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The Effect of Workforce Diversity on Organizational Competitiveness: The Mediating Role of Inclusive Leadership and Innovative Work Behavior

In: Proceedings of the 1st International Conference on Business, Economic, and Social Sustainability (ICOBES 2025)

Author

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  • Puspa Eka Ayu Febriana

    (Universitas Sarjanawiyata Tamansiswa)

Abstract

This study aims to examine the conceptual framework of the mediating roles This study examines the impact of workforce diversity on organizational competitiveness by evaluating the mediating roles of inclusive leadership and innovative work behavior, utilizing the Resource-Based View (RBV) as its theoretical framework. A quantitative explanatory research design using a census sampling technique with 127 non-academic staff of Universitas Sarjanawiyata Tamansiswa Yogyakarta. Data were gathered using a structured questionnaire assessing workforce diversity, inclusive leadership, innovative work behavior, and competitiveness, and were analyzed using Structural Equation Modeling (SEM-PLS) to elucidate both direct and indirect correlations among the variables. The results indicate that workforce diversity favorably affects inclusive leadership and innovative work behavior, hence improving organizational competitiveness. Both mediators substantially enhance the effect of workforce diversity on competitiveness, suggesting that diversity alone does not yield a competitive advantage without the backing of inclusive managerial competencies and employees’ innovative initiatives. This study includes a systematic conceptual synthesis of existing theoretical and empirical studies on diversity management, leadership, innovation, and competitiveness, with the empirical investigation. The research emphasizes that diversity serves as a strategic asset only when it is converted into inclusive leadership practices and innovation-oriented processes; otherwise, diversity initiatives tend to be merely symbolic and do not produce competitive results. This study’s novelty resides in its multidimensional integration of diversity, inclusion, and innovation within the competitiveness framework, a topic that remains underexplored in multicultural organizational environments, especially in developing nations. The report underscores the necessity for firms to develop strategic diversity management and inclusive leadership initiatives that promote innovation and maintain long-term competitiveness in evolving global markets.

Suggested Citation

  • Puspa Eka Ayu Febriana, 2026. "The Effect of Workforce Diversity on Organizational Competitiveness: The Mediating Role of Inclusive Leadership and Innovative Work Behavior," Advances in Economics, Business and Management Research, in: Syamsul Hadi & Riskin Hidayat & Ambar Lukitaningsih & Ong Lin Dar & Taufik Abd Hakim (ed.), Proceedings of the 1st International Conference on Business, Economic, and Social Sustainability (ICOBES 2025), pages 950-962, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-626-5_70
    DOI: 10.2991/978-94-6239-626-5_70
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