How and Where Diversity Drives Financial Performance; Harvard Business Review, January 30, 2018

Rocio Lorenzo and 

Martin Reeves,

Harvard Business Review; How and Where Diversity Drives Financial Performance

"Diversity is both an issue of fairness and, some say, a driver of innovation and performance. To assess the latter claim, we undertook a large, cross-country study into the relationship between multiple aspects of managerial diversity, the presence of enabling conditions such as leadership support for diversity, and innovation outcomes.

We surveyed more than 1,700 companies across eight countries (the U.S., France, Germany, China, Brazil, India, Switzerland, and Austria) and a variety of industries and company sizes, examining diversity in management positions, measured with respect to gender, age, national origin, career path, industry background, and education...

When we looked at the enabling conditions for diversity, including fair employment practices (such as equal pay), participative leadership, top management support for diversity, and open communication practices, less than 40% of firms employed them. And not surprisingly, firms that had such practices in place had better diversity scores, and as a result better innovation performance. This strongly suggests that diversity represents a tangible missed opportunity and significant potential upside for most companies. In total, the presence of these enabling factors is worth up to 12.9% points of innovation revenue."