Abstract
Firms operate in the conditions of increased workplace diversity due to globalisation. Companies around the world agree that they can benefit from embracing cultural diversity. Inclusive leadership is known to be one of the strategies for managing diversity in the workplace. This literature review aims at studying the relationship between workplace diversity and inclusive leadership using recent scholarly literature. The analysis of the literature revealed a positive correlation between inclusive leadership strategy and workplace diversity. Inclusive leadership positively affects workplace diversity both directly and indirectly. The confirmed variables that mediate and moderate the relationships between these variables were inclusive climate, inclusive culture, discrimination, sexual harassment, and adaptive behaviour. Additionally, the review revealed that both inclusive leadership and workplace diversity positively affected firm innovation. Two research gaps were identified that should be addressed in future research.
Background
Globalisation has made organisations around the world increasingly diverse in terms of culture, gender, and language. As a result, the private and public sectors are transformed to adapt to the quickly changing workplace culture and enjoy the benefits of an increasingly diverse workforce. The increase in foreign investments, cross-culture teams, and changing attitudes among employees are among the central reasons for organisations around the world to embrace cultural diversity in the workplace (Kuknor and Bhattacharya, 2020). Organisations in numerous countries around the globe realised that embracing cultural diversity has become one of the central success factors that can lead businesses to effective workplace culture and competitive success (Sanyal et al., 2015). Thus, leaders around the world are looking for ways to embrace cultural diversity to stay competitive in the world arena.
The utilisation of inclusive leadership is one of the central strategies that can help companies embrace diversity. The central idea of inclusive leadership is letting all the team members understand that their voices genuinely matter (Javed et al., 2019). Leaders that utilise this strategy try to discuss everything with their team and take the opinions of everyone into consideration (Nembhard and Edmondson, 2006). In other words, inclusive leadership promotes shared decision-making, which makes the employees feel valued. Inclusive leadership is known to have a significant positive impact on innovation in different types of organisations if used adequately (Javed et al., 2019).
This paper aims at identifying the role of inclusive leadership in diverse workplaces. In particular, the report reviews the current body of literature to examine the relationship between inclusive leadership strategy and the success of workplace diversity management. Additionally, the paper provides a critical evaluation of literature to identify a gap in knowledge that can be addressed in future research.
Critical Review
Central Concepts and their Definitions
This critical review discusses the relationships between two central concepts, including cultural diversity and inclusive leadership. The concept of inclusive leadership was first described by Nembhard and Edmondson (2006) as “words and deeds by a leader or leaders that indicate an invitation and appreciation for others’ contributions” (p. 947). The authors claimed that inclusive leaders organised their decision-making process in a way that all voices genuinely mattered (Nembhard and Edmondson, 2006). Inclusive leaders suppose that benefits can be shared, which is promoted by having the same goals and actively participating in achieving them (Dulebohn et al., 2012). As a result of close cooperation, inclusive leaders enjoy close relationships with their employees, which is often crucial for success (Dulebohn et al., 2012). Inclusive leadership is known to promote inclusive workplace culture and impact employee voice behaviour (Guo, Zhu, and Zhang, 2022). Inclusive leaders also promote fairness in the manager-employee relationships, which leads to increased respect and trust of the employees (Sanyal et al., 2015). In summary, even though inclusion leadership is a relatively new concept, it is a matter of increased attention from scholars and managers.
Workplace diversity is a complicated concept understood differently by researchers. O’Reilly, Caldwell, and Barnett (1989) stated that diversity is a composition of a group in terms of representatives’ social and cultural identity. The researchers differentiated between primary dimensions (sex, race, age, and physical qualities) and secondary dimensions (marital status, education level, religion, and geographical location) of diversity (O’Reilly, Caldwell, and Barnett, 1989). Moreau and Peltier (2004) explained diversity as a mixture of variety, balance, and disparity in different demographical characteristics of the employees. According to Ellemers and Rink (2016), workplace diversity has a significant positive impact on innovation, understanding of diverse clients, and improved decision-making processes if managed effectively. However, if managed inappropriately, workplace diversity may lead to communication problems, ineffective decision-making, and increased conflicts among employees (Amaram, 2007). Understanding workplace diversity as a concept and its effects on the performance of organisations is of extreme importance to managers and researchers.
Relationship between Workplace Diversity and Inclusive Leadership
The concepts of inclusion and workplace diversity are known to be very close in nature (Kuknor and Bhattacharya, 2020). However, Bernardo and Ferdman (2010) state that the presence of cultural diversity does not always mean that inclusion is present. Kuknor and Bhattacharya (2020) state that organisational inclusion is only an emerging concept. However, both concepts are of extreme importance in the circumstances of globalisation. According to Grissom (2018), the workforce between 2016and 2026 will become increasingly diverse in terms of race, culture, sex, and age, which calls for improved leadership practices to benefit from the diversity. Inclusion and diversity are extremely broad topics that include numerous themes, such as discrimination, leadership, workplace culture, and unconscious bias (Grissom, 2018). This paper focuses on inclusive leadership as a part of the broad concept of inclusion.
Recent research demonstrates that inclusive leadership has a positive impact on workplace diversity. According to Kuknor and Bhattacharya (2020), inclusive leadership promotes empowerment, humility, courage, and accountability, which increase cultural diversity in the workplace. Ashikali, Groeneveld, and Kuipers (2021) stated that the relationship between workplace diversity and inclusion is one-sided. In particular, increased diversity does not automatically mean greater inclusion (Ashikali, Groeneveld, and Kuipers, 2021). However, inclusive leadership promotes workplace diversity both directly and indirectly. Randel et al. (2018) also stated that there is a positive effect between inclusive leadership and workplace diversity, as the stronger the leader is perceived to promote pro-diversity beliefs. Perry, Block, and Noumair (2020) stated that inclusive leadership negatively affected the mistreatment of sexually and culturally diverse employees, which promoted diversity in the workplace. Thus, recent research demonstrates a positive one-sided correlation between inclusive leadership and workplace diversity.
While all researchers in the revised literature agree that inclusive leadership positively affects workplace diversity, the link is known to be indirect. Studies focused on different variables that mediate the relationship between inclusive leadership and workplace diversity. Numerous researchers focused on inclusive climate as a mediator in the relationships between these two concepts. The inclusive climate was described by different studies as the atmosphere of empowerment, inclusive decision making, and valuing diversity (Ashikali, Groeneveld, and Kuipers, 2021; Perry, Block, and Noumair, 2020). Kuknor and Bhattacharya (2020) stated that the relationship between the two concepts is mediated by organisational inclusion, which is characterised by equitable employment practices, integration of differences, and inclusion in the decision-making process. Ashikali, Groeneveld, and Kuipers (2021) stated that inclusive leadership positively affected the inclusive climate in an organisation, which, in turn, had a positive effect on cultural diversity. Randel et al. (2018) stated that inclusive leadership made the employees feel valued for their uniqueness, which positively affected workplace diversity. Perry, Block, and Noumair (2020) also stated that inclusion climate was a mediator between inclusive leadership and workplace diversity.
A review of current research revealed that workplace culture might mediate the relationship between inclusive management and workplace diversity. Amin, Till, and McKimm (2018) stated that inclusive leadership creates a workplace culture that supports cultural diversity. Korkmaz et al. (2022) stated that inclusive leadership positively affected the development of values that promoted workplace diversity. Since workplace culture is a collection of all the artefacts, behaviours, values, and underlying assumptions, it may be stated that Korkmaz et al. (2022) also confirmed that workplace culture mediated the relationship between diversity and inclusive leadership.
There are other mediators mentioned by different authors. Perry, Block, and Noumair (2020) emphasised that inclusive leadership decreases the frequency and acceptance of unfavourable practices that affect workplace diversity. In particular, inclusive leadership reduces sexual harassment and discrimination in the workplace, which, in turn, increases workplace diversity (Perry, Block, and Noumair, 2020). Qurrahtulain et al. (2022) stated that adaptive behaviour affects the adaptive behaviour of employees. Adaptivity of employees positively affected workplace diversity, which demonstrates that adaptive behaviour may be a mediator of the relationship between workplace culture diversity and inclusive management. However, it should be stated that evidence is only emerging.
Inclusive Leadership, Workplace Diversity, and Innovation
The review of the literature demonstrated that both workplace diversity and inclusive leadership had a positive impact on innovation. Qi et al. (2019) conducted quantitative research studying the relationship between inclusive leadership and innovative behaviour. The results demonstrated that perceived organisational support was a significant moderator between inclusive leadership and innovation in the workplace (Qi et al., 2019). Javed, Khan, and Quratulain (2018) also studied the relationship between inclusive leadership and innovative behaviour. The results revealed a strong positive correlation between inclusive leadership and innovation. Additionally, the study revealed that Leader-Member Exchange was a significant mediator in the relationship between inclusive leadership and innovation (Javed, Khan, and Quratulain, 2018). A study by Javed et al. (2019) revealed that inclusive leadership and innovation were positively correlated. The study demonstrated that the effect of inclusive leadership was both direct and indirect, with psychological empowerment being a significant mediator.
Similarly, researchers found that cultural diversity had a significant impact on workplace innovation. Ellemers and Rink (2016) stated that managers can benefit from increased innovation if workplace diversity is managed effectively. In particular, the researchers stated that culturally diverse employees have different underlying assumptions, which may allow the managers to look at problems from a different angle. Similarly, Kim (2006) stated that hiring employees with different demographical backgrounds can be beneficial, as it can bring a wide variety of perspectives, experiences, opinions, backgrounds interns of values, rules, and limitations. Additionally, workplace diversity promotes creativity, which is crucial for innovative decisions (Kim, 2006). Thus, it may be concluded that both workplace diversity and inclusive leadership had a positive impact on innovation.
Problem Statement
The literature review revealed that inclusive leadership and workplace diversity had been matters of increased attention among scholars in recent years. However, while the concept of inclusive leadership emerged only recently (Nembhard and Edmondson, 2006), the concept of cultural diversity has been discussed intensively for more than half a century (O’Reilly, Caldwell, and Barnett, 1989).
The literature review revealed that current quantitative studies demonstrate significant evidence of the one-way positive correlation between inclusive leadership and workplace diversity (Ashikali, Groeneveld, and Kuipers, 2021; Grissom, 2018; Kuknor and Bhattacharya, 2020; Perry, Block, and Noumair, 2020). Inclusive leadership positively affects workplace diversity both directly and indirectly (Amin, Till, and McKimm, 2018; Korkmaz et al., 2022). The confirmed variables that mediate and moderate the relationships between these variables were inclusive climate (Kuknor and Bhattacharya, 2020), inclusive culture (Amin, Till, and McKimm, 2018), unfavourable diversity practices (Perry, Block, and Noumair, 2020), and adaptive behaviour (Qurrahtulain et al., 2022).
Even though numerous variables that affect the relationship between inclusive leadership and workplace diversity were identified, no research assessed these variables in one model. The analysis demonstrates that some of these variables are very close in nature, such as inclusive climate and inclusive culture. Thus, further research is required that will create a more complicated model and measure the effect of all the variables simultaneously to account for the influence of confounding variables.
The literature review also revealed that both workplace diversity and inclusive leadership have a positive effect on firm innovation both directly and indirectly (Ellemers and Rink, 2016; Qi et al., 2019). However, no studies were found that created a quantitative model that assessed the effect of both inclusive leadership and workplace diversity on innovation simultaneously. Since it was previously confirmed that there is a significant correlation between workplace diversity and inclusive leadership, it may be assumed that the effect of one of the variables on workplace innovation is either moderated or mediated by another. The literature review revealed no research that studied such effects.
Thus, the results of this study suggest that future research should focus on an in-depth assessment of the relationship between inclusive leadership and workplace diversity by including additional independent variables in the model. Additionally, this study suggests that future research is studying the mediation and moderation effects of workplace diversity and inclusive leadership on firm innovation.
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