The environmental determinants of diversity management: Competition,collaboration and clients

Diversity management has received considerable attention in public management research. Most existing research, however, analyses the effects rather than the determinants of diversity management. Using panel data on American hospitals from 2008 to 2011, we probe how market competition, inter‐organizational collaboration and clientele diversity affect diversity management adoption. We find that all three environmental factors increase diversity management adoption. Hospitals in competitive markets are more likely to adopt diversity management strategies when they engage in extensive service collaboration and serve a diverse population. Monopolies in less collaborative environments lag behind in adopting diversity management, especially when they serve ethnically homogenous populations. Our findings broaden understandings about what drives diversity management practices and add to the literature on the external contingency of managerial practice.