Shin and Gulati on Showcasing

Patrick Shin and Mitu Gulati have a new paper up on ssrn, which was part of the board diversity conference at UNC last spring.  Their abstract is as follows:

Diversity initiatives are commonplace in today’s corporate America. Large and successful firms frequently tout their commitments to diversity, sometimes appointing women and racial minorities to highly visible posts, including seats on their boards of directors. Why would a profit-minded firm engage in such behavior? One frequently voiced explanation is that by creating such diversity, firms send out a positive signal about their attributes: a firm’s willingness to expend resources on diversity shows its commitment to workplace fairness and equality, which makes it more attractive to potential employees, customers and financiers. This claim has considerable surface appeal not only as an explanatory thesis, but as a rationale that conveniently bridges the normative gap between corporate self interest and the promotion of social justice. In this article, we raise some difficulties with the theory of diversity-as-signal in terms of both its explanatory adequacy and its normative implications.

I'm perhaps somewhat more optimistic about the origins and effects of the board diversity initiatives than are Patrick and Mitu; it seems to me that these initiatives are different from a corporation taking out an advertisement with "diverse" people in it, who may not even be corporate employees.  Corporate board diversity may be about what they call "showcasing," but it has a positive effect in that it results in representation on the board of people from groups that have not traditionally been represented.

Now, there's a very important discussion to be had about the value of board diversity.  As I recall of the work that was presented at the conference, there's little evidence so far of changes in a company's profits in the wake of diversification efforts.  But as I asked at the conference, perhaps the effects can be measure in other ways.  I suggested looking at this in terms of a company's charitable contributions.  One of the participants said — no surprise here — one scholar has already done this and found a positive relationship.  

I also wonder about whether the rationales that are offered are really themselves cover when a company decides that it is appropriate to seek a diverse board and yet it  feels compelled to offer some business-based rationale.  I wonder if this is what I refer to in the civil rights movement as "excuse rationales."  We offer some excuse to justify what we want to do anyway.  And you see excuses all the time, "we'll be sued if we don't do x"; "we'll lose the cold war if we don't do x."  Maybe we do x because it is the moral thing to do, but we need to pass the responsibility for doing it to someone else.

All of this reminds me of a post from some years back at blackprof, about the promotion for  "Uncle Ben" of Uncle Ben's Rice.  Where once "Uncle Ben" was a servant, now he's chairman of the board (Times article on this here).  Uncle Ben's website allows you to visit his office and learn about the history of Uncle Ben's Rice, as well as the positive things that Uncle Ben has been able to do, including … get this … feed children in need (click on the newspaper on his desk to see this story or click here for the link to philanthropic iniatitives) and use his legislative connections in the 1960s to preserve 46,000 acres of Louisiana second- growth forests in the Mississippi delta.  Evidence that the diversification of the board has made a difference?  Perhaps.  And, since I love talk of jazz — particularly of the effect of jazz on property law — how about this: in the history section, on the  1930s page, Uncle Ben talks about the sweet sound of jazz in New Orleans, where his rice was first marketed (it seems).

While you've over at the Unclebens.com website, you can sign up for a coupon for $0.75 off your next purchase.