Is diversity good for your business? When answering this question, supporters of diversity point to the growing number of studies that show companies with greater diversity outperform the competition. I see two major reasons why these studies, compelling as they may be, are not moving the needle on diversity.
First, these studies show correlation, which is indicative of two phenomena occurring together, but they cannot show causality — i.e., which is the cause and which is the effect. Take gender diversity: The fact that companies with more women in senior executive positions outperform their competition on various key performance indicators can be interpreted in three ways: