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Does Diversity Pay?: Racial Composition of Firms and the Business Case for Diversity

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Abstract:

Does Diversity Pay?:
Racial Composition of Firms and the Business Case for Diversity

The "business case for diversity" perspective argues that a diverse workforce, relative to a homogeneous one, produces better business results such as greater corporate profits and earnings. In contrast, skeptics suggest that, in addition to dividing the nation, the emphasis on diversity introduces conflict and other problems that detract from an organization's ability to be effective and profitable. Using data from a national sample of for-profit business organizations (the 1996-1997 National Organizations Survey), this paper tests four hypotheses that are consistent with the business case for diversity thesis. The analysis provides support for all four hypotheses: racial diversity is associated with increased sales revenue, more customers, greater market share, and greater relative profits. Although factor analysis suggests that business performance and business volume are distinct, for both of these dimensions, there is a positive relationship between the racial diversity of firms and their business functioning. The implications of these findings are discussed briefly.

Most Common Document Word Stems:

divers (255), racial (139), organ (102), busi (99), group (73), level (71), perform (57), profit (34), 1 (33), variabl (32), model (32), firm (31), high (30), differ (30), relat (28), effect (28), workforc (28), factor (28), custom (27), p (27), sale (26),

Author's Keywords:

workplace diversity, diversity, race, tokenism, discrimination, profit, business, racial diversity
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Name: American Sociological Association
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MLA Citation:

Herring, Cedric. "Does Diversity Pay?: Racial Composition of Firms and the Business Case for Diversity" Paper presented at the annual meeting of the American Sociological Association, Montreal Convention Center, Montreal, Quebec, Canada, Aug 11, 2006 <Not Available>. 2009-05-24 <http://www.allacademic.com/meta/p101792_index.html>

APA Citation:

Herring, C. , 2006-08-11 "Does Diversity Pay?: Racial Composition of Firms and the Business Case for Diversity" Paper presented at the annual meeting of the American Sociological Association, Montreal Convention Center, Montreal, Quebec, Canada Online <APPLICATION/PDF>. 2009-05-24 from http://www.allacademic.com/meta/p101792_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Does Diversity Pay?:
Racial Composition of Firms and the Business Case for Diversity

The "business case for diversity" perspective argues that a diverse workforce, relative to a homogeneous one, produces better business results such as greater corporate profits and earnings. In contrast, skeptics suggest that, in addition to dividing the nation, the emphasis on diversity introduces conflict and other problems that detract from an organization's ability to be effective and profitable. Using data from a national sample of for-profit business organizations (the 1996-1997 National Organizations Survey), this paper tests four hypotheses that are consistent with the business case for diversity thesis. The analysis provides support for all four hypotheses: racial diversity is associated with increased sales revenue, more customers, greater market share, and greater relative profits. Although factor analysis suggests that business performance and business volume are distinct, for both of these dimensions, there is a positive relationship between the racial diversity of firms and their business functioning. The implications of these findings are discussed briefly.

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Document Type: application/pdf
Page count: 34
Word count: 8275
Text sample:
Does Diversity Pay?: Racial Composition of Firms and the Business Case for Diversity Cedric Herring Department of Sociology University of Illinois at Chicago and Institute of Government and Public Affairs University of Illinois December 2005 I would like to thank Tyrone Forman Sharon Collins Moshe Semyonov and John Sibley Butler for their helpful comments and suggestions. Abstract for Does Diversity Pay?: Racial Composition of Firms and the Business Case for Diversity The Abusiness case for diversity@ perspective argues that
32 Wood Peter. 2003. “Diversity in America.” Society 40: 60-67. Wright Peter Stephen P. Ferris Janine S. Hiller and Mark Kroll. 1995. “Competitiveness Through Management of Diversity: Effects on Stock Price Valuation.” Academy of Management Journal 38:272-287. Zenger Todd R. and Barbara S. Lawrence. 1989. “Organizational Demography: The Differential Effects of Age and Tenure Distributions on Technical Communication.” Academy of Management ]ournal 32:353-376. Zuberi Tukufu. 2001. “The Population Dynamics of the Changing Color Line in the USA ” In


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