Diversity, Equity, and Inclusion ( DEI ) as a Catalyst in Lean‐Driven Exploratory Innovations: Role of Psychological Safety

ABSTRACT Diversity, equity, and inclusion (DEI) create the organizational conditions that enable efficiency‐oriented management approaches, such as lean management, to contribute to innovation outcomes. Grounded in emergent state theory, the study investigates how DEI initiatives and people‐centric (soft) lean practices (LPs) collectively foster the emergence of psychological safety (PS) as an organizational state, and how PS, in turn, translates these practices to exploratory innovation (EI) outcomes. The hypotheses are tested using survey data gathered from 265 innovation‐intensive manufacturers in Brazil and India. The findings indicate that DEI initiatives have a direct positive effect on PS development and strengthen the impact of soft LPs on PS. Additionally, soft LPs significantly contribute to the emergence of PS, which functions as a key mediating mechanism that translates the effects of soft LPs on EI outcomes. In contrast, PS does not mediate the relationship between DEI and EI outcomes, suggesting that DEI may shape innovation through alternative pathways. Theoretically, the study contributes to corporate social responsibility (CSR) literature by conceptualizing DEI as a microfoundation of internal CSR mechanisms that shape psychological and behavioral conditions necessary for innovation outcomes. For senior management, these findings emphasize the importance of elevating DEI from a compliance‐oriented initiative to a strategic lever for innovation.