Diversity is not just a social issue, it is an economic one.

The problem with treating diversity as only a social-justice issue is that social issues rarely get solved without demonstrating how they indirectly affect all people, not just the disenfranchised.  All you must do is look at the history of social corporate responsibility (CSR) to see this effect (O’Toole & Vogel, 2011).  CSR was treated with mostly lip-service until two things were demonstrably clear in the marketplace: 1) consumer trends were changing to favor organizations demonstrating CSR principles; and, 2) CSR (or sustainable) practices made economic sense by reducing waste, improving operations, and elevating brand.  While the messaging is about being socially conscious, CSR business models can lead to competitive differentiation, which leading to profits. The only real academic argument against CSR is the implied altruistic nature of most CSR proponents; every corporation engaging in CSR generates either direct or indirect economic profit from those actions, meaning CSR is nothing more than “enlightened self-interest” (Smith, 2003).  As much as we should care about social issues, until they affect us directly, critical mass is not achieved towards solving them.

Diversity is no different.  We, as a collective species, should promote diversity (religious, nationality, sex, age, values, etc.) simply because it is ethical and just. However, because of the numerous permutations of bias, no single group of disenfranchised gains sufficient support to make true change solely on the basis of justice.   Unless we can demonstrate how biases affect everyone, progress will remain slow, or non-existent.  The best way to combat isses of diversity is through developing the enlightened self-interest of the greater society.

Fortunately, there is tremendous support that diversity is the key to economic profit and productivity benefiting everyone, including those who are not victims of bias.  It is no accident that our national headlines, business articles, and social commentary are inundated with stories about both diversity as well as innovation.  These two concepts are intimately conjoined. Without diversity of experience, thought, and perspective, innovation does not happen; without innovation, society will no longer grow and prosper, but decline.  This affects everyone.

Innovation is the only true competitive differentiator in today’s world economy (Drucker, 1992; Friedman, 2006; Salchow Jr., 2016; Teece, 1998, 2004). Whether the innovation is a means to increase organizational efficiency, develop new business models, or an innovative product, the days of competing solely on accumulated land, capital, equipment, or market dominance are long over.  Those who don’t innovate, fail in the long-run. This affects people, companies, communities, and countries not just certain individuals. The inability to adapt to the global economy has decimated entire regions in the U.S. from miners, to steal producers, to manufacturers.   The number of companies and individuals directly affected is miniscule to the number of companies, individuals, and communities that have collapsed indirectly from these failures.  Lack of innovation capability affects us all.

Yet, we know that diversity in perspective, knowledge, experience, and capabilities is a foundation of innovation (Gladis, 2017). We know that diversity drives innovation (Niebuhr, 2010; Parrotta, Pozzoli, & Pytlikova, 2014), and creates economic rents, productivity, and success (Beck & Walmsley, 2012; Crook, Todd, Combs, Woehr, & Ketchen, 2011; Kim & Ployhart, 2014). Without diversity, we cannot hope to innovate because innovation is all about seeing things from a different perspective, a different value structure, a different life experience, a different cognitive lens.  It is through exploring and evaluating these differences that we see new possibilities, new solutions, and new ways of moving forward as companies, communities, and societies.  Diversity forces us to challenge what we think we know, and that leads to innovation.

It is sad that at a time when collaboration and access to diverse perspectives is so easy, we have instead taken to divisiveness, to segregation. We seek the illusionary safety of the known and miss the forest for the trees that don’t look, act, talk, or believe like us.  However, if we fail to see how diversity is an asset, not a liability, we fail our society. We fail, not because we violate the social contract, but because we will bankrupt society.  We fail by succumbing to what we believe is, rather than seeing what could be.  Without innovation, driven by diversity, we become static and eventually decline (Second Law of Thermodynamics anyone?).

Diversity is an economic imperative, not just a social one. The best way to secure your own future, is to seek out and embrace diversity. It is in our own self-interest.


Beck, J. W., & Walmsley, P. T. (2012). Selection ratio and employee retention as antecedents of competitive advantage. Industrial and Organizational Psychology, 5(1), 92–95. http://doi.org/10.1111/j.1754-9434.2011.01410.x

Crook, T. R., Todd, S. Y., Combs, J. G., Woehr, D. J., & Ketchen, D. J. J. (2011). Does human capital matter? A meta-analysis of the relationship between human capital and firm performance. Journal of Applied Psychology, 96(3), 443–456. http://doi.org/10.1037/a0022147

Drucker, P. F. (1992). The post-capitalist world. Public Interest, 109(Fall 1992), 89–101. Retrieved from http://www.nationalaffairs.com/

Friedman, T. L. (2006). The world is flat: A brief history of the twenty-first century. New York, NY: Farrar, Straus and Giroux.

Gladis, S. (2017). The Formula for Achieving Innovation. TD: Talent Development, (February).

Kim, Y., & Ployhart, R. E. (2014). The effects of staffing and training on firm productivity and profit growth before, during, and after the Great Recession. The Journal of Applied Psychology, 99(3), 361–89. http://doi.org/10.1037/a0035408

Niebuhr, A. (2010). Migration and innovation: Does cultural diversity matter for regional R&D activity? Papers in Regional Science, 89(3), 563–585. http://doi.org/10.1111/j.1435-5957.2009.00271.x

O’Toole, J., & Vogel, D. (2011). Two and a half cheers for conscious capitalism. California Management Review, 53(3), 60–76. http://doi.org/10.1525/cmr.2011.53.3.60

Parrotta, P., Pozzoli, D., & Pytlikova, M. (2014). The nexus between labor diversity and firm’s innovation. Journal of Population Economics, 27(2), 303–364. http://doi.org/10.1007/s00148-013-0491-7

Smith, H. J. (2003). The shareholders vs. stakeholders debate. MIT Sloan Management Review, 44(4), 85–90. Retrieved from http://sloanreview.mit.edu/

Teece, D. J. (1998). Capturing value from knowledge assets: The new economy, markets for know-how, and intangible assets. California Management Review, 40(3), 55–79. http://doi.org/10.2307/41165943

Teece, D. J. (2004). Knowledge and competence as strategic assets. Handbook on Knowledge Management 1: Knowledge Matters, 40(3), 129–152. http://doi.org/http://dx.doi.org/10.1007/978-3-540-24746-3_7

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