Business Article on Firm Diversity and Performance

In: Business and Management

Submitted By LaurentB
Words 596
Pages 3
Organizational Theories and Behaviors
Summary of the article « Examining the link between diversity and firm performance: The effects of Diversity reputation and leader racial diversity», Cornell University

The 21st century is typified by more women and employees with diverse ethnic backgrounds, alternative lifestyles, and intergenerational differences than in the past. Moreover, many leaders have realized that the extent to which these demographic workforce changes are effectively and efficiently managed will impact organizational functioning and competitiveness. If some studies have been made on the effects of cultural diversity in management and strategic choices on firm performance, research is now needed to understand the effects of diversity reputation on firm performance and how leader racial diversity is related to organizational financial performance.

Conceptual Background and hypotheses

Diversity reputation and firm performance
The corporate reputation is defined as stakeholder’s perceptions about an organization’s ability to create value, the quality of a firm’s products and services, long-term investment value, and the ability to attract and retain talent. Related to diversity reputation, stakeholders may use media rankings as an overall evaluation of whether a firm is a diversity leader. As it has been shown that stock price valuations evaluated according to a “best company” announcement, the study hypotheses that the market price will evaluate after a “best diversity company” if there is a link between diversity reputation and financial performance.

Leadership diversity and firm performance
It also has been shown that there is a link between gender or racial diversity and organizational performance. Given that top managers are responsible for a firm’s strategic decisions, researchers…...

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