Business Commons^™

Do Pro‐Diversity Policies Improve Corporate Innovation?, Roger C. Mayer, Richard S. Warr, Jing Zhao

Business Faculty Publications and Presentations

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.