CSR: Gender Diversity can be Productive in Business

Gender Diversity in the business world makes a company more productive, as measured by market value and revenue, according to research conducted by Harvard Business Review. In a study of 1069 leading firms across 35 countries and 24 industries, it was found that countries and industries that view gender diversity as important, capture benefits from it. However, those that don’t, do not benefit either.

For example, the percentage of women in telecommunication companies in Western Europe, historically a relatively gender-inclusive context, was significantly tied to a company’s market value. However, in the energy sector in the Middle East, which has historically not been gender-inclusive, firms’ gender diversity was unrelated to company performance.

The study also showed that the positive effects of diversity were seen in societies with normative acceptance of working women. But it was not seen in societies with only regulatory support. Certain countries have strong cultural support, but less legal structures in place. Others have established legal structures but cultures are strongly patriarchal in nature. Japan, for example, has some of the most generous parental and homecare leave policies globally but also suffers from male dominant work culture. This is why it doesn’t benefit much from diversity like the Western European countries.

The international comparisons have revealed the striking importance of a country’s diversity norms, such as gender role attitudes. The data has suggested that for diversity to work, workers have to buy into the value of diversity, not just hear some rules about it. Diversity creates positive benefits when people believe in its intrinsic value. They can’t just see gender inclusion as an obligation.

There are three main reasons why opinions about the value of diversity matter so much to the actual value it brings.

A diverse workforce signifies an attractive work environment.

In numerous studies, research has shown that employees in pro-diversity regions, like the U.S. and Western Europe, prefer diverse work environments. In a survey of 1,000 respondents, the job site Glassdoor found that 67% of job seekers overall look at workforce diversity when evaluating an offer. Another survey found that 61% of women look at the gender diversity of the employer’s leadership team when deciding where to work.

A perception that valuing diversity means valuing diverse exchange of ideas

Research by Hewlett, Marshall, and Sherbin has shown that leaders with diverse backgrounds and experience helped companies innovate more. Diverse leaders were more likely to create an environment where new, creative ideas were considered. And diverse teams were more likely to have some common experiences with their end user.

A diverse workforce signifies competent management for investors.

Gender diversity can also signal to investors that a firm is well-run. Sociological research on market valuation suggests that investors value when firms use commonly-accepted “best practices,” such as the inclusion of diverse groups in hiring.