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Study: Gender Diversity Improves Market Value and Revenue, But Certain Conditions Are Needed

By:
Chris Gaetano
Published Date:
Feb 11, 2019
A recent study looking at over 1,000 firms across 35 countries and 24 industries has found that companies that are more gender diverse can have higher market value and revenues, but only in places with widespread beliefs that gender diversity is important, according to the Harvard Business Review. For example, in telecommunications firms in Western Europe, where gender diversity tends to be expressed as a shared cultural value, there is a strong relationship between gender diversity and market value. On the other hand, the energy sector in the Middle East, which is not historically known for its commitment to women's rights, gender diversity makes no real difference on firm performance. This was found to be the case even if there are laws and policies that might nominally indicate such a shared cultural commitment. This was the case in Japan, where the study found that, like in the Middle East, there was no relationship between firm performance and gender diversity, with the authors noting that the country's business culture is more patriarchal than that of, say, western Europe. This is because, according to the study, gender diversity there only has "regulatory support" versus "normative acceptance" of women in the workplace. 

This calls to mind another recent study that noted that while the number of diversity programs has grown over the years, these initiatives have done little to produce tangible results. One of the study's conclusions is that these programs will do little if they're not a priority for leaders. Without the right tone at the top, diversity programs could potentially feel like lip service. This could be a ground-level reflection of the macro observations made in the previous study: Companies can benefit from gender diversity if it is genuinely committed to the goal, versus doing so for PR reasons. 

The Harvard study's results could also explain inconsistencies that an Ernst & Young-supported study outlined; this study noted that there is great variation in the academic literature as to whether firm performance and gender diversity are linked. Some studies have found a strongly positive relationship while others have found either none at all, or even a negative one. However, the study did note that there is a positive correlation between gender-diverse firm performance within a country and that country's place on the World Economic Forum’s Global Gender Gap Index.