Racial Diversity, Business Strategy, and Firm Performance: A Resource-Based View.

Although ‘valuing diversity’ has become a watchword, field research on the impact of a culturally diverse workforce on organizational performance has not been forthcoming. Invoking a resource-based framework, in this study the author examined the relationships among cultural (racial) diversity, business strategy, and firm performance in the banking industry. Racial diversity interacted with business strategy in determining firm performance measured in three different ways, as productivity, return on equity, and market performance. The results demonstrate that cultural diversity does in fact add value and, within the proper context, contributes to firm competitive advantage.