Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • July–August 2018
  • Article
  • Harvard Business Review

The Other Diversity Dividend

By: Paul Gompers and Silpa Kovvali
  • Format:Print
ShareBar

Abstract

Researchers have struggled to establish a causal relationship between diversity and financial performance—especially at large companies, where decision rights and incentives can be murky, and the effects of any given choice can be tough to pin down. So the authors chose a “lab rat” with fewer barriers to understanding—the venture capital industry. VC firms are fairly flat: Every investor is a decision maker, and choices have clear business consequences. Using publicly available information, researchers can see how similar or different decision makers are and compare decision quality on the basis of investments’ performance. After examining tens of thousands of VC investments, Gompers has found that diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns. And even though associating with similar people can have social benefits for those people, it can lead investors and firms to leave a lot of money on the table. In this article Gompers and Kovvali describe the research and provide recommendations for reaping the business benefits of diversity.

Keywords

Diversity; Decision Making; Finance; Performance Improvement; Venture Capital

Citation

Gompers, Paul, and Silpa Kovvali. "The Other Diversity Dividend." Harvard Business Review 96, no. 4 (July–August 2018): 72–77.
  • Find it at Harvard
  • Register to Read

About The Author

Paul A. Gompers

Finance
→More Publications

More from the Authors

    • March–April 2021
    • Harvard Business Review

    How Do Venture Capitalists Make Decisions

    By: Paul A. Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev
    • December 2020
    • Faculty Research

    Entrepreneurial Finance Vignettes - 2021

    By: Paul A. Gompers
    • 2020
    • Faculty Research

    Private Equity and COVID-19

    By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
More from the Authors
  • How Do Venture Capitalists Make Decisions By: Paul A. Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev
  • Entrepreneurial Finance Vignettes - 2021 By: Paul A. Gompers
  • Private Equity and COVID-19 By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College