The business case for commitment to diversity

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.

[1]  J. Collins.  Turning goals into results: the power of catalytic mechanisms. , 2017, Harvard business review.

[2]  C. D. De Dreu,et al.  Minority dissent and team innovation: the importance of participation in decision making. , 2001, The Journal of applied psychology.

[3]  S. Snell,et al.  Human resources and the resource based view of the firm , 2001 .

[4]  Robert I. Sutton.  Weird Ideas That Work: 11 1/2 Practices for Promoting, Managing, and Sustaining Innovation , 2001 .

[5]  Catherine M. Dalton,et al.  Spotlight on corporate governance , 2005 .

[6]  Frans. Johansson.  Masters of the Multicultural , 2005 .

[7]  T. Cox.  Cultural diversity in organizations : theory, research, and practice , 1993 .

[8]  B. Menguc,et al.  Diversity at the executive suite: A resource-based approach to the customer orientation - Organizational performance relationship , 2006 .

[9]  O. Richard,et al.  CULTURAL DIVERSITY IN MANAGEMENT, FIRM PERFORMANCE, AND THE MODERATING ROLE OF ENTREPRENEURIAL ORIENTATION DIMENSIONS , 2004 .

[10]  G. Weber.  Making Differences Matter , 2007 .

[11]  J. Barney,et al.  Organizational Culture: Can It Be a Source of Sustained Competitive Advantage? , 1986 .

[12]  D B Yoffie,et al.  Judo strategy. The competitive dynamics of Internet time. , 1999, Harvard business review.

[13]  J. Barney.  Firm Resources and Sustained Competitive Advantage , 1991 .

[14]  P. McLeod,et al.  Ethnic Diversity and Creativity in Small Groups , 1996 .

[15]  Robert L. Dipboye,et al.  Leveraging diversity to improve business performance: Research findings and recommendations for organizations , 2004 .

[16]  Ken A. Smith,et al.  Making Use of Difference: Diversity, Debate, and Decision Comprehensiveness in Top Management Teams , 1999 .

[17]  David I. Levine,et al.  Do birds of a feather shop together? The effects on performance of employees' similarity with one another and with customers , 2004 .

[18]  J. Dutton,et al.  Advances in strategic management , 1994 .

[19]  Catherine M. Dalton,et al.  In defense of the individual: the CEO as board chairperson , 2005 .

[20]  Kevin E. Joyce.  Lessons for employers from Fortune's "100 best" , 2003 .

[21]  Catherine M. Dalton,et al.  On the decision to reprice stock options: almost never , 2005 .

[22]  Abagail McWilliams,et al.  Human resources and sustained competitive advantage: a resource-based perspective , 1994 .

[23]  Ronald K. Mitchell,et al.  Who Matters to Ceos? An Investigation of Stakeholder Attributes and Salience, Corpate Performance, and Ceo Values , 1999 .

[24]  G. Hamel.  Strategy Innovation and the Quest for Value , 1998 .

[25]  Hiroyuki Itami.  Mobilizing invisible assets , 1987 .