How and When Does Age Diversity Promote Firm Performance? The Mediation of Diversity Management and Employees’ Participation in Decision Making and the Moderation of Diversity Legitimacy Logic

Abstract

Given the increasing scholarly attention to the relationship between age diversity and firm performance, the current research aimed at examining the intervening mechanisms and boundary conditions for this relationship. Specifically, I expected that age diversity would prompt firm’s diversity management and invite employees to participate in decision making, which further increased firm performance. I also expected that legitimate reason for the top management to maintain diversity (i.e., diversity legitimacy logic) was a key moderator for the effects of diversity management and employees’ participation in decision making on firm performance, such that the effects were stronger when the firm legitimacy logic was lower. Using data from 65 chief executive officers working in 65 shoe manufacture firms, we found that age diversity was positively and indirectly related to firm performance via diversity management, but not employees’ participation in decision making. In addition, we found that diversity legitimacy logic moderated the relationship between employees’ participation in decision making and firm performance. This research highlights two potential mechanisms in linking age diversity with firm performance, and also emphasizes diversity legitimacy logic as a critical boundary condition for these effects.