Using 68 work groups, including the group leader, this study explores
the relationships among demographic diversity, evaluations of group pe
rformance, and leaders' self-perceived efficacy. Results show an indir
ect effect on leaders' self efficacy, mediated by leaders' estimation
of group performance levels. Group heterogeneity is associated with mo
re negative group performance, with a resultant decline in the leaders
' self efficacy. In addition to this indirect effect, group heterogene
ity has a direct and independent effect on leaders' self efficacy. Bot
h effects are greater for self efficacy in charismatic domains than in
transactional aspects of leadership. Research and practical implicati
ons for diversity and leadership are discussed.