Exploring the nexus between perceived organizational diversity and cooperative performance: the mediating role of employee engagement Open Access

Globalization has transformed the operational landscape of organizations. In today’s world, workforce diversity has emerged as a cornerstone of modern management practices. It emphasizes appreciating and acknowledging the differences among the workforce in terms of age, gender, sexual orientation, race, ethnicity and nationality (Kim, 2006). An organization’s culture and individuals’ backgrounds jointly shape employees’ workplace behavior and interactions (Hsiao, Auld, & Ma, 2015). With time, organizational diversity has evolved from a legislative requirement to a strategic priority (Kundu & Mor, 2017). In a similar vein, Konrad (2006) highlighted multicultural organization as a long-term goal requiring a vision that embraces diversity as a core value and integrates diverse knowledge, skills and work methods into operational processes. According to Farrer (2004), organizations must celebrate, value and actively encourage workforce diversity to succeed. Hence, global chief executive officers are also prioritizing diversity management in their organizations in pursuit of a competitive edge (Ng & Burke, 2005; Süβ & Kleiner, 2007; Wikina, 2011,Korovyakovskaya, 2024; Okatta, Ajayi, & Olawale, 2024).

Effective management of workforce diversity relies on employees’ perceptions of management activities, particularly about the organization’s values and the integration of diversity through fair employment practices (Mor Barak, Cherin, & Berkman, 1998; Cox, 1993). Employees form perceptions of their organization’s workforce diversity values based on workplace policies and culture (Madera, Dawson, & Neal, 2013). Avery and McKay (2006) identified key factors that employees consider crucial in evaluating an organization’s commitment to managing diversity, which include unbiased recruitment practices, inclusive policies, targeted recruitment of underrepresented groups, maternity benefits and awareness of diversity-related issues. To capitalize on workforce diversity, employees must positively perceive the organization’s efforts in this regard (Kossek & Zonia, 1993). Receptivity to diversity and diversity management are critical factors that determine the effectiveness of initiatives in driving organizational success (Soni, 2000). Moreover, organizational performance is also influenced by employees’ perspectives on diversity-related issues (Veldsman, 2013, Lawrence, 1997). An employee’s perspective and attitude can significantly impact the efficacy of diversity initiatives, influencing their loyalty, satisfaction and organizational performance (Allen, Dawson, Wheatley, & White, 2007; Hicks-Clarke & Iles, 2000).

Cooperative societies play a crucial role in India’s socioeconomic development, fostering economic independence and community empowerment (Singh & Pundir, 2000). According to the National Bank for Agriculture and Rural Development (Annual report, 2023–24), India’s cooperative movement ranks among the world’s largest, with approximately 800,000 cooperative societies and a membership base of over 29 crore individuals. India’s cooperative sector accounts for a substantial 27% of the global cooperative sector. In particular, 15 Indian cooperatives feature among the world’s top 300 cooperatives, ranked by turnover and gross domestic product per capita, with Indian Farmers Fertilizer Cooperative Limited (IFFCO) holding the leading position, followed by Amul. In the Asia-Pacific region, India ranks second, surpassed only by Japan, and sixth globally, preceded by the USA, France, Germany, Brazil and Japan, in terms of the number of cooperatives. Furthermore, IFFCO, Amul and Krishak Bharati Cooperative Limited rank 72nd, 90th and 236th, respectively, among the world’s top 300 cooperatives by turnover (US$). These remarkable achievements emphasize the significance of the cooperative sector for the Indian economy, highlighting the need for further research to unlock its full potential.

Multistate cooperative societies operate within India’s diverse sociocultural and linguistic environments (Hashmi, 2018). Cooperative societies must strategically leverage their workforce’s diverse strengths to gain a competitive advantage. Initially, diversity was examined only through demographic profiling; subsequently, other concepts such as perceived organizational diversity, diversity practices, diversity climate and deep-level diversity characteristics have also been explored in the research studies (Mor Barak et al., 1998; April, Ephraim, & Peters, 2012; Pelled, Eisenhardt, & Xin, 1999; Avery, McKay, Wilson, & Tonidandel, 2007). Despite the prominence of cooperative societies, the empirical understanding of how perceived organizational diversity and employee engagement influence the performance of cooperative societies remains unexplored, highlighting the need for further research. Therefore, this research article attempts to address the following objectives:

• To study the relationship between perceived workplace diversity and the performance of multistate cooperative societies.

• To investigate the mediating role of employee engagement on the relationship between perceived workplace diversity and performance of multistate cooperative societies.

The International Cooperative Alliance defined cooperative as “people-centric enterprises jointly owned and democratically controlled by and for their members to realize their common economic, social and cultural needs and aspirations.” The Cooperative Movement can be traced back to 1844 when the Rochdale Equitable Pioneers formed the first successful consumer cooperative. However, in India, the movement began with the Cooperative Credit Societies Act of 1904, further supported by the 1912 Cooperative Societies Act, which incorporated diverse societies beyond credit. Subsequently, the 1919 Administrative Reforms Act classified cooperatives as a provincial issue, delegating their development to individual provinces. In 1942, the British Government enacted the Multiunit Cooperative Societies Act to oversee societies functioning across multiple states. Post-independence, the Multistate Cooperative Societies Act of 1984 emerged, encapsulating the lessons learned from prior regulations. At present, cooperative societies operating in multiple states/union territories are administered by the MSCS Act, 2002. A notable example is IFFCO, a prominent multistate cooperative society operating across several states in India. It distinguishes itself from public and private sector organizations, as it is guided by a strong set of principles, including mutual aid, personal accountability, democratic governance, equal opportunities, openness and social consciousness. By embodying these values, it offers a unique and valuable contribution to the nation’s progress and development.

Multistate cooperative societies serve the interests of members across multiple states, providing mutual assistance and enhancing social and economic conditions. The central registrar exercises administrative and financial oversight over these societies. To register under this act, a minimum of 50 members from two states is required. More than 50 people can also become members, but every additional state must meet the requirement. The governing body of a multistate society should comprise at least seven and no more than 21 members. According to the 97th Constitutional Amendment Act of 2011, multistate cooperatives must include two females and one additional member from a scheduled caste or a scheduled tribe on their main governing body list.

National Co-operative Database (2026) reports that there are presently 1,716 multistate cooperative societies in India. The developmental trend of multistate cooperatives over the years indicated a surge in registrations from 2010 to 2015 under the MSCS, 2002 Act. Maharashtra has the highest number of multistate cooperatives, totaling 701, followed by Uttar Pradesh with 186 and New Delhi with 166. These three states comprise approximately 62% of total multistate cooperatives. In addition, credit societies are the predominant category of these registered societies, totaling 725, followed by agro-processing/industrial cooperatives at 215 and multipurpose cooperatives at 142.

Perceived organizational diversity indicates employees’ assessment of an organization’s dedication to encouraging diversity inside the workplace. It involves understanding and appreciating differences among individuals, which can improve job efficiency and effectiveness (Bartz, Hillman, Lehrer, & Mayhugh, 1990). Organizational approaches to diversity can be classified based on how diverse information and viewpoints are effectively integrated into strategy, operations and practices (Thomas & Ely, 1996). Previous studies indicate inconsistent results related to the relationship between workforce diversity and organizational performance, suggesting the effects of diversity are multifaceted and context-specific. Although workforce diversity is acknowledged as an essential factor for organizational success, the relationship between perceived workplace diversity and performance remains complex (Gharti & Modi, 2024). Nevertheless, most research indicates a positive relationship between the two (Adhikari, 2024; Kundu, Bansal, & Pruthi, 2019). Positive perception toward diversity is associated with improved employee attitudes and motivation, ultimately driving organizational success and reinforcing the strategic value of diversity initiatives within organizations. Allen et al. (2007) found that employees who perceive greater diversity at senior management levels tend to associate this with enhanced organizational performance. Similarly, Kundu and Mor (2017) observed that employees’ acknowledgment of gender diversity initiatives correlates positively with perceived organizational performance. Blouch and Azeem (2019) propose that this relationship is reinforced when employees perceive organizational justice, indicating that fair treatment within a diverse environment enhances perceived performance. In addition, there are multiple factors, such as inclusive culture and diversity management, that can also influence organizational performance along with perceived organizational diversity (Choi & Rainey, 2010; Okatta et al., 2024):

Employees recognize organizational care not only when investments are aimed at enhancing their competence but also through initiatives that address concerns over diversity (Luu, Rowley, & Vo, 2019). Effective diversity management serves as a strategic way for organizations to capitalize on the benefits offered by diverse workforces (Richard, Roh, & Pieper, 2013). Employee engagement is a positive mental state indicated by energy, commitment and involvement (Schaufeli, Salanova, Gonza′lez-Roma′, & Bakker, 2002). It is enhanced when employees feel valued and supported by their organization, leading to mutual benefits and positive behaviors (Eisenberger, Huntington, Hutchison, & Sowa, 1986). By implementing diversity-oriented human resource (HR) practices, organizations not only provide training but also ensure fair opportunities for employees, fostering an environment conducive to engagement and support (Shen, Chanda, D'Netto, & Monga, 2009). In addition, Adhikari (2024) also stated that perceived organizational diversity significantly enhances employee engagement. A strong, positive perception of heterogeneity among respondents indicates that it fosters harmony and personal enrichment, leading to higher levels of engagement:

Multiple studies have shown a strong and positive relationship between a highly engaged workforce and organizational performance (Kazimoto, 2016; Avigdor, Deborah, Jennifer, Daniel, & Bernardo, 2007; Truss, Shantz, Soane, Alfes, & Delbridge, 2013; Fernando, Pedro, & Gonzalo, 2013). Top executives anticipate that diverse and inclusive talent in the workplace leads to greater engagement scores and improved organizational performance (Ferry, 2013). In addition, Badal and Harter (2013) also discovered that firms with a diverse workforce and high levels of employee engagement obtain considerable financial benefits. Organizations that neglect to prioritize distinctiveness and inclusion in their business strategy tend to have a workforce with low levels of engagement (Riffkin & Harter, 2016). However, when employees and their managers are of different races, they are more likely to have strong inclinations to leave the company. As a result, employees become disengaged at work. Nonetheless, if top-level management is capable of efficiently managing workforce diversity and providing an optimal organizational climate, it can influence employee retention and, ultimately, boost their engagement (Jones & Harter, 2005):

This study collects data through a structured questionnaire via both online and offline modes to ensure an adequate response rate. The respondents were ensured that the information gathered from them would not be misused and that all the answers would remain anonymous. The respondents consisted of employees from multistate cooperative societies situated in the Delhi-National Capital Region (NCR) of Northern India. Delhi-NCR was selected as it holds the second-highest number of registered multistate cooperative societies in India, which counts to 200 (National Cooperative Database, Ministry of Cooperation, Government of India). In addition, Delhi-NCR reflects a microcosm of cultural, linguistic and socioeconomic diversity (Hashmi, 2018).

The sampling technique used in this study involves a combination of convenience and purposive sampling. Sample size was determined using the sample-to-item ratio method based on the number of items used in a study (Memon et al., 2020). A minimum ratio of 5:1 has been recommended (Suhr, 2006). With 42 items in the questionnaire, a minimum of 210 respondents was deemed necessary. Consequently, 300 questionnaires were distributed, yielding 257 responses (85.6% response rate), with 40 responses collected online and 217 obtained offline. Respondents were initially approached in person for data collection; however, some respondents who lacked time were provided the option to complete the questionnaire online at their convenience. Both online and offline questionnaires were distributed to ensure broader coverage and inclusivity of individuals, with varying degrees of familiarity and digital access. However, it was ensured that the questionnaire wording, content and response scale were the same across both formats to reduce mode-related response bias. After data cleaning, 222 responses (74%) were deemed valid for data analysis.

Perceived workplace diversity is described as employees’ perspective on an organization’s commitment to diversity, emphasizing fair employment opportunities, impartial recruitment practices and managerial accountability for diversity initiatives (Avery & McKay, 2006). The variable includes 16 items categorized into four subconstructs: “receptivity to diversity and diversity management (six items), equitable representation and developmental opportunities (five items), hiring and retaining diverse employees (three items) and promotion of gender diversity (two items)” (Kundu & Mor, 2017). The item was evaluated using a five-point Likert scale.

Employee engagement refers to a motivated and enthusiastic mindset at work, which includes energy level, commitment and task involvement. This study utilizes the Utrecht Work Engagement Scale, which comprises 17 items divided into three dimensions: dedication (five items), absorption (six items) and vigor (six items). Responses were captured using a five-point Likert scale, ranging from “strongly disagree” to “strongly agree.”

Cooperative performance is the subjective evaluation of a cooperative society’s competency by its employees, revealing their perception of the society’s effectiveness compared to other industry entities (Tzafrir, 2006). This construct includes nine items on a five-point Likert scale (1 = worst, 2 = bad, 3 = almost same, 4 = better and 5 = much better), assessing quality, market share, profitability, productivity, customer service, return on equity, revenue growth, financial strength and innovation. Respondents have to compare it with other industry competitors over the past three years.

Smart PLS 4 was used to test the hypothesis and analyze complex interactions between variables (Ringle, 2015). Because not all the research items are distributed normally (p < 0.05 based on the “Cramer-von Mises test”), variance-based structural equation modeling is more suitable for this study. Moreover, SPSS was used to compute the descriptive statistics of the respondents.

The proposed path model constructed for this research study is illustrated in Figure 1. This study comprised three main variables: perceived organizational diversity (POD), employee engagement (ENG) and cooperatives’ performance (CSP). POD and ENG are reflective-reflective higher-order constructs, with four and three subconstructs, respectively. This method is implemented when there are higher-order constructs, a small sample size and non-normally distributed data (Hair, Hult, Ringle, & Sarstedt, 2014). The structural model incorporates perceived organizational diversity and employee engagement as higher-order constructs in the top-down approach. The subdimensions of these higher-order constructs are referred to as lower-order constructs. Four subconstructs were used to assess perceived organizational diversity, which were coded as: “receptivity to diversity and diversity management (RD), equitable representation and developmental opportunities (ED), employing and retaining diverse employees (HD) and promotion of gender diversity (GD)”. Similarly, three subconstructs – dedication (DE), vigor (VG) and absorption (AB) – were used to evaluate employee engagement. Because there are no subconstructs in cooperative performance, the related items were loaded directly onto the main construct. The path model was analyzed in two stages: the measurement model assesses the validity and reliability of the model, and the structural model evaluation determines the predictive power of the model. Six key criteria were used to analyze the structural model: coefficient of determination (R²), path model coefficients, predictive relevance (Q²), mediation analysis and effect sizes (F²).

The demographic profile given in Table 1 outlines seven characteristics: gender, age, religion, education, marital status, monthly income and work experience. The sample consisted of 70% males and 30% females. The age distribution revealed that 45.33% of the respondents fell within the 31–40 years age range. The majority of the respondents (84%) identified as Hindu, and 74% were married. In terms of income, 46.67% of the respondents earned a monthly income between ₹25,001 and ₹50,000. The respondents’ educational qualifications showed that 73.33% held a graduate degree. In addition, 42.67% of the participants had 6–10 years of professional experience.

Common method bias (CMB) was assessed using inner model – variance inflation factor (VIF) values, which were below 3.33 (Table 2), indicating the model is free from CMB (Kock, 2015). It is determined when a uniform measuring method is used to evaluate both the independent and dependent variables, leading to systematic errors in the data.

The model’s reliability and validity were evaluated using Smart PLS comprehensive measurement model assessment. Table 3 depicts factor loading, convergent validity, multicollinearity and reliability of the lower-order constructs. Factor loading measures the correlation between items and their underlying factors (Pett, Lackey, & Sullivan, 2003), which was used to assess convergent validity and indicator reliability. The outer loading of an indicator should exceed 0.708 to establish convergent validity. However, loadings exceeding 0.4 are considered acceptable for maintaining the indicator in its construct in this study (Hair, Howard, Nitzl, & C., 2020). All retained item loadings exceeded the acceptable threshold of 0.4 (Hair et al., 2020), ensuring adequate reliability. However, items AB5, AB6, CSP5, CSP6, CSP7, CSP8 and CSP9 were removed due to low factor loadings. The VIF values were below the threshold of 5 (Hair et al., 2020), indicating no serious multicollinearity issue among the indicators (Fornell & Bookstein, 1982). The reliability of the scale used in this study was confirmed, as all Cronbach’s α values exceeded the recommended cutoff of 0.708 (Hair et al., 2014). Moreover, convergent validity was established, as the average variance extracted (AVE) values surpassed the threshold of 0.5 (Fornell & Larcker, 1981), as presented in Table 3.

Discriminant validity was assessed using the Fornell–Larcker criterion, confirming the distinctiveness of each construct in this study (Fornell & Larcker, 1981; Hair et al., 2014). It was established based on the criterion that the square root of the AVE for each construct should surpass its correlation coefficients with all other constructs, as shown in Table 4. Therefore, it provides robust evidence of discriminant validity.

The study used POD and ENG as higher-order constructs, which were validated as part of the measurement model evaluation. Initially, the subconstruct gender diversity promotion showed outer loadings below the 0.708 threshold (Hair, Risher, Sarstedt, & Ringle, 2019), leading to its removal to ensure reliability. The remaining constructs demonstrated acceptable loadings above 0.4 (Hair et al., 2020). Subsequent evaluations confirmed internal consistency reliability (Cronbach’s alpha > 0.70) and convergent validity (AVE > 0.50) for the reflective higher-order constructs (Santosa, 2018; Hair et al., 2019), as shown in Table 5. Finally, discriminant validity was established using the Fornell–Larcker criterion (1981), with the square root of AVE exceeding correlations with other constructs (Table 6).

The study analyzed the relationships between variables using path coefficients and t-tests to determine whether the proposed hypotheses were accepted or rejected. The results, presented in Figure 2 and Table 7, show that all path coefficients are positive and significant, supporting the proposed hypotheses. Specifically, the study found a positive relationship between perceived organizational diversity and cooperative performance (β = 0.270, t = 4.708, p < 0.05), supporting H1. In addition, a positive relationship was found between perceived organizational diversity and employee engagement (β = 0.377, t = 5.667, p < 0.05), supporting H2. Furthermore, employee engagement was found to have a significant impact on cooperative performance (β = 0.569, t = 11.868, p < 0.05), supporting H3. Overall, the results support all three H1–H3, indicating positive and significant relationships between the variables.

Mediation analysis was performed to assess the mediating role of employee engagement between perceived workplace diversity and cooperative performance. The results mentioned in Table 8 revealed a significant (p < 0.05) partial mediating role of ENG (H4: β = 0.214, t = 5.874, p < 0.05). The total effect of POD on CSP was significant (β = 0.484, t = 7.007, p < 0.05), with the involvement of the mediator, the direct effect was still significant (β = 0.270, t = 4.708, p < 0.05). Hence, ENG partially mediates the relationship between POD and CSP.

The R² was measured to assess the variance of dependent variables explained by independent variables (Santosa, 2018). As shown in Table 9, the R² values indicate that 14.2% of employee engagement variance is explained by perceived organizational diversity (R² = 0.142), while 51.2% of cooperative performance variance is explained by employee engagement and perceived organizational diversity (R² = 0.512). According to the suggested threshold value of 0.10 (Falk & Miller, 1992), the findings showed that the model achieved satisfactory R² statistics for ENG and CSP, which is significant. Subsequently, Q² measures the predictive relevance of a structural model by comparing predicted values of endogenous variables with actual data. According to Hair et al. (2019), “Q² values above 0, 0.25 and 0.50 signify small, medium and large predictive relevance”, respectively. The proposed model exhibits a low level of predictive accuracy for cooperative performance (0.224) and employee engagement (0.129), as both values are less than 0.25 (Table 9).

Table 10 presents the effect sizes of the independent variables in the path model, quantifying the impact of eliminating each variable on the R² value of the dependent variable (Hair et al., 2019). According to Cohen (1988), “effect sizes are classified as small (>0.02), medium (>0.15) or large (>0.35)”. The results demonstrate that employee engagement has a large effect on cooperative performance, while perceived organizational diversity has a medium effect on employee engagement and a small effect on cooperative performance. At last, the present study used the “standardized root-mean-square residual” (SRMR) as a measure to evaluate the adequacy of the model. A fit with a value below 0.10 and 0.08 (Hu & Bentler, 1999) is deemed to be a good fit. The current study’s SRMR value is 0.097.

The increasing need to attain a competitive advantage has compelled organizations to recognize the significance of workforce heterogeneity. Therefore, this study investigated the impact of perceived organizational diversity on employee engagement and performance of multistate cooperative societies situated in Delhi-NCR, India. The analysis exhibited that POD has a positive relationship with employee engagement and cooperative performance. This indicates that employees who had a favorable attitude toward the organization’s efforts to foster diversity exhibited higher levels of engagement at work, resulting in improved performance of multistate cooperative societies.

Existing literature indicates that employees’ perceptions of diversity and its management significantly impact organizational performance. Therefore, multiple research studies have demonstrated that employee perceptions of diversity management can have a positive or negative impact on organizational performance (Lauring & Selmer, 2011; Reynolds et al., 2014; De Meuse & Hostager, 2001; Soni, 2000). Kundu and Mor (2016) asserted that employees’ commitment can be enhanced with the implementation of effective diversity management strategies, which subsequently enhances organizational performance. When employees perceive organizational support for diversity, their views on firm performance also tend to improve (Abu Bakir, 2017; Brewer, 2005). Employees with higher skill levels tend to be more open and receptive to diversity in the workplace compared to those with lower levels of skills (Schaafsma, 2008).

Patrick and Kumar (2012) also discovered that personnel in the Indian information technology (IT) sector exhibited a favorable attitude toward diversity. Although the majority of employees were pragmatic and receptive to diversity, a smaller yet significant group was enthusiastic about its advantages, acknowledging that it introduces distinct perspectives and strengths to the workplace. Similarly, Kossek and Zonia (1993) and Kundu (2003) have also affirmed the necessity of employing and maintaining individuals from varied categories and genders to maintain organizational excellence. The results were similar to prior research on these factors, indicating that POD exhibited a positive relationship with performance and employee engagement (Allen et al., 2007; Choi & Rainey, 2010; Gonzalez & DeNisi, 2009; McKay, Avery, Liao, & Morris, 2011). Along with that, multiple studies reaffirm the significance of how diversity is perceived in the workplace (Mor Barak et al., 1998; Cox, 1993; Kaplan, Wiley, & Maertz, 2011; Hicks-Clarke & Iles, 2000).

According to Allen et al. (2007), perceptions of diversity among senior and lower management levels emerged as the strongest predictors of organizational performance. The study found a positive correlation between perceived diversity across all three management levels (senior, middle and lower) and perceived organizational performance. On the contrary, Kundu, Mor, Kumar, & Bansal (2020) stated that employee perspectives on diversity across different managerial hierarchies, including senior, middle and lower management levels, have distinct relationships with perceived organizational performance, ranging from weak to significantly positive and negative. Perception toward diversity within different management levels varies significantly across different types of organizations, influenced by factors such as ownership and organizational nature. The disparity in research findings may stem from variations in cultural contexts and sample demographics. According to Davis, Frolova, and Callahan (2016), workforce diversity is seen differently globally as it has culture-specific implications. Furthermore, Shemla, Meyer, Greer, and Jehn (2016) also indicated that the predominant research on perceived organizational diversity exhibits conflicting results, largely due to differences in study timing and context. Consequently, the results regarding perceptions of diversity cannot be generalized across various sectors, cultures and time frames.

The path model analysis reported that employee engagement had the most substantial influence on cooperative performance, indicating that it played a crucial role in enhancing the performance of multistate cooperative societies. Furthermore, employee engagement was also identified as a significant partial mediator in the relationship between POD and CSP, confirming its efficacy as a mediator within the path model.

The Q² values obtained for cooperative performance (Q² = 0.224) and employee engagement (Q² = 0.129) are relatively low, indicating modest predictive relevance of the model. However, it is important to note that Q² primarily assesses out-of-sample prediction and does not undermine the theoretical contribution of the model. In behavioral and social science research, such values are not uncommon (Ndzendze, Aigbavboa, & Thwala, 2024), as the constructs under investigation are often influenced by multiple contextual and unobserved factors. Moreover, all path coefficients in the structural model were found to be statistically significant and consistent with the theoretical framework, underscoring the robustness of the proposed relationships. The effect sizes also reveal interesting insights into the relationships between these variables. Employee engagement has a large effect on cooperative performance (f² = 0.569), underscoring its critical role in driving cooperative performance. In contrast, perceived organizational diversity has a medium effect on employee engagement (f² = 0.165), suggesting that POD moderately influences employee engagement. However, the small effect of perceived organizational diversity on cooperative performance (f² = 0.128) indicates a more nuanced relationship, potentially influenced by other factors. This is one of the preliminary studies that have analyzed these variables in the cooperative sector, which significantly contributes to India’s socioeconomic growth. In addition, POD and employee engagement accounted for 51.2% of the variance in cooperative performance. The outcomes of the path model analysis offer a comprehensive elucidation of employees’ perspectives on workforce diversity and its impact on the performance of cooperative societies.

This study contributes significantly to the theoretical landscape of organizational diversity research. Firstly, it pioneers the exploration of perceived organizational diversity in the cooperative sector, diverging from the predominant focus on the IT and public sector in Indian studies (Kundu & Mor, 2017; Jauhari & Singh, 2013; Kundu et al., 2019). Secondly, it underscores the importance of examining diversity from the employees’ perspective, emphasizing its effects are perception-driven. This perspective diverges from previous studies, which primarily investigated this relationship from the manager’s perspective (Allen et al., 2007; Garib, 2013; Nachmias, Mitsakis, Aravopoulou, Rees, & Kouki, 2022; Reynolds et al., 2014; Rodgers, Hoon, & McAllister, 2019). The study further enriches the literature by employing a comprehensive set of cooperative performance indicators. Unlike previous studies, this research utilizes nine indicators of performance, yielding a more detailed insight (Kundu & Mor, 2017; Marimuthu & Kolandaisamy, 2009; Ali, Kulik, & Metz, 2011; Som, 2008). Finally, this study addresses the knowledge gap in the Indian and Asian countries, although many studies have explored organizational diversity in the developed countries (Carmen Diaz-Fernandez et al., 2014; Allen et al., 2007; Olsen, Parsons, Martins, & Ivanaj, 2016; Lückerath-Rovers, 2013).

This study provides crucial insights for senior management, legislators and directors of multistate cooperative societies (MSCS). It suggests that top management should invest in diversity-related initiatives to foster positive attitudes and behaviors among employees, leading to improved performance of cooperative societies. MSCS should focus on developing diversity-focused HR practices and diversity management. This study suggests that MSCS should explicitly communicate the purpose of their diversity initiatives, promoting a culture of fairness and equity and minimizing the risk of negative perceptions among employees. The study also recommends that MSCS should continue to convey diversity-related objectives to employees by adopting and publicizing a formal diversity, equity and inclusion (DEI) statement to ensure positive receptivity. MSCS must reevaluate its recruitment strategies and form a dedicated committee or appoint an officer for DEI initiatives.

In today’s globally competitive landscape, organizations are adapting to changing business environments due to globalization, demographic shifts, increased competition and evolving customer expectations by adopting new HR initiatives such as workforce diversity (Chand & Tung, 2014). The success of modern businesses largely depends on their ability to manage a diverse workforce, which can initially present challenges like increased responsibility, conflicts and reduced job satisfaction, but can foster innovation and creativity when it is managed properly (Cletus, Mahmood, Umar, & Ibrahim, 2018). While there is substantial research on workforce diversity across the public and private sectors in India and developed nations, a significant gap exists in understanding how perceived organizational diversity impacts the performance of the cooperative sector, particularly within multistate cooperative societies. Therefore, this study aims to explore how perceived organizational diversity impacts cooperative performance and also examine the extent to which employee engagement facilitates this relationship. By utilizing primary data obtained through a structured questionnaire and analyzed through structural equation modeling, the study reveals that perceived organizational diversity is positively associated with employee engagement and cooperative performance.

The empirical results show that employees’ perceptions of organizational efforts toward diversity can have a substantial effect on cooperatives. Based on these findings, it is suggested that cooperatives should prioritize not only diversity-related initiatives but also ensure that employees hold positive perceptions of DEI practices. The way employees perceive an organization’s commitment to workforce diversity is essential in shaping their attitudes and ultimately influencing cooperative performance. Moreover, these initiatives are taken seriously by employees, who anticipate that this should be visible within cooperatives. Organizations must effectively communicate their DEI objectives to employees to foster positive receptivity toward diversity and diversity management (Soni, 2000). In addition, this study also indicates that employees are committed to collaborating with diverse individuals and trust top management for fair treatment. However, more efforts are needed from directors or managers of cooperatives to manage diversity, such as establishing DEI committees and officers, training on discrimination, increasing minority and women’s representation on the board of directors and ensuring equal decision-making opportunities for employees. In summary, this study significantly contributes to existing studies by providing practical implications for multistate cooperatives, enhancing the understanding of employee perceptions toward organizational diversity and its impact on cooperatives’ performance and employee engagement. Moreover, this research also provides the groundwork for future studies that can investigate this concept or model in other regions or types of cooperatives, such as unregistered cooperative societies, Primary Agricultural Cooperative Societies and other industrial sectors. Such investigations may reveal new insights, enhance the generalizability of the results and guide policy and practice within the cooperative sector in India, ultimately contributing to its development.

The research restricts its geographical scope to the Delhi-NCR region and limits its analysis to the multistate cooperative societies. As a result, the findings exhibit limited generalizability to other regions and types of cooperative societies. Due to India’s diverse cultural and economic landscapes, employee perceptions may vary significantly across different contexts. Therefore, future research may explore these differences and provide valuable insights that could further enrich the understanding of this concept. This research only utilizes employee engagement as a mediating variable, creating opportunities for future studies to incorporate other variables, such as inclusion, organizational commitment and turnover as mediators. Furthermore, the cooperatives’ performance was assessed on the subjective judgments of respondents, rather than on factual financial and production data. Consequently, future research should investigate the use of more impartial indicators and objective measurements to evaluate any discrepancies between perception and reality. Finally, data gathering could be improved by performing semi-structured interviews with employees of multistate cooperatives to gain a comprehensive grasp of the concept.

This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors.