This study aimed to advance faultline theory, which explains group-level workforce diversity, by examining the effects of faultlines themselves as well as the influence of power imbalance between subgroups on group performance, directly measuring the degree of power imbalance held by each subgroup delineated by faultlines. In addition, the study sought to elucidate the complex mechanisms through which faultlines affect group performance by testing how bridging ties between subgroups and group-level LMX (Leader-Member Exchange) differentiation moderate the effects of faultlines and power imbalance. To this end, team network data were collected from 259 members working in 42 teams across domestic manufacturing firms and public enterprises, and the study hypotheses were tested. Contrary to expectations, the strength of faultlines per se did not have a significant effect on group performance; rather, power imbalance between subgroups was found to have a negative impact on performance. Furthermore, bridging ties between subgroups demonstrated both an independent positive effect on group performance and a moderating effect that mitigated the negative impact of power imbalance. Meanwhile, LMX differentiation showed a tendency to amplify the negative effects of faultlines and power imbalance, but this effect was not statistically significant. This study holds theoretical significance in that it examined the actual attributes of subgroups through the lens of power—a key factor in diversity research—and comprehensively investigated social networks within groups. Based on the findings, implications for team design and diversity management within teams were discussed.