Linking Workforce Diversity to Team Performance: A Mediated–Moderation Model of Knowledge Sharing and Inclusive Leadership

In contemporary organizations, workforce diversity has become both a strategic asset and a managerial challenge. While prior research has established mixed findings regarding the diversity–performance relationship, limited empirical evidence exists within team and developing country contexts, particularly in the manufacturing sector. Drawing on Social Identity Theory, this study the study conceptualizes and examines the relationship between workforce diversity and team performance, incorporating knowledge sharing as a mediating mechanism and inclusive leadership as a moderating condition. A quantitative, cross-sectional research design was employed using survey data collected from employees in a Sri Lankan manufacturing firms with analysis done in moderated- mediation in Process. The findings reveal that workforce diversity has a significant positive impact on team performance. However, the relationship is partially explained through knowledge sharing, suggesting that diverse teams perform better when knowledge exchange is facilitated. Furthermore, inclusive leadership strengthens this relationship by fostering an environment of trust, openness, and collaboration. Among diversity dimensions, gender diversity showed a significant positive effect, while age and educational diversity were not statistically significant predictors. The study contributes to the literature by integrating mediating and moderating mechanisms into the diversity–performance link within an under-researched context. Practical implications highlight the importance of leadership and knowledge management practices in leveraging diversity for enhanced team effectiveness.