Policies and practices designed to foster diversity in organizations are now well integrated into a firm’s corporate strategy. In this article, we examine the role diversity management policies play in the financial performance of family firms, based on the premise that family firms have unique goals and governance structures that may affect the adoption of such policies. Using a longitudinal data set covering 952 publicly listed firms and multidimensional measures for diversity and financial performance, our empirical analyses suggest that family firms underperform nonfamily firms on diversity performance indicators. Interestingly, however, we find that the weaker diversity management practices of family firms may contribute to their robust financial performance.
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