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

TLDR

The value‑in‑diversity perspective holds that a diverse workforce generally benefits business, whereas other views see it as neutral or harmful. The article tests eight hypotheses from the value‑in‑diversity thesis using 1996‑1997 National Organizations Survey data and discusses the implications of the findings relative to alternative views. The study analyzes a national sample of for‑profit business organizations from the 1996‑1997 National Organizations Survey to test eight hypotheses about diversity’s business impact. Results show that racial diversity is linked to higher sales revenue, more customers, larger market share, and higher relative profits, while gender diversity is linked to higher sales revenue, more customers, and higher relative profits.

Abstract

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.