Cultural Diversity in Small Firms: Implications for Company Performance
Vol. Volume 5, Number 3 December/2000
Linda S. Hartenian, Donald E. Gudmundson
Proponents of diversity argue that culturally diverse work forces have economic advantages for organizations. Of particular interest for small firm survival is whether entrepreneurs will see the need to design the organization's work force with cultural diversity in mind. A review of the literature could find no empirical studies that examined work force diversity (i.e., percent of cultural minorities employed) and firm economic performance. Firms with more culturally diverse work forces were found to have a greater positive percent change in revenue, net income, and CEO income in selected years than firms with less culturally diverse work forces. Two statistically significant t-tests showed that firms with diverse work forces performed better than firms with nondiverse work forces. Additional t-test analyses showed no significant differences in financial performance between firms with minority owners and firms with nonminority owners. Interpretation of these findings suggests that small firm owners should focus on managing diverse work forces and measuring non-financial indicators of a firm's success.
Diversity, Company Performance, Work Force, Financial Outcomes