Section Fivewould produce declining returns as they deal with increasingly
heterogeneous environments. One speculative interpretation is
that increased cultural diversity produces increased innovation
and creativity that enable companies to become better at
marketing to more diverse customers.^25 This is a complex area
that will need more research in the future before the effects are
fully understood. However, for the companies that understand
the relationships there are great opportunities for financial gain.
Employment
Countercyclical Hiring
Research also has examined the impact of the contrarian
practice of hiring key employees during economic downturns.
The practice is obviously a limited one because the firm is
hiring while there is a downturn. Nonetheless, firms can obtain
bargains in key personnel that may be needed to implement a
strategy that will produce substantial returns after the recovery.
For example, the firm may hire key research and development
people on such a basis while the demand for their services from
other companies is low. A recent study assessed the impact of
this practice on shareholder returns. The study used a measure
of executives’ perceptions of the extent to which their firms
engaged in such practices during the last economic downturn.
Multiple regression employing a number of control variables