Diversity and decentralization: Means or ends? Performance implications for firms and stakeholders in a new era of ambiguity

Hudson, Kerry 2025. Diversity and decentralization: Means or ends? Performance implications for firms and stakeholders in a new era of ambiguity. Journal of Management & Organization 10.1017/jmo.2025.10049

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Abstract

Increasing senior leadership diversity and decentralizing decision-making have become imperatives for many organizations, supported by a growing normative literature. However, mixed empirical evidence suggests that these may hinder the decision-making processes required to deliver value to firms and their stakeholders. We argue that diversity and decentralization should instead be viewed as means of organizing towards these ends, and theorize the conditions under which they may harm performance – specifically, the nature of the knowledge problems faced by leaders. Analyzing a 19-year panel of 922 U.S. firms, we find that diversity and decentralization are associated with stronger financial and market performance in uncertain environments but become liabilities under ambiguity, where speed and strategic clarity are critical and homogeneous, centralized leadership is more effective. Stakeholder outcomes are similarly affected, particularly employee wellbeing and ethical political activity. These findings challenge normative claims, with implications for theory, proscriptions, and practice.

Item Type:	Article
Date Type:	Published Online
Status:	In Press
Schools:	Schools > Business (Including Economics)
Publisher:	Cambridge University Press
ISSN:	1833-3672
Date of First Compliant Deposit:	1 September 2025
Date of Acceptance:	29 August 2025
Last Modified:	02 Sep 2025 14:00
URI:	https://orca.cardiff.ac.uk/id/eprint/180755

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