Cultural diversity as a mechanism for innovation: Workplace diversity and the absorptive capacity framework

Although prior research demonstrates a relationship between organizational diversity and firm performance, there lacks detailed explanation describing how and why organizational diversity impacts firm performance. This limited understanding of the diversity “black box” may explain why prior research has produced mixed results concerning the relationship between diversity and either group or firm outcomes. Culturally diverse firms experience improved performance when an innovation strategy is in place, and group diversity has been linked to creativity in prior research. This may mean that diversity-creativity linkages are variables responsible for firm performance outcomes. However, there is scant attention paid to how individual- and group- levels of creativity and innovation within the firm result in firm-level innovation. The author of this article explores how firms that value diversity become innovative through their ability to harness creativity and transform it into useful ideas, products, and services. Multi-level creativity is described by the author, and using the diversity perspectives and absorptive capacity framework, the paper discusses how diversity and the manner in which it is managed creates an environment ripe for firm-level innovation to flourish.