Gender-diverse companies thrive only in areas that embrace diversity

Do gender-diverse companies make more money than businesses run primarily by men? If research says they perform better, that could bolster the argument that women should have more access to top positions in organizations. But previous studies have produced conflicting results. Why?

We put this question to Harvard Business School Assistant Professor Letian Zhang, who studies organizational theory and strategy with a focus on social inequalities and status hierarchies. He explores the issue in a recent paper scheduled to be published in the journal Organization Science.

Instead of following the usual methodology of studying organizations in a particular industry or geography, Zhang went wide and deep. He developed a longitudinal sample of 1,069 leading public firms in 35 countries and 24 industries. His chief finding: The social context around companies matters. That is, gender-diverse firms tend to thrive only in parts of the world that embrace gender diversity, like Europe.

“For business leaders, this paper provides some preliminary evidence that diversity is positively correlated with productivity in contexts where gender diversity is valued,” Zhang said. “This is presumably because this kind of context creates a safe environment for women to contribute their ideas freely and therefore encourage the flow and exchange of ideas, increasing team performance.”