The Overall Effect of Diversity Management on the Competitiveness of Firms in Ethiopian Industries, With a Focus on Adama City, Oromia Region

This study examines the overall effect of diversity management on the competitiveness of firms in Ethiopian industries, with a specific focus on Adama City, Oromia Region. It assesses how Workforce Diversity Indicators, Diversity Management Practices, and the Business Advantage of Managing Diversity influence firms’ competitive performance. A mixed-methods design was employed, combining quantitative data from 262 employees obtained through structured questionnaires with qualitative insights drawn from interviews and focus group discussions. Standard multiple regression analysis was conducted after confirming that all assumptions for regression were satisfied. The results show that diversity management substantially contributes to firm competitiveness, although its impact varies across components. Workforce Diversity Indicators and the Business Advantage of Managing Diversity were significant predictors and jointly explained 65.1% of the variation in firm competitiveness. Business Advantage was the strongest predictor, demonstrating that firms that strategically leverage diversity gain superior competitive outcomes. Diversity Management Practices, however, were not statistically significant, indicating potential gaps in implementation, weak policy enforcement, or limited integration of diversity initiatives into daily operations. Qualitative findings supported the quantitative results, highlighting that inclusive and diverse workplaces enhance innovation, decision quality, adaptability, and employee satisfaction. The study recommends strengthening strategic diversity integration, improving diversity management practices, enhancing inclusion-focused training for employees and managers, and promoting organizational cultures that support diversity. Theoretically, the findings reinforce the Resource-Based View and strategic diversity frameworks by confirming diversity as a valuable intangible resource that improves competitiveness. Further research is suggested on longitudinal designs, sectoral comparisons, and barriers to effective diversity implementation. JEL Code: M1; M10