Factors influencing the implementation of diversity management in business organisations in a transition economy. The case of Slovakia

Abstract

With increasing internationalisation of business, diversity management has emerged as an important issue, even in traditionally non-diversified companies. This research seeks to examine the effect of size, legal form and share of the foreign capital in the ownership structure of the organisation on the implementation of diversity management. An empirical survey was carried out that examined the state of the implementation of diversity management in the Slovak Republic. Using non-parametric statistical methods and post-hoc testing by data analysis, the research survey revealed that the evaluated factors significantly influenced the attitudes of respondents towards the diversity management implementation. The respondents working in large business organisations generally perceive the diversity management concept more positively when compared with respondents working in smaller organisations. The respondents working in business organisations where the share of foreign capital in the ownership structure exceeds 80% are more positively inclined towards the implementation of diversity management. The legal form of the business organisation does not influence the attitudes of the respondents in any significant way. We recommend domestic business organisations and SMEs focus on the diversity issues, especially on supporting the diversified work teams. This can preferably be done by diversity training, using formalised HRM procedures and mentoring initiatives. Diversity management is not solely a domain of subsidiaries and large business organisations. The organisations are able to benefit from diversity management regardless of their size and country of origin.

Keywords:

• diversity management
• implementation
• factors
• legal form
• number of employees
• foreign capital

Jel Classification:

• F23
• M10
• M12
• M19
• M53

1. Introduction

For any multicultural country, such as the United States or Great Britain, the issue of diversity is not new. However, diversity has not been as frequently emphasised in the countries of the Visegrad region: the Slovak Republic, the Czech Republic, Poland and Hungary. These countries have been recognised as homogeneous with respect to ethnic and religious background, and are highly male dominated in many aspects of social life. With notable economic development in recent decades, the labour markets have undergone fundamental changes. Before 1989, the economy of the Slovak Republic was centralised. Since nearly everyone was employed, competition in the labour market did not really exist. There was no need to invest into human capital. There was no need to adopt the diversity management concept and, to be honest, this concept was all but unknown to managers. The access to information about modern managerial techniques was very restricted and when some information made it through, it was often misused for propaganda.

The situation improved in 1989 when the central planning ceased to exist and the political situation radically changed. Suddenly a lot of opportunities arose. The utilised model of privatisation allowed for a quick change of ownership of the huge, previously state-owned companies and the first foreign direct investments (FDIs) appeared. However, some of the political leaders were not accepted by Slovakia’s political partners. As a result, the Slovak Republic joined NATO and the European Union later than its fellow Visegrad neighbours. It was 1998 when, after political changes, the amount of foreign direct investment increased. This transfer of capital is usually accompanied by the transfer of technologies and knowledge. The so-called ‘knowledge spillover’ took the form of more strategic-oriented planning of Slovak enterprises (these enterprises were usually characterised by the high share of foreign capital in their ownership structure and high number of employees) in many areas. The area of human resources was one of them.

With the increased amount of FDI the workforce mobility potential also increased. Suddenly, there were workers from Romania, the Ukraine and the states of former Yugoslavia working in large companies. Suddenly, the managers of the subsidiaries were of German, French, Japanese or Korean nationality and ethnic diversity became an issue to be dealt with. Ethnic diversity was not the only problem. There were still other unsolved issues, e.g., gender equality (see Štefanková, Cagaňová, & Moravčík, 2010), ageism (Marosné, Kapsdorferová, Czeglédi, & Hajós, 2012) and cultural differences (Dabija & Băbuț, 2013; Ubrežiová, Stankovič, Mihalčová, & Ubrežiová, 2013). Diversity management became one of the research topics of the scholars in the Slovak and the Czech Republics (Chebeň, Lančarič, & Savov, 2010; Eger & Indruchová, 2014; Egerová & Jiřincová, 2014; Eger et al., 2009; Eger et al., 2012; Lančarič, Chebeň, & Savov, 2012). The majority of these studies focused on the company-level diversity management, either from the perspective of managers or the perspective of work-team performance.

In this paper, we focus on the background of the implementation of diversity management from the point of view of factors having a direct influence on this process. We evaluate the influence of the legal form (as an expression of the number of owners and the ability to quickly adopt a new concept) of the business organisation, the size (number of employees) of the business organisation and the share of the foreign capital in the ownership structure of the organisations. Previous similar studies (Süβ & Kleiner, 2008) examined the organisations in a relatively stable entrepreneurial environment (Germany). To the best of our knowledge there is no study (apart from Egerová, Jiřincová, Lančarič, & Savov, 2013, which we co-authored) dealing with this topic in the transition economies of the Visegrad countries. In the paper we answer the following questions:

1.	Is there a difference in adopting the diversity management concept in business organisations according to the organisations’ legal form? Are certain legal forms (characterised by the lower number of owners) more apt to implement the management of diversity?
2.	Are large organisations more inclined to implement diversity management than small companies?
3.	Is a high share of the foreign capital in the ownership structure of the business organisation (the country-of-origin effect) in favour of implementing diversity management?
4.	Is the influence of selected factors towards diversity management implementation in a transition economy similar to the influence of such factors in a stable entrepreneurial environment?

The rest of the paper is organised as follows: Section 2 reviews the empirical literature on diversity and diversity management. Section 3 presents the data and the non-parametric methodology. In section 4, empirical results are summarised. In section 5, implications are discussed. Section 6 concludes.

2. Literature review

2.1 Diversity

Towards the end of the previous century the issue of diversity in organisations gained a prominent place in both academic and societal debates. Within the discussions over the past decades concerning diversity issues in organisations (Essed, 2002; Liff & Wajcman, 1996; Zanoni, 2011), we particularly note a struggle in relation to sameness and difference. Risberg and Soderberg (2008) define diversity as a mix of differences, similarities, and tensions that can exist among the elements of a collective mixture. Diversity or heterogeneity may be understood from the point of view of certain criteria or dimensions. In this sense we distinguish between primary and secondary diversity (Hubbard, 2004; Süβ & Kleiner, 2008). Primary dimensions of diversity include age, ethnicity and culture, gender, race, religion, sexual orientation, and capabilities (Schwind, Das, & Wagar, 2007). Secondary, diversity includes mainly factors such as socio-economic status, education, religion, geographical affiliation and marital status (Sweetman, 2004). Because globalisation and migration allowed for a more mixed work-force, scholars began researching the potential benefits of diversity as a business case with a focus on the organisational performance (Jackson & Joshi, 2011; van Knippenberg, van Ginkel, & Homan, 2013; Thomas & Ely, 1996). The diverse workplace requires employees to possess the relevant knowledge, skills, abilities, and attitudes to effectively interact with colleagues, customers, and clients who are different from themselves (Jayne & Dipboye, 2004; Ostendorp & Steyaert, 2009; Zanoni, Nilsson, Janssens, & Wahlin, 2010). To achieve this goal, organisations increasingly rely on teams to generate the solutions required for sustained business success. There has been a surge in research on how these teams should be composed to foster high levels of performance (Armstrong et al., 2010; Kozlowski & Bell, 2003; Olsen & Martins, 2012). Many companies take different measures to better handle diversity (Janssens & Zanoni, 2014; Manoharan, Gross, & Sardeshmukh, 2014), seeing an opportunity to enhance their future growth and to develop a competitive advantage (Roberson & Park, 2007; Thomas & Wetlaufer, 1997; Wentling & Palma-Rivas, 1998). Cox and Blake (1991) proposed six main business benefits of a diverse workforce:

1.	Cost argument: the cost of doing a poor job in integrating workers is increasing, so those who manage diversity will gain a cost advantage.
2.	Resource-acquisition argument: adopting a diversity-management approach will develop reputations of favourability for the organisations as prospective employers for women and ethnic minorities, so these organisations will get the best personnel.
3.	Marketing argument: multi-national corporations (MNCs) will obtain insight and cultural sensitivity from having members with roots in other countries, and this will improve marketing.
4.	Creativity argument: the presence of diversity of perspectives and less emphasis on conformity to past norms should improve creativity.
5.	Problem-solving argument: heterogeneity in groups potentially produces better decisions and problem solving through a wider range of perspectives.
6.	System flexibility argument: the system becomes less standardised, and therefore more fluid, which creates more flexibility to react to environmental changes.

This range of potential business advantages for diversity has been supported by several authors (e.g. Hubbard, 2004; Hubbard, 2011; Ilmakunnas & Ilmakunnas, 2011; Risberg & Soderberg, 2008; Subeliani & Tsogas, 2005; Thomas, 1991) who suggest that increased diversity can lead to a better understanding of local markets and customers, increased ability to attract and retain the best people, greater creativity, better problem solving and greater flexibility for organisations.

The business environment becomes more global and organisations become leaner and flatter. They must accomplish more with fewer people, but people who have different cultures, values, motivations, work styles, lifestyles and family roles (Montes, 2000). As organisations make efforts to manage their increasingly diverse workforces, they must encourage both respect for individual differences and also a singular organisational identity. This balancing act is referred to as diversity management (Eger & Egerová, 2013; Smith, Morgan, King, Hebl, & Peddie, 2012). The basis of the diversity management concept can be seen in the natural substance of diversity existing in human society where diversity of people is a natural thing (Eger et al., 2009, 2012; Hubbard, 2004). Diversity management is broadly defined as ‘the utilisation of HR management practices to (i) increase or maintain the variation in human capital on some given dimension(s), and/or (ii) ensure that variation in human capital on some given dimension(s) does not hinder the achievement of organisational objectives, and/or (iii) ensure that variation in human capital on some given dimension(s) facilitates the achievement of organisational objectives’ (Olsen & Martins, 2012). Diversity management can also be defined as a management philosophy of recognising and valuing heterogeneity in organisations with a view to improve organisational performance (Ozbilgin & Tatli, 2011). Diversity management practices have evolved over time. Prior to the 1970s, the dominant approaches to diversity were considered as (i) a liberal approach, which works under the philosophy of sameness, and (ii) a radical approach, which works under the philosophy of positive discrimination. More recently, there has been a greater recognition of the approach that works under the philosophy of employee differences being valued and utilised effectively (Kirton & Greene, 2010).

Although prudent diversity management is imperative for firms due to a diverse workforce, and multiethnic, multiracial, and multicultural customer base, the degree of investment in diversity initiatives and the resultant diversity performance of a firm is often determined by an economic cost-benefit analysis (Singal, 2014). Fostering diversity is associated with costs of communication, coordination and conflict, and can negatively influence an organisation. Increased conflict can result due to lack of communication in teams because employees from diverse backgrounds may not understand or trust each other (Ancona & Caldwell, 1992). The coordination and integration costs associated with a diverse workforce can sometimes seem to be greater than the benefits of creativity and knowledge spillovers (Parrotta, Pozolli, & Pytlikova, 2012). Second, there are significant costs associated with implementation of successful diversity programmes. These costs include diversity training of managers and traditional employees, search costs for non-traditional employees and suppliers, modifying corporate policies to be sensitive to cultural differences, infrastructural costs for accommodating workers with disabilities and women with young children, and such other related costs – which can negatively impact profitability (Singal, 2014). In addition to these monetary costs and uncertain benefits, especially in the short term, it is time-consuming to develop trust and relationships with new suppliers or contractors, and manage diverse employees. Transactions costs are reduced when dealing with long-standing suppliers and recruiting from known pools of candidates, thus leading owners and managers to maintain status quo rather than invest in diversity management.

3. Methodology of research

3.1 Sample and data collection

As stated in Munk, Kapusta, and Švec (2010) good quality data are a prerequisite for a well-realised data analysis. If there is ‘junk’ at the input, the same will be at the output, regardless of the method for knowledge extraction used. With this statement in mind, a theoretical survey about the issues to be solved was created on the basis of the studies of the printed and non-printed information sources relevant to the topic of diversity management. A selective survey was used as a method of data collection. According to Munk, Drlik, Kapusta, et al. (2013) the selective survey means that the chosen data are only part of basic file and therefore the accuracy of results is limited. The selective file was determined randomly. A scale questionnaire of the authors’ own construction was used as a collection tool. Apart from the introductory classification items (legal form, number of employees, proportion of foreign capital, field of activities, work position of the respondent and the company seat) it contained 25 items divided into three topics. The field of inclusion and justice (items 1–12), the field of the diversity management implementation (items 13–18) and the field of benefits resulting from the implementation (19–25). The complete list of the items is provided in the Section 3.4.

The individual items of the questionnaire were scaled. A Likert scale from 1 to 7 was used. Level 1 corresponded to the absolute agreement of the respondent with the statement in the wording of the item (formulated as a positive statement). Level 7, on the contrary, corresponded to the absolute disagreement of the respondent. Level 4 expressed his/her irresolute attitude. The added Level 8 enabled the respondent not to comment on a given item. All such ‘answers’ were excluded from further processing. The questionnaire was partly distributed in person and partly electronically by means of an online form of the Google Drive system. On the whole, 200 respondents from the Slovak Republic participated in the research. The personal distribution of questionnaires obviously provided for a high return rate. Each individual respondent represents one business subject.

3.2 Used methods

The reliability of the questionnaire was verified by means of Cronbach’s alpha. Values of Cronbach’s alpha of 0.7 or more mean sufficient internal scale consistence. The method of a split-half measurement instrument was used, as the second method of verifying the reliability. The oldest and probably most widely used split-half coefficient calculates the correlation between scores on two halves of the test (X1 and X2) and estimates the correlation – reliability – for a full length test with the Spearman–Brown ‘prophecy’ formula.

The construct validity was verified by means of a factor analysis. Factor analysis allows researchers to make inferences about the nature of a construct by examining the factor structure of a valid measure of that construct (Deacon & Abramowitz, 2005).

Since the assumption of the normality was violated, non-parametric statistical methods were used. To verify the existence of statistically significant differences between the individual groups of respondents (depending on a particular factor, see classification units) the Kruskal-Wallis Analysis of Variance and Jonckheere-Terpstra test were used. The Kruskal-Wallis test is a non-parametric parallel of a simple classification of the dispersion analysis (dispersion analysis for one factor). It is a direct generalisation of the Wilcoxon two sample test (Pavelka & Klímek, 2000). The aim of the test is to find whether the differences of the medians found in the sample of the individual groups are statistically significant (there is a relationship between the variables) or whether these are coincidental (there is no relationship between the variables). In case the Kruskal-Wallis test confirmed the existence of a statistically significant difference, suitable methods of ‘post hoc testing’ were used (Tukey’s HSD test).

3.3 Verifying reliability and validity of the measurement instrument

The reliability of the questionnaire was verified by means of Cronbach’s alpha and the Split-half test. Table 1 summarises the gained results.

Table 1. Reliability evaluation –results.

Cronbach’s alpha		Split-half		Number of items
		Equal	Unequal
Total reliability	0.914	0.756	0.756	25

Source: Authors' own calculations.

As is obvious from Table 1, the overall reliability of the questionnaire corresponds to the recommended value of 0.7 (Split-half test) and in the case of Cronbach’s alpha it even exceeds it. With regard to the achieved results it is therefore possible to regard the reliability of the measurement instrument as sufficient.

The construction validity was verified by the factor analysis by means of the varimax rotation of factors. The suitability of applying the factor analysis was verified on the basis of the KMO test and Bartlett’s test of sphericity. The condition of the minimum number of respondents (150) was met. The results of both testing statistical methods were satisfactory (Bartlett’s test: p < 0.05; KMO > 0.7, the value reached was 0.865). The assumptions of applying the factor analysis were met. The factor analysis identified six background factors that altogether explained almost 70% of the total variance. Based on the correlation of factors with the individual items it was possible to identify these factors:

factor 1: benefits of the implementation of diversity management,

factor 2: fair treatment of employees,

factor 3: respecting the special needs of employees with disabilities,

factor 4: openmindness in terms of respecting the diversity of the workforce,

factor 5: active support of fair recruitment policy,

factor 6: equal treatment of diverse employees groups.

Based on identifying the factors fully corresponding to the questionnaire content we regard the construction validity of the measurement instrument as satisfactory.

3.4 Questionnaire items

Item 1.	=	The ‘diversity policy’ of the organisation is clearly defined.
Item 2.	=	The organisation deems the upholding of the principle of equal opportunities when recruiting new employees necessary. (Not only due to complying with the legal regulations.)
Item 3.	=	The organisation actively supports the policy of employing physically handicapped job candidates
Item 4.	=	The organisation actively supports the policy of employing older job candidates (over 55).
Item 5.	=	The organisation actively supports the policy of employing job candidates from other ethnic backgrounds.
Item 6.	=	The organisation actively supports employing women.
Item 7.	=	The managers treat the employees fairly, regardless of their age.
Item 8.	=	The managers treat the employees fairly, regardless of their gender.
Item 9.	=	The managers treat the employees fairly, regardless of their ethnicity.
Item 10.	=	The managers treat the employees fairly, regardless of their religion.
Item 11.	=	The managers treat the employees fairly, regardless of their sexual orientation.
Item 12.	=	The managers treat the employees fairly, regardless of their physical handicap.
Item 13.	=	The organisation provides managers sufficient diversity training.
Item 14.	=	The managers support open discussion about diversity and equality issues.
Item 15.	=	The managers perceive employees as autonomous individuals.
Item 16.	=	The managers bear in mind the diversity benefits when assigning tasks and commitments.
Item 17.	=	The scope of work is adapted to the needs of the individual groups of employees.
Item 18.	=	The recruitment of employees is intentionally aimed at raising the level of diversity in the working teams.
Item 19.	=	Diverse workforce provides a possibility of identifying customers’ needs better.
Item 20.	=	Diverse workforce provides the employer with a wide scope of abilities and skills.
Item 21.	=	Diverse workforce provides the employer with a possibility of selecting more suitable employees.
Item 22.	=	Diverse workforce brings with itself higher innovation potential (thanks to a variety of new ideas and approaches).
Item 23.	=	Diverse workforce enriches the teamwork and makes it more interesting.
Item 24.	=	Diverse workforce improves the image of the organisation.
Item 25.	=	Diverse workforce improves the working climate at the workplace.

4. Empirical results

4.1 Sample characteristics

The first five items of the questionnaire allowed for more detailed information about the research sample. The respondents were characterised according to of legal form of the organisation they are working for; its size (described by the number of the employees), the proportion of foreign capital in its ownership structure and the sector of the national economy in which the business subject operates. The work position of the respondent was the fifth classification item. Tables 2–6 summarise representation of the individual categories in the research sample.

Table 2. Sample characteristics – legal form of the business organisation.

		Frequency	%	Cumulative %
Valid	Joint-stock company	54	27.0	27.1
	Limited company	99	49.5	76.9
	cooperative	18	9.0	85.9
	other (SHR, contractors, commercial trade)	25	12.5	98.5
	Public trade company (v.o.s.)	3	1.5	100.0
	Total	199	99.5
Missing	System	1	0.5
Total		200	100.0

Source: Authors' own calculations.

Table 3. Sample characteristics – number of employees of the business organisation.

		Frequency	%	Cumulative %
Valid	Up to 10	27	13.5	13.6
	11–50	54	27.0	40.7
	51–250	56	28.0	68.8
	Over 251	62	31.0	100.0
	Total	199	99.5
Missing	System	1	0.5
Total		200	100.0

Source: Authors' own calculations.

Table 4. Sample characteristics – share of foreign capital in the ownership structure of the business organisation.

		Frequency	%	Cumulative %
Valid	0%	127	63.5	64.1
	1– 20%	6	3.0	67.2
	21– 40%	8	4.0	71.2
	41– 60%	13	6.5	77.8
	61– 80%	4	2.0	79.8
	81% and more	40	20.0	100.0
	Total	198	99.0
Missing	System	2	1.0
Total		200	100.0

Source: Authors' own calculations.

Table 5. Sample characteristics – sector of national economy the business organisation is operating in.

		Frequency	%	Cumulative %
Valid	Primary	30	15.0	15.1
	Secondary	55	27.5	42.7
	Tertiary	105	52.5	95.5
	Quarterly	9	4.5	100.0
	Total	199	99.5
Missing	System	1	0.5
Total		200	100.0

Source: Authors' own calculations.

Table 6. Sample Characteristics - Work position of the respondent.

		Frequency	%	Cumulative %
Valid	Managerial	112	56.0	56.0
	Non-managerial	88	44.0	100.0
	Total	199	99.5
Missing	System	1	0.5
Total		200	100.0

Source: Authors' own calculations.

On the whole, 200 respondents participated in the research, each of them representing one business subject. The respondents working in the Limited liability companies were the highest represented group (49.5%), followed by respondents working in joint-stock companies (27.0%). Together with the respondents working in the public business companies, capital companies accounted for almost 80% of the sample (Table 2).

The categories used regarding the companies’ number of employees corresponded to the typology of businesses according to their sizes commonly used in the EU (Gozora, 2005). The representation of the individual categories is relatively evenly proportioned (Table 3). The biggest proportion is accounted for by the respondents working in the so-called large businesses (number of employees more than 250), namely 31.0%. The medium sized businesses are the second most represented group (28.0%), closely followed by small businesses (27.0%) and micro businesses (13.5%).

According to the feedback gained from the respondents filling the item, mapping the share of foreign capital posed a problem especially for the respondents working in non-managerial positions. Not always they knew what the exact share of foreign capital in the ownership structure of their company was, or, as the case may be, whether the share concerned the registered capital or the total assets. Despite this fact it may be stated that the domestic companies, without any foreign capital, had the biggest representation (63.5%). The second most numerous group was represented by companies with the proportion of foreign capital over 81% (20.0%).

From the viewpoint of the national economy, the most numerous group represented in the sample was formed by the respondents working in businesses of the tertiary sphere, i.e., the service sector (52.5%). From the respondents working in businesses operating in the secondary sphere, the processing sector accounted for 27.5% of the total number of respondents. The respondents working in the businesses operating in the public sector had the lowest level of representation, with only 4.5% (Table 5).

The proportion of respondents working in the managerial and non-managerial positions was relatively equal (Table 6). The managers accounted for 56.6% of respondents and non-managerial employees for the remaining 44.4%. The fact that the majority of the respondents were managers increased the reliability of the gained knowledge regarding the state of the diversity management concept implementation. Owing to the fact that the sample was divided relatively equally it was possible to compare the attitudes of the managers and non-managerial employees.

4.2 Factors influencing the perception of diversity management

Some of the classification items served as a factor on the basis of which the existence of the statistically significant differences in the attitudes of the respondents towards diversity management was evaluated.

4.2.1 Legal form

The first evaluated factor that may cause differences in the attitudes of the respondents was the legal form of the business organisation. Legal form usually mirrors the structure of the board of owners. The most frequently utilised legal form in the Slovak Republic is ‘Ltd’, followed by the ‘JSC’. There is typically a lower number of owners in a limited company compared with a cooperative or joint-stock company. Therefore, the legal form is one of the determinants of the level of the division of control and decision roles. To introduce and implement some new concept is usually easier in tan organisation where this level is lower (limited company).

We assumed that the legal form of the business organisation the respondents is working in may influence his/hers perception of the diversity management concept. Namely, his/hers attitude towards inclusion and fairness (items 1–12), towards diversity management implementation (items 13–18) and towards the perception of benefits of this implementation (items 19–25).

The Kruskal-Wallisov test (henceforth KW test) was used in order to verify the existence of statistically significant differences in the attitudes of respondents working in the business organisations with different types of organisational (legal) form. The results of the test are shown in the Table 7.

Table 7. Results of Kruskal-Wallis test – legal form.

Item	1	2	3	4	5	6	7	8	9	10	11	12	13
p level	0.170	0.931	0.260	0.249	0.032*	0.893	0.089	0.077	0.172	0.681	0.638	0.498	0.357
item	14	15	16	17	18	19	20	21	22	23	24	25
p level	0.858	0.374	0.991	0.546	0.728	0.866	0.477	0.676	0.063	0.060	0.340	0.701

^* the statistically significant differences are flagged.

Source: Authors’ own calculations.

The Kruskal-Wallisov test confirmed the existence of statistically significant variance only in item 5 (which dealt with the active support of employment of applicants from different ethnicities). However, Jonckheere-Terpstra’s test did not confirm the statistically significant difference. The number of questionnaire items with confirmed the statistically significant difference was surprisingly small. We assumed that the legal form (especially in case of respondents working in the limited company) would account for more obvious differences. This result led us to an assumption that the diversity management implementation and practices are perceived very similarly in all business organisations, regardless of their legal form. It is difficult to judge whether it is a good thing or not.

We further analysed the statistically significant difference in attitudes of respondents towards the active support of employment of applicants from different ethnicities (item 5). Based on the result of Tukey’s test (Table 8), we concluded that the statistically significant difference in attitudes of respondents is created by the attitudes of employees working in joint-stock companies and production cooperatives. At first sight this difference can be considered surprising since these two legal forms are similar from the ownership structure’s point of view (high number of owners). However, here the similarity ends. The cooperatives are an older legal form, massively used before 1989, especially in the agriculture sector. Nowadays, they are still mostly used in the agriculture sector, but it is considered the less effective legal form (for the Slovak Republic see Tóth, Lančarič, Piterková, Savov, & Rábek, 2014; the cooperatives, for example in Germany, are much more effective). The large organisations operating in other industries usually take the form of a JSC. The share of foreign capital in the ownership structure of these organisations is usually high (the number of employees and the share of foreign capital was positively correlated). The potential of diversity management implementation is therefore higher in JSCs when compared with cooperatives. This assumption is supported by the achieved mean values in item 5, where cooperatives make less effort to actively support the employment of applicants from different ethnicities compared with joint-stock companies. One of the reasons for the lower employment of applicants from different ethnicities is determined by the fact that employees of cooperatives are less cosmopolitan. As stated before, the cooperatives are usually operating in countries where the people are slower to assimilate strangers and new concepts in general.

Table 8. Results of Tukey’s HSD test – legal form – item 5.

Legal form		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
Joint-stock	Limited company	−0.446	0.316	0.621	−1.32	0.42
	Cooperative	−1.387	0.501	0.048*	−2.77	−0.01
	Other	−0.205	0.465	0.992	−1.49	1.08
	Public commercial company	1.113	1.089	0.845	−1.89	4.11

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 9. Results of Kruskal-Wallis test – number of employees.

Item	1	2	3	4	5	6	7	8	9	10	11	12	13
p level	0.004^*	0.237	0.109	0.424	0.014^*	0.184	0.730	0.244	0.264	0.067	0.079	0.226	0.006^*
item	14	15	16	17	18	19	20	21	22	23	24	25
p level	0.281	0.983	0.711	0.774	0.324	0.017^*	0.051	0.400	0.277	0.162	0.039^*	0.549

^* the statistically significant differences are flagged.

Source: Authors' own calculations

4.2.2 Number of employees (size of the business organisation)

In Slovakia, the perception of diversity is mostly narrowed to ethnic diversity and the other sources of diversity are often forgotten. From the ethnicity point of view, the Slovak Republic is very homogeneous. The workers born abroad account for 0.7% of overall workforce. The statistics regarding the number of gipsies are biased, because many gipsies state their nationality is Hungarian in the census. This narrow perception of diversity does not encourage the organisations’ interest in managing diversity. The motivation for Slovak small- and medium-sized companies (SMEs) to take an active approach to the diversity management concept is especially low. Therefore, it is very important to apprehend diversity management as a very complex and broad concept, very useful for any organisation, regardless of its size. However, it is obvious that the need for diversity management implementation is potentially higher in those organisations with greater numbers of employees.

Regarding the number of employees, we have assumed that diversity management is better developed in larger business organisations when compared with small ones. We have also assumed there will be differences in the perception of benefits caused by the implementation of the diversity management model. We expected the attitude of respondents working in large companies towards the benefits of diversity management implementation to be more positive (the achieved mean values to be lower) compared with respondents working in small business organisations.

The Kruskal-Wallis test confirmed the existence of statistically significant differences in five questionnaire items (items 1, 5, 13, 19 and 24).

Item 1 dealt with the clarity of the diversity policy in the business organisation. As can be seen in Table 10, there is a statistically significant difference in attitudes of respondents working in large organisations (over 251 employees) and respondents working in small-sized organisations (11–50 employees). Based on the results, we conclude the diversity policy in large organisations is defined more clearly when compared with the small-sized organisations.

Table 10. Results of Tukey’s HSD test – number of employees – item 1.

Number of employees		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
Over 250	10 and fewer	−0.912	0.415	0.128	−1.988	0.164
	11–50	−1.023	0.329	0.012*	−1.878	−0.169
	51–250	−0.162	0.333	0.962	−1.026	0.702

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 11. Results of Tukey’s HSD test – number of employees – item 5.

Number of employees		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
Over 250	10 and fewer	−1.131	0.439	0.052	−2.270	0.008
	11-50	−0.778	0.346	0.114	−1.675	0.119
	51-250	–0.,890	0.341	0.047*	−1.774	−0.007

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 12. Results of Tukey’s HSD test – number of employees – item 13.

Number of employees		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
Over 250	10 and fewer	−1,397	0.415	0.005*	−2.473	−0.321
	11–50	–0.926	0.345	0.039*	−1.819	−0.032
	51–250	−0.670	0.341	0.205	−1.555	0.214

^* the statistically significant differences are flagged.

Source: Authors' own calculations

The same difference in attitudes between respondents working in large organisations (over 251 employees) and respondents working in small-sized organisations (11–50 employees) can be seen in items 19 and 24. Both items were referring to the field of the perceived benefits of diversity management implementation. Item 19 dealt with better identification of customers’ needs. Item 24 dealt with business organisation’s image (Tables 13 and 14). Once again, we conclude that the benefits of diversity management implementation were perceived more positively by the respondents working in large organisations when compared with small-sized organisations.

Table 13. Results of Tukey’s HSD test – number of employees – item 19.

Number of employees		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
Over 250	10 and fewer	−0.807	0.419	0.221	−1.893	0.279
	11–50	−1.121	0.346	0.008*	−2.018	−0.224
	51–250	−0.531	0.337	0.396	−1.405	0.344

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 14. Results of Tukey’s HSD test – number of employees – item 24.

Number of employees		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
Over 250	10 and fewer	−0.543	0.375	0.470	−1.514	0.427
	11–50	–0.824	0.295	0.029*	−1.589	−0.059
	51–250	−0.202	0.294	0.902	−0.963	0.560

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Statistically significant differences in respondents’ attitudes were also confirmed in item 13 (Table 12). Item 13 focused on diversity training of managers. In item 13, there were differences in attitudes between respondents working in large organisations (over 251 employees) when compared with respondents working both in small-sized (11–50 employees) and middle-sized organisations (51–250 employees).

The existence of differences in items mentioned above was also confirmed by Jonckheere-Terpstra’s test.

Statistically significant differences were noticed mainly in the attitudes of respondents working in small-sized enterprises (11–50 employees) and respondents working in large companies, employing over 250 employees. In items where tests confirmed the existence of statistically significant differences, our assumption that the diversity management concept in large companies is better developed was confirmed. The necessity of inclusion of diversity planning into the corporate strategic planning is more recognised in large organisations (item 1). Moreover, their approach to implementation of diversity management practices is more active in comparison with small-sized and micro-sized organisations (item 13). This results in more positive perception of diversity management implementation benefits (items 19 and 24) both in the area of identification of customers’ needs and the image of the organisation.

4.2.3 Share of foreign capital in the ownership structure

The third evaluated factor was the share of foreign capital in the ownership structure of the business organisation. Our line of thought was as follows. The organisational culture of the mother company is usually being adopted by the subsidiary companies. The likelihood of this adoption rises with the proportion of the owned share in ownership structure of the subsidiary company. Thanks to the phenomenon of knowledge spillover (Gaumont & Leonard, 2010; Moravčíková, Lančarič, Ubrežiová, Savov, & Kozáková, 2014; Rani & Joshi, 2012; Senichev, 2013) which accompanies foreign direct investments, the know-how of the subsidiary company is adjusted as well. Since the diversity management concept is better refined and adopted abroad (when compared with the Slovak Republic) we assumed that the attitude of respondents referring to the diversity management concept in business organisations with a higher share of foreign capital in the ownership structure will be more positive. We expected that the more affirmative attitude towards the diversity management concept will be obvious in all three topic fields of the questionnaire, but mainly in items dealing with the benefits of diversity management implementation. After all, the perceived benefits are the cause of why organisations consider diversity management implementation in the first place.

Table 15 summarises the results of Kruskal-Wallis’s test, which confirmed the existence of statistically significant differences in attitudes of respondents in items 4, 5, 10, 11, 20, 22, 23, 24 and 25). The existence of statistically significant differences in these questionnaire items was also confirmed by Jonckheere-Terpstra’s test. However, not all differences in the mean values of the individual factor’s categories were statistically significant, according to Tukey’s test. Therefore, we interpret only results concerning items where the statistical significance of the difference was confirmed both by non-parametric tests and following post-hoc testing (items 4, 5, 10, 11, 23 and 25).

Table 15. Results of Kruskal-Wallis test – share of foreign capital.

Item	1	2	3	4	5	6	7	8	9	10	11	12	13
p level	0.149	0.075	0.152	0.038	0.004*	0.283	0.666	0.351	0.115	0.001*	0.029*	0.377	0.482
item	14	15	16	17	18	19	20	21	22	23	24	25
p level	0.266	0.337	0.095	0.313	0.225	0.057	0.016*	0.598	0.008*	0.007*	0.006*	0.001*

^* the statistically significant differences are flagged.

Source: Authors' own calculations

The highest concentration of the confirmed statistically significant differences in attitudes of the respondents was in items concerning the field of inclusion and justice (items 4, 5, 10 and 11) and perceived benefits of diversity management implementation (items 23 and 25).

Items 4 and 5 dealt with the support of employment of older job (item 4) and job applicants from other ethnicities (item 5). Items 10 and 11 refer to fairness of employees’ treatment according their sex and religion, respectively.

As is obvious from Tables 16 and 17, there was a difference in attitudes of respondents working in the business organisation in which the share of foreign capital in its ownership structure exceeded 80% and those respondents working in an organisation in which the share of foreign capital in its ownership structure was in the interval 41–60%, towards the support of employment of job applicants belonging to marginalised groups. The attitude of respondents working in business organisation in which the share of foreign capital in its ownership structure exceeded 80% is generally more positive (see the mean difference; owing to the questionnaire scale used, negative difference means the attitude is more positive) when compared with other categories of the evaluated factor.

Table 16. Results of Tukey’s HSD test – share of foreign capital – item 4.

Share of foreign capital		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
over 80%	0%	−0.134	0.355	0.999	−1.156	0.888
	1–20%	−0.103	0.849	1.000	−2.548	2.343
	21–40%	−0.644	0.752	0.956	−2.809	1.520
	41–60%	−2.103	0.639	0.015*	−3.943	−0.262
	61–80%	0.231	1.017	1.000	−2.697	3.159

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 17. Results of Tukey’s HSD test – share of foreign capital – item 5.

Share of foreign capital		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
over 80%	0%	−1,052	0.330	0.020*	−2.001	−0.102
	1–20%	−1.744	0.784	0.232	−4.003	0.515
	21–40%	−0.410	0.734	0.993	−2.525	1.704
	41–60%	−1.910	0.590	0.018*	−3.611	−0.210
	61–80%	−2.160	0.939	0.199	−4.865	0.544

^* the statistically significant differences are flagged.

Source: Authors' own calculations

The second group of items in which the statistically significant differences were confirmed dealt with fairness of employees’ treatment. Once again, the attitudes of respondents working in a business organisation in which the share of foreign capital in its ownership structure exceeded 80% differ (Tables 18 and 19). The attitude of these respondents is overly more positive in comparison with other categories of the evaluated factor. However, the statistically significant difference in achieved mean values exists only in comparison with the factor’s category 21–40%.

Table 18. Results of Tukey’s HSD test – share of foreign capital – item 10.

Share of foreign capital		Mean difference	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
over 80%	0%	−0.250	0.113	0.235	−0.575	0.075
	1–20%	0.000	0.272	1.000	−0.782	0.782
	21–40%	−1.000	0.254	0.002*	−1.732	−0.268
	41–60%	−0.385	0.198	0.380	−0.955	0.186
	61–80%	0.000	0.325	1.000	−0.937	0.937

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 19. Results of Tukey’s HSD test – share of foreign capital – item 11.

Share of foreign capital		Mean difference (I–J)	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
over 80%	0%	−0.503	0.193	0.101	−1.059	0.053
	1–20%	0.158	0.455	0.999	−1.152	1.467
	21–40%	−1.342	0.403	0.013*	−2.502	−0.183
	41–60%	−0.092	0.343	1.000	−1.079	0.895
	61–80%	−0.342	0.544	0.989	−1.909	1.225

^* the statistically significant differences are flagged.

Source: Authors' own calculations

The third pair of items in which the difference of attitudes was confirmed were items 23 and 25. They dealt with the benefits of implementation of diversity management. Item 23 dealt with work in the diverse team, while item 25 dealt with the work-climate at the workplace. The results shown in Tables 20 and 21 are very similar to the previous results. The respondents working in a business organisation in which the share of foreign capital in its ownership structure exceeded 80% perceive the benefits more positively when compared with the other respondents’ categories. The statistically significant difference in achieved mean values exists once again only in comparison with the factor’s category 21–40%.

Table 20. Results of Tukey’s HSD test – share of foreign capital – item 23.

Share of foreign capital		Mean difference (I–J)	Std. error	Sig.	95% confidence interval
					Lower bound	Upper bound
over 80%	0%	−0.515	0.264	0.375	−1.275	0.245
	1–20%	−0.650	0.637	0.911	−2.484	1.184
	21–40%	−2,150	0.564	0.003*	−3.773	−0.527
	41–60%	−0.458	0.465	0.922	−1.795	0.880
	61–80%	−0.150	0.763	1.000	−2.347	2.047

^* the statistically significant differences are flagged.

Source: Authors' own calculations

Table 21. Results of Tukey’s HSD test – share of foreign capital – item 25.

Share of foreign capital		Mean Difference (I-J)	Std. Error	Sig.	95% Confidence Interval
					Lower Bound	Upper Bound
over 80%	0%	–0.332	0.267	0.815	–1.101	0.437
	1-20%	–1.500	0.644	0.187	–3.353	0.353
	21-40%	–2,250	0.569	0.002*	–3.889	–0.611
	41-60%	–0.577	0.469	0.822	–1.928	0.774
	61-80%	–0.250	0.771	1.000	–2.470	1.970

^* the statistically significant differences are flagged.

Source: Authors' own calculations

5. Findings and practical implications

Based on the results, we can state that some findings are in agreement with the results of similar studies, while others are somewhat surprising.

By evaluating the first factor (legal form) we searched for an answer to the question of whether there is a difference in adopting the diversity management concept in business organisations according to their legal form. Since there was only one questionnaire item affected, we conclude that the legal form is not a relevant factor influencing the implementation of diversity management. We assumed that the organisational forms that can usually be characterised by the small number of owners (Ltd.) are more apt to implement the management of diversity. In such organisations, the consensus among owners should be easier to reach and therefore any new concept should be relatively easier and faster to implement. This assumption was not proven correct.

The second evaluated factor was the size of the company measure by the number of employees. The same factor was examined by Süβ & Kleiner (2008) in a slightly different manner. They divided the business organisations by the median of 17,500 employees. We examined organisations whose size was considerably smaller (such large organisations do not operate in the Slovak Republic). We used the common categories of 1–10 employees, 11–50 employees, 51–250 employees and 251+ employees. Even if our largest category was much smaller in comparison with Süβ and Kleiner’s, the results are similar. Respondents working in organisations employing over 250 employees have a more positive attitude towards diversity management when compared with respondents from other size categories. We conclude the size of the organisation is a relevant factor influencing the implementation of diversity management. Large organisations are indeed more inclined to implement diversity management than small companies.

The last of the examined factors was a share of foreign capital in the ownership structure of the organisation. We divided the organisations into six categories. At one end of the spectrum were the domestic ones (0%), at the other end the subsidiaries (over 80%). The answer to the question ‘Is a high share of foreign capital in the ownership structure of the business organisation (the country-of-origin effect) in favour of implementation of diversity management?’ is ‘Yes, it is’. Based on the results, we conclude that the respondents working in business organisations in which the share of foreign capital in its ownership structure exceeded 80% have a more positive attitude towards the diversity management concept when compared with other respondents’ categories. Our assumption that the higher share of foreign capital will positively influence the attitude of respondents towards the diversity management concept was proved correct. We can also state that a higher share of foreign investment plays an important role in the willingness and readiness to adopt the diversity management concept.

The overall results suggest that the influence of selected factors towards diversity management implementation in a transition economy is similar to their influence in a stable entrepreneurial environment when size of the organisation and foreign capital concerned.

We recommend focusing on the implementation of diversity management practices such as diversity training and mentoring to business organisations, regardless of their size. Diversity management should not be the sole domain of large business organisations. SMEs are also able to benefit from its implementation. However, despite the above-stated agreement on the benefits resulting from the diversified workforce there is still an unsolved problem of quantification of the benefits, and how they project themselves in the performance of the individual company even though some partial studies focusing on the given topic have already been carried out (Hubbard, 2004, 2011; Lokwood, 2005). If, for example it was possible to provide precise calculations of savings in the costs caused by reducing the factor of fluctuation thanks to increasing the work morale and the enthusiasm of employees, there would be much more willingness from the side of businessmen to deal with diversity issues in SMEs.

There are some limitations to this research. First is the number of examined business organisations: we examined 200 business organisations. If the number is higher, the overall validity of the results and the ability to make conclusions would improve. Secondly is the work position of the respondents. Since not all of them are managers, their knowledge regarding the implementation of the diversity management might by limited. Therefore, the results should be approached with caution.

6. Conclusion

We assume that our research survey identified, at least partially, the importance of the chosen factors influencing the implementation of the concept of diversity management in organisations in a transition economy. We used data regarding business organisations in the Slovak Republic.

The results confirmed the size of the organisation and the share of the foreign capital in ownership structure to be significant determinants of diversity management implementation. Our results are in line with the results of other studies examining the same factors in different entrepreneurial environments.

Some fields we focused on require further in-depth research in the future. We are, of course, aware of the fact that there are more factors that should be examined as well. The utilisation of the diversity management practices differ according to the extent to which the contact with customer is personalised. Some industries, such as hospitability management and airlines, do recognise the benefits of diversity management implementation much more easily compared with industries such as agriculture. The personalisation of contact with the customer is closely related to the kind of services provided by the organisation. The length of existence of the business organisation is another factor that should be examined. The willingness to implement diversity management is determined by its costs. The link between the diversity management implementation and the performance of the business organisation is not yet drawn quite clearly; therefore, the actual profitability of the organisation is very important. In times of crisis, the HR activities are among the first to suffer.

Funding

This work was supported by the Juraj Dobrila University of Pula [grant number RERO-SO9-552].

Acknowledgements

We are very grateful for the critical remarks made by two anonymous reviewers that have significantly improved the quality of the paper. We would like to express our gratitude to fellow researchers dealing with the diversity management issue who inspired us and guided us.

The authors acknowledge financial support from the VEGA 1/0024/13.

Disclosure statement

No potential conflict of interest was reported by the authors.