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Harvard Research Reveals that Gender Diversity Makes Firms More Productive

Gender parity in business has been a hot topic for years. Some researchers have argued that it leads to more innovative thinking while others claim it can harm performance. But what’s the truth?

The problem is that, in the past, most research studies have limited their looks at gender diversity to a specific industry or region. But when you take a wider view, the results are clear. Gender diversity in the workplace is a good thing according to Harvard Business School researchers.

According to a research study by Professor Zhang, which looked at 1,069 firms across 35 countries and 24 industries, gender diversity relates to more productive companies as measured by market value and revenue. The key is that gender diversity has to be viewed as “normatively” accepted to get these results. In other words, gender diversity has to be considered important.

In countries and industries where gender diversity isn’t looked upon highly, the results are vastly different. For example, in telecommunication companies in Western Europe, gender diversity resulted in a 7 percent increase in market value. However, in the Middle East, that was not the case.

There were also differences when culture was considered. For example, though Japan offers some of the most generous parental and homecare leave policies in the world, it also has a very patriarchal work culture. This meant that gender diversity in Japan was not as beneficial as it was in places like Western Europe.

As for why this is the case, there are three main reasons that the image of gender diversity is so important to the value it brings.

  1. A diverse workforce is attractive. In regions and industries where gender diversity is considered important, workers are attracted to companies that make it a priority. This means that get more top candidates. The reverse is true for areas that are not pro-diversity.
  2. When you value diversity, you encourage diverse ideas. In areas of pro-diversity, people feel more comfortable contributing their unique ideas. This results in more innovative ideas and greater creativity. When countries don’t value women, they’re less likely to share, and everyone loses.
  3. Gender diversity signals a well-run firm. An investor in an area where gender diversity is accepted is more likely to value diverse companies highly. But those that do not value diversity won’t associate the same strong value.

Read the full report on the Harvard Business Review.

Posted in: Feature Small, MBA News, News

Schools: Harvard Business School

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