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Is diversity critical to a business' financial success?
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Diverse workforces drive profits through innovation

Diverse workforces are more innovative, and innovate companies are also more profitable. Therefore, diversity is critical to the financial growth, and success, of a business.
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The Argument

Innovation is key to profitability. Companies with fresher product portfolios offer more creative and novel solutions, this will sell more products and services, and, ultimately, record higher profits. Diversity helps companies to achieve this innovation. There is a clear correlation between a company's diversity and its creativity, flair, and innovation. A recent study from the Harvard Business Review examined 1,700 companies across eight different countries (the US, France, Germany, China, Brazil, Austria, Switzerland and India). For all of the companies studied, researchers discovered a positive correlation between diversity and innovation.[1] These researchers were able to put a number on how diversity positively influenced the companies. They found that diversity helped boost innovation revenue by 12.9%.[1] Most importantly, it was found that the most diverse enterprises were also the most innovative, as measured by the freshness of their revenue mix. Countries with above-average total diversity, measured as the average of six dimensions of diversity (migration, industry, career path, gender, education, age), had 19% points higher innovation revenues. All six dimensions of diversity had statistically significant correlations with innovation, both individually and collectively, although industry, nation of origin, and gender had slightly larger effects.[1] Therefore, a diverse workforce creates a business with innovation. This will increase the profits the business will make, leading to financial success for the company.

Counter arguments

According to a 2007 study by political scientist Robert Putnam, there is a strong positive relationship between interracial trust and ethnic homogeneity. People from different ethnic or cultural backgrounds can have varying beliefs concerning politics, lifestyle and religion, which can lead to tension and conflict in a work environment.[2] Furthermore, many employers may create diverse workforces for the sole intention of producing a good profit. However, the creation of diverse spaces must be rooted in justice, not financial incentives. Diverse workforces, especially employees who represent marginalised groups, may feel further excluded if they believe their employment was owed, in part, to a characteristic they have no control over.


[P1] Innovation leads to higher profits for a business. [P2] Higher levels of diversity creates the innovation that will increase profits. [P3] Therefore, diversity leads to higher profits.

Rejecting the premises

[Rejecting P2] Diverse employees may lead to clashes and disagreements, which makes the workplace environment uncomfortable. Some businesses may only create diverse workforces for financial incentives, rather than the cause of justice.


This page was last edited on Wednesday, 26 Aug 2020 at 11:23 UTC

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