Minority Employees as Resources: Nonlinear Relationship Between Racial Minority Employee Proportion and Unit Performance

Abstract

This study draws upon human capital resource theory to propose and investigate a nonlinear relationship between racial minority employee proportions in work-units and unit-performance, moderated by racial composition of the customer base. Time-lagged data obtained from 331 college bookstores and their customer bases – colleges, provide evidence for a concave nonlinear relationship between racial minority employee proportion and store sales, while data from a survey panel (n = 497) of service establishment managers support the assertion that racial minority employee proportion predict diversity-related human capital resources. Further, at high levels of this focal predictor, racial minority employee proportion is found to be negatively related to sales for colleges with low proportions of racial minority customers but does not influence sales for high-minority customer bases. I interpret these results utilizing extant theories of diversity and provide a roadmap for future research in this domain.

Keywords

Minority employees diversity firm-performance human capital TMGT effect

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