Academic journal article Journal of Small Business Management

Workforce Diversity in Small Business. an Empirical Investigation [*]

Academic journal article Journal of Small Business Management

Workforce Diversity in Small Business. an Empirical Investigation [*]

Article excerpt

While it would seem that hiring a diverse workforce would be advantageous to any firm that wants to compete globally, such diversity in fact entails costs as well as benefits for the small firm. This study explores the relationship between workforce diversity in small businesses and the small business owner/manager's motivation to diversify the owner/manager's personal characteristics (ethnicity, age, education, and gender), and the number of family members employed in the small business. Results suggest that the owner's minority status and age were significant predictors of the firm's level of workforce diversity. The results also showed that the gender of the owner was a significant predictor of workforce diversity but not in the hypothesized direction: small businesses managed by men had more diverse workforces than did those managed by women.

Hiring people who will help the organization succeed is increasingly important, and yet it can be difficult to identify the right person from among many applicants. In the past, many business owners have sought a culturally and ethnically homogeneous workforce. However, the effects of globalization and the changing nature of the labor market may make such a strategy less advantageous than in the past. It is becoming more and more obvious that businesses must address issues related to the diversity of their workforces.

Discussions in the popular press about workforce diversity have tended to argue that diversity is intrinsically good for the organization (Rice 1994; Sheridan 1992; London, Daft, and Fugate 1993). However, initial empirical and theoretical studies suggest that there are both advantages and disadvantages to having a diverse workforce (Trandis, Kurowski, and Gelfand 1994; Milliken and Martins 1996).

The limited research on workforce diversity has presented decision-makers in business with many new questions while offering few answers to existing ones. As Trandis, Kurowski, and Gelfand (1994) state, the field of workforce diversity "a virgin field lacking theoretical frameworks and intensive empirical background" (p. 770). This study examines what motivates small business owner/managers to diversify their workforces as well as the relationships between several characteristics of small business owner/managers, organizational characteristics, and the level of workforce diversity.

Literature Review

Much of the diversity literature to date is expository in nature. Researchers have proposed that businesses need to be more accepting of individual differences in order to be competitive in the future (Edwards, Laporte, and Livingston 1991), and theorists have developed strategies to handle diversity issues (Copeland 1990; Wozniak 1991). Some discuss the need to train employees in diversity concepts (Banach 1990); others emphasize the importance of changing personnel policies, compensation, and benefits to accommodate the growing diversity in the labor force (Williams 1990). Benibo (1997) used Perrow's (1970) technology-based typology of complex organizations to develop a conceptual framework that can explain the relationship between workforce diversity and technology.

These articles suggest that workforce diversity is not a passing fad but an important issue to be addressed. However, the concept of workforce diversity has not yet been examined extensively in empirical studies. In addition, the empirical research that has been done is "... a challenge to review, because it spans multiple disciplinary boundaries, assesses the effects of various types of diversity, focuses on many different dependent variables, and employs a wide range of types of groups and settings" (Milliken and Martins 1996, p. 404).

With regard to small business, the decisions made by owner/managers of small firms--including hiring decisions--are based on both the needs of the business and the manager's personal preferences. Let us examine each in turn. …

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