Top Management Diversity Is Just Good Business: Using CSR Measures to Explore the Diversity-firm Performance Link

Patti Miles, Niclas Erhardt
(University of Maine, USA)

Abstract: Historically, research on diversity as related to firm performance is inconsistent. The mixed findings can be attributed in part to a limited focus on the diversity-firm performance link. Drawing on upper echelon and human resource management literatures, the present study utilizes fortune 500 and COMPUSTAT and KLD Stats data to explore both, if and how top management diversity may impact firm performance. We argue that firms with top management diversity are more profitable over time. Moreover, firms with top management diversity seem to employ corporate social responsibility practices that may provide some explanation as to how top management diversity leads to increased firm performance. Findings from a fully mediated model lend support for both hypotheses and shed new perspectives on the black box of top management.

Key words: diversity; top management teams and mediation

JEL codes: J24, J21, M54, M14