When and Where Does Workplace Diversity Pay? Institutional and Resource-Based Views

We propose and test a theory of the value of racial minorities’ contribution to firm performance based on the demographic principle of proportional representation in the organization, community, and region. We conceptualize two demographic extremes, rarity and commonness in light of the predictions of institutional theory and the resource-based theory of the firm. Findings show that whether or not workforce diversity pays depends on proportional...