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Do Pro‐Diversity Policies Improve Corporate Innovation?
Author(s) -
Mayer Roger C.,
Warr Richard S.,
Zhao Jing
Publication year - 2018
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12205
Subject(s) - diversity (politics) , corporate governance , business , value (mathematics) , workforce , human capital , enterprise value , product innovation , cash flow , product (mathematics) , industrial organization , economics , accounting , finance , market economy , economic growth , geometry , mathematics , machine learning , sociology , anthropology , computer science
Using new product announcements, patents, and patent citations as measures of corporate innovation, we find that corporate policies that promote more pro‐diversity cultures, specifically treatment of women and minorities, enhance future innovative efficiency. This positive effect is stronger during economic downturns and in firms that are more innovative, value intangibles and human capital more highly, have greater growth options, have higher cash flow, and have stronger governance. Pro‐diversity policies also increase firm value via this stimulating effect on innovative efficiency. Our results suggest a channel through which workforce diversity may enhance firm value.