Increased profits may cause diversity efforts, not the other way around

See The Economics of DEI and Merit: A hiring approach that maximizes talent and rewards performance is the antidote to bias by Roland Fryer. Excerpt:

"Some say that diversity in and of itself is good for business. Consulting firms and activists have advised that adding women and minorities to a company, especially its board, will magically cause profits to grow. Credible research has always shown this was wishful thinking.

Frequently cited McKinsey studies have found a strong link between firms’ earnings and the racial and ethnic diversity of their executives. The consulting firm doesn’t make its data public, but in 2024 business researchers Jeremiah Green and John R.M. Hand were unable to replicate the results with data from S&P 500 companies. In 2020, Robin J. Ely and David A. Thomas further debunked the “add diversity and stir” approach in Harvard Business Review: “We know of no evidence to suggest that replacing, say, two or three white male directors with people from underrepresented groups is likely to enhance the profits of a Fortune 500 company.”

The available research focuses overwhelmingly on correlations between diversity and performance, rather than causation. Another Harvard Business Review article notes a link between businesses’ DEI rankings and various measures of their dynamism and culture, which in turn are linked to performance. But the authors concede that causation is “difficult to prove.” If the most successful businesses also face the most pressure to improve DEI metrics, it’s plausible that increased profits may cause diversity efforts, not the other way around."