Differentiating on Diversity: How Disclosing Workforce Diversity Influences Consumer Choice

Abstract

Many companies are making efforts to diversify their workforces, motivated by documented operational performance benefits and increased pressure to “walk the talk” on diversity, equity, and inclusion (DEI) initiatives. One specific call to action from stakeholders is the public disclosure of intersectional diversity data in EEO-1s, which companies with 100+ employees must report each year to the federal government, but which companies rarely make publicly available. Conducting five online experiments to examine how consumers perceive transparency into an operation’s workforce diversity, we find no evidence that disclosing workforce diversity data undermines customer attitudes or behaviors toward the company, even when the disclosures reveal racial disparities across job categories. Instead, we find that consumers perceive firms that disclose their workforce diversity data to be more committed to DEI initiatives, view disclosing firms more positively, and are more likely to choose their offerings over those of non-disclosing firms. We find these attitudinal and behavioral differences to be especially pronounced when the disclosures reveal progress in diversification.