Context matters: Diversity's short‐ and long‐term effects in fortune's “best companies to work for”

• DOI: http://doi.org/10.1002/smj.2576
• Author: Joseph C. Ofori‐Dankwa,Scott D. Julian
• Published date: 01 July 2017
• Date: 01 July 2017

Strategic Management Journal

Strat. Mgmt. J.,38: 1557–1565 (2017)

Published online EarlyView 28 October 2016 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2576

Received 1 January 2016;Final revisionreceived 27 July 2016

CONTEXT MATTERS: DIVERSITY’S SHORT- AND

LONG-TERM EFFECTS IN FORTUNE’S “BEST

COMPANIES TO WORK FOR”

SCOTT D. JULIAN1,*and JOSEPH C. OFORI-DANKWA2

1Mike Ilitch School of Business, Wayne State University, Detroit, Michigan, U.S.A.

2College of Business and Management, Saginaw Valley State University, University

Center, Saginaw, Michigan, U.S.A.

Research summary:Previous research has examined the racial diversity-productivity relation-

ship in corporations with an evident high commitment to minority programs, Fortune’s “Best

Companies for Minorities.” Toassess generalizability, we replicate this research using a different

context of high organizational-employee value congruence, Fortune’s “Best Companies to Work

For.” We are not able to nd evidence for the curvilinear relationships previously found, but do

uncover a linear negative relationship between racial diversityand short-run performance.

Managerial summary:Using Fortune’s “Best Companies for Minorities,” previous research

found that racial diversity affected both rm productivity and Tobin’s q. To see if we could nd

these results in a different group of rms, we replicate this research using a sample drawn from

Fortune’s “Best Companies to Work For.” The former sample is distinguished by high commit-

ment to minority programs,while the one used here stresses high congruence of values between the

organization and all its employees. Weare unable to replicate the relationships previously found,

however, but do nd that increasing racial diversity had a negative effect on rm productivity.

Copyright © 2016 John Wiley & Sons, Ltd.

INTRODUCTION

Demographic diversity has been of frequent

interest to strategic management, chiey through

concerns regarding top management team diversity

(Carpenter, 2002; Knight et al., 1999; Simons,

Pelled, and Smith, 1999). Interest has extended

beyond top management to the effects of visible,

rm-wide diversity (e.g., racial composition of the

work force) on organizational performance (e.g.,

Cunningham, 2009; Richard, 2000). One research

thrust has focused on how different organizational

factors inuence the diversity-performance link,

Keywords: racial diversity; rm performance; “Best Com-

panies to Work For”; value congruence; diversimilarity

*Correspondence to: Scott D. Julian, Wayne State Univer-

sity, 310 Prentis Building, Detroit, MI 48202, U.S.A. E-mail:

sdjulian89@gmail.com

Copyright © 2016 John Wiley & Sons, Ltd.

such as the level of rm innovativeness and

risk-taking (Richard et al., 2003, 2004), the type

of organizational structuring (managerial span of

control) (Richard, Ford, and Ismail, 2006), growth

versus downsizing strategies (Dwyer, Richard, and

Chadwick, 2003; Richard, 2000), and organiza-

tional culture (Dwyer et al., 2003; Richard, Kirby,

and Chadwick, 2013).

Richard, Murthi, and Ismail (2007) (henceforth,

RMI) is important in relation to this inquiry as it

examined the effects of racial diversity on rm per-

formance in the context of a high corporate diver-

sity focus, one involving commitment to programs

and policies directed toward minorities. Interest-

ingly, while urging researchers to take into account

different contexts, RMI did not fully consider the

potential ramications of their unique sample, For -

tune’s “Best Companies for Minorities,” either in