• Asia-Pacific Journal of Business
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• v.12 no.4
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• pp.193-209
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• 2021

Purpose - The purpose of this study is to specify the relationship between demographic cohesion and firm performance by examining the roles of HR practices, such as job rotation and flexible work arrangement. Design/methodology/approach - This study samples 1,093 firms in Korea and collects their data between 2007 and 2017 from Workplace Panel Survey, a database from Korea Labor Institute. The demographic cohesion is measured using the Herphindal-Hershman index and the firm performance is measured with net incomes. This study employs a fixed-effects model for the estimation of firm performance with respect to demographic cohesion, job rotation, and flexible work arrangement. Findings - There is a positive relationship between demographic cohesion and net incomes. And the relationship is positively moderated by job rotation. However, flexible work arrangement shows a mixed moderation. Research implications or Originality - Differentiated from the studies on demographic diversity, this study shows that demographic cohesion has a mixed impact on firm performance. While demographic cohesion can improve firm performance through trust building, in-group favoritism, and collective identity it entails internal conflicts. However the link between demographic cohesion and firm performance is moderated by job rotation and flexible work arrangement. While there is a positive moderation of job rotation, there is a negative moderation of flexible work arrangement.