Diversity, Social Goods Provision, and Performance in the Firm

30 Pages Posted: 2 Sep 2010  

Sara Fisher Ellison

Massachusetts Institute of Technology (MIT) - Department of Economics

Jeffrey Greenbaum

University of California, Berkeley - Department of Economics

Wallace P. Mullin

George Washington University - Department of Economics

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Date Written: August 31, 2010

Abstract

The last decade has seen a growing interest among economists on the effect of diversity on the provision of social goods and the stock of social capital. Indeed, in the workplace, cooperation, trust, and other social goods may be important elements of the smooth functioning of an office, but firm owners ultimately care about an office’s performance, as reflected in revenues, costs, and profits. We explore this next logical question: how does diversity affect ultimate performance? We have a unique data set from a firm which operates numerous small offices in the United States and abroad. They have provided us with eight years of individual-level employee survey data, which measure quantities such as level of cooperation, as well as office-level measures of diversity and performance over that period. We find some evidence that more homogeneous offices enjoy higher levels of social goods provision but that those offices do not perform any better and may actually perform worse. We speculate that one possible reason that the more homogeneous offices do not perform better despite higher levels of social goods provision is that they do not have as diverse a portfolio of skills, talents, and interests on which to draw.

Keywords: Diversity and Social Goods

JEL Classification: J16, L2

Suggested Citation

Ellison, Sara Fisher and Greenbaum, Jeffrey and Mullin, Wallace P., Diversity, Social Goods Provision, and Performance in the Firm (August 31, 2010). MIT Department of Economics Working Paper No. 10-11. Available at SSRN: https://ssrn.com/abstract=1670167 or http://dx.doi.org/10.2139/ssrn.1670167

Sara Fisher Ellison (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-262C
Cambridge, MA 02142
United States
617-253-3821 (Phone)
617-253-1330 (Fax)

Jeffrey Greenbaum

University of California, Berkeley - Department of Economics ( email )

508-1 Evans Hall #3880
Berkeley, CA 94720-3880
United States
516-359-9327 (Phone)

Wallace P. Mullin

George Washington University - Department of Economics ( email )

2201 G Street NW
Washington, DC 20052
United States

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