Diversity has long been discussed to impact on firm innovation (Arun and Joseph, 2021; Tshetshema and Chan, 2020; Xie et al., 2020; Zhan et al., 2015; Ostergaard et al., 2011). On the one hand, the value of diversity literature suggests that employee’s diverse knowledge is a key driver of competitive advantage at organizational level (Lungeanu and Contractor, 2015; Teece, 2009; Chandler, 2001; Grant, 1996). Employees with diverse knowledge, experience and skills benefit the firms by creating more innovation opportunities via triad-and-error or knowledge combination approaches (Quintana-Garca and Benavides-Velasco, 2008). They extend organizational routines and search activities (Dosi, 1988), and increasing absorptive capacity (Zahra and George, 2002) and organizational learning (van der Vegt and Janssen, 2003). The integration of different resources and knowledge embodied and embedded across the diversified employees within a firm generates new products (Grant, 1996). On the other hand, some empirical studies found that employee diversity result in conflict, division and disbanding of the innovation teams. It creates stereotyping, and in-group/out-of-group and cognitive biases (Williams and O’ Reilly, 1998). For example, gender diversity can create emotional conflicts, reducing team performance (Pelled et al., 1999), and the quality of new ideas may be reduced (Cave and Valentine, 1999). Thus, it is very difficult for firms to manage the employees with diverse cognitive and demographic backgrounds (Joshi and Roh, 2009; Harrison and Klein, 2007; Williams and O’s Reilly, 1998), and eventually get benefits of it (Roberge and Dick, 2010). Employee diversity “appears to be a double-edged sword, increasing the opportunity for creatively as well as the likelihood that group members will be dissatisfied and fail to identify with the group” (Milliken and Martins, 1996, p.403; Zhan et al., 2015; Gonzalez-Moreno et al., 2018).