Does diversity have implications for economic performance? Back in 1998, a statement by Lew Platt, former CEO of Hewlett Packard, incepted a massive amount of studies in economics and management:
“I see three main points to make the business case for diversity:
- A talent shortage that requires us to seek out and use the full capabilities of all our employees.
- The need to be like our customers, including the need to understand and communicate with them in terms that reflects their concerns.
- Diverse teams produce better results.
This last point is not as easy to sell as the first two - especially to engineers who want the data.
What I need is the data, evidence that diverse groups do better.”
Diversity can promote economic performance in many ways. Immigrants and foreign workers bear transnational skills that facilitate trade and investment between their countries of origin and of destination. Being familiar with tastes and cultural-based preferences at home, they help creating product and business development opportunities. Experimental studies showed that groups with more diverse skills can outperform homogeneous groups, even the latter are more skilled, when it comes to complex problem solving. Diverse perspectives can lead to differentiated appreciations of business opportunities; the confrontation of diverse perspectives deepens knowledge and challenges the status quo. For all these reasons, many studies have provided evidence that diversity increases wages, innovation, and economic growth. Yet, diversity has not only positive sides. It also implies communication costs, distrust and lack of social cohesion. Nonetheless, the positive effects tend to prevail in wealthier and more inclusive societies.
As well as cultural diversity promotes entrepreneurship and economic growth, it may be expected to promote the resilience to economic shocks. Understanding this issue may be of particular importance given the current economic crisis incepted by the pandemic. Building on this evidence, in a recent study we address the relationship between cultural diversity and regional resilience to the 2008 economic crisis. Our findings indicate that the cultural diversity of immigrant entrepreneurs complements other regional resilience factors.