Impact of innovative climate on cultural diversity perceptions and organizational commitment in multinational enterprises: the moderating role of workplace formalization

Purpose Grounded in the social information processing theory, this study examines the impact of innovative climate on employees' perceptions of cultural diversity management and its subsequent effect on organizational commitment. We also explore the moderating role of workplace formalization in these relationships. Design/methodology/approach Multisource survey data were collected from 219 matched pairs of Thai employees and Chinese supervisors across 56 multinational enterprises in Thailand. The data was analyzed using Partial Least Squares Structural Equation Modeling. Findings The findings support the positive relationships between innovative climate, cultural diversity management, and organizational commitment. However, high formalization was found to diminish these effects. Particularly in highly formalized workplaces, the positive effect of innovative climate on perceived cultural diversity management is significantly reduced. Moreover, perceived cultural diversity management does not lead to the development of organizational commitment in such environments. Practical implications The findings offer policy recommendations for multinational enterprises on fostering an innovative climate and effective cultural diversity management while avoiding excessive formalization. Such practices can enhance employee commitment, which in turn may strengthen human capital and improve firm productivity over time. Originality/value Our study advances the understanding of how employees process information about inclusivity in innovative work environments and how these perceptions influence organizational commitment. We also offer new insights into how workplace formalization shapes employees' ability to internalize and respond to the positive effects of an innovative climate and cultural diversity management.