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Diversity can improve stores’ sales performance

Racial diversityMatching levels of racial diversity between store employees and the surrounding community impacts the store unit’s sales performance.

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This is according to a new study from the Naveen Jindal School of Management at UT Dallas. The study merges two opposing views on diversity in the workplace, said Dr. Orlando Richard, associate professor of organizations, strategy and international management and lead author of the study.

Social identity theory predicts that diversity is negative because people can’t identify with one another, while the information-based perspective argues that diversity is positive because it leads to more creativity.

The researchers collected demographic and performance data from a large retailer that operates more than 200 store units in small communities throughout the greater Midwest and West. They also used community demographic data from the U.S. Census Bureau.

The study found that having diversity within a store can have positive implications for performance, and if the community is also diverse, that can increase the positive effects even more.

In the study, the superior store performance was evident within store units with high racial diversity among its employees and high racial diversity in the surrounding communities.

Stores with low workforce diversity located in diverse communities had low performance.

Richard said hiring managers should take a close look at the communities they serve as a way to have higher identification between employees and the community at large.

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