ABSTRACT. Studies on innovations attract many researchers all over the world due to their crucial role in today's highly competitive world. At the same time, cultural dimensions, cultural factors, and their impact on performance measures are also becoming a very popular topic for research. In our paper, we attempted to analyze the issues related to cultural diversity and its impact on innovation performance. We used survey data-collection method with support of trade unions in regions. Then, we used quantitative techniques such as correlation-regression analyses in order to find support for the proposed hypotheses. We found that cultural diversity has inverted U-curve relationship with innovation performance in the case of Azerbaijan also along with that we found that two components of cultural diversity, namely gender diversity and foreigners' diversity have the highest outcomes in terms of innovation performance when the diversity levels are moderate.