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• Working Paper | HBS Working Paper Series | 2020

  Shaking Things Up: Unintended Consequences of Firm Acquisitions on Racial and Gender Inequality

  Letian Zhang

  This paper develops a theory of how disruptive events shape organizational inequality. Despite various organizational efforts, racial and gender inequality in the workplace remains high. I theorize that because the persistence of such inequality is reinforced by organizational structures and practices, disruptive events that shake up old hierarchies and break down routines and culture should give racial minority and women workers more opportunities to advance. To examine this theory, I explore a critical but seldom analyzed organizational event in the inequality literature—mergers and acquisitions. I propose that post-acquisition restructuring could offer an opportunity for firms to advance diversity initiatives and to objectively re-evaluate workers. Using a difference-in-differences design on a nationally representative sample covering 37,343 acquisitions from 1971 to 2015, I find that although acquisitions lead to occupational reconfiguration that favors higher-skilled workers, they also reduce racial and gender inequality. In particular, I find improved managerial representation of racial minorities and women and reduced racial and gender segregation in the acquired workplace. This post-acquisition effect is stronger when (a) the acquiring firm values race and gender equality more and (b) the acquired workplace had higher racial and gender inequality. These findings suggest that disruptive events could produce an unintended consequence of increasing racial and gender equality in the workplace.

  Keywords: inequality; Diversity; Equality and Inequality; Mergers and Acquisitions;

  Citation:

  Zhang, Letian. "Shaking Things Up: Unintended Consequences of Firm Acquisitions on Racial and Gender Inequality." Harvard Business School Working Paper, No. 20-022, August 2019. (Revised January 2020.)  View Details

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• Article | Harvard Business Review (website) | 2019

  When Gender Diversity Makes Firms More Productive

  Stephen Turban, Dan Wu and Letian Zhang

  Does diversity make a company more productive? Many say yes—some researchers argue that gender diversity leads to more innovative thinking and signals to investors that a company is competently run. Others say no—conflicting research indicates that gender diversity can disrupt social cohesion, making people less likely to collaborate. Most of this research, however, has looked at the question within a single country or industry. Could the conflicting research be due to differences in context? Region and industry might affect people’s opinions of gender diversity, and this might then affect whether or not diversity leads to stronger outcomes. In a recent study of 1069 leading firms across 35 countries and 24 industries, researchers found that gender diversity relates to more productive companies, as measured by market value and revenue, only in contexts where gender diversity is viewed as “normatively” accepted. By normative acceptance, they mean a widespread cultural belief that gender diversity is important. In other words, beliefs about gender diversity create a self-fulfilling cycle. Countries and industries that view gender diversity as important capture benefits from it. While those that don’t, don’t. The researchers outline three main reasons why opinions about the value of diversity matter so much to the actual value it brings. And these may provide lessons for managers who wish to capture the benefits of gender diversity.

  Keywords: Gender; Diversity; Performance; Performance Productivity;

  Citation:

  Turban, Stephen, Dan Wu, and Letian Zhang. "When Gender Diversity Makes Firms More Productive." Harvard Business Review (website) (February 11, 2019).  View Details

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• Article | Organization Science | January–February 2019

  Who Loses When a Team Wins? Better Performance Increases Racial Bias

  Letian Zhang

  Although it is well known that organizational and team performance influences strategic decision-making, little is known about its impact on ascriptive inequality. This study proposes a performance effect on racial bias: higher team performance reduces managers’ performance pressure and, therefore, leads to more managerial bias in the subsequent round. I find strong evidence for this proposition using a fine-grained dataset from the National Basketball Association. In this highly competitive industry, team performance is positively associated with coaches’ subsequent exercise of racial bias: players experience more favorable treatment from same-race coaches after their teams have won more games. This study demonstrates an important relationship between performance feedback and racial bias and suggests that even in highly competitive industries, managerial bias may be prevalent in high-performing teams and organizations.

  Keywords: discrimination; race and ethnicity; performance feedback; NBA; Prejudice and Bias; Race; Ethnicity; Performance; Sports;

  Citation:

  Zhang, Letian. "Who Loses When a Team Wins? Better Performance Increases Racial Bias." Organization Science 30, no. 1 (January–February 2019): 40–50.  View Details

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