24372: Corporate Cultural Diversity and Long-Term Performance: The Role of Employee Ownership (session 25412)

This paper investigates the relationship between corporate cultural diversity and long-term financial performance, focusing on the moderating role of employee ownership. We argue that corporate cultural diversity, the coexistence of multiple distinct values within an organization, allows firms to better adapt and pivot their strategic focus benefiting firms’ long-term financial performance. However, as corporate cultural diversity may also promote misunderstandings and conflicts among employees, we suggest that firms with higher levels of employee ownership are better equipped to capitalize on the advantages of corporate cultural diversity. Employee ownership may help to mitigate the potential negative effects of corporate cultural diversity as an increased sense of ownership facilitates to solve arising conflicts. Drawing on a dataset of S&P 1500 firms, our findings reveal that companies benefit from more corporate cultural diversity only in the context of high levels of employee ownership. These findings highlight the dynamic between corporate cultural diversity and ownership structures, offering insights into how firms can leverage corporate cultural diversity to strengthen long-term performance.

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