Social identity theory and self-categorization theory have usually been interpreted to suggest that demographic dissimilarity will negatively influence employee outcomes. However, inconsistent with this interpretation, positive and neutral relationships between demographic dissimilarity and employee outcomes have also been documented in some instances for women and minority employees. It is argued here that the influence of demographic dissimilarity on the attitudes of women and minority employees is moderated by their level of dogmatism, which influences whether they view sex- and race-based status hierarchies in organizations as legitimate. Data from a survey shows that the influence of demographic dissimilarity on the organization-based self-esteem of employees, their level of trust in their peers and their attraction towards their peers is positive for individuals with higher level of dogmatism and negative for individuals with lower level of dogmatism. Copyright © 2003 John Wiley & Sons, Ltd.