The Effect of Perceived Firm Diversity, Equity and Inclusion ( <scp>DEI</scp> ) on Employee Wellbeing and Green Performance: A Moderated Mediated Model

ABSTRACT Diversity, equity, and inclusion (DEI) efforts have garnered increased attention as companies recognize their potential to enhance both employee well‐being and green performance. Based on affective event theory (AET) and social exchange theory (SET), this research examines the impact of perceived firm diversity, equity, and inclusion (DEI) on employee well‐being and green performance, with a focus on the moderating effect of leader emotional expression. This study specifically links DEI to environmental management by demonstrating how inclusive workplace cultures foster employee well‐being, which enhances organizational commitment to sustainable practices, such as reducing environmental impact and achieving firm green performance. 362 United States respondents were collected, and the analysis was conducted using SmartPLS. The results indicate that perceived firm DEI has a strong positive effect on employee well‐being and green performance, including environmental outcomes. DEI increases green performance by improving innovation and stakeholder engagement, aligning with sustainability targets. The outcomes indicate that the emotional expression of a positive leader enhances green performance by supporting a conducive environment that promotes employees to adopt sustainable practices, while negative expressions of a leader may limit this impact due to an increase in employee resilience. The present research has numerous theoretical and practical implications, providing an explanation of how companies can utilize inclusive practices to support staff well‐being and maximize performance, particularly in enhancing environmental sustainability, as well as identifying which leadership behaviors might enhance these advantages.