Diversity at organizational levels: the effect of executive board of directors and corporate officers diversity on performance

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2001-01-01
Authors
Erhardt, Niclas
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Abstract

The research of diversity effects on performance shows the need to go beyond individual or group level of analysis and to include the organizational levels of analysis. In light of current evidence that shows a positive effect of diversity on innovation and creativity performance at group levels, this study hypothesized that other performance measures may also be positively correlated at organizational levels. This relationship was examined by using 1993 and 1998 financial data and diversity representation (average between 1997 and 1998) from 127 large US companies. Two performance measures (return on asset and investment) were correlated with executive board of director and corporate officer diversity (race and gender). This statistical analysis indicated that executive board of director and corporate officer diversity are positively correlated with organizational performance. The discussion addressed: first, the advantage of organizational level of analysis over the individuals and groups approach; and second, the implications for human resources management and a need to develop a theoretical framework for diversity's effect on performance.

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Industrial relations
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