Abstract

In the United States, social justice and equality have become a centralized concern over the past couple of years resulting from widespread incidents of racialized violence, and the passing of multiple anti-LGBTQ+ bills. Consequently, people have started demanding greater accountability and initiatives to protect minority communities. Many businesses, to stay competitive and support the needs of their employees and customers, have strengthened their commitments to foster a culture of diversity and inclusion at work. With increasing attention being given to such policies, it is important to ask how diversity and inclusion efforts can impact organizations through employee wellbeing and firm success. My research uses a mixed methods approach to analyze the relationship between diversity and inclusion policies and business performance. The study hypothesizes that greater implementation of diversity and inclusion policies will increase profitability through increased worker productivity, lower wage costs, and higher sales revenue. Microeconomic theory of the firm, wage differential theory, and the demand and supply of monopolistic competition are used as theoretical models for my hypothesis. Qualitative results were compiled by interviewing managers and employees work for for-profit businesses in Wayne County. The responses provide evidence for my hypothesis as interviewees noted diversity and inclusion policies have a positive effect on employee engagement, customer satisfaction, and sales. Additionally, data on mutual funds’ performance and their Gender Equality Scores (GES) was also used as a second method to test my hypothesis. Two out of the four components of the lagged GES, ‘gender balance in leadership and workforce’, and ‘policies aimed at promoting gender equality’ had positive effects on the one-year returns of mutual funds by 0.160 and 0.909 percentage points respectively. ‘Equal compensation and work-life balance’, and ‘commitment, transparency, and accountability’ had negative impacts on a mutual funds’ returns, suggesting a net effect of diversity and inclusion efforts.

Advisor

Long, Melanie

Department

Economics

Keywords

Diversity and Inclusion Policies

Publication Date

2022

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis Exemplar

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