The evidence regarding diversity's effect on firm performance

Abstract Regulators, legislatures, and advocacy groups assert that diversity improves decision‐making in groups when pushing firms to change the way they select managers, officers, and directors. Likewise, consulting firms trumpet diversity as a path to better organizational outcomes, citing impressive‐sounding performance differentials between diverse and non‐diverse entities. A review of the empirical literature provides a much more uncertain assessment of the evidence for the “business case” for diversity. This literature is dominated by research designs that do little to isolate causal relationships. This review examines many of the most highly cited articles used to support the proposition that diversity improves decision‐making and performance within groups or firms, focusing on the credibility of the research designs employed.