an
examination of differential learning processes over time. With innovative data analysis
methods such as latent growth curve modeling also referred to as latent trajectory
modeling or simply latent curve modeling (e.g., Bollen & Curran, 2006; Voelkle,
2007; L. J. Williams, Edwards, & Vandenberg, 2003), scholars could answer questions
regarding different trajectories of skill acquisition over time for employees with
different types of disabilities. Longitudinal designs would also enable event analysis
(Singer & Willett, 2003), for example about whether a particular experience leads a
person with a disability to quit his or her job and what factors influence this decision.
However, there are also problems associated with the use of longitudinal designs.
Usually the collection of longitudinal data requires high administrative efforts and can
therefore become very time-consuming and costly (Punch, 2005). Maybe the most
challenging aspect of the collection of longitudinal data is drop-out, especially the
occurrence of systematic drop-out (e.g., Allison, 2001; Newman, 2003; Roth, 1994). In
the study of people with disabilities, systematic drop-out could be especially
problematic because of the alterability of ones disability status. If someones
condition significantly improves, s/he may no longer fulfill the requirements for being
classified as having a disability. Vice versa, if a disability becomes worse or is
accompanied by an additional limitation, they may also not fit into a certain pre-
defined disability category any longer, or may even drop out of the study for health
reasons. Therefore, researchers need to pay attention to these processes.
Finally, other disciplines like medicine, psychology, sociology, etc. may provide
solutions to the sampling challenges. For example, so called single-case research
Explaining the Gap in Diversity Research 51
designs seek to establish causal relationships between independent (here,
intervention) and dependent (outcome) variables (Kratochwill & Levin, 2010, p.
125). They are often used in psychological and educational intervention research
(Kratochwill, 2007) and can be administered to an individual, a dyad, a small group, or
larger institutional populations like organizations (Levin, O'Donnell, & Kratochwill,
2003). However, the design usually focuses on a few study objects with multiple
assessment occasions (Kazdin, 2007). If for example questions regarding the success
with which an intervention helps to integrate people with disabilities in an organization
are the focus, these designs may represent an interesting alternative to traditionally
used designs in the field of management (for an overview see, Kratochwill & Levin,
2010).
2.3.3.3 Accuracy versus Generalizability
A third challenge linked to the sampling is the trade-off between accuracy and
generalizability. First, scholars have to decide whether they want to be very accurate
about the type of disability and the resulting restrictions, or whether they want to build
larger groups of disabilities (e.g., physically disabled) to realize appropriate sample
sizes and to be able to generalize results to a larger population (see the part about the
heterogeneity of the disability construct). Second, researchers can make use of specific
firms that specialize in the employment of people with disabilities (e.g., sheltered
workshops, or call-centers that employ especially people with disabilities) or study
people with disabilities who are embedded in regular firms. By using such specific
settings to conduct research, it is possible to realize appropriate sample sizes. Research
questions that involve concerning the comparison of different disabilities and their
influence on workplace experiences can be tackled. However, the use of such settings
also restricts the external validity of the findings. It is not possible to generalize
results, since the conditions in regular organizations might be very different from the
ones researched. Thus, there often is a trade-off in disability management research
between realizing an appropriate sample size by using very specific firms and
conducting research that is valid for a broad population of organizations.
52 Explaining the Gap in Diversity Research
2.3.3.4 Cross-national Comparisons
Related to the generalizability of results from management studies of people with
disabilities is the challenge of conducting cross-national comparisons. There is a huge
variety of regulations and laws concerning the employment of people with disabilities
in different countries (Aarts, Burkhauser, & de Jong, 1996). Therefore, researchers
have to be cautious about using findings from a study in one country to draw
conclusions for others. For example, Germany has a regulation that stipulates that the
workforce of companies with more than 20 employees must contain at least 5 per cent
people with disabilities. If they do not fulfill this requirement, they have to pay an
equalization fee. In Switzerland, such a regulation is not in place. Thus, even in
companies from the same geographical region there can be serious differences that
may bias results concerning the employment and inclusion of people with disabilities.
These quotas, for example, affect the likelihood that German managers will have
greater exposure to people with disabilities than managers in their neighboring country
of Switzerland. This can have an important influence on the way they perceive and
treat people with disabilities. Therefore, it is extremely challenging to generalize
findings and make general conclusions about the factors leading to the successful
employment of people with disabilities.
2.4 Summary of Solutions
Throughout the article, I tried to offer initial recommendations about how to deal with
the mentioned challenges. Some of these ways of coping raised additional problems
themselves. However, there are four general pieces of advice for doing quantitative
research about people with disabilities in organizations.
First, scholars should provide to a detailed description of their sample. It is important
to know what kind of disabilities are present in the sample. This information strongly
affects the generalizability of the results. Therefore, an intense elaboration of the
sample can help to set the ground for valid conclusions in this extremely
heterogeneous area of research.
Second, the problem of sampling can be approached by conducting research in
companies that specialize in the employment of people with disabilities. By doing so,
researchers can gain better insights into the factors that influence the successful
Explaining the Gap in Diversity Research 53
integration of people with disabilities and can help to make these organizational
features known to a broader audience. However, in a second step, it would be valuable
to confirm these findings in broader settings including regular organizations, since the
specificity of these forms might bias results and thus, limit the generalizability of the
findings.
Third, depending on the research question, experimental or quasi-experimental settings
are highly relevant to the study of disabilities. By using these methods, researchers are
able to make assumptions about the causal relationships of the studied constructs.
Furthermore, the requirements for an appropriate sample size may be easier to realize
in these kinds of study designs. The use of quasi-experimental designs has been
extremely limited thus far; disability researchers should strongly consider their use.
Fourth, knowledge from other areas of business administration as well as other
disciplines can not only enhance the theory building process (D. L. Stone & Colella,
1996), but also the empirical findings in management research on disability. Examples
include discrete-choice experiments from the field of marketing (Street & Burgess,
2007) and single-case research designs from medical and psychological research
(Kratochwill & Levin, 2010).
Finally, it is important to match the sample, measures, study design, and data analyses
to the research question. This recommendation holds true for research in general, but is
especially relevant for disability research. This is because of the various
methodological challenges which can be reduced by focusing on solutions that best fit
the research question. For example, the use of longitudinal designs can help to
overcome the sampling problem of disability research, especially if researchers are
interested in questions regarding within-person development.
This paper focused on quantitative research. However, even if some of the mentioned
challenges also apply to qualitative techniques, they can be a valid option to overcome
some of the problems. For example, the problem of the multifaceted construct of
disability could be covered with more in depth approaches of qualitative methodology.
Especially a combination of qualitative and quantitative approaches could enhance
research in the field of disabilities (e.g., Baldridge & Veiga, 2006).
54 Explaining the Gap in Diversity Research
2.5 Concluding Thoughts
The present paper aimed at investigating the reasons for the considerable lack of
quantitative research concerning disability compared to other diversity dimensions in
the field of business administration. I suggested that certain methodological challenges
play a significant role in explaining this situation. Through expert interviews, I
identified 16 different challenges, mainly related to one of three broad categories (i.e.,
construct of disability, measurement, and sampling; see Figure 2.1). When screening
the literature that was published in the last 15 years, I was actually able to detect a lot
of the mentioned challenges either in the limitations section of the articles, or when
reviewing the manuscripts. For example, Baldridge and Swift (in press) as well as
Baldridge and Veiga (2006) admit the limited generalizability of their findings due to
their sample, which solely consisted of people with hearing impairments. A limitation
that is stated by Colella and Varma (2001) as well. Westaby, Versenyi, and Hausmann
(2005) mention a small sample size, partly caused by a low frequency of employment.
However, the presented collection of methodological challenges is not supposed to be
exhaustive. The main focus was on challenges that are specific to disability research
within the management field (i.e., questions associated with employment). A more
thorough elaboration of challenges in conducting disability research (e.g., psychology,
medicine, rehabilitation, sociology, pedagogy etc.) would have gone beyond the scope
of this paper. The same applies to the presented possible solutions. However, I hope to
have provided a starting point for management research and refer the interested reader
to the cited literature to get a more detailed description of the presented approaches.
Management research in the disability field is necessary to identify critical factors for
the successful inclusion of people with disabilities into the regular labor market. This
means that scholars need to provide managers with knowledge concerning social
interaction processes, effects of leadership styles, structural boundary conditions,
organizational characteristics, and other factors that determine the success of
integration projects. A considerable amount of research has already been conducted for
other diversity dimensions. However, due to many unique characteristics associated
with the disability construct, these findings cannot be directly transferred.
Management research has to pay attention to these differences and specific questions
(e.g., accommodation requests) inherent to the disability field.
Explaining the Gap in Diversity Research 55
Even though some serious threats to the study of people with disabilities in the
workplace were presented, I believe that it is possible to conduct high-quality
quantitative research in the field. In fact, examples for this research already exist (e.g.,
Colella & Varma, 2001; Florey & Harrison, 2000). Furthermore, it seems inevitable to
do so because of the reasons presented at the beginning of this paper, namely: practical
(shortage of labor), humanistic, and financial (pressure on social security systems)
ones. With this paper I hope to inspire researchers to engage in this challenging but
interesting field, to advance the theory building process in the area of disability
research, and thus, to make a significant contribution towards a more inclusive world
for people with and without disabilities.
56 Organizational Identity Strength as a Leadership-Performance Mediator
3 Study 2 Organizational Identity Strength and
Transformational Leadership Climate as Mediators of the
Relationship between CEO Charisma and Organizational
Performance
Authors: Stephan A. Bhm, David J. G. Dwertmann, Heike Bruch,
Boas Shamir
Individual contribution: Mainly responsible for the methods, results, and discussion
section. In addition, I was involved in the whole process of
conceptualization, planning, writing, etc.
Presentations: A prior version of this paper was presented at the Academy
of Management Annual Conference 2012 in Boston, MA.
The title was Identity strength as a mediator of the
charismatic leadership-performance link.
Current stage: In preparation for submission to the Journal of
Organizational Behavior
3.1 Abstract
In this paper we suggest that the relationship between CEO charisma and firm
performance is mediated by the strength of the organizational identity. We propose
that CEO charisma enhances organizational identity strength directly as well as
indirectly by affecting the leadership climate in the organization. Organizational
identity strength, in turn, enhances the performance of the firm. We tested these
propositions with a three-path mediation model at the organizational level of analysis
on a sample of 157 German companies (20,639 employees) utilizing four independent
data sources. We found that CEO charisma predicted the transformational leadership
climate in the organization, and both CEO charisma and TFL climate predicted
organizational identity strength, which in turn predicted firm performance. Our study
contributes to opening the black box between organizational leadership and
organizational performance by demonstrating the cascading effect of top-level
Organizational Identity Strength as a Leadership-Performance Mediator 57
leadership on leadership climate in the entire organization and showing that the
relationships of both leadership levels with firm performance are mediated by
organizational identity strength. It also contributes by being the first study to
investigate and demonstrate the relationship between organizational identity strength
and performance at the organizational level of analysis.
Keywords: identity strength, CEO charisma, TFL climate, firm performance,
structural equation modeling, three-path mediation model
3.2 Introduction
In this paper we seek to integrate two central bodies of knowledge -- the literature on
organizational leadership and the literature on organizational identity -- in order to
contribute to the understanding of a controversial issue in organizational studies the
relationship between organizational leadership and organizational performance. Earlier
studies on this relationship focused on the effects of leadership succession on
organizational performance and their conclusions ranged from no effect (Lieberson &
O'Connor, 1972) to executive leadership can explain as much as 45% of
organizational performance (Day & Lord, 1988, p. 453).
More recent studies have mainly focused on the relationship between charismatic or
transformational leadership and performance. Studies of transformational leadership
generally support the existence of a relationship between such leadership and
individual and unit-level performance (for meta-analyses see Judge & Piccolo, 2004;
Lowe, Kroeck, & Sivasubramaniam, 1996). However, very few studies examined this
relationship at the organizational level. Studies of the relationship between CEO
charisma and organizational performance have produced mixed results, with some
studies reporting a positive effects of CEO charisma on firm performance (Agle, 1993;
Agle, Mitchell, & Sonnenfeld, 1999; Waldman, Javidan, & Varella, 2004), others
reporting no effect (Agle, Nagarajan, Sonnenfeld, & Srinivasan, 2006; Tosi, Misangyi,
Fanelli, Waldman, & Yammarino, 2004), and one study reporting a positive effect
only under conditions of high environmental uncertainty (Waldman, Ramirez, House,
& Puranam, 2001). One conclusion emerging from these studies (Agle, et al., 2006;
Waldman & Yammarino, 1999) is the need to examine the relationship in more depth
58 Organizational Identity Strength as a Leadership-Performance Mediator
in order to identify potential moderators and mediators that could explain the
inconclusive evidence.
In the present study, we develop and test a model that includes two such mediators in
order to examine the possibility that even if CEO charisma does not have a direct
relationship with firm performance, it affects other variables which in turn affect firm
performance. First, we draw on considerations from the leadership literature and the
organizational identity literature to suggest that CEO charisma affects the strength of
the organizational identity, which in turn enhances firm performance. Leaders are
identity entrepreneurs (Haslam & Reicher, 2007). They engage in rhetorical and
symbolic behaviors to create a strong sense of identity in their organizations. They use
the identity to persuade people to understand themselves, their interests, and their
predicaments in a certain way, to persuade certain people that they are (for certain
purposes) identical with one another and at the same time different from others, and
to organize and justify collective action along certain lines. (Brubaker & Cooper,
2000, p. 5). Based on the self-concept theory of charismatic leadership (Kark, Shamir,
& Chen, 2003; Shamir, House, & Arthur, 1993), we suggest that charismatic leaders
are particularly likely to engage in behaviors that facilitate the development of a strong
and shared sense of identity in their organizations and hence the stronger the charisma
of the CEO, the stronger the organizational identity.
The voluminous literature on organizational identity has focused mainly on theoretical
development (Foreman & Whetten, 2002) and on how the content of the identity
affects various organizational phenomena in particular cases (e.g., Dutton & Dukerich,
1991; Golden-Biddle & Rao, 1997). To complement these approaches, research needs
to identify comparable aspects of organizational identity that can be measured and
their relationships with various antecedents and consequences can be explored in a
population of organizations. One such aspect is organizational identity strength. The
strength of the organizational identity, defined as the extent to which identity
perceptions are deeply held and widely shared among organization members, has
received only scant attention in the literature (Ashforth, Harrison, & Corley, 2008;
Gioia & Thomas, 1996; Kreiner & Ashforth, 2004; Milliken, 1990), and its
relationships with organizational leadership and organizational performance have not
been empirically examined so far. On the basis of arguments on the relationships
between identity strength and collective efficacy and pro-activity at the organizational
Organizational Identity Strength as a Leadership-Performance Mediator 59
level (Milliken, 1990), the effects of the organizations identity on organization
members identification with the organization (Ashforth, et al., 2008; Cole & Bruch,
2006; Kreiner & Ashforth, 2004), motivation, commitment, cooperation and
performance (Kark, et al., 2003; Shamir, et al., 1993), and the relationship between
organizational identity and its external image and reputation (Gioia, Schultz, & Corley,
2000; Hatch & Schultz, 1997), we suggest that firm identity strength is a predictor of
firm performance and a mediator in the relationship between CEO charisma and firm
performance.
In addition, we propose a second path through which CEO charisma is associated with
firm performance. Since for the majority of employees in organizations above a
certain size, the CEO charisma is a distant form of leadership (Shamir, 1995), it has to
be mediated by leadership at lower levels of the organization. It is the lower-level
leaders who have to transmit the charismatic leaders vision to lower echelons of the
organization and demonstrate their commitment to the vision in their daily interactions
with other organization members. In other words, both the top-level leader of the
organization and lower-level leaders within the organization may influence the
strength of the organizational identity. We build on arguments and findings on the
cascading effects of charismatic and transformational leadership (Bass, Waldman,
Avolio, & Bebb, 1987; Waldman & Yammarino, 1999; Yammarino, 1994) to propose
that the stronger the leader charisma the more likely s/he is to foster a transformational
leadership climate in the organization. We further build on the literature on
transformational leadership and recent studies on the effects of TFL climate on
positive organizational outcomes to propose that such a climate would further enhance
the strength of the organizational identity and ultimately the performance of the firm.
The model we more fully develop in the next sections is presented in Figure 3.1.
60 Organizational Identity Strength as a Leadership-Performance Mediator
Figure 3.1 Organizational level model of antecedents and the performance
outcome of identity strength including data sources

Note. Coefficients are standardized regression weights. Controls were deleted from the
figure for simplicity reasons.
** p < .01

To test our model and hypotheses, we utilize a large organizational level data set
comprised of four independent data sources (i.e. three employee surveys and one
CEO/HR director questionnaire). In total, 20,639 employees nested in 157 companies
participated in our study. We use structural equation models to test our hypotheses and
conclude with practical implications and directions for future research.
Our study contributes to several streams of research. First, we enrich and refine the
literature on the relationship between CEO charisma and firm performance by
demonstrating two mechanisms that mediate this relationship. Second, we provide
support for arguments (so far supported only by a single study, Bass, et al., 1987)
about the relationship between top-level leadership and leadership at lower levels of
Organizational Identity Strength as a Leadership-Performance Mediator 61
the organization. Third, we contribute to the emerging literature that views leadership
as an organizational level phenomenon and captures this view in the construct of
leadership climate. Fourth, by positing the construct of organizational identity strength
as a central and potentially useful construct and showing, for the first time, its
relationships with leadership aspects and firm performance, we offer an original
contribution to the organizational identity literature.
3.3 Theory and Hypotheses Development
3.3.1 CEO Charisma and Firm Performance
Leadership scholars have proposed various mechanisms through which charismatic
CEOs might influence firm performance: (1) By presenting a compelling vision,
charismatic CEOs inspire and enthuse organization members and other relevant
stakeholders (Agle, 1993; Shamir, et al., 1993) thus increasing their motivation,
commitment and efforts on behalf of the organization. (2) By manifesting strong
convictions and expressing confidence in the organization and in employees abilities
(House, 1977) charismatic leaders empower organization members and increase their
sense of collective efficacy, which increases their motivation, persistence and ability to
overcome difficulties and obstacles. (3) Thorough their vision, strong values, role-
modeling behavior and use of other symbolic means, charismatic leaders provide a
focal point that increases intra-organizational integration. Such behaviors increase the
level of cohesion among organizational members and among organizational units, and
influences the development of a strong organizational culture, both of which are likely
to result in agreement about values and goals, a high level of cooperation, and overall
better integrated internal processes (Waldman & Yammarino, 1999). (4) The same
behaviors are likely to increase the salience of the collective identity, which in turn
increases organizations members identification with the organization and their
willingness to make sacrifices for the organization (Shamir, et al., 1993). (5) By
providing intellectual stimulation, and a sense of collective efficacy, and by generating
among organization members a high level of trust and confidence in the abilities of
their leader, charismatic leaders help the organization to overcome various forms of
cognitive, motivational and obligation inertia (Agle, et al., 2006), deviate from the
62 Organizational Identity Strength as a Leadership-Performance Mediator
status quo, and make necessary changes in order to better adapt to environmental
changes.
From an empirical point of view, there is mixed evidence on the relationship between
CEO charisma and firm performance. Agle (1993) and Agle et al. (1999) reported
positive associations between CEO charisma and organizational performance.
Waldman and colleagues (2004) also found a positive relationship between CEO
charisma and subsequent organizational performance, but Waldman et al. (2001) found
such a relationship only in organizations facing a high level of environmental
uncertainty. In contrast, Tosi et al. (2004) as well as Agle et al. (2006) found no such
relationship. In fact, Agle and colleagues (2006) found a relationship in the opposite
direction, i.e. a positive link between firm performance and subsequent attributions of
charisma to the CEO. One potential limitation of the abovementioned studies is that
they assessed CEO charisma on the basis of ratings provided by members of the top
management teams of the organizations studied, whereas the theoretical arguments for
expecting a link between CEO charisma and firm performance are not limited to the
CEO effects on the top management team. Therefore, in the present study, we assess
CEO charisma on the basis perceptions of organizational members from all
hierarchical levels of the organization.
It should also be mentioned, that meta-analytic studies of the effects of
transformational leadership (which includes charisma) established the existence of a
positive relationships between transformational leadership and various indicators of
group and organizational performance (Judge & Piccolo, 2004; Lowe, et al., 1996).
While these studies are not limited to CEO leadership and do not separate the effect of
charisma from the overall effect of transformational leaderships, their results are
consistent with the theoretical arguments provided in the beginning of this section.
Therefore, in view of these results, the strength of the theoretical arguments, and the
fact that at least some of the studies of the CEO charisma-organizational performance
link found positive relationships, we propose:
H1: CEO charisma is positively related to firm performance.
Organizational Identity Strength as a Leadership-Performance Mediator 63
3.3.2 CEO Charisma and Organizational Identity Strength
Both Waldman & Yammarino (1999) and Agle et al. (2006) have called for examining
mediating variables in order to understand the black box containing CEO charisma
and organizational performance. On the basis of considerations from both the
leadership literature and the organizational identity literature, we suggest that
organizational identity strength (OIDS) may be a mediator of particular interest.
Before attending to these considerations, we need to clarify the meaning of the OIDS
construct.
For more than two decades, scholars have been interested in organizational identity as
a root construct (Albert, Ashforth, & Dutton, 2000) for many organizational
phenomena and processes including competitive advantage (Fiol, 1991),
organizational change (Reger, Gustafson, Demarie, & Mullane, 1994) or conflict
(Golden-Biddle & Rao, 1997). Since Albert and Whettens (1985) seminal work
defining organizational identity as that which members believe to be central,
enduring, and distinctive about their organization (p. 265), several books and many
theoretical and empirical papers have been published, and the field of identity research
has developed into an important part of management research (Albert, et al., 2000;
Ashforth, Rogers, & Corley, 2011; Oliver & Roos, 2007; Whetten, 2006).
However, some scholars have recently pointed to the fact that research on
organizational identity is facing some limitations, especially with regard to the
constructs operationalization and empirical measurement. As Foreman and Whetten
(2002, p. 618) note, in the field of organizational identity, theory development has far
outpaced theory testing. Indeed, when analyzing scholarly work on organizational
identity (see e.g., Oliver & Roos, 2007 for an overview), it becomes obvious that
researchers have answered the question of who are we as an organization in a
multifaceted and thorough way. However, their conclusions tend to be valid especially
for the studied organizational context. Not quite surprisingly, organizations central
and distinguishing attributes, including its core values, organizational culture, modes
of performance, and products (Elsbach & Kramer, 1996, p. 442) differ from one
organization to another, making it hard to compare identity content across
organizations and almost impossible to build and test quantitative models on these
grounds. Consequently, Whetten (2006, p. 229) has recently called for other forms of
64 Organizational Identity Strength as a Leadership-Performance Mediator
scholarship and encouraged future research involving model building, hypothesis
testing, and empirical measurement.
One potential way to deal with these issues is to focus on identity strength rather than
on identity content. As Cole and Bruch (2006, p. 588) point out, it may not be
identity per se, but rather the strength with which identity beliefs are entrenched within
organizational members that might be of real importance to organizations. Martin,
Feldman, Hatch, and Sitkin (1983) suggested that an important part of organizational
culture may be the strength of an organizations identity (OIDS). Following this
suggestion, Milliken (1990) and Gioia and Thomas (1996) suggested that irrespective
of the type or content of the organizational identity, organizations are likely to differ
on the extent to which they have a strong sense of identity. Milliken (1990), and Gioia
and Thomas (1996) define OIDS as the degree to which organizational member
perceive it to be unique or special. A somewhat different definition is provided by
Kreiner and Ashforth (2004) who define a strong organizational identity as one that is
widely shared and deeply held by organizational members. However, their
operationalization of the construct reflects the construct as it was defined and
measured by Milliken (1990) and Gioia and Thomas (1996) as they relied on items
that assess the extent to which there is a common sense of purpose, clear and unique
vision, feeling of unity, and specific mission in the organization.
Following the above mentioned scholars, we adopt the distinction between type of
identity, which reflects its contents as manifested in references to the organizations
history, traditions, symbols, practices, and philosophy and strength of identity. We
integrate the previous definitions of organizational identity strength to define it as the
extent to which there is a shared and strongly held belief among organization members
that the organization has a common and unique identity. As explained by Ashforth and
colleagues (Ashforth, et al., 2008; Kreiner & Ashforth, 2004), OIDS is theoretically
related to organizational identification (or identification with the organization), a well-
studied construct in organizational behavior, but the two constructs are distinct from
each other.
Organizational identification is an individual-level construct, a specific case of social
(or collective) identification which was defined by Ashforth & Mael (1989, p. 21) as
the perception of oneness or belongingness to some human aggregate. Accordingly,
organizational identification is the perception of oneness or belongingness to an
Organizational Identity Strength as a Leadership-Performance Mediator 65
organization or self-definition in terms of organizational membership. In agreement
with previous authors, we regard OIDS, in contrast with organizational identification,
as an organizational-level construct, a collective property of entire organizations
(Cole & Bruch, 2006, p. 587). Following the work of Kozlowski and Klein (see also
Chen, Mathieu, & Bliese, 2005) on collective constructs, OIDS may originate in
individual members identity strength perceptions that converge into a collective-level
construct within organizations as a function of attraction, selection, attrition,
socialization, social interaction, leadership and other psychological processes
(Kozlowski & Klein, 2000, p. 30). In a similar vein, Ashforth et al. (2008) suggested
that the more organization members agree, share, and articulate their perceptions about
the organizations essence and uniqueness the stronger is its identity, and an
organization with a strong identity will tend to attract and retain those who feel some
resonance with the organizational identity.
The relationship between the organizational leadership and OIDS has not been studied
so far. Still, there are reasons to believe that leadership in general and charismatic
leadership in particular plays an important role in fostering a strong sense of
organizational identity. First, OIDS is an important component of organizational
culture (J. Martin, et al., 1983) and leaders are, at least to some extent, the givers and
definers of organizational culture (Schein, 1990; Trice & Beyer, 1991). More
broadly, leadership is the management of meanings (Smircich & Morgan, 1982) and
the organizational identity is one meaning leaders try to influence. It is therefore
reasonable to expect leadership to affect the shared sense of identity of organization
members.
This is particularly true in the case of charismatic leadership. In developing the
rationale for expecting charismatic leadership to have an impact on OIDS, we largely
follow and extend the argumentation of Shamir and colleagues (Kark, et al., 2003;
Shamir, et al., 1993; Shamir, Zakay, Breinin, & Popper, 1998) but we also rely on the
work of other scholars who investigated charismatic leadership (Conger, Kanungo, &
Menon, 2000) and on the social identity theory of leadership (Hogg & Terry, 2001;
Van Knippenberg & Hogg, 2003).
Shamir and colleagues theoretically developed and empirically tested a self-concept
based theory of charismatic leadership. Central to their work is the proposition that the
outcomes of charismatic leadership (such as personal commitment, or organizational
66 Organizational Identity Strength as a Leadership-Performance Mediator
citizenship behavior) can largely be explained by the effects of leader behavior on
followers self-concepts, including social identification. Originally Shamir et al.s
(1993) theory focused on the impact of charismatic leaders on individual followers but
some of their arguments can be extended to the organizational level. In particular,
Shamir and colleagues (1993) argue that charismatic leaders tend to increase the
salience of the collective identity in followers self-concepts in various ways thus
increasing their identification with the collectivity, commitment to the collectivity and
efforts toward the achievement of the collective mission. Studies by Shamir et al.
(1998) Conger et al. (2000) and Kark et al. (2003) extended this line of reasoning to
the unit-level of analysis by showing that charismatic leaders can also increase the
collective identification of unit members with their specific unit. Similarly, Van
Knippenberg and Hogg (2003, p. 261) describe how leaders can render the
collectives identity salient, thus mobilizing followers and giving direction to
collective action.
We submit that the behaviors that were originally specified to explain the effects of
charismatic leaders on organization members identification with their organization or
organizational unit are also relevant for explaining the predicted impact of charismatic
leaders on their organizations identity strength. Specifically, we submit that
charismatic leaders raise OIDS by: (1) defining the boundaries of the collectivity and
managing both the entry and exit of members in a way that symbolizes the values of
the organizational identity. (2) Highlighting the history of the collectivity and telling
stories about its history. (3) Emphasizing the collective identity in their visions, and
justifying proposed changes in terms of their consistency with the collective identity
and its central values. (4) Emphasizing the collectivitys distinctiveness, prestige,
superiority and competition with other groups. (5) Using ceremonies, rituals, slogans,
internal language, dress, logos, and other symbolic means to represent and reinforce
the collective identity. (6) Role modeling the collective identity and its central
characteristics and values in their behavior, and presenting themselves as prototypical
members of the group (Van Knippenberg & Hogg, 2003) and as representative
characters (Shamir, et al., 1993) thus becoming themselves a symbol of the
organizational identity.
One only has to think about charismatic political leaders such as Mahatma Gandhi and
Nelson Mandela to realize how much the identity of the leader and the identity of the
Organizational Identity Strength as a Leadership-Performance Mediator 67
collectivity converged in both internal and external constituents perceptions of India
and South Africa. Similar cases can be found in the business sphere e.g. Steve Jobs
and Apple) Charismatic CEOs should be in a favorable position to act as identity
entrepreneurs (Haslam & Reicher, 2007) and to have similar effects due to their
visibility, their ability to draw the attention of their constituents, and the fact that they
are often perceived as representative characters that embody the organizations identity
and values. They can, for instance, positively distinguish their company from their
competitors referring to organizational visions, success stories, specific competencies,
successful innovations, or unique products. Through such an accentuation of the
organizations uniqueness, boundaries, and strengths they might not only address their
employees wish to belong to a distinct, unique, and prestigious organization (Haslam,
2004; Tajfel & Turner, 1979, 1986) but also increase the sense of collective identity in
their organizations. We believe such potential effects of CEO charisma on OIDS
should be found not only in publicly celebrated, large-scale enterprises but also in
smaller firms in which owners and CEOs can interact with employees on a daily basis,
set a personal example, and demonstrate to the employees what the organizations
stands for, and their own commitment to the organizational mission (Koene, Vogelaar,
& Soeters, 2002).
Based on the above arguments, we formulate the following hypothesis:
H2: CEO charisma is positively related to organizational identity strength.
3.3.3 Organizational Identity Strength and Firm Performance
An association between OIDS and firm performance was implied by the first
researchers to examine the OIDS construct. Milliken (1990) suggested two reasons for
expecting such a link. First, she hypothesized that a strong sense of organizational
identity tends to be associated with a belief in the organizations relative
invulnerability to environmental changes. Therefore, the stronger the sense of
organizational identity, the less likely managers will see an environmental change as a
threat. Relatedly, she suggested that a shared belief that an institution is special may be
associated with confidence in its ability to weather storms created by environmental
changes. Thus the stronger the sense of organizational identity, the more certain
managers and employees will be of their ability to respond effectively to an
68 Organizational Identity Strength as a Leadership-Performance Mediator
environmental change. These arguments imply that a strong sense of organizational
identity may be associated with collective perceptions of potency or efficacy. A strong
sense of collective efficacy may, in turn, increase firm performance through its effects
on managers and employees motivation, persistence and resilience.
Similarly, Gioia and Thomas (1996) interpreted the results of their study as suggesting
that a strong identity might provide the organization with confidence to be proactive
and adopt a more offensive strategy to deal with the challenges it faces. Interestingly,
they also found OIDS to be negatively related to interpretations of organizational
issues as political and suggested that stronger perceptions of institutional identity
minimize the need for political speculation around the key issues facing the
organization and increase managers commitment to proactively deal with these issues.
Both Milliken (1990) and Gioia and Thomas (1996) focused on organization managers
in their studies and their arguments concern the effects of OIDS on managers
perceptions, which in turn affect their actions with implications for organizational
performance. We suggest that in addition to these effects, there are other reasons to
expect OIDS to be related to organizational performance, and these reasons are related
to the effects of leadership on OIDS discussed in the previous section and concern the
entire membership of the organization.
Scholars working from the social identity perspective to organizational analysis have
argued that a strong organizational identity is one of the antecedents of organizational
identification. For instance, Ashforth et al. (2008) argue that the stronger the
organizational identity the more likely organization members are to identify with their
organization. Organizational identification, in turn, is likely to affect members
motivation, commitment and actions on behalf of the organization, its goals and its
mission. As Shamir et al. (1993, p. 580) point out: The higher an identity in the
salience hierarchy, the greater the probability that a person will perceive a given
situation as an opportunity to perform in terms of that identity, and the greater the
probability that a person will actively seek out opportunities to perform in terms of that
identity. As a result, organization members who perceive a strong organizational
identity and identify with their organization are likely to transcend narrow self-
interests and rationality (Ashforth & Humphrey, 1995, p. 116) and engage in self-
sacrificial, collective-oriented behavior (Shamir, et al., 1993, p. 582) on behalf of
Organizational Identity Strength as a Leadership-Performance Mediator 69
their company. Similar arguments have been advanced by Kark and Shamir (2002)
and Van Knippenberg (2000).
Positive links between identity perceptions, value-based commitment, and related
motivation and behavior are also proposed in Meyer and colleagues (Meyer, Becker,
& Van Dick, 2006) integrative model of social identities and commitments at work.
Increased commitment of organizational members to organizational goals and
objectives is likely to be positively related to increased levels of firm performance as
highly committed members can be expected to perform well above the minimum
required for retention. While there is evidence in support of a positive relationship
between organizational commitment and performance at the individual level (e.g.,
Meyer, Paunonen, Gellatly, Goffin, & Jackson, 1989; Meyer, Stanley, Herscovitch, &
Topolnytsky, 2002), empirical research on the commitment-performance link at the
organizational level of analysis is scarce, although Ostroff (1992) reports a positive
relationship in a sample of 298 schools.
In addition to the abovementioned internal reasons for expecting a relationship
between organizational identity strength and firm performance, there may also be
external reasons for such an expectation. Organizational identity as defined in this
study is based on organization members perceptions. However, this internal identity is
related in various ways to the external identity of the organization the way it is
perceived by its external constituents (Hatch & Schultz, 1997). Leaders of
organization invest considerable resources and efforts in fostering a strong
organizational identity for both internal and external reasons. Top-level managers
project the organizational identity to external constituents in order to gain their support
(Gioia, et al., 2000). Furthermore, when the organization has a strong identity, lower-
level managers and members of the organization are also likely to project its identity in
their interactions with suppliers, customers and other constituents.
The stronger the organizational identity the more likely is its external projection to be
powerful and influential because external constituents are likely to be more influenced
by a projected identity they perceive to be authentic, namely reflecting the real
internal identity of the organization, the one which is deeply held and widely shared
by its members.. A strong identity makes it easier not only for organization members
but also for external constituents to identify the organization and identify with the
organization. If the projected organizational identity is accepted by the external
70 Organizational Identity Strength as a Leadership-Performance Mediator
constituents, they are likely to support the organization in ways that might contribute
to its performance directly (e.g. by purchasing its products) or indirectly (e.g. by
cooperating with the organization or engaging in favorable legislation and regulation).
To summarize, we base our expectation of a positive relationship between OIDS and
firm performance on three lines of argumentation. First, we follow arguments and
findings indicating that a strong organizational identity increases the sense of
collective organizational efficacy among organization managers and members, which
is likely to foster a more proactive approach to dealing with the issues facing the
organization and to maintain performance-directed efforts in the face of obstacles and
setbacks. Second, we adopt the arguments suggesting that a strong sense of
organizational identity fostered by charismatic leaders is likely to increase
organization members identification with the organization resulting in greater
commitment to the collective goals and efforts, and an increased level of cooperation
among organization members toward the achievement of the organizational goals.
Third, we suggest that a strong identity may influence external constituents to support
the organization in ways that facilitates its performance. On the basis these arguments
and the arguments presented in the previous section, we therefore offer the following
hypotheses:
H3: Organizational identity strength is positively related to firm performance.
H4: Organizational identity strength mediates the relationship between CEO charisma
and firm performance.
3.3.4 CEO charisma and Transformational Leadership Climate
In addition to the path from CEO charisma to organizational performance through
organizational identity strength, we propose another mechanism by which CEO
charisma may affect firm performance. Specifically, we suggest that CEO charisma
influences the leadership climate in the organization, which in turn further increases
organizational identity strength and ultimately firm performance.
In this section, we focus on the relationship between CEO charisma and the
transformational leadership (TFL) climate of the organization. We focus on TFL
climate because transformational leadership and charismatic leadership are related
constructs (House & Shamir, 1993) and the original conceptualization of
Organizational Identity Strength as a Leadership-Performance Mediator 71
transformational leadership (Bass, 1985) included charisma as its main component.
Furthermore, the construct of transformational leadership has already been
conceptualized and investigated at the organizational-level of analysis whereas the
term charisma is more strongly associated with a single individual, and to the best of
our knowledge, there has been no theoretical or empirical work on the charismatic
climate of leadership in organizations.
Leadership climate has been conceptualized and investigated as the degree to which
different leaders in an organization direct similar behaviours toward their subordinates
(e.g., Bliese & Halverson, 1998; Chen & Bliese, 2002; Chen, Kirkman, Kanfer, Allen,
& Rosen, 2007; Gavin & Hofmann, 2002). More recently, Walter and Bruch (2010)
and Menges et al. (2011) have extended this concept to TFL, suggesting that a TFL
climate is an organization-level construct which reflects the extent to which leaders
throughout an organization direct TFL behaviour towards their immediate followers. A
TFL climate emerges at the organizational level through various mechanisms that
contribute to the similarity of individuals leadership behaviours and followers
perceptions of these behaviours and to the variability of such behaviours and
perceptions between organizations (Klein, Dansereau, & Hall, 1994). These
mechanisms include processes of attractionselectionattrition and newcomer
socialization (Schneider, 1987; Schneider & Reichers, 1983), as well as common
experiences and mutual interactions among the organizations managers and between
managers and employees (Kozlowski & Hattrup, 1992; Morgeson & Hofmann, 1999).
Another mechanism that might contribute to the emergence of a leadership climate is
the influence of the top-level leader of the organization, in our case the CEO. This is
particularly true of charismatic leaders. Such leaders can have a direct impact on
organization members as suggested by various theories of charismatic leadership (e.g.,
Conger & Kanungo, 1998; House, 1977; Shamir, et al., 1993) but they may also affect
organization members indirectly, through their effects on the behaviour of lower-level
leaders. This mechanism, which has been called the falling dominoes effect or the
cascading effect (Yammarino, 1994) and was demonstrated empirically by Bass and
colleagues (1987) refers to the influence of charismatic or transformational leaders of
organizations on lower level distant followers and the entire organization through their
effects on their more immediate followers the managerial echelons of the
organization. Waldman & Yammarino (1999) have developed a comprehensive model
72 Organizational Identity Strength as a Leadership-Performance Mediator
of the effects of CEO charisma on organizational performance in which the cascading
effect plays a central role. Primarily building on the work of Shamir (1995), Waldman
and Yammarino (1999) differentiate between close and distant leadership effects,
suggesting that charismatic CEOs might directly influence the behavior and
performance of both followers in close organizational proximity (e.g., by direct
interaction) and followers at lower organizational echelons (e.g., by symbolic
behaviors, visions, or storytelling). However, a central role is given in their model to
the indirect effects charismatic leaders on the entire organizational membership
through their direct effects on the top management team.
There are several ways by which charismatic CEOs are likely to affect the behavior of
lower-level managers and thus contribute to the creation of a TFL climate. First, by
role-modeling leadership behavior or leadership style. Because charismatic CEOs are
highly esteemed they become the models to be imitated by successive expanding
layers of followers (Bass & Stogdill, 1981, p. 262). If charismatic CEOs succeed in
instilling a sense of pride, confidence, and identification with the leader in their direct
followers, the latter are likely to emulate the CEOs leadership behavior (Bass, et al.,
1987). Second, by developing and sharing compelling visions, charismatic CEOs
inspire the other managers in the organization to share their vision with their own
followers in a similar manner (Bass, et al., 1987; Tichy & Ulrich, 1984) for instance
by delivering similar speeches, telling similar stories, and engaging in other symbolic
behaviors. Third, Charismatic CEOs charisma might have an impact on lower-level
charismatic/transformational leadership by affecting certain organizational practices
such as the selection of leadership personnel or the leadership development and
training programs in the organization. Charismatic CEOs might be expected to
influence such practices in a way that selects and develops new generations of leaders
with similar characteristics, values, and modes of behavior thus contributing to an
overall TFL climate within the firm.
Based on the arguments developed above, we hypothesize:
H5: CEO charisma is positively related to the firm TFL climate.
Organizational Identity Strength as a Leadership-Performance Mediator 73
3.3.5 TFL Climate and Firm Performance
Considerable evidence accumulated over the past 30 years supports the existence of a
relationship between transformational leadership and unit-level or organizational-level
performance (for meta-analyses see Dumdum, Lowe, & Avolio, 2002; Judge &
Piccolo, 2004; Lowe, et al., 1996). These findings have been attributed to many factors
including the effects of TFL on employees empowerment, efficacy perceptions,
motivation, commitment, increased efforts, intellectual stimulation, identification with
the organization and its values, and increased cooperation (Bass, 1985; Bass & Avolio,
1994; Kark, et al., 2003). It seems a logical to extend these results to the
organizational-level of analysis and suggest that the extent to which leaders at various
levels of the organization exhibit transformational leadership behaviors (i.e. the extent
to which there is a TFL climate in the organization) would also be associated
performance at the organizational level. It should mentioned again that
transformational leadership includes a component of charisma, and therefore the
reasons for expecting a relationship between charisma and firm performance discussed
in a previous section may also apply for expecting a relationship between TFL climate
and firm performance.
Other reasons may be offered to support such an expectation. The studies of Walter
and Bruch (2010) and Menges et al. (2011) have linked TFL climate with positive
outcomes at the organizational level. For instance, Menges and colleagues have linked
TFL climate with workforce performance the aggregated task performance of the
organizations individual members and their aggregated organizational citizenship
behaviors. They argued that these effects are mediated through an organization-wide
positive affective climate the shared experience of positive affect within an
organization (Dasborough, Ashkanasy, Tee, & Tse, 2009; Gamero, Gonzlez-Rom, &
Peir, 2008). According to them, a TFL climate is experienced as a positive work-
event which increases the positive affective climate which in turn contributes to
performance due to the effects of positive emotions on motivation and creativity
(Fredrickson, 2003; Fredrickson & Branigan, 2003). They found empirical support for
their hypotheses. In a similar vein, TFL climate may facilitate performance in other
ways. For instance, transformational leadership was found to increase employee trust
(Podsakoff, MacKenzie, & Bommer, 1996; Podsakoff, MacKenzie, Moorman, &
Fetter, 1990). A high TFL climate may similarly increase organization members
74 Organizational Identity Strength as a Leadership-Performance Mediator
collective trust in the leadership of the organization, and a high level of organization-
wide trust may increase cooperation and ultimately organizational performance.
H6: Firm TFL climate is positively related to firm performance.
3.3.6 TFL Climate and Firm Identity Strength
In addition to expecting TFL climate to be related directly to firm performance, we
also expect an indirect relationship through the impact of TFL climate on
organizational identity strength. This expectation builds upon the rationale provided
for our previous hypotheses. Transformational leadership includes leader behaviors
that can be expected to clarify the organizational identity and raise it salience thus
contributing to formation of a shared sense that the organization has a unique identity.
For instance, transformational leaders (Bass, 1985; Bass & Avolio, 1994) craft and
present captivating visions for the collective organizational future or, if they are lower-
level leaders, transmit the vision to the organization employees. This vision often
emphasized the organizations core values and links the picture of the future with these
values, its history and other core elements of its identity. Furthermore,
transformational leaders at all level of the organization behave in ways that provide a
role model which represents the collective identity and its core values, and
demonstrate their commitment to organizational mission, which is often considered a
statement about the organizations identity (who we are and what we exist for).
Managers at all levels throughout the organization are likely to be seen by their
subordinates as representing the organization. Therefore, the more they engage in
transformational leadership behaviors (i.e. the higher the TFL climate in the firm) and
the more they emulate the statement and behaviors of the CEO and covey the
messages of the charismatic CEO in their daily interactions with their co-workers (due
to the cascading effect described above), the more likely organizational members are
to develop a strong sense of shared identity. In other words, if leaders of all
organizational levels engage in similar, homogenous TFL behaviors, they are likely to
create an ambient stimulus (Hackman, 1992) that would foster the development of
strong and shared identity perceptions among their followers. For reasons discussed in
a previous section we expect such a sense of identity (OIDS) to be related to firm
performance.
Organizational Identity Strength as a Leadership-Performance Mediator 75
Therefore our final hypotheses are:
H7: Firm TFL climate is positively related to firm identity strength.
H8: Firm identity strength mediates the relationship between firm TFL climate and
Firm performance.
3.4 Methods
3.4.1 Sample
Data for this study was collected in collaboration with a benchmarking agency from
Germany. Companies in this study had to be located in Germany, needed at least 20
employees and were not allowed to exceed 5,000 employees. 189 companies were
contacted and 157 provided complete data which equals an organizational-level
response rate of approximately 83%. Companies were from various industry
backgrounds including services (53%), manufacturing (28%), trade (13%), and finance
and insurance (6%). On average, there were about 278 employees per company (SD =
538; median = 127). Within companies, the average response rate was 47% which
results in a total of 20,639 employees. Mean age of the respondents was 37 years and
there were more males (58%) than females. The average time that the respondents had
already worked for their current company was 9 years.
3.4.2 Procedure
We used a standardized procedure to collect data in all companies. The temporal
sequence for all companies was the same. First, all information included as control
variables in this study, were assessed by a questionnaire which was filled out by either
the HR executive of the firm, or the chief executive officer (CEO). Second, to assess
TFL climate, CEO charisma, and identity strength, we collected data from company
employees. To do so, participating organizations sent a standardized survey-invitation
email from the HR-departments address, or the address of a top management team
member. The invitation assured full anonymity and included a link to a web-based
survey on an independent third company page. It is important to note, that we
programmed an algorithm into the survey web site to randomly assign participants to
76 Organizational Identity Strength as a Leadership-Performance Mediator
one out of four versions of the survey. We applied this split-sample design (Rousseau,
1985) to cope with the attitude survey problem of common source bias (Podsakoff, et
al., 2003). In this study, we used constructs from three of the four survey versions.
Participants in our study either answered the CEO charisma questions, the TFL items,
or the identity strength questions. Finally, after completing the described data
collection, we sent out a second survey to the HR executive or the CEO of the
company to assess the performance of the firm.
3.4.3 Measures
If not otherwise mentioned, we used a seven-point Likert scale for the measures (1 =
strongly disagree; 7 = strongly agree). Where no German translations were accessible,
we worked together with professional translators and used a classical double-blind
back translation procedure to ensure the correct meaning of the items (Schaffer &
Riordan, 2003).
CEO charisma was assessed by 7 items developed by Agle and colleagues (2006)
based on work by Podsakoff and colleagues (1990). A sample item was, Our chief
executive officer has a clear understanding of where we are going. Cronbachs alpha
of the scale was .96.
TFL climate was measured by asking employees to rate the transformational
leadership behaviors of their direct superiors and aggregating these ratings to the
organizational level. We used 22 items originally developed by Podsakoff,
MacKenzie, and Bommer (1996) and Podsakoff and colleagues (1990) to assess the
transformational behaviors of the leaders. My supervisor is able to get others
committed to his/her dream of the future was a sample item of the scale. A
Cronbachs alpha of .97 indicated a sufficient internal consistency of the scale.
Organizational identity strength was measured by 6 items developed by Gioia and
Thomas (1996). However, Gioa & Thomas, following Milliken (1990) focused on the
sense of identity felt by organizational administrators and therefore, following a
procedure used by Cohen-Meitar, Carmeli, & Waldman (2009) we reformulated the
items to capture the collective identity of the entire organization. A sample item was,
In this company we feel that the company has carved out a significant place in the
industry. Due to the rewording, we ran a confirmatory factor analysis on this
Organizational Identity Strength as a Leadership-Performance Mediator 77
measure. When assessing the appropriateness of the model fit, we refer to the
comparative fit index (CFI), the Tucker Lewis Index (TLI), and the standardized root
mean square residual (SRMR) as descriptive fit indices. We chose the CFI and TLI
due to the results of a simulation study by Sharma, Mukherjee, Kumar, and Dillon
(2005). Following propositions by Meyers, Gamst, and Guarino (2006) and Marsh,
Hau, and Wen (2004), we set the cut-off value for the CFI and the TLI to .90. For the
SRMR we followed Hu and Bentler (1999) and chose a cut-off value of <.08. Based
on these criteria, the CFA showed a non-sufficient fit (
2
= 107.04, df = 9; CFI = .912;
TLI = .854; SRMR = .047) according to the TLI. Therefore, we followed the
procedure by Cheng (2001) and Kunze, et al. (2011) and deleted one item (People in
this company are knowledgeable about the companys history and traditions.), based
on the high error correlations with other items and modification indices for the model.
A second confirmatory factor analysis indicated a very good model fit (
2
= 23.92, df
= 5; CFI = .977; TLI = .955; SRMR = .028). Cronbachs alpha for the scale was .95.
Performance was assessed as one construct, combining assessments of organizational
and operational performance (Combs, Crook, & Shook, 2005). Following Kunze and
colleagues (2011), we used company growth, financial performance, and return on
assets as measures of organizational performance. For operational performance,
employee retention and fluctuation, employee productivity, and efficiency of business
procedures were used as indicators. Since our sample consisted of mainly privately
owned companied, we were not able to assess objective performance data. Therefore,
following a widely used practice (e.g., Delaney & Huselid, 1996; Dess & Robinson,
1984; Wall et al., 2004), we asked the HR department executives or the CEO to
provide evaluations of the performance of their company relative to competitors from
the same industry. A sample item was Compared to your companys competitors
from the same industry, how would you rate your companys growth? The rating
scale ranged from, 1 = far below average to 7 = far above average. The 6 item scale
showed a sufficient internal consistency (Cronbachs alpha = .81).
Empirical evidence suggests that subjective performance measures are valid and thus,
can indicate the performance of a company (Rowe & Morrow, 1999; Wall, et al.,
2004). Specifically, Wall et al. (2004) report the results of two studies comparing
subjective and objective organizational performance measures showing that the two
types of measures were positively associated, and the relationships of subjective and
78 Organizational Identity Strength as a Leadership-Performance Mediator
objective company performance measures with a range of independent variables were
equivalent. Based on their results and those of previous studies, they conclude that the
results overall do not support the view that the use of subjective measures leads to
overestimation of relationships with other variables relative to the objective measure.
This is particularly true for measurements that are directed at CEOs or director-level
managers and obtain assessments of performance aspects which are similar to those
captured by objective measures (e.g. growth, financial performance), and are likely to
dominate these managers view of companys performance.
Controls were included in the analyses to capture their influence on the study
variables. We included company size and organizations affiliation with one of four
broad industry classes (i.e., services, manufacturing, trade, and finance and insurance)
in our analyses. Prior studies have shown that organization size influences attitudes
and behaviors of the employees (e.g., Markham & McKee, 1991; Ragins, Cotton, &
Miller, 2000). We measured company size by asking for the number of employees,
converted to full-time equivalents (e.g., Schminke, Cropanzano, & Rupp, 2002) in the
first questionnaire filled out by the HR executive of the firm, or the CEO. After testing
for the normality distribution assumption, we followed a common procedure (e.g.,
Menges, et al., 2011) and decided to log-transform the measure. Following prior
research by Sine, Mitsuhashi, and Kirsch (2006) we also controlled for industry
affiliation. Based on the questionnaire answers, we created three dummy variables (i.e.
manufacturing, trade, and finance and insurance) which contained the industry
affiliation of the participating organizations and included them in our analyses (Cohen,
Cohen, West, & Aiken, 2003). The category service, as the largest group, served as our
reference industry.
3.4.4 Company Level Data Analysis
The predictions were tested at the company level. To do so, where necessary, we
aggregated the individual responses to the company level. We used commonly
employed aggregation statistics (r
wg
, ICC(1), ICC(2)) to test for the suitability of this
procedure (Bliese, 2000). In the literature, ICC(1) values based on significant one way
ANOVA F statistics, ICC(2) values above .50, and median r
wg
values higher than .70
are considered acceptable (Bliese, 2000; Kenny & La Voie, 1985; Klein & Kozlowski,
2000).
Organizational Identity Strength as a Leadership-Performance Mediator 79
In the present study, the values for the TFL climate (ICC(1) = .10; F = 4.27, p < 0.001;
ICC(2)

= .77; median r
wg
= .90), CEO charisma (ICC(1) = .26; F = 11.06, p < 0.001;
ICC(2) = .91; median r
wg
= .88), and identity strength (ICC(1) = .22; F = 9.87, p <
0.001; ICC(2) = .90; median r
wg
= .76) met the given criteria, justifying the
aggregation of individual responses to the company level.
3.4.5 Data Analysis
As recommended by James, Mulaik, and Brett (2006), we used structural equation
modeling (SEM) with maximum likelihood estimation to test the projected mediation
model. According to Mathieu and Taylor (2006, p. 1045) SEM techniques have long
been advocated as preferable to regression techniques for testing meditational
relationships because they permit one to model both measurement and structural
relationships and yield overall fit indices. In addition, SEM models in general can
account for measurement errors thus preventing results from being biased due to
unreliability (Busemeyer & Jones, 1983). Finally, by enabling the researcher to test for
the overall model fit, it empowers us to do model comparison to investigate the
assumed relationships (Bagozzi & Yi, 1988).
Following a two step approach, as proposed by Anderson and Gerbing (1988), and
carried out by others, we tested our measurement model prior to the investigation of
our hypothesized structural model.
3.5 Results
3.5.1 Descriptive statistics
The descriptive statistics and intercorrelations among study variables are shown in
Table 3.1. The Cronbachs alpha reliability values for the measures are provided in the
diagonal entries in parentheses.
It can be seen that, in line with our hypotheses, CEO charisma is significantly related
to TFL climate (r = .48, p < .01). In addition, both the leadership constructs are related
to identity strength (CEO charisma, r = .68, p < .01; TFL climate, r = .65, p < .01).
However, whereas TFL climate is significantly related to performance (r = .19, p <
80 Organizational Identity Strength as a Leadership-Performance Mediator
.05), CEO charisma is not (r = .11, p > .05), which is contrary to our prediction. As
expected, identity strength is associated with performance (r = .25, p < .01). Finally,
company size was significantly correlated with TFL climate and identity strength, and
manufacturing was significantly correlated with TFL climate. Neither service, nor
trade, nor finance & insurance were related to the study variables. Therefore, we
decided to delete these control variables from further analyses. We did so to reduce the
number of parameters to be estimated and therefore, maximize the power for the
following tests (Bedeian, 2007). Furthermore, unnecessary control variables could
cause biased estimates of our parameters (Becker, 2005).
Organizational Identity Strength as a Leadership-Performance Mediator 81
Table 3.1 Descriptive Statistics and Correlations among the Variables in this study
Mean s.d. 1 2 3 4 5
1. CEO charisma 3.92 0.45 (.97)
2. TFL climate 3.60 0.37 .48** (.96)
3. Identity strength 5.40 0.61 .68** .65** (.95)
4. Performance 5.77 0.73 .11 .19* .25** (.81)
5. Company size (log) 4.91 1.14 -.08 -.31** -.26** .11
6. Service 0.55 0.50 .08 .12 .04 .06 -.08
7. Manufacturing 0.29 0.45 -.03 -.16* -.05 .00 .10
8. Trade 0.13 0.33 -.02 .04 -.03 -.03 -.01
9. Finance & Insurance 0.06 0.23 -.05 -.04 -.06 -.10 -.01
Note. All correlations were tested one-tailed. The diagonal entries in parentheses reflect Cronbachs alpha internal consistency reliability
estimates.
* p < .05
** p < .01
82 Organizational Identity Strength as a Leadership-Performance Mediator
3.5.2 Measurement model
We first tested the appropriateness of the measurement model. This model consisted of
the main latent variables, namely TFL climate, CEO charisma, identity strength, and
performance, and their respective indicators. For the TFL climate and performance
measure, we used a partial disaggregation method (Coffman & MacCallum, 2005) and
parceled the items according to the predefined structure of the measures. This was
done because both parcels were grounded in the original measure and to limit the
number of parameters which need to be estimated (for details and additional
advantages, see: Little, Cunningham, Shahar, & Widaman, 2002; L. J. Williams &
O'Boyle, 2008). TFL climate was represented by six parcels, representing the various
TFL facets (Podsakoff, et al., 1996; Podsakoff, et al., 1990). Two parcels
(organizational and operational performance) represented the performance measure
(Combs, et al., 2005; Kunze, et al., 2011). According to the predefined cut-off values,
we gained a sufficient model fit for our measurement model (
2
= 401.17, df = 164;
CFI = .932; TLI = .921; SRMR = .052). All of the factor loading were significant (p <
.01).
To test the distinctiveness of the measures, we also estimated an alternative model in
which all CEO charisma and TFL climate items were forced to load on one common
factor (Menges, et al., 2011). The rest of the model stayed the same. However, this
alternative model yielded a non-acceptable model fit (
2
= 1394.43, df = 167; CFI =
.649; TLI = .601; SRMR = .328). Therefore, we decided to retain the originally
proposed model.
3.5.3 Structural model
After testing for the appropriateness of the measurement model, we examined the
structural part of the specified model (Anderson & Gerbing, 1988). Results of this
analysis are depicted in Figure 3.1. We excluded the control variables from the figure
for simplicity reasons. However, following the suggestions by Richardson and
Vandenberg (2005), we regressed each dependent construct, namely CEO charisma,
TFL climate, identity strength, and performance on the control variables.
Organizational Identity Strength as a Leadership-Performance Mediator 83
The structural model included the direct and indirect effects, as proposed for three-
path mediation models by Taylor, MacKinnon, and Tein (2008). This three-path
mediation model indicated a sufficient model fit (
2
= 469.11, df = 196; CFI = .923;
TLI = .910; SRMR = .057). In the model, the direct path from CEO charisma to
performance is not significant, which falsifies hypothesis 1. CEO charisma was
significantly positive linked to organizational identity strength ( = .48, p < .01) as
proposed in hypothesis 2. According to hypothesis 3, organizational identity strength
should be positively related to firm performance. This hypothesis gained support by
the data ( = .43, p < .01). It is often argued, that a direct effect between a predictor
and outcome variable is not necessary for postulating a mediation effect (e.g.,
MacKinnon, Fairchild, & Fritz, 2007). Therefore, we further tested the proposed
mediation of organizational identity strength on the relationship between CEO
charisma and firm performance by using bootstrap procedures (Cheung & Lau, 2008;
Shrout & Bolger, 2002). The result indicated a significant indirect effect from CEO
charisma to performance via identity strength ( = .209, SE = .095; CI: .082 - .415; p <
.01). This is in line with hypothesis 4.
As predicted in hypothesis 5, we found CEO charisma to be significantly positively
linked to TFL climate ( = .47, p < .01). Compared to the descriptive statistics, in the
structural model the association between TFL climate and performance is not
significant anymore ( = .08, p > .01). This is contradictory to hypothesis 6. In line
with our prediction from hypothesis 7, firm TFL climate was positively associated
with organizational identity strength ( = .41, p < .01). Finally, we inspected the
proposed mediation effect of firm identity strength on the relationship between TFL
climate and firm performance. As outlined, in contrast to the correlation results from
the descriptive statistics, TFL climate is not significantly related to firm performance
anymore. Whereas this result is contradictory to our hypothesis 6, it suggests a full
mediation of identity strength in the TFL climate performance link and therefore, is in
line with hypothesis 8. To further investigate these findings, we performed
bootstrapping procedures to directly test for the indirect effects (Cheung & Lau, 2008;
Shrout & Bolger, 2002). The result indicated a significant indirect effect between TFL
climate and performance via identity strength ( = .175, SE = .085; CI: .075 - .402; p <
.01). Thus, hypothesis 8 gained further support.
84 Organizational Identity Strength as a Leadership-Performance Mediator
To test the robustness of our model we compared the hypothesized three-path
mediation model to three alternative models as illustrated in Table 3.2. First, we
specified a mediation-only model (alternative model 1) which differed from the
original model only in regard to the direct links between TFL climate and CEO
charisma with performance, which were set to zero. This model showed a comparable
good fit (
2
= 2.64, df = 2, p > .05). Descriptive fit indices were also almost the
same, only the SRMR was slightly worse (SRMR = 0.002). Second, we specified a
direct effects only model (alternative model 2). Here, only direct effects of TFL
climate and CEO charisma on performance were allowed, while all other relationships
were fixed to zero. The model indicated a significantly worse fit than the original
model (
2
= 181.35, df = 4, p < .001). Finally we tested a no-controls model
(alternative model 3). Here we set all links of the control variables with other
constructs to zero. The model showed a significantly worse fit than the original model
(
2
= 32.13, df = 8, p < .001).
Organizational Identity Strength as a Leadership-Performance Mediator 85
Table 3.2 Model comparison
Structural Model 2 df 2 CFI TLI SRMR
Hypothesizes model: three-path mediation model
469.11 196 .923 .910 .057
Alternative model 1: mediation-only model
471.75 198 -2.64 .923 .910 .059
Alternative model 2: direct-effects only model
650.46 200 -181.35** .873 .854 .294
Alternative model 3: no-controls model
501.25 204 -32.13** .916 .905 .080
Note. CFI = Comparative fit index; TLI = Tucker lewis index; SRMR = Standardized root mean squared residual. All models are
compared to the baseline model 1.
** p < .01
86 Organizational Identity Strength as a Leadership-Performance Mediator
3.6 Discussion
In this paper, we strived to advance the literature streams dealing with identity strength
and charismatic leadership in multiple ways. We did so in a rigorous way, by using
multiple, independent data sources from different organizational levels (i.e. three
employee surveys and one CEO/HR director questionnaire) and using SEM with
bootstrapping techniques to assess the significance level of the predicted indirect
effects. Furthermore, we tested the proposed model against other, likewise plausible
models to strengthen our findings.
First, our study contributes to the literature on organizational identity as it addresses
calls by Whetten and colleagues (Foreman & Whetten, 2002; Whetten, 2006) to
include the construct in testable, quantitative models and to use it in conjunction with
other organizational studies constructs (Whetten, 2006, p. 220). In order to do so, we
focused on organizational identity strength as a generalizable and transferable
representation of members identity beliefs. To our knowledge, our study is the first to
operationalize and measure identity strength as an organizational property which is at
least surprising since the construct is usually associated with the organization as a
referent (e.g., Cole & Bruch, 2006; Dutton & Dukerich, 1991) and should hence also
be tested at the firm level of analysis.
In addition, we empirically investigated whether charismatic leadership at different
hierarchical levels might function as an antecedent of identity strength. As indicated
by prior research (Conger, et al., 2000; Shamir, et al., 1993; Shamir, et al., 1998), our
results reveal that CEO charisma, as well as TFL climate, are significantly linked to
identity strength, pointing to the important role that leaders have for the identity
formation within their companies. Identity strength, in turn, is positively related to
performance which is in line with prior, largely untested scholarly propositions (e.g.,
Meyer, et al., 2006; Tyler, 1999; Van Knippenberg, 2000) and emphasizes the
importance of the identity strength construct. Again, our multi-firm data set enabled us
to test these links at the appropriate level of analysis and to investigate differences
across organizations.
Furthermore, our analyses reveal that CEO charisma is relatively strongly linked with
TFL climate. Together with the aforementioned findings, this provides some support
Organizational Identity Strength as a Leadership-Performance Mediator 87
for a cascading model of leadership (e.g., Bass, et al., 1987; Waldman & Yammarino,
1999). It seems as if the CEO can influence leadership behavior at lower
organizational echelons via contagion effects on the firms leadership personnel, e.g.
by acting as a role model or by engaging in symbolic behaviors which illustrate the
desired leadership style within the firm.
Finally, our study indicates a relationship between charismatic leadership behavior at
different organizational levels and firm performance. However, whereas TFL climate
was significantly related to performance, CEO charisma did not show a direct link to
performance. This is in line with prior research by Waldman and colleagues (2001),
Tosi and colleagues (2004), as well as Agle and colleagues (2006). Different
explanations might be offered for this finding, including the necessity to investigate
further moderating variables such as environmental uncertainty (Tosi, et al., 2004;
Waldman, et al., 2001) or certain stages in organizational life cycles (Shamir &
Howell, 1999) that were not part of our study. In general, it seems that particularly the
effect of CEO charisma on firm performance has not yet been fully understood (Agle,
et al., 2006). By focusing on identity strength as a potential mediator of the CEO
charisma-performance link, our study tried to shed additional light on this relationship.
When directly assessing the indirect effect from CEO charisma to performance via
identity strength, the indirect effect turned out to be significant which is in line with
our expectations. Moreover, as proposed in our hypotheses, the direct association
between TFL climate and performance became insignificant after including identity
strength, suggesting a full mediation. The results were strengthened by a bootstrap
analysis testing the indirect effect between TFL climate and performance via identity
strength.
In sum, this research showed the important connections between the leadership and
identity literature. It was shown that charismatic leadership on various hierarchical
levels relates to perceptions of collective identity strength within organizations, which
in turn, might positively affect the performance and therefore, the success of the
company.
88 Organizational Identity Strength as a Leadership-Performance Mediator
3.6.1 Limitations and Future Research Directions
Even if this paper has various methodological strengths, like the use of four
independent data sources, a large sample, and the use of SEM to demonstrate the better
fit of our theoretical model in comparison to other plausible models, some limitations
need to be considered when interpreting the studys findings.
First, we were not able to apply an experimental design. Therefore, it is not possible to
make concluding interpretations about the causal direction of the tested relationships.
For example, we found a significant relationship between identity strength and
performance and argued that high identity strength would affect firm performance.
However, it could also be the other way round. A high performance of the company
could lead to a strong identity among its members. While the causal direction could
not be tested empirically in this study, we provided theoretical arguments for our
assumption of positive effects of identity strength on performance (see also Peteraf &
Shanley, 1997). Nevertheless, future studies should aim at applying experimental or
quasi-experimental designs (Shadish, Cook, & Campbell, 2002) to test the causal
direction between our focal variables.
Second, we were not able to assess objective performance data. Instead, we used a
combined measure composed of organizational and operational performance assessed
by the HR departments executives. Even if prior empirical evidence suggests, that
subjective performance measures are valid (Rowe & Morrow, 1999; Wall, et al.,
2004), further research should try to establish the tested relationships using objective
performance measures.
Finally, we argued for cascading effects of CEO charisma on lower leadership
echelons (i.e. TFL climate among the companys supervisors). However, we were not
able to directly test this assumption. Longitudinal research would be an appropriate
option to test whether a change of the CEO and therefore, a new charisma perception,
cascades down to lower levels of supervisor behavior. Therefore, scholars should aim
at investigating these mechanisms by applying longitudinal research designs.
In our study, we hypothesized a link between identity strength and performance that
was also supported by our data. Future research could analyze this relationship in more
detail and investigate potential mediators such as increased levels of affective
commitment (Meyer, et al., 2006; Meyer, et al., 2002) or cohesion (Carron & Brawley,
Organizational Identity Strength as a Leadership-Performance Mediator 89
2000). In addition, it might be particularly interesting to leave the boundaries of the
organization and to include constructs such as customer identification in future models
of identity strength effects.
Future research should also take into account the follower perspective and
organizational boundary conditions. As Shamir and colleagues (1993) pointed out, the
effects of CEO charisma or charismatic leadership may be affected by attributes of the
followers. These could include their values and identities on the one hand, where a
match between the leaders messages and existing follower values and identities may
be essential. Or follower orientations on the other hand, where orientations towards
work and life as well as the orientation towards social relations in general may affect
the influence of charismatic leaders (Shamir, et al., 1993). Scholars should aim at
integrating such a follower perspective in the proposed model as well as potentially
influencing organizational boundary conditions (e.g., opportunity for moral
involvement).
3.6.2 Managerial Implications
The implications for managers stemming from this study are manifold. Even if we
found no direct relationship between CEO charisma and firm performance, our results
point to the importance of the CEO as a source of transformational leadership behavior
and identity perceptions within firms, which in turn relate also to performance.
Therefore, top managers should pay attention to the way they are perceived by their
subordinates. Specifically, they should act as a role model for line managers regarding
TFL behavior. Regular contact as well as visibility for lower leadership echelons could
further increase the likelihood of cascading effects.
In addition, this studys findings once more point to the central role of strong identity
perceptions for firms. Given the positive relation with firm performance in our study
and anecdotal evidence in cases like Apple or Google, organizations should be keen to
foster such strong identities. Our study indicates that leadership behavior plays a key
role for the development of identity strength. Consequently, organizations could point
leaders at all hierarchical levels to the chances of fostering strong identity perceptions
and could also help them to do so, e.g., by addressing identity issues in leadership
trainings. In addition to the potential influence of leadership behavior, also HR could
90 Organizational Identity Strength as a Leadership-Performance Mediator
come up with initiatives to foster the identity strength within the firm. Potential
activities might include corporate events that accentuate the uniqueness of the firm or
special communication materials such as company newspapers that highlight joint
achievements (who we are) and forward-looking visions (who we want to become).
Taken together, managers should be aware of these possibilities to foster employees
identity strength perceptions, and in turn, positively influence the companys
performance as well as other desirable outcomes (e.g., reduced turnover, see Cole &
Bruch, 2006).

Discrimination as a Mediator of the Diversity Climate-Performance Link 91
4 Study 3 Expanding Insights on the Diversity Climate-
Performance Link: The Role of Work Group
Discrimination and Group Size
Authors: Stephan A. Bhm, David J. G. Dwertmann, Florian Kunze,
Bjrn Michaelis, Kizzy M. Parks, Daniel P. McDonald
Individual contribution: Mainly responsible for the methods, results, and parts of
the discussion section. In addition, I was involved in the
whole process of conceptualization, planning, writing, etc.
Presentations: A prior version of this paper was presented at the Academy
of Management Annual Conference 2010 in Montreal,
Canada.
Current stage: Accepted for publication at Human Resource Management
4.1 Abstract
The present study extends knowledge of the performance consequences of work group
diversity climate. Building upon Kopelman, Brief, and Guzzos (1990) climate model
of productivity, we introduced work group discrimination as a behavioral mediator that
explains the positive performance effects of diversity climate on group performance.
In addition, we investigated group size as moderator upon which this mediated
relationship depended. These moderated-mediated propositions were tested using a
split-sample design and data from 248 military work units comprising 8,707
respondents. Findings from structural equation modeling revealed that work group
diversity climate was consistently positively related to group performance and that this
relationship was mediated by work group discrimination. Results yielded a pattern of
moderated mediation, in that the indirect relationship between work group diversity
climate (through perceptions of work group discrimination) and group performance
was more pronounced in larger than in smaller groups. The results illustrate that work
group discrimination and group size represent key factors in determining how a work
92 Discrimination as a Mediator of the Diversity Climate-Performance Link
group diversity climate is associated with group performance and, thus, have
significant implications for research and practice.
Keywords: diversity climate, work group discrimination, group performance, work
group size, structural equation modeling
4.2 Introduction
Trends like increasing globalization and migration, growing individual mobility, and
aging populations have created diverse work settings in which employees of different
genders, age groups, races, ethnicities, nationalities, sexual orientations, and disability
status work together (Doverspike, Taylor, Shultz, & McKay, 2000; Fullerton &
Toossi, 2001; Gonzalez & DeNisi, 2009). As a result of this development, scholars and
practitioners are focusing on research and practical activities to amplify the potential
positive outcomes of diversity (e.g., innovation and creativity) while preventing its
negative effects (e.g., increasing group conflicts and discrimination) (Van
Knippenberg, et al., 2004; Van Knippenberg & Schippers, 2007).
One concept that has gained considerable attention in this regard is diversity climate,
which describes members' shared perceptions of an organization's diversity-related
policies, practices, and procedures (Gelfand, et al., 2005; Kaplan, et al., 2011; Mor
Barak, et al., 1998). At the individual level of analysis, perceptions of a positive
diversity climate within organizations have been linked to various desirable outcomes
such as increased job satisfaction, career and organizational commitment as well as
reduced turnover intentions and lowered absenteeism (Avery, et al., 2007; Buttner, et
al., 2010; McKay, et al., 2007). At the business unit or collective level of analysis,
diversity climate has been shown to relate positively to key performance indicators
such as store sales (McKay, et al., 2009), return on profit (Gonzalez & DeNisi, 2009),
and/or customer satisfaction (McKay, et al., 2011).
While we seem to know that a pro-diversity climate has a positive impact on
performance, we know surprisingly little how such effects occur and which
intervening processes and mechanisms are important to explore (McKay, et al., 2009;
Shore, et al., 2011). Indeed, diversity climate research has to date largely neglected
which processes might function as a linkage between diversity climate and collective
performance (Avery & McKay, 2010; McKay, et al., 2009).
Discrimination as a Mediator of the Diversity Climate-Performance Link 93
Our study addresses this "black box" of diversity climate effects by building on the
theoretical work of Schneider and Reichers (1983) who have proposed that climate
might impact outcomes primarily through its effects on various forms of
organizational behavior. In other words, climate as a normative environment first has
to change relevant behaviors in order to take effect. Building upon this notion,
Kopelman and colleagues (1990) developed a model of climate, culture and
productivity. They proposed organizational climate to influence productivity through
its positive effects on cognitive and affective states (such as work motivation and job
satisfaction) as well as on salient organizational behaviors (such as employee
attachment, performance, and citizenship). We theoretically anchor our study in
Kopelman et al.'s (1990) model and extend it by introducing discrimination as a
behavioral mediator and group size as a structural moderator of the diversity climate-
group performance link. By doing so, we contribute to the diversity climate literature
in several important ways.
First, from an empirical perspective, our study contributes to the diversity climate
literature as it is one of the very few pieces actually testing important elements of
Kopelman et al.'s (1990) model, such as the translation of climate into behavior, which
in turn, affects performance. Up to now, research on such transfer processes has been
scarce (Schneider, et al., 2011).
Second, by focusing on discrimination as a potential mediator, we propose and
empirically test a behavioral mechanism that has not yet attracted the attention it
deserves in the diversity climate-performance link. Complementing and extending the
behaviors proposed by Kopelman and colleagues (1990), which all constitute
desirable, individual-level behaviors (such as citizenship behavior), we concentrate on
the mitigation of a harmful, group-level behavior taking place between organizational
members. Ample research dating back to the work of Tajfel and Turner (1986) has
demonstrated that discrimination within groups is one of the primary threats to group
functioning with detrimental effects for both employees (e.g., increase in work tension
and stress, reduced satisfaction and health) and entire organizations (e.g., costly
lawsuits, decrease in employee commitment and morale, flawed public images)
(seeGoldman, Gutek, Stein, & Lewis, 2006, for a review of this literature). Therefore,
it is imperative to shed more light on the ways in which discrimination can be avoided
in the workplace and the role of a pro-diverse work climate in this regard.
94 Discrimination as a Mediator of the Diversity Climate-Performance Link
Third, by investigating the role of discrimination, we also integrate the surprisingly
unconnected literatures on diversity climate and discrimination. Only recently, Smith,
Brief and Colella (2010) have noted that the interest in diversity management and pro-
diverse work climates has taken attention away from the construct of discrimination.
Particularly, no study known to us has examined the theoretical and empirical
relationship between diversity climate and discrimination (Smith, et al., 2010; Triana,
Garcia, & Colella, 2010).
Fourth, in order to further sharpen our understanding of the role of discrimination in
the diversity climate-performance link, we investigate group size as a structural
boundary condition. As Wegge, Roth, Neubach, Schmidt, and Kanfer (2008) have
proposed, larger groups are more likely to show communication deficiencies, conflict,
stereotyping and mutual discrimination than smaller groups. Consequently, a
pronounced diversity climate might be more important for larger than for smaller
groups in order to reduce the level of discrimination and to spur group performance.
In sum, with the current paper we advance theoretical knowledge on the effects of
diversity climate on performance by introducing discrimination as an intervening
mechanism, and by researching group size as a boundary condition of the diversity
climate-discrimination link. In addition, we contribute to practice, since the study
outlines how lower levels of discrimination and improved group performance can be
achieved through fostering diversity-friendly work climates. The resulting moderated-
mediation model is depicted in Figure 4.1.
4.3 Theory and Hypotheses Development
4.3.1 Diversity climate defined
Organizational climate research has its roots in the late 1930s (Schneider, et al., 2011)
when Lewin and colleagues (1939) studied aggressive behavior in groups under
various conditions of social climate. More recently, Reichers and Schneider (1990, p.
22) developed a theoretical concept of organizational climate which they defined as
"shared perceptions of the way things are around here." Climate perceptions evolve as
part of a sense-making process, in which individual employees retrieve and interpret
certain information from their work environment (Schneider, 1975; Schneider &
Discrimination as a Mediator of the Diversity Climate-Performance Link 95
Reichers, 1983). If colleagues sufficiently share this information on relevant
organizational events and characteristics, a perception of a collective climate may
emerge. In the past 20 years, many forms of climate have been proposed and
empirically tested, such as cooperation climate (Collins & Smith, 2006), service
climate (Towler, Lezotte, & Burke, 2011), or employee relations climate (Ngo, Lau, &
Foley, 2008). Therefore, it is necessary to specify the focus of the climate to which one
refers. This study examines diversity climate, formally defined as "aggregate member
perceptions about the organization's diversity-related formal structure characteristics
and informal values" (Gonzalez & DeNisi, 2009, p. 24).
4.3.2 Main effect of diversity climate on work group performance
To argue for a positive effect of diversity climate on group performance we
theoretically build upon Kopelman et al.'s (1990) climate model of productivity. A
pronounced diversity climate provides important normative information about the
diversity-related attitudes and behaviors that are expected, supported, and rewarded. It
signals to employees that the group or organization values the contributions of all
members and relies on their full inclusion in order to be successful (Kossek & Zonia,
1993; Mor Barak, et al., 1998; Nishii, in press). Adding to these general assumptions
and Kopelman et al.'s (1990) overall framework, potential effects of diversity climate
on group performance might be traced back to two main sources: 1) the fostering of
positive, performance-relevant group processes and behaviors (such as
communication); and 2) the attenuation of negative, performance-relevant group
processes and behaviors (such as discrimination or conflict).
With regard to the first perspective, Shore and colleagues (2011) as well as Cox (1994)
mention performance-relevant processes and states such as workgroup cohesiveness
and communication, creativity and innovation, as well as problem solving that should
profit from a pronounced diversity climate within work groups. In line with this
notion, research has proposed that diverse employees within groups tend to possess
valuable, non-redundant information which might help them to achieve better
performance outcomes (Van Knippenberg, et al., 2004). In order to leverage these
performance potentials, however, an effective communication and information
elaboration within work groups must take place (Earley & Mosakowski, 2000; Hinsz,
et al., 1997). A pronounced diversity climate within work groups makes it more likely
96 Discrimination as a Mediator of the Diversity Climate-Performance Link
that such effective communication occurs. More specifically, a strong and shared
commitment to diversity within work groups should motivate employees to closely
pay attention to ideas, thoughts, and proposals from all group members - enabling
especially minority and potential low-status group members to bring in their diverse
and potentially challenging opinions and viewpoints. In this way, a climate for
diversity might also remove former demography-based status differences (J. H. Turner
& Stets, 2006) between group members and "level the playing field with respect to
perceptions of competence among group members" (Shore, et al., 2011, p. 1279).
Consequently, unfounded conforming behaviors of low status group members should
decrease with positive effects for the group's overall potential for creativity, problem
solving, and ultimately performance. This should also enhance members' long-term
motivation to contribute to group goals and organizational functioning (L. Roberson &
Block, 2001) as nobody feels marginalized or excluded - again especially important
for employees from underrepresented groups (Goldman, et al., 2006; McKay, et al.,
2009).
With regard to the second perspective, a distinct diversity climate might also attenuate
negative group processes that hinder performance. Such negative processes typically
include stereotyping, sub-group formation, relationship conflict, and discrimination
stemming from similarity/attraction, categorization and social identity-based processes
(Byrne, 1971; Tajfel & Turner, 1986; J. Turner, 1987). Especially demographically-
diverse groups have been repeatedly shown to bear the potential for subgroup
formation with negative effects for overall group identity (Earley & Mosakowski,
2000), willingness to cooperate (Chatman & Flynn, 2001), and performance (Pelled,
1996). Members of potential out-groups typically suffer from less communication, and
more discrimination and conflict compared to members of the respective in-group
(Tajfel & Turner, 1986). As Gonzalez and DeNisi (2009, p. 27) proposed, a supportive
diversity climate within groups might "weaken in-group bias and social categorization
processes, leading to lower adverse impact on intergroup conflict and social
integration." Consequently, in groups with a pronounced diversity climate, especially
negative forms of conflict such as relationship conflict (Jehn, et al., 1999; Mohammed
& Angell, 2004; Pelled, et al., 1999) might decrease while performance increases.
From an empirical perspective, only few studies have investigated the diversity
climate-performance relationship at the collective level of analysis. Previous research
Discrimination as a Mediator of the Diversity Climate-Performance Link 97
has found a positive association between higher levels of a pro-diverse work climate
and unit performance and productivity (Gonzalez & DeNisi, 2009; McKay, et al.,
2009). In addition, McKay and colleagues (2011) demonstrated a positive relationship
between diversity climate and customer satisfaction, moderated by service climate and
business unit demography. In sum, based on the theoretical and empirical evidence
presented above, we propose the following:
H1: Work group diversity climate will be positively related to work group
performance.
4.3.3 Effect of diversity climate on work group discrimination
As Hypothesis 1 on the diversity climate-performance link indicates, scholars typically
rely on mediators to explain the performance implications of diversity climate.
Unfortunately, only few of the potential intervening processes were actually tested
(McKay, et al., 2009; Schneider, et al., 2011). Therefore, in order to better understand
the diversity climate/performance link, we build on Kopelman et al.'s (1990) model
and focus on the aforementioned second perspective, i.e. the mitigation of potentially
harmful processes and behaviors within work groups. Specifically, we propose that
diversity climate is negatively related to discrimination within work groups.
Since the work of Allport (1954), discrimination has been defined as unjustified
negative actions that undermine the equal treatment of all individuals or groups (see
also Dovidio & Hebl, 2005). In contrast to diversity climate, which reflects a
normative environment within groups or organizations (Gelfand et al., 2005; Gonzalez
& DeNisi, 2009), discrimination is a behavioral construct that is based on actual or
perceived incidents that are considered to be unfair against certain groups of
individuals (Fiske, 1998). In this regard, our understanding of the diversity
climate/discrimination link (as a normative cause and a behavioral effect) is congruent
to a recent review of the climate literature by Schneider and colleagues (2011, p. 388)
who summarized that "climate is thought to yield behavior consistent with the climate
employees experience, and it is the behavior that yields the outcome."
As described above, a strong diversity climate is usually associated with a distinct
organizational mindset, fostering the social integration of employees from
underrepresented groups (Gonzalez & DeNisi, 2009; McKay et al., 2007; McKay et
98 Discrimination as a Mediator of the Diversity Climate-Performance Link
al., 2009). If shared within work groups, a pronounced diversity climate can function
as a clear point of orientation and as a strong behavioral guideline for both employees
and supervisors. Group members develop a common interpretation regarding
behaviors that are expected and rewarded (Bowen & Ostroff, 2004; Mischel, 1973,
1977).
Consequently, one can expect that group members and supervisors who jointly
perceive a pronounced diversity climate would act in accordance with it. Because
discriminatory behavior can be regarded as a clear violation of a pro-diversity
professional policy, a negative effect of diversity climate on discrimination within
work groups is to be expected (Gelfand et al., 2005). Similarly, Nelson and Probst
(2010) proposed in a theoretical model of workplace discrimination and harassment
that diversity climate should function as the main driver of discrimination as it tells
people how the organization will react towards discrimination. While units with a
strong diversity climate will be intolerant of discrimination, low levels of diversity
climate will indicate that discrimination is tolerated - and employees and supervisors
might act accordingly.
From an empirical point of view, research on the relationship between diversity
climate and discrimination is scarce. While we are unaware of any published study on
the diversity climate/discrimination relationship, Hofhuis, van der Zee, and Otten
(2012) have recently shown that diversity climate is negatively associated with
diversity-related conflict, a construct similar to discrimination.
Based on the outlined reasoning, we hypothesize that:
H2: Diversity climate will be negatively related to work group discrimination.
4.3.4 Effect of work group discrimination on group performance
Following the logic developed in hypothesis 1, discrimination might negatively affect
performance-relevant processes and behaviors at the group level based on several
theoretical arguments. First, employees attitudes towards their employers and work
groups depend on their perceptions of whether or not their own opportunities and
treatment are the same as those extended to members of other groups (Gutek, Cohen,
& Tsui, 1996). If some employees believe that they have suffered from unfair,
discriminatory treatment, they are likely to develop a feeling of not being valued as
Discrimination as a Mediator of the Diversity Climate-Performance Link 99
much as other members (Snape & Redman, 2003). Gutek and colleagues (1996) used
these processes to explain why entire groups of employees may emotionally withdraw
when they believe that members of their own in-group (e.g., a gender group) are
treated unfairly or in a discriminatory way. Consequently, collective processes might
emerge in work groups in which clusters of employees (e.g., women, aging workers, or
disabled employees) perceive certain forms of discrimination. Such a perception could
lead to a drop in their collective performance.
Second, as described above, group performance is also dependent upon both positive
and negative processes taking place within work groups such as knowledge exchange,
communication, or conflict (Hackman & Morris, 1975; Jehn, et al., 1999; Pelled, et al.,
1999). Discrimination within work groups is likely to weaken social integration and to
increase negative inter-personal processes such as relationship conflict while it should
reduce positive behaviors and states such as communication, cooperation, or cohesion
- both with negative overall effects for work group performance.
On the basis of these arguments, we suggest:
H3a: Work group discrimination will be negatively related to work group
performance.
4.3.5 Mediation effect of discrimination
In Hypothesis 1 we predict a positive influence of diversity climate on group
performance. According to Hypothesis 2, diversity climate is expected to be negatively
associated with work group discrimination. Finally, in Hypothesis 3a, we propose a
negative influence of work group discrimination on group performance. Taken
together, these three hypotheses indicate both a direct and an indirect effect of
diversity climate on group performance. Based on prior theoretical considerations in
Coxs interactional model of cultural diversity (1994), we propose a mediation model.
In contrast to prior theoretical and empirical work (e.g., Collins & Smith, 2006;
Patterson, Warr, & West, 2004), we do not rely on the mediating effects of positive
employee attitudes but propose work group discrimination--a negative behavioral
pattern--as a mediator in the diversity climate-performance link.
Based on this rationale, we suggest the following:
100 Discrimination as a Mediator of the Diversity Climate-Performance Link
H3b: The relationship between diversity climate and group performance is mediated
through work group discrimination.
4.3.6 Group size as a moderator of the diversity climate-discrimination
relationship
With this study, we not only extend Kopelman et al.'s (1990) climate model of
productivity by integrating discrimination as a negative mediator of the diversity
climate-performance link, but also by introducing group size as a structural boundary
condition. We argue that group size affects how and when climates (in our case
diversity climate) actually translate into related behavior (in our case discrimination
within work groups). More specifically, we propose that in larger groups the
mitigating effect of diversity climate on discrimination should be more pronounced, as
larger groups are generally more prone to perceptions of discriminatory behavior than
smaller groups. In line with this assumption, Wegge and colleagues (2008) suggest
that the probability of communication deficiencies and mutual conflict should be
higher in larger than in smaller teams. This can be explained by various processes.
First, as work groups become larger, self- categorization and subsequent sub-group
formation in terms of race, age, gender, religion, and ethnical background should be
more easily possible as the sheer presence of two (or more) demographic groups is
often enough to turn in-group defining characteristics salient (Abrams, Thomas, &
Hogg, 2011; J. C. Turner, Hogg, Oakes, Reicher, & Wetherell, 1987). Moreover, in
large groups, minority members might be more easily identified, again fostering
processes of in-group/out-group formation as well as related discrimination.
Consequently, for larger work groups that might suffer from increased levels of
discrimination, the attenuating influence of a pronounced diversity climate might be
more important than for smaller works groups.
Second, in smaller work groups, members and supervisors should have more
opportunities for personalized interactions with others, thereby establishing more
cross-cutting ties that make demographic boundaries less salient. This assumption is in
line with Wegge and colleagues' (2008) conclusion about dyadic communications in
larger versus smaller units. Large groups have a higher chance for homogenous dyadic
communications (e.g., between members of a similar age or the same sex), reducing
Discrimination as a Mediator of the Diversity Climate-Performance Link 101
the number of heterogeneous dyadic interactions. In other words, in large groups
people can better choose with whom they want to interact and they may choose
demographically-similar peers (Byrne, 1971). In small groups, however, supervisors
and employees have only a limited pool of colleagues, making it necessary to
communicate across demographic boundaries which should turn prejudices less salient
and reduce the danger of discrimination. In addition, in smaller groups, members
should be more reliant on each other to accomplish joint goals. This stronger outcome-
dependency should make it more likely that work group members also cooperate more
intensively in small groups, thereby increasing the chances for positive intergroup
contact (Allport, 1954; R. Brown & Hewstone, 2005; Pettigrew, 1998), which in turn,
should reduce the level of prejudices and discrimination.
Therefore, we argue that a strong diversity climate may exhibit less influence on
discrimination in small groups because the level of discrimination in these units is
already lower. In contrast, in larger groups, where discrimination plays a more
dominant role due to the above described processes, a strong diversity climate as a
normative guideline should unfold to its full extent, yielding lower levels of
discrimination. Members of larger groups, therefore, should benefit from a strong
diversity climate more than members of smaller work groups. This leads to the
following:
H4a: Work group size is a moderator of the diversity climate-discrimination
relationship. Specifically, the negative relationship between diversity climate and
discrimination will be more pronounced in larger than in smaller work groups.
4.3.7 Group size as a moderator of the mediated diversity climate-performance
relationship
Based on the argumentation provided in the prior hypotheses we assume that work
group size not only moderates the relationship between diversity climate and
discrimination, but also the mediated relationship between diversity climate and group
performance. More specifically, if in smaller groups the relationship between diversity
climate and discrimination is less pronounced, also the mediated effect of diversity
climate on performance through discrimination should be weaker. The other way
around, a larger group size might not only favor the diversity climate-discrimination
102 Discrimination as a Mediator of the Diversity Climate-Performance Link
relationship, but also the mediated effect of diversity climate on group performance
through discrimination. In sum, we propose the following moderated-mediation
hypothesis:
H4b: Work group size moderates the mediated relationship between diversity climate
and group performance through discrimination. Specifically, the mediated
relationship should be more pronounced in larger than in smaller work groups.
4.4 Methods
4.4.1 Sample
Data used to test the relationships were collected by the Defense Equal Opportunity
Management Institute (DEOMI) from United States military personnel in the spring of
2008. A total of 8,707 military personnel from 248 work groups took part in the
survey. We allocated each group a code to match respondents with groups. The
average response rate was 50 percent which is in line with general findings concerning
the response rate at the individual level (Baruch & Holtom, 2008). The survey
consisted of an online version of the DEOMI Organizational Climate Survey
(DEOCS) developed by the Defense Equal Opportunity Management Institute
(Dansby & Landis, 1991).
All analyses testing the proposed hypotheses were conducted at the group level.
Following Klein, Conn, Smith, and Sorra (2001) we deleted groups with less than
three members. This resulted in the exclusion of 35 groups. In addition, the two largest
work groups containing 600 and 348 members were deleted as well due to outlier
analyses. Thus, the final data set consisted of 7,689 employees from 211 work groups.
On average, there were 36.44 employees per work group (SD = 44.63, median =
20.00) and group sizes ranged from 4 to 268 (range = 264).
The respondents demographics were 81.4 percent male, and the majority of the
respondents were between 22 and 40 years old (68.5 percent). The ethnic composition
of the sample was very heterogeneous (59.1 percent Caucasian, 15.2 percent African
American, 5.4 percent Asian, 4 percent Hispanic, 1.5 percent Native American; 1.3
percent Native Hawaiian or Pacific Islander; 5.8 percent with multiple answers; and
Discrimination as a Mediator of the Diversity Climate-Performance Link 103
7.6 percent missing answers). In addition, the sample comprised a wide variety of
military branches (e.g., Air Force, Army, Coast Guard, Marine Corps, and Navy).
To handle the potential problems arising from common method bias (e.g., D. T.
Campbell & Fiske, 1959; Podsakoff, et al., 2003) we conducted a split sample design.
Half of the respondents in each group provided the rating for diversity climate and
discrimination; the other half provided the group performance ratings. By doing so, we
controlled for one of the major causes of common method variance () obtaining the
measures of both predictor and criterion variables from the same rater or source
(Podsakoff, et al., 2003, p. 887). Avoiding this cause prevents the results from being
biased by the effects of consistency motifs, implicit theories, social desirability
tendencies, dispositional and transient mood states, and any tendencies on the part of
the rater to acquiesce or respond in a lenient manner (for a detailed description see
Podsakoff, et al., 2003).
4.4.2 Procedure
Typically, the DEOCS is administered annually at the request of a military unit
commander and operates similarly to an annual employee survey. The DEOCS is
administered and received by DEOMI personnel and is available in both paper-and-
pencil and web-based versions. All personnel are provided with either a confidential
unique online code to complete the survey online, or a paper copy of the survey and a
response sheet. All responses to the survey are completely confidential, and although
the DEOCS is deployed at the request of a military unit commander, the commander
does not receive specific details about individual respondents in terms of participation
or outcomes on the survey.
4.4.3 Measures
Perceptions of diversity climate, work group discrimination, and group performance
were measured with the DEOCS. The DEOCS evolved from the Military Equal
Opportunity Climate Survey (MEOCS; Dansby & Landis, 1991), and both surveys are
suitable for military and civilian organizations of varying sizes. In total, the DEOCS
contains 66 self-report items which are traditionally combined into 13 distinct scales,
seven of which address equal employment opportunity and six of which address
104 Discrimination as a Mediator of the Diversity Climate-Performance Link
factors in organizational effectiveness. Tests of the internal consistency and factor
structure of the DEOCS and its predecessor, the MEOCS, were previously conducted
and showed sufficient results. For further details see Estrada, Stetz, and Harbke
(2007), Landis, Fisher, and Dansby (1988), and Truhon (2003). Items for all constructs
were measured with a five-point Likert scale ranging from 1 totally agree with the
statement to 5 totally disagree with the statement. A summary of measures used in
the study is discussed below.
Diversity climate was assessed with a 7-item measure developed by Parks and
colleagues (2008). The items closely overlap with items from Mor Barak and
colleagues (1998), McKay and colleagues (2008), and Hopkins, Hopkins, and Mallette
(2001). A sample item was, My work unit is valued for the different perspectives that
we bring to the organization. Items were coded such that a high value indicated a
positive diversity climate. A Cronbachs alpha of .91 indicated a sufficient consistency
of the scale.
Discrimination was measured with 10 items focusing on forms of discrimination
(disability, age, religion, gender, ethnicity). Each dimension was captured with two
items. All items were developed by Dansby and Landis (1991). A sample item was, A
supervisor did not appoint a qualified worker with a disability to a new position, but
instead appointed another less qualified worker. Items were coded such that higher
values equal a higher level of discrimination. A Cronbachs alpha of .89 indicated a
high internal consistency. In order to capture several forms of discrimination (i.e.,
disability, age, religion, gender, ethnicity), we measured each separately; however we
computed one discrimination score for the analyses
4
.
Group performance was assessed with three items developed by Dansby and Landis
(1991). A sample item was, When high priority work arises, such as short deadlines,
crash programs, and schedule changes, the people in my work group do an outstanding
job in handling these situations. High values indicate a good performance.
Cronbachs alpha was .91, indicating sufficient internal consistency.
Group size was assessed by the number of respondents per group.

4
To test the appropriateness of our model, we computed confirmatory factor analyses. We tested two models,
one in which we formed the proposed second order discrimination factor (2 = 62.9, df = 30; CFI = .97;
RMSEA = .072; SRMR = .047), and one model in which we kept all discrimination forms separately (2
= 358.9, df = 10; chi-square difference test p<.001; CFI = .69; RMSEA = .213; SRMR = .336). The
results clearly supported the proposed second order model.
Discrimination as a Mediator of the Diversity Climate-Performance Link 105
Due to previous studies demonstrating that actual diversity (e.g., Jayne & Dipboye,
2004) may impact group performance, we included three variables as controls. To
control for age, gender, and ethnic diversity in the work groups, we computed Blau's
(1977) index of homogeneity for each facet separately based on the answers provided
by the respondents.
4.4.4 Group Level Data Analysis
All hypotheses tests were conducted at the group level. Therefore, individual values
were aggregated to the next higher level. The appropriateness of this procedure was
tested using different aggregation statistics (r
wg
, ICC(1), ICC(2)) (Bliese, 2000). The
r
wg
evaluates if members ratings within a group are interchangeable. The ICC(1)
assesses the existence of group effects on the measure of interest, while the ICC(2)
displays the reliability of group means. Whereas there are no absolute standards for
these indices, ICC(1) values based on significant F statistics from a one way ANOVA,
ICC(2) values above .50, and a median r
wg
of more than .70 are usually considered as
acceptable (Bliese, 2000; Kenny & La Voie, 1985; Klein & Kozlowski, 2000).
For diversity climate all three statistics showed sufficient results (ICC(1) = .10; F =
2.91, p<0.001; ICC(2) = .66; median r
wg
= .68). Only the r
wg
was slightly below the .70
cutoff value. Similar results were obtained for the discrimination scale with all three
values justifying an aggregation to the group level (ICC(1) = .07; F = 2.38, p<0.001;
ICC(2) = .58; median r
wg
= .80). Finally, we received sufficient aggregation statistics
for the group performance measure (ICC(1) = .08; F = 2.48, p<0.001; ICC(2) = .58;
median r
wg
= .71).
4.4.5 Data Analysis
SEM using maximum likelihood estimation was used to test the proposed mediation
model. This was done because SEM has three important advantages compared to
classical regression analysis as proposed by Baron and Kenny (1986) and refined by
Frazier, Tix, and Barron (2004). First, SEM models can account for measurement
errors, thus preventing results from being biased by unreliability (Busemeyer & Jones,
1983). Second, instead of applying a hierarchical step-by-step regression procedure,
the use of SEM allows for the simultaneous testing of several relationships and this
106 Discrimination as a Mediator of the Diversity Climate-Performance Link
reduces type II errors. Finally, SEM enables testing for the overall model fit and hence
empowers us to do model comparisons to investigate the assumed mediation
relationship (Bagozzi & Yi, 1988).
In order not to confound the meaning of the study variables by simultaneously
estimating the measurement and structural model (Burt, 1976), we followed the
recommendations for a two-step approach by Anderson and Gerbing (1988). We first
tested for the appropriateness of our measurement model. In a second step, we
considered the structural model including the proposed relationships according to our
hypotheses. Thereby, we tested different models against the proposed moderated
mediation model effect.
The proposed moderation effect was tested by adding the orthogonal-centered product
term of the moderator variable group size and the predictor variable diversity climate
to the model (Lance, 1988; Little, Bovaird, & Widaman, 2006). To further inspect the
moderation effect, we plotted the results and performed a simple slopes analysis
(Aiken & West, 1991).
To investigate the mediation effect of discrimination further, we directly assessed the
significance of the indirect effect of diversity climate on performance via
discrimination using bootstrap analysis (Cheung & Lau, 2008; L. R. James, et al.,
2006). The bootstrapping is accomplished by taking a large number of samples of
size n (where n is the original sample size) from the data, sampling with replacement,
and computing the indirect effect, ab, in each sample (Preacher & Hayes, 2004, p.
722; ab equals the paths which constitute the indirect effect). The major advantages of
bootstrapping are that it makes no assumptions about the shape of the distribution of
the variables or the sampling distribution of the statistic (Efron & Tibshirani, 1986,
1993) and also allows the computation of confidence intervals for the mediation effect.
Following the procedure described by Preacher, Rucker, and Hayes (2007) for
regression analyses, we specified two additional SEM models to test the conditional
indirect effects in the moderated-mediation model with bootstrapping procedures. One
contained high values of the proposed moderator group size (+1 standard deviation),
the other model low ones (-1 standard deviation).
Discrimination as a Mediator of the Diversity Climate-Performance Link 107
4.5 Results
4.5.1 Descriptive statistics
Table 4.1 displays the descriptive statistics and intercorrelations among the study
variables. The Cronbach's alpha reliability values for the measures are provided in
parentheses in the diagonal entries. It can be seen that all constructs except of the
control variables are significantly related to each other. All correlations are in the
proposed directions. Diversity climate is negatively related to discrimination (r = -.48,
p < .01) and positively correlated with group performance (r = .21, p < .01).
Discrimination relates negatively to group performance (r = -.27, p < .01). Since the
proposed mediation cannot be examined by correlation tables, we used SEM to test our
assumptions.
108 Discrimination as a Mediator of the Diversity Climate-Performance Link
Table 4.1 Descriptive statistics and correlations among the variables in this study
Mean s.d. 1 2 3 4 5 6 7
1. Age diversity 0.60 0.11
2. Gender diversity 0.25 0.17 .25**
3. Ethnic diversity 0.52 0.19 .07 .12
4. Group size 36.44 44.63 .11 -.01 .28**
5. Diversity climate 3.75 0.43 .01 .07 -.18* -.04 (.91)
6. Discrimination 1.54 0.28 .10 .12 .27** .20** -.48** (.89)
7. Group performance 4.11 0.46 .04 .09 .18* -.08 .21** -.27** (.91)
Note. All correlations were tested two-tailed. The diagonal entries in parentheses reflect Cronbachs alpha internal consistency reliability
estimates.
* p < .05
** p < .01
Discrimination as a Mediator of the Diversity Climate-Performance Link 109
4.5.2 Measurement model
To examine the proposed hypotheses we first established the measurement model. The
model consisted of the three latent study variables - diversity climate, discrimination,
and group performance - with 20 indicators. The discrimination measure was modeled
as a second order construct, with five discrimination sub-dimensions (each with two
items) that together loaded on the overall discrimination construct.
Following propositions from an extensive simulation study by Beauducel and
Wittmann (2005) we decided to refer to the comparative fit index (CFI), the root mean
squared error of approximation (RMSEA), and the standardized root mean square
residual (SRMR) as descriptive fit indices to assess the model fit. Based on
propositions in the literature we set the cut-off value for the CFI to .90 (Meyers, et al.,
2006), for the RMSEA < .10 (Browne & Cudeck, 1993; Loehlin, 2004), and for the
SRMR < .08 (Hu & Bentler, 1999). Based on the defined criteria, the tested
measurement model showed a sufficient overall model fit (
2
= 405.6, df = 162; CFI =
.917; RMSEA = .085; SRMR = .085).
In addition, we tested several additional models (see table 4.2). Since it could be
argued that diversity climate and discrimination are strongly related we tested for an
alternative two factor model in which we formed one common factor instead of two
distinct ones with all diversity climate and discrimination items and one performance
factor (alternative model 1). The model fit decreased significantly (
2
= 1280.7, df =
169; CFI = .623; RMSEA = .177; SRMR = .141). Next we specified a two factor
model in which all discrimination and performance items loaded on one common
factor and the diversity climate items formed the second factor (alternative model 2).
The model showed an insufficient fit (
2
= 1236.8, df = 169; CFI = .637; RMSEA =
.173; SRMR = .120).The third two factor model consisted of one factor in which all
diversity climate and performance items loaded on a common factor and the
discrimination items formed a second factor (alternative model 3). Again, the model
did not indicate a sufficient result (
2
= 1285.6, df = 169; CFI = .621; RMSEA = .177;
SRMR = .138). Finally, we also tested a one factor model in which all items loaded on
one common factor (alternative model 4). The model showed a significantly worse fit
than the proposed model (
2
= 1720.1, df = 170; CFI = .474; RMSEA = .208; SRMR =
110 Discrimination as a Mediator of the Diversity Climate-Performance Link
.157). Since all the alternative models yielded a non-sufficient model fit, we decided to
retain our specified three factor model.
Discrimination as a Mediator of the Diversity Climate-Performance Link 111
Table 4.2 Measurement model comparison
Measurement model
2

2
df CFI RMSEA SRMR
Hypothesized model: three factor model
405.6 162 .917 .085 .085
Alternative Model 1: two factor model
(diversity climate and discrimination as a
common factor)
1280.7 875.1** 169 .623 .177 .141
Alternative model 2: two factor model
(performance and discrimination as a
common factor)
1236.8 831.2** 169 .637 .173 .120
Alternative model 3: two factor model
(performance and diversity climate as a
common factor)
1285.6 880.0** 169 .621 .177 .138
Alternative model 4: one factor model
1720.1 1314.5** 170 .474 .208 .157
Note. RMSEA = root-mean-square error of approximation, CFI = comparative fit index; SRMR = standardized root mean squared
residual.
2
is referring to the difference of the respective model to the hypothesized three factor model.
* p < .05
** p < .01

112 Discrimination as a Mediator of the Diversity Climate-Performance Link
4.5.3 Structural model
After testing for the appropriateness of the measurement model, we examined the
structural part of the specified model (Anderson & Gerbing, 1988). Results of this
analysis are depicted in Figure 4.1. Following the suggestions by Richardson and
Vandenberg (2005), we specified a path from the control variables to each dependent
construct: diversity climate, discrimination, and group performance. Significant
relationships were found between gender diversity and performance ( = .22, p < .01)
as well as between ethnic diversity and discrimination ( = .21, p < .01).
Discrimination as a Mediator of the Diversity Climate-Performance Link 113
Figure 4.1 Diagram of paths in the proposed moderated mediation model

Note. N = 211 groups, squared multiple correlations in parentheses. For calculating the indirect effects 5,000 bootstrap samples were
used. Squared multiple correlations are bold and in parentheses.
* p < .05
** p < .01
114 Discrimination as a Mediator of the Diversity Climate-Performance Link
Table 4.3 Structural model comparison
Structural Model 2 df 2/df 2 CFI RMSEA SRMR
Hypothesized model: moderated-
mediation model
556.04 250 2.22 .903 .076 .079
Alternative model 1: direct-effects only
model
621.97 253 2.49 65.92** .883 .083 .157
Alternative model 2: indirect-effects only
model
561.60 252 2.23 5.55* .901 .076 .080
Alternative model 3: no-controls model 580.36 256 2.27 24.32** .879 .078 .084
Note. RMSEA = root-mean-square error of approximation, CFI = comparative fit index; SRMR = standardized root mean squared
residual. All models are compared to the hypothesized model.
* p < .05.
** p < .01
Discrimination as a Mediator of the Diversity Climate-Performance Link 115
First, we compared our proposed moderated-mediation model to various other models
(see Table 4.3). Specifically, following the classical proceeding for testing mediation
in regression analysis by Baron and Kenny (1986) and Frazier et al. (2004), we
specified an additional direct effects only model, an indirect effects only model, and a
model without the control variables to test the robustness of the results. In a first step,
we examined the hypothesized moderated-mediation model that allowed direct as well
as indirect effects between diversity climate and group performance. This model
gained a good fit (
2
= 556.04, df = 250; CFI = .903; RMSEA = .076; SRMR = .079).
Second, we assessed the appropriateness of a direct effects only model in which we
constrained the indirect path from diversity climate to performance to zero (alternative
model 1). The model indicated a worse fit than the originally proposed model (2 =
65.92; p < .01). Third, the specified indirect effects only model was tested. Here, the
direct effect from diversity climate to performance was set to zero (alternative model
2). The model performed worse than the hypothesized moderated mediation model
(2 = 5.55; p < .05). Finally, we tested a model which equaled the initially proposed
model, but excluded the control variables (model 4). The model showed a poorer fit to
the data than the originally hypothesized model (2 = 24.32; p < .01). In addition,
results for the hypothesized effects did not significantly differ from the original model,
indicating that the control variables do not bias the overall model results.
According to hypothesis 1, groups with a high or positive diversity climate should
perform better than groups with a low or negative diversity climate. This relationship,
which we found in the correlations Table 4.1, was significant in the direct effects only
model ( = .17, p < .05). However, in the moderated mediation model, it turned out to
be non-significant anymore ( = -.03, p > .05), which already indicates a mediation
effect.
Hypothesis 2 and 3a predicted that diversity climate is negatively related to
discrimination which in turn, is negatively related to performance. As can be seen in
Figure 4.1, both hypotheses were supported by our results ( = -.57, p < .01; = -.37,
p < .01).
According to Hypothesis 3b the relationship between diversity climate and group
performance was expected to be mediated by discrimination. As shown above, the
significant direct effect between diversity climate and performance got insignificant
116 Discrimination as a Mediator of the Diversity Climate-Performance Link
after allowing for an indirect effect via discrimination. This result indicates a full
mediation. However, to further test for this relationship, we applied bootstrap analysis
(Cheung & Lau, 2008; Shrout & Bolger, 2002). This direct analysis revealed a
significant indirect effect of diversity climate on performance ( = .21, p < .01, CI:
.086 - .362). Thus, Hypothesis 3b gained further support.
Hypothesis 4a predicted a moderation effect of group size on the relationship between
diversity climate and discrimination. More specifically, we expected that the negative
relationship between diversity climate and discrimination would be more pronounced
in larger work groups due to less personal contact. In line with our hypothesis, the
interaction effect of diversity climate and group size was significantly related to
discrimination ( = -.17, p < .05). To further inspect this relation, we plotted the
simple slopes (Aiken & West, 1991) for large groups (one standard deviation above
the mean) and small groups (one standard deviation below the mean). Results can be
seen in Figure 4.2. As predicted, the relationship is stronger for large work groups than
for small ones. However, simple slope analysis revealed that the effect is significant
for both, large groups ( = -.25, p < .05) as well as small groups ( = -.15, p < .05).
Finally, we investigated the moderated-mediation effect (i.e. whether the indirect
effect of diversity climate on performance via discrimination was conditional upon the
characteristic of group size) which we proposed in hypothesis 4b. Similar to our prior
testing of the mediation, we specified two SEM models, one containing high levels of
group size (one standard deviation above the mean) and one containing low levels of
group size (one standard deviation below the mean). In line with our prediction, under
conditions of high group size, the indirect effect, tested again with bootstrapping
procedures, of diversity climate on performance via discrimination was stronger ( = -
.55, p < .01) than under conditions of low group size ( = -.19, p < .05). These results
support hypothesis 4b.
Overall, the hypothesized moderated mediation model accounted for 41.5% of
variance in discrimination and 17.6% of variance in work group performance.


Discrimination as a Mediator of the Diversity Climate-Performance Link 117
Figure 4.2 The moderation effect of group size on the relationship between
diversity climate and discrimination

Note. Results are plotted one standard deviation above (high) the mean and one
standard deviation below (low) the mean.
4.6 Discussion
With this study we strived to build upon, empirically test, and theoretically extend
Kopelman and colleagues (1990) climate model of productivity. More specifically, we
explored the link between diversity climate and group performance by shedding light
on the role of work group discrimination as a behavioral transfer mechanism and work
group size as a structural boundary condition.
In a first step, diversity climate at the work group level was tested for its direct effect
on work group performance. In a second step, diversity climate was tested for a
negative effect on discrimination within workgroups. Next, work group discrimination
was examined for its potentially negative relation to group performance. Then, in step
four, we investigated the mediating role of work group discrimination in the diversity
climate-group performance link. In the fifth step, we tested the moderating effect of
group size on the relationship between diversity climate and discrimination. Finally,
we investigated the resulting moderated mediation. All hypothesized relationships in
118 Discrimination as a Mediator of the Diversity Climate-Performance Link
our moderated mediation model were found to be significant, including the full
mediation of the diversity climate-group performance link via work group
discrimination, and a moderating effect of this relationship by group size. We believe
that these results contribute to the diversity climate literature by substantiating and
extending prior findings in several ways.
First, our research contributes to the empirical investigation of the effects of diversity
climate, a study direction which seems promising, but is not yet very well developed
(Avery & McKay, 2010; McKay et al., 2009; Van Knippenberg & Schippers, 2007).
While many studies focused on the antecedents of diversity climate (e.g., Pugh, et al.,
2008), we empirically investigated its outcomes, and specifically its collective
performance effects. By showing that diversity climate at the group level of analysis
relates to group performance, we contributed to the ongoing discussion on the business
case for diversity climate (Avery & McKay, 2010) and provided an empirical test of
Kopelman et al.'s (1990) theoretical model.
Second, our study followed recent calls (Avery & McKay, 2010; McKay et al., 2009)
to shed more light on the question how such performance effects actually occur.
Therefore, we built upon and extended work by Kopelman and colleagues (1990) who
proposed that certain climate-triggered behaviors might function as intervening
mechanisms between specific climates and desired outcomes. While most scholars rely
on such behavioral processes to explain climate effects, actual research on this
"behavioral piece" is scarce (Schneider et al., 2011, p. 388). In addition to the positive,
individual behaviors proposed by Kopelman et al. (1990), we introduced
discrimination as a negative, interpersonal behavior within work groups that is likely
to be mitigated by diversity climate. In doing so, we added to theory by showing that
climates cannot only increase desirable behaviors that individual employees show
towards their employer, but that they can also reduce harmful behaviors which
employees show towards their colleagues and direct reports. This finding is also highly
relevant from a practical point of view, given the detrimental effects of discrimination
for employees and organizations (Goldman, et al., 2006).
Third, with our focus on discrimination as a potentially mediating behavior between
diversity climate and performance, we also better integrated the rather unconnected
literature streams of diversity climate and discrimination. While scholars such as
Gelfand and colleagues (2005) or Nelson and Probst (2010) have theoretically
Discrimination as a Mediator of the Diversity Climate-Performance Link 119
proposed a negative relationship between both constructs, virtually no study has
examined it. Indeed, a structured literature review carried out for this study
(investigating the three databases Business Source Premier, PsycINFO, and
PsycARTICLES) resulted in 22 scholarly, empirical articles on diversity climate with
only one very recent study (Hofhuis, et al., 2012) indicating a negative relationship
between diversity climate and diversity related conflict (a construct which seems
related to discrimination). We hope to have addressed this serious gap in the literature
by theoretically and empirically arguing for the mitigating effect of diversity climate
as a normative environment on group discrimination as a related behavior within
groups.
Finally, by investigating group size as a moderator of the diversity climate-
discrimination link, we further extended both our theoretical understanding of climate
effects as well as Kopelman et al.'s (1990) climate model of productivity. In line with
our hypothesis, our data indicated that the mitigating effect of diversity climate on
discrimination is more pronounced in large groups. In other words, the bigger the
group, the more important it is that a pronounced diversity climate acts as clear point
of orientation that shows all members that discriminatory behavior is not tolerated
within the group. This finding is pointing both scholars and practitioners to the need of
taking structural boundary conditions into consideration when hypothesizing climate
effects.
4.6.1 Managerial Implications
There are several important implications of our research for company managers. On
the one hand, our study results are consistent with and extend prior empirical work
suggesting a clear "business case" for diversity climate (Robinson & Dechant, 1997).
In fact, our results indicate that group perceptions of diversity climate positively relate
to group performance. Thus, for both line and HR managers, the fostering of a pro-
diversity work climate should be a clear business objective.
On the other hand, our study highlights the role of discrimination and work group size
in the link between diversity climate and group performance. For managers, this
finding is important because it sheds additional light on the question of how to prevent
discrimination in the workplace. For companies, perceptions of discrimination
120 Discrimination as a Mediator of the Diversity Climate-Performance Link
continue to be both practically relevant and dangerous, as they often lead to costly
lawsuits, ruined public images, and severe drops in morale (Hicks-Clarke & Iles, 2000;
E. H. James & Wooten, 2006; Pruitt & Nethercutt, 2002; Robinson & Dechant, 1997).
Case in point: in 2011 99,947 charges of discrimination were filed with the US Equal
Employment Opportunity Commission (Equal Employment Opportunity Commission,
2011). Again, the active fostering of a strong and shared diversity climate can be
recommended as a key preventive measure. As our data indicate this seems to be
especially relevant for larger work groups which tend to be affected by more intense
perceptions of discrimination behavior due to a weaker social integration of
employees. Hence, a clear normative guideline how to deal with diversity is especially
fruitful for such large groups in order to mitigate discrimination and to spur
performance.
What is the best way of achieving this in practice? Organizations might follow several
strategies such as introducing and applying transparent HR policies, practices, and
procedures with regard to recruiting, career development, remuneration, or dismissal
(McKay & Avery, 2005). Especially for organizations with highly diverse personnel
(e.g., different races, disabled or older workers), it seems decisive that employees hold
positive diversity beliefs and trust the organization's overall efforts to support and
value diversity (Homan, Van Knippenberg, Van Kleef, & De Dreu, 2007). Moreover,
diversity perceptions of employees should be carefully monitored. To achieve this,
managers can take advantage of assessment tools such as employee opinion surveys,
focus groups, exit interviews, and analyses of patterns of employees grievances
(Ensher, Grant-Vallone, & Donaldson, 2001). Again, such measures might be
especially relevant for larger work groups which seem prone to higher levels of
discrimination. Additionally, companies should think about the organization-wide
implementations of specially designed diversity workshops and trainings, educating
both leaders and employees about the positive effects of a pro-diversity attitude and
work behavior (McKay & Avery, 2005). In fact, such programs already exist in the
military (Offstein & Dufresne, 2007). A clear commitment to diversity from top-
management might improve the credibility of such programs and trainings. Finally,
organizations should take potential complaints regarding discrimination seriously and
reprimand employees and supervisors who behave in ways that violate diversity
policies. Such behavior would directly and negatively affect both performance and
well-being within the group and organization.
Discrimination as a Mediator of the Diversity Climate-Performance Link 121
In sum, companies which succeed in creating a positive diversity climate, have the
potential to improve group and organizational performance while avoiding negative
outcomes such as discrimination and its related costs.
4.6.2 Limitations and Directions for Future Research
Although our paper has various methodological strengths, like independent data
sources and a large sample size, there are several limitations that should be considered
when interpreting the study's findings.
First, due to the cross sectional design of our data, no final conclusion about causality
can be drawn. This is especially relevant for Hypothesis 1 for which a reversed
direction of influence is also imaginable. Even though we believe that we have
provided convincing theoretical arguments for the direction described in Hypothesis 1,
future studies should replicate our results by applying longitudinal methods in
experimental or quasi-experimental research designs (Shadish, et al., 2002). Such
proceedings through which participants are randomly or post-hoc assigned to
treatments, and/or independent and outcome variables are separated over time, should
allow future studies to establish a causal linkage for the observed relationships in our
analyses.
Second, although we were able to analyze a large data set, the generalizability of our
findings is limited by the properties of our sample. Specifically, our participants came
solely from one cultural sphere: the Anglo-Saxon cultural cluster (Hofstede, 2001).
However, results by Chiu, Chan, Snape, and Redman (2001) indicate some evidence
for varying discriminatory attitudes in different cultural backgrounds. Cooke and Saini
(2010) also argue for varying effects of diversity management practices with the
potential to change diversity climate perceptions in Western versus Eastern countries.
Thus, future studies should replicate our findings in different cultural settings, possibly
with samples from Europe and Asia. Furthermore, our sample consisted exclusively of
military employees. Therefore, the special hierarchal system and organizational culture
of military entities might have influenced the study's findings. Specifically, military
units might possess a more collective-oriented culture with positive effects for a
group's climate for diversity. In contrast, a certain form of gender segregation in the
military might impact especially discrimination perceptions of women. Consequently,
122 Discrimination as a Mediator of the Diversity Climate-Performance Link
in future studies, scholars should try to replicate our results with civilian samples to
increase the results external validity. However, there is evidence demonstrating no
major differences between civilian and military contexts (Dvir, Eden, Avolio, &
Shamir, 2002; Shamir, et al., 1998), therefore we do not believe that this is a
substantial threat to the validity of our study.
Third, we applied a group performance measure that is based on the aggregated
perceptions of group members. Other sources of performance ratings may be desirable
for future studies, such as group supervisors' ratings or objective information such as
the number of tasks accomplished per group. Doing so would provide even more
reliable and robust results for the diversity climate-performance relationship.
Beyond these limitations, our study results offer several interesting pathways for
further research. For example, future studies might conceptually and empirically
integrate our results in multilevel models (e.g., Hox, 2010). It would be interesting to
consider group diversity climate as a cross level moderator for individual relationships,
such as the discrimination-individual performance relationship (e.g., Goldman, et al.,
2006). Furthermore, our model might be extended by integrating individual outcome
variables influenced by group diversity climate and discrimination, such as individual
turnover intention (Tett & Meyer, 1993) or job satisfaction (Wanous, Reichers, &
Hudy, 1997).
In addition, future studies should examine additional boundary conditions that can
prevent discrimination and translate diversity climate into group performance. An
interesting factor in this regard might be transformational leadership climate which has
been proven to be beneficial in diverse team settings (Kearney & Gebert, 2009; Kunze
& Bruch, 2010; Shin & Zhou, 2007). A transformational leader who aligns group
members to a shared vision and common goals should be a positive factor for the
dispersion of a diversity climate throughout the group, leading to positive effects on
group performance via the mediation of decreased discrimination. Other interesting
moderators might be group cohesion (Knouse & Dansby, 1999) or group identification
(Van der Vegt & Bunderson, 2005). We expect both to be positive boundary
conditions for the diversity climate-group performance association, since groups that
are either closely connected or that have a strong sense of a common identity should
have better capabilities to transfer higher diversity climate, thus influencing decreased
levels of discrimination and ultimately better group performance.
Discrimination as a Mediator of the Diversity Climate-Performance Link 123
In sum, we hope that our studys findings make a valuable contribution to the diversity
climate and discrimination literature and that it provides a solid base on which many
future studies targeting this theoretically and practically relevant issue may emerge.

124 Overall Conclusion
5 Overall Conclusion
As outlined in the introduction of this dissertation, the workforce is becoming
increasingly diverse. Companies are looking for ways to adjust to this trend. This
dissertation combined two important topics: diversity and organizational climate to
form the construct of diversity climate/climate for inclusion. By doing so, it addressed
this important challenge for practitioners as well as multiple calls in the separate
scientific literature streams (a more throughout discussion is provided in the respective
section of each individual study).
First, regarding the diversity literature, Study 1 of this dissertation focused on the so
far underrepresented diversity facet of disability (Dovidio, et al., 2011; McLaughlin, et
al., 2004; Moore, et al., 2011; see Chapters 1.1.4; 2.2.1). It not only provided an
explanation for the difference in the amount of empirical research between disability
and other diversity facets, but also provided scholars with recommendations on how to
close this gap (see Chapters 2.4; 2.5). This is especially relevant for practice as people
with disabilities continue to be underrepresented in the job market (EU, 2010; U.S.
Census Bureau, 2010; UN, 2006) and scholars need to provide practitioners with
solutions on how to change this situation. As an additional contribution to the diversity
literature, Study 3 investigated diversity climate as an important organizational factor
by assessing its predictive value for group discrimination and performance.
Second, multiple scholars in the field of organizational climate highlighted the
importance of deliberately choosing the form of climate when designing a study
(Schneider, et al., 2011; see Chapter 1.2.4). In this dissertation, two dimensions of
organizational climate were assessed. Study 2 investigated the TFL climate on an
organizational level and found that leadership from higher levels (in this case CEO)
can cascade down to all hierarchy levels in an organization (Shamir, et al., 1993). TFL
climate in turn, influences organizational identity strength and performance (see
Chapter 3.5). This study outlines for managers how to influence their employees on
various levels of the organization. In Study 3, effects of diversity climate on work
group discrimination and performance were shown (see Chapter 4.5). Both studies
provide important insights into climate research and support the notion that the use of
specific forms of climate could be an important avenue for future research.
Overall Conclusion 125
Third, diversity climate has been examined as a predictor, criteria, and moderator (see
Chapter 1.3.4). However, the research on its effects as a predictor are scarce and there
is a lack of research investigating the mechanisms and processes through which
diversity climate affects organizational outcomes. Study 3 tackled these gaps in the
literature by assessing the positive effects of diversity climate for unit level
performance and by identifying group discrimination as a mediator of this relationship
(see Chapter 4.5). In a more and more diverse world (Ashkanasy, et al., 2002), and
with a current lack of research concerning diversity (Nishii & zbilgin, 2007), this
study highlights the importance of having organizations and managers pay attention to
the diversity climate within their company in order to avoid the occurrence of
discrimination and ultimately, performance losses.

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Curriculum Vitae 173
Curriculum Vitae
David J. G. Dwertmann, born in Engelskirchen, Germany
EDUCATION
2010 2013 University of St. Gallen, Switzerland
Doctoral studies in Strategy & Management (Dr. oec. HSG/Ph.D.
HSG)
2011 University of Essex, United Kingdom
Summer School in Social Science and Data Analysis
2005 2009 University of Mannheim, Germany
M.Sc. in Psychology (Dipl. Psych.)
2007 2008 University of Bern, Switzerland
Visting Student at the Department of Psychology
2003 2005 Universities of Freiburg, Passau, Wrzburg, Germany
M.A. in history of art, business studies, German language and
literature studies, law (without graduation)
WORK EXPERIENCE
Since 2012 Cornell University, USA
Visiting Fellow, ILR school Department of Human Resource
Studies
2009-2012 University of St. Gallen, Switzerland
Research Associate, Center for Disability and Integration
2008 2009 San Diego State University, USA
Research intern (industrial and organizational psychology),
Department of Psychology (Prof. K. Hattrup)
2006 2007 Kienbaum Management Consultants, Germany
Intern, Assistant to the Managing Director
2006-2007 University of Mannheim, Germany
Student Assistant, Department of Psychology (chair for
methodology, diagnostic, and evaluation, Prof. Dr. Wittmann)
2006 University of Mannheim, Germany
Tutor for general research methods, (chair for learning, memory,
and personality, Prof. Dr. Erdfelder)