THE ROLE OF WORKFORCE DIVERSITY IN ENHANCING ORGANISATIONAL PERFORMANCE: A REVIEW OF SMALL AND MEDIUM ENTERPRISES IN DEVELOPING REGIONS

Abstract

Workforce diversity is increasingly recognized as a key driver of innovation and organizational performance, particularly in small and medium enterprises (SMEs). This paper presents a comprehensive review of the role of workforce diversity in enhancing organisational performance, with a specific focus on SMEs in developing regions. “The paper explores how different forms of diversity—such as gender, age, ethnicity, and educational background—contribute to improved decision-making, creativity, and competitiveness within SMEs. While workforce diversity offers several advantages, such as fostering innovation and expanding market reach, SMEs in developing regions often face challenges in managing diverse teams, including communication barriers and cultural conflicts. This review also highlights the importance of effective diversity management strategies, such as inclusive leadership and employee engagement, in maximizing the positive impact of diversity on organisational performance. Drawing on empirical studies, the paper identifies key best practices and policy implications for promoting workforce diversity in SMEs, particularly in resource-constrained environments like the North-East region of Odisha. The findings suggest that, with the right management approaches, workforce diversity can significantly enhance organisational effectiveness, contributing to long-term sustainability and growth. The review concludes by recommending further research on the intersection of workforce diversity and organisational performance in under-explored developing regions.