University Research Report: Cultural Diversity and Business Leadership

This research report delves into the critical topic of cultural diversity in business, examining contemporary issues of race, religion, and nationality. It defines cultural diversity in the workplace as an environment that embraces employees from diverse backgrounds, irrespective of their differences, highlighting the benefits of such inclusivity. The report explores the importance of cultural diversity, discussing its impact on innovation and problem-solving. It addresses the challenges of diversity while also analyzing discrimination in the workplace, covering direct and indirect forms. The report further examines diversity theories and models, such as the Institutional Theory of Diversity Management and the Resource-Based Theory of Diversity Management. It concludes with a call for businesses to foster inclusive environments and the importance of adhering to regulations to ensure fair treatment of all employees.

Running head: LEADERSHIP & ORGANIZATIONAL BEHAVIOUR IN BUSINESS
Leadership & Organizational Behaviour in Business
Name of the Student
Name of the University
Author Note

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Table of Content
Introduction................................................................................................................................2
Cultural diversity........................................................................................................................2
Discrimination in the workplace against diversity.....................................................................5
Diversity theories and models....................................................................................................6
Suggested theories and alternatives to resolve the issue............................................................8
References................................................................................................................................10

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Topic – Cultural Diversity in Business
Introduction
This research report is a detailed analysis of cultural diversity in business. The
analysis has been performed considering the contemporary business issues on the basis of
race, religion, and nationality. In general, it can be stated that cultural diversity in the
workplace is when the organizations are open to hire employees from all sort of backgrounds,
irrespective of their age, race, religion and culture. Particularly, when the organizations tend
to recruit and retain a diverse pool of people, it could certainly bring myriad benefits to the
organization and even to employees. The purpose of the report is to analyse the importance of
cultural diversity in business against the contemporary issues of race, religion and nationality.
Discrimination on the basis of race, religion and nationality in the workplace are crucial
issue. In general, it can be stated that it is against the regulation to discriminate against any
individual in the workplace due to their actual or assumed race. It is highly significant that
employees are protected at all phases of employment with the inclusion of recruitment,
workplace terms and conditions. Thus, this research report pays attention to how diversity
norms and ethics are applied in the workplace to prevent discrimination of employees.
Cultural diversity
According to Martin (2014) cultural diversity in the workplace is more of a practice
where employees from the different cultural, national, religious and racial background can
work together under the same norms and policies. Irrespective of the races, religion and
culture, employee holds equal right in the workplace. Particularly, when organizations hire
and retain a diverse pool of people, it certainly brings about a set of benefits to both
employers and employees. For example, Fine, Johnson and Ryan (1990) mentioned that when

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people come from different cultural background, ways of exchanging knowledge and skills
are facilitated.
Importance of cultural diversity in the workplace
It has been identified that diversity in the workplace has been a significant topic
within several organizations for many decades, however, the increasing number of
millennials in the workplace has made it more significant than ever. Since a large percentage
of diverse generation in the workplace, millennials tend to force the organizations to
reconsider how diversity could affect the workplace as well as their business efforts (Mazur
2010). On the other side, a broad body of studies demonstrating how diversity could bring
outstanding benefits to business –such as in today, fast-changing economic environment,
businesses that cannot innovate swiftly enough to continue could struggle to seek success
(Amaram 2007). So, having the best and brightest minds could sound like an ideal approach
but it if all these minds consider as well as behave in the more similar way, they might fall
into the same predictable patterns.
This is most likely to be devastating to the organization. This means that culturally
diverse workforce do not bring differences for the sake of differences, rather they could
introduce innovative ways of thinking that could cut through the harmful effects of
conformity. Patrick and Kumar (2012) performed a study and finding of the paper indicate
that the diverse teams or the groups of people in the workplace could outperform a more
homogenous groups with respect to problem resolving. Moreover, it proves that being similar
to others and it lead people to consider that they could share a more common experience,
opinions and ideas and this covers the whole line of discussion. Laroche (2012) mentioned
the fact that participants are more likely to consider a conflicting opinions when tend to come
from someone they considered as different than themselves. This means an addition to

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diversity to a group could be about making people believe that there are differences requiring
discussion. It has been identified that this idea is often proved as a team with culturally
diverse people are more likely to generate new ideas as well as some creative solutions to the
issues. Moreover, this could consider some more assumptions for granted and pull
inspiration from a greater range of experience. This eventually leads to a dynamic innovation
required for success in today’s economy.
Diversity in the real-world
Wilson (2014) mentioned the fact that United State has become an increasingly
diverse society over the last few decades and it is perfectly in the process of becoming more
diverse over the next few decades. There is a significant business case implying that diversity
is driving the bottom line, while there is certainly an argument about the workplace that must
reflect the reality. Businesses are in the rush of offering broader line of products and services
to consumers belonging to different cultural background, recruiting employees who can
provide more valuable understanding into what those consumers want as well as need to
positively drive profits. On the other side, Trax, Brunow and Suedekum (2015) mentioned
that with more and more businesses being performed on a global scale as well as virtual
teams tend to operate across different national boundaries embracing cultural diversity that
offers a large set of opportunities for the organization looking forward to develop a
competitive edge.
Challenges of diversity
It has been identified that while the benefits of diversity in the workplace are perfectly
recorded, it could also bring a set of unique challenges. Ferdman and Deane (2014)
mentioned that while a diverse workforce perform effectively with respect to productivity,
they could show a limited range of happiness among employees on a frequent basis. For

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example, research report of 2014 MIT performed on gender diversity helps to observe that an
office with diverse gender have outperformed a far better in terms of economic performance
compare to their homogenous counterparts (nearly 41%) and in the research both men and
women were surveyed in those organizations and they scored lower with respect to job
satisfaction as well as morale (Baert et al. 2015). Another similar research performed by
McGoldrick and Arrowsmith (2017) have showed a similar trends, however, since Harvard
Business Review has identified that such dynamics, to a particular degree, is indeed the point.
This means a diverse team could create a feeling of discomfort which actually contributes to
an effective performance level. So, it is worth stating that shaking up the status que and
ingraining new ideas from people with multiple set of experiences is most likely to be
disruptive and uncomfortable. However, Lee et al. (2015) mentioned that it provides the ways
of generating new solutions to the issues. Authors of this article has stated the fact that while
individuals feel comfortable and relaxed in an office surrounded with co-workers who often
or always think and look like them, they are likely to be exposed to diverse ways of thinking,
which eventually drives them to perform more effectively and better.
Discrimination in the workplace against diversity
It has been identified that issue of discrimination on the basis of race, religions and
nationality and its impact on people has relatively decreased due to several debates, laws and
researches but decades back, discrimination in the workplace was a major concern.
Discrimination can be in any form, for example, the racial discrimination in which the
individual in the workplace is treated quite unfairly due to his/her race- colour, citizenship
and national origins. In this context, Bækgaard and Kjaer (2012) racial discrimination could
usually occur and has occurred mostly during the employment and training. Moreover,
according to the author such decimation might not always be deliberate.

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This means some individuals could be discriminating against the person without
understanding it, but this is still considered as the action of discrimination. It can be stated
that such kind of act is an example of direct discrimination to treat individuals less favourably
compared to the individuals who could be treated in some particular circumstance due to
race. So, in order to prove a direct race discrimination, it is always effective to consider an
individual belonging to different racial group, has been or would have been treated less
favourably. On the other side, Blommaert, Coenders and van Tubergen (2014) mentioning
about the indirect race discrimination, which is about having a particular set of rule, policy or
the practices of particular racial or ethnic groups that are most likely to be able to meet
compared to other people. For example, an employer or an organization is emphasizing that
candidate particular for a job need to have UK qualification. Moreover, an employer or the
organization might imposed a ban on wearing headscarves in the workplace or the employer
might insist that individuals must have to have English as the first language. When this issue
is researched further outside US, it has been learnt that Equality Act 2010 in UK indicates
that when an individual is treated is differently due the race in any situation of workplace fall
under the Equality Act (Trax, Brunow and Suedekum,2015). This means according to
Equality Act, an individual most not be discriminated against due to the race. Moreover, in
the Equality Act, race is referred to colour, nationality and citizenship.
Equality Act in US on the other side, come into action in 2010, October, and the
principle of the Act brings together almost 116 pieces of equality legislations about sex, race
and disability and sexual orientation, belief, and tries to incorporate a single approach where
it could be appropriate (Mazur, 2010). Moreover, this employment Act also puts a ban on
pre-employment Health Questions, this means an employer which is in the process of
recruiting a deserving candidate is not likely to ask about the health of employees apart from

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where one of the exception developed in Act relevant and where it is important to develop
whether the potential employees could undergo elements of the interview process.
Diversity theories and models
As discussed before diversity in the workplace has always been significant and
considering this issue, there are several theories and model have been developed. Nielsen and
Nielsen (2013) mentioned about two specific approaches that are relatively broad and are
such as Institutional Theory of Diversity Management, Resource Based Theory of Diversity
Management. So, each of this approaches explain how the incorporation of diversity could
help the organization enhance effective strategies to meet the organizational goals.
Institutional Theory of Diversity Management
As put forward by Blommaert, Coenders and van Tubergen (2014), institutional
theory effectively identifies that to determine a firm’s the structure an individual is not
supposed to separate the social environment discovered within the organization. So, to
effectively grasp the structure of the organization it needs to be understood that the behaviour
of employees in organizations and organizations themselves need to have some limiting or
restricted factors like the legislations, laws and similar administrative structures. Moreover,
such conformity often demonstrates that organizations are most likely to be more consistent
with the norms and they could gain the legitimacy for their operations. So, by showing the
legitimacy with the help of the actions, organizations are supposed to prove their priorities
and they could start to accumulate the material resources from other sources (Nielsen and
Nielsen, 2013). So, it can be stated that as the regulations require the organizations to become
more diverse, organizations must have provide to both the individuals in the organization and
the ones outside the organizations that they are complying to the fundamental laws and
regulations. This means if an organization fails to follow such laws and regulations, its

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operation could be enquired or there are chances that it may be terminated for disobeying the
law.
Resource Based Theory of Diversity Management
The fundamental focus of Resource Based Theory of Diversity management is to determine
how the performance or the implementation of diverse practices could affect organisational
resources. Arnould, Price and Malshe (2014) mentioned that there are four different
categories of resources that organizations hold or acquire, such as physical, capital, financial,
human capital as well as corporate capital resources. It can be added that such resources
could ether assist or prevent the operations of the firm. There are many situations where the
organisations make attempts to use the resources in many ways that could help to enhance the
businesses.
On the basis of this business perspective, it can be added that organizations that are
diverse in nature are most likely to gain advantages compared to the organisations that are
homogenous. In addition to this, the racial diversity within the organization could increase
the financial performance particularly when the growth or innovation strategy is
implemented. Furthermore, Alvarez and Barney (2017) performed a study and stated the fact
that the organizations that are more diverse in nature or follow diverse management practices
usually experience a low or limited range of turnover and hence, diversity management
practices are communicated properly with the innovative strategy that led to higher
productivity and effective market performance. So, the theory and application of this theory
helps to observe the fact that firms that are diverse in nature gain a large set of advantages
compared to the firms that are failed to implement diversity policies in the workplace.

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Suggested theories and alternatives to resolve the issue
Even though the above stated theories state the similar facts that organizations that
apply diversity practices in the workplace and the organisations that comply with laws and
regulations are most likely to gain benefits. However, when the organizations are in the need
of talents and highly productive workforce under diverse workplace, it is better they first
create that platform where individuals with skills and talents belonging to different cultural
background are noticeable. For example, the organizations today can rely on the Consultant
Approach that pay attention to some positive aspects of how making the workplace relatively
diverse could increase the productivity. Here, the firms can pay attention to diversity that
certainly benefit their businesses.
In this context, Nielsen and Nielsen (2013) arguably mentioned that since the firms
find it difficult to find qualified workers that have the talent and abilities required to do the
job, they need to examine all sort of means to find the potential workers. So, with the help of
consultant approach to find the best talents, the organisations could make a more diverse
environment that help organizations to look at minorities as well as potential employees who
are noticeable. On the other side, the Consultant approach could also help the organizations to
deal with and manage diversity to effectively understand their needs of diverse customer
base. This means if organizations could create diversity in the workplace then these new
perspectives of more diverse employees need to convert into financial success. This means if
the workplace remains diverse, diverse staff will better understand the needs and demands of
their diverse customers in the marketplace.

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References
Alvarez, S. A., & Barney, J. B. (2017). Resource‐based theory and the entrepreneurial
firm. Strategic entrepreneurship: Creating a new mindset, 87-105.
Amaram, D. I. (2007). Cultural diversity: Implications for workplace management. Journal
of Diversity Management (JDM), 2(4), 1-6.
Arnould, E. J., Price, L. L., & Malshe, A. (2014). Toward a cultural resource-based theory of
the customer. In The Service-Dominant Logic of Marketing (pp. 109-122). Routledge.
Bækgaard, M., & Kjaer, U. (2012). The gendered division of labor in assignments to political
committees: Discrimination or self-selection in Danish local politics?. Politics &
Gender, 8(4), 465-482.
Baert, S., Cockx, B., Gheyle, N., & Vandamme, C. (2015). Is there less discrimination in
occupations where recruitment is difficult?. ILR Review, 68(3), 467-500.
Blommaert, L., Coenders, M., & van Tubergen, F. (2014). Ethnic discrimination in
recruitment and decision makers’ features: Evidence from laboratory experiment and
survey data using a student sample. Social indicators research, 116(3), 731-754.
Ferdman, B. M., & Deane, B. (2014). Diversity at work: The practice of inclusion.
Fine, M. G., Johnson, F. L., & Ryan, M. S. (1990). Cultural diversity in the
workplace. Personnel Administration, 19(3), 305-320.
Laroche, L. (2012). Managing cultural diversity in technical professions. Routledge.
Lee, S. Y., Pitesa, M., Thau, S., & Pillutla, M. M. (2015). Discrimination in selection
decisions: Integrating stereotype fit and interdependence theories. Academy of
Management Journal, 58(3), 789-812.

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Martin, G. C. (2014). The effects of cultural diversity in the workplace. Journal of Diversity
Management (JDM), 9(2), 89-92.
Mazur, B. (2010). Cultural diversity in organisational theory and practice. Journal of
intercultural management, 2(2), 5-15.
McGoldrick, A. E., & Arrowsmith, J. (2017). Discrimination by age: The organizational
response. In Ageism in work and employment (pp. 93-114). Routledge.
Nielsen, B. B., & Nielsen, S. (2013). Top management team nationality diversity and firm
performance: A multilevel study. Strategic Management Journal, 34(3), 373-382.
Patrick, H. A., & Kumar, V. R. (2012). Managing workplace diversity: Issues and
challenges. Sage Open, 2(2), 2158244012444615.
Trax, M., Brunow, S., & Suedekum, J. (2015). Cultural diversity and plant-level
productivity. Regional Science and Urban Economics, 53, 85-96.
Wilson, E. (2014). Diversity, culture and the glass ceiling. Journal of Cultural
Diversity, 21(3), 83.