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Want More Innovation? Get More Diversity

It turns out that diversity also makes good economic sense.

This article originally appeared in The Chronicle of Higher Education on November 23, 2015. 

By Willemien Kets

You don’t need a degree in statistics to see that African-Americans are underrepresented at the highest academic levels on college campuses across the country. Nationally, 5.3 percent of doctorates are awarded to African-Americans, and 4 percent of full professors are African-American. In my own field, economics, the percentage of professors is even lower: 1.8 percent.

Ending this underrepresentation is important for many reasons, not least because of the unquestionable importance of fairness and equity. But it turns out that diversity also makes good economic sense.

Research by my colleagues and I suggests that university administrators who do not work hard to attract and retain African-American faculty may well be missing out on an important benefit: Academic departments that are more diverse may produce more unorthodox ideas and do more original work. In the academic world, where there is a big premium on being the first to come up with an idea, this is a major benefit.

We have developed a mathematical model to study the effects of diversity. It allows us to drill down, and in doing so we discovered a simple truth: More diverse groups may do better because they are less conformist.

Picture it: You’re brainstorming with your best friend of 30 years. You grew up in the same neighborhood, went to the same school, and stood up for each other at your weddings. When a crazy idea crosses your mind, you immediately see all the reasons why he may dismiss it. On the other hand, you know what ideas he is receptive to — so why not start with those?

Now suppose you’re brainstorming with someone who grew up with a different perspective and who has very different experience than you. Would you be more willing to share your crazy idea with her? After all, you have no clue what ideas she is open to — so why not try it out?

Something like this may be going on in the academic workplace. We often don’t realize it, but we constantly think about how people around us will react to us. In itself, this is not a bad thing. If we didn’t put ourselves into other people’s shoes, we’d be experiencing even more frictions and misunderstandings than we already do.

But our research suggests that a little unpredictability may not be a bad thing. In fact, a little more unpredictability may be what we need to make us all a little less conformist and a little more open to trying new things.

To be sure, mathematical models have their limitations, an important one being that it’s impossible to include all factors that play a role in real life. However, extensive data suggest that more diverse teams outperform homogeneous teams when it is crucial to be innovative, consistent with our mathematical model. In continuing work, we are designing experiments to test the theory directly.

So if diverse groups outperform more homogeneous ones, why do university administrators not choose to hire more African-Americans? There are many possible reasons, but one is that people have a tendency to hire people like themselves. Interacting with people like ourselves allows us to stay within our comfort zones. It is certainly easier to find common ground with one’s friend of 30 years than with a stranger. Yet given the increasing emphasis on innovation and creativity in today’s economy, it pays for universities to actively pursue a more racially and ethnically diverse faculty.

2014 study found that papers written by ethnically diverse groups receive more citations and have higher impact than papers written by more homogeneous ones. This is true even holding fixed the authors’ previous publishing performance. So researchers at all levels may benefit from working with people from different ethnicities. Similarly, for innovation-focused banks, increases in racial diversity are related to enhanced financial performance.

If diverse teams are more creative, then the economic benefits of diversity apply much more broadly than has been previously recognized. It has long been known that diversity in educational background makes teams more productive: A product-development team that consists only of engineers or only of marketers will not do as well as a team where both groups are represented.

Our research suggests that even if people from different backgrounds have exactly the same skills and knowledge, diverse teams may still do better than more homogeneous ones, a finding that should affect hiring practices in every academic department. Because while it is important for university administrators to reflect and hold meetings with students, faculty, and staff to identify and confront campus and societal injustices, one simple strategy can help produce a more inclusive atmosphere, reduce the underrepresentation of minority groups, and improve the research climate: Stop hiring people who look like you.

- Willemien Kets is an assistant professor of managerial economics and decision sciences at Northwestern University’s Kellogg School of Management.

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