This study explores the influence of demographic similarity between business unit managers and their internal and external stakeholders—line employees and residents of the community being served—on financial performance. A sample of 52 business units of a service industry organization totaling 254 managers and 2,935 employees was used. The study relies on the social categorization and information/decision-making perspectives on diversity, which suggest that managerial demographic similarity to firm stakeholders is related to greater expertise to access diverse markets and networks and management in a diverse environment. Implications for research and for organizational leadership diversity are addressed.
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