Does diversity improve profits and shareholder returns? Evidence from top rated companies for diversity by DiversityInc (original) (raw)

The business case for commitment to diversity

Business Horizons, 2008

Does an organization's commitment to diversity -as reflected by CEO commitment, human capital, corporate communications (internal and external), and supplier diversity -result in competitive advantage and superior financial performance? Diversity can bring new voices and perspectives into the strategy dialogue, help managers understand and address the needs of a demographically diverse customer base, and stimulate a wider range of creative decision alternatives. However, the anticipated benefits of corporate diversity efforts may also be accompanied by costs that can affect shareholder wealth. In a study comparing the financial performance of the DiversityInc Top 50 Companies for Diversity to a matched sample, we find evidence that firms with a strong commitment to diversity outperform their peers on average. For commitment to diversity to become ingrained in corporate culture there must be visible and ongoing support from senior management, a clear articulation of the business case for diversity, line manager accountability, and training programs directed at communications, conflict resolution, and team building.

The effects of diversity on business performance: Report of the diversity research network

Human Resource Management, 2003

Since 1996 a group of industry chief executives and human resource professionals have been working together under the auspices of a non-profit organization called the Building Opportunities for Leadership Development (BOLD) Initiative to help American corporations learn how to leverage their cultural diversity for competitive advantage.

THE EFFECTS OF DIVERSITY ON BUSINESS PERFORMANOE: REPORT OF THE DIVERSITY RESEARCH NETWORK

This article summarizes the results and conclusions reached in studies of the relationshi-ps hetween race and gender diversity and husiness performance carried out in four large firms hy a research consortium known as the Diversity Research Network. These researchers were asked hy the BOLD Initiative to conduct this research to test arguments regarding the "husiness case" for diversity. Few positive or negative direct effects of diversity' on performance were ohserved. Instead a numher of different aspects of the organizational context and some group processes moderated diversity-performance relationships. This suggests a more nuanced view of the "husiness case" for diversity may he appropriate.

Does Diversity Pay?: Race, Gender, and the Business Case for Diversity

American Sociological Review, 2009

The value-in-diversity perspective argues that a diverse workforce, relative to a homogeneous one, is generally beneficial for business, including but not limited to corporate profits and earnings. This is in contrast to other accounts that view diversity as either nonconsequential to business success or actually detrimental by creating conflict, undermining cohesion, and thus decreasing productivity. Using data from the 1996 to 1997 National Organizations Survey, a national sample of for-profit business organizations, this article tests eight hypotheses derived from the value-in-diversity thesis. The results support seven of these hypotheses: racial diversity is associated with increased sales revenue, more customers, greater market share, and greater relative profits. Gender diversity is associated with increased sales revenue, more customers, and greater relative profits. I discuss the implications of these findings relative to alternative views of diversity in the workplace.