Social identity theory explains people’s tendency to identify themselves with certain groups or social categories. Social identity theory contradicts traditional views of group relations because, according to it, in-group favoritism tends to arise even in the absence of strong leadership or interdependence of group members, their interaction, and cohesion. The mere assignment of group membership to an individual is a sufficient condition for the emergence of in-group favoritism.
Favoritism may be independent of prior perceptions of interpersonal similarity or sympathy and occurs even in the absence of interaction within or between groups, in situations where group membership is anonymous, and where personal gain is independent of group actions. Even the apparently random assignment of people to groups can lead to discrimination against out-groups and increase intragroup cooperation and cohesion. One can assume the existence of a psychological group, which is understood as a gathering of people who share the same social identification or define themselves in terms of belonging to the same social category.
However, such an approach results in the notions of in-group and out-group dynamics, where an individual and in-group might feel a sense of superiority in regard to out-groups. This confrontational attitude can lead to a widening gap of misunderstanding between these groups, which leads to discrimination and stereotypes since there is no incentive to collaborate and understand each other. The given concept can help people to understand to roots of discrimination and stereotypes because they are mere results of in-group and out-group dynamics, where people are inclined to perceive their in-group as superior to the out-group.
Therefore, the implications for managers are manifested in the notion that an organization needs to avoid creating an environment where smaller groups are formed. Since most companies are built upon departments and different branches, it is inevitable that employees might begin to identify themselves with a certain group, which would result in discrimination and stereotyping issues. In order to avoid these problems, it is important to build a highly inclusive organizational culture and environment, where the notion of in-group is at least expanded to an entire organization. Managers need to promote inclusiveness and tolerance in a workplace, where any form of in-group and out-group dynamics are punished or not incentivized.