Analysing the Effect of Deep-Level Diversity Dimensions on Employees’ Performance Among SMEs in Southwest Nigeria

This study analyses the effect of deep-level diversity dimensions – values, beliefs, and personality traits – on employee performance among Small and Medium-Sized Enterprises (SMEs) in Southwest Nigeria. Drawing on Byrne's Similarity-Attraction Theory, the research explores how underlying psychological and attitudinal differences among employees shape workplace interaction, cohesion, and performance. A quantitative, cross-sectional research design was employed, with data collected from 1,983 valid respondents drawn from a sample of 2,296 selected across six states in Southwest Nigeria using the Krejcie and Morgan sample size formula. Descriptive and inferential analyses, including Partial Least Squares Structural Equation Modelling (PLS-SEM) via SmartPLS 4.1, revealed that deep-level diversity has a positive but statistically non-significant effect on employee performance (β = 0.027, t = 0.969, p = 0.332), with a negligible effect size (f² = 0.001). The findings imply that underlying, non-observable attributes such as values, beliefs, and personality traits do not, on their own, translate into measurable gains or losses in employee performance, suggesting that their influence may operate indirectly through intervening mechanisms rather than through a direct performance pathway. The study concludes that deep-level diversity should be understood as a latent organisational resource rather than an automatic driver of performance, and recommends that SME owners and managers pair deep-level diversity management with complementary HR interventions, such as inclusive leadership and structured feedback, to activate its potential benefits.

Management

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