Section Fiveto an extreme. With extreme homogeneity, organizations may
become less capable of adapting to changing circumstances
and less flexible.^22
Recent research has examined this assertion by analyzing
the hiring for affirmative action purposes during economic
downturns. This research has found that firms placing greater
emphasis on such hiring have better financial performance than
other firms, as measured by shareholder returns, two years
after the economic recovery. Emphasis on hiring for affirmative
action purposes was correlated with the lagged financial
performance variable. As with the other studies of firm
performance, an extensive set of control variables was
employed. Not surprisingly, the effects of increased diversity do
not result in immediate performance because time is needed
for the benefits of diversity to be manifested in increased
performance. Speculative interpretations are that such hiring
for affirmative action purposes has the additional benefit of
enhancing the firm’s reputation among female and minority job
applicants, as well as reducing the likelihood of litigation and its
associated costs.^23
Another study examined the performance impact of
cultural diversity in international operations of 442 Fortune 500
firms. Culturally related international diversification was
expected to have a positive impact on firm performance. One