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Is diversity actually linked to financial performance?

Rocio Lorenzo and Martin Reeves 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. They found that there was a statistically significant relationship between diversity and innovation outcomes in all countries examined.

Furthermore, the more dimensions of diversity represented, the stronger the relationship was, although the precise patterns of diversity and performance were different across cultures. They also found that diversity had gained momentum as a topic in more than 70% of the enterprises surveyed, especially in developing economies.

They also found that the most-diverse enterprises were also the most innovative, as measured by the freshness of their revenue mix. In fact, companies with above-average total diversity, measured as the average of six dimensions of diversity (migration, industry, career path, gender, education, age), had both 19% points higher innovation revenues and 9% points higher EBIT margins, on average. All six dimensions of diversity had statistically significant correlations with innovation, both individually and collectively, although industry, nation of origin, and gender had slightly larger effects.



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