Making the case for diversity as a strategic business tool in small firm survival and success
Although human resource managers have long realized the impact of diversity on organizational outcomes, most of the research to date has focused on large organizations. Very little consideration has been given to small firms in the United States with fewer than 15 employees, which are not required to comply with federal Equal Employment Opportunity legislation. We propose that by valuing racial diversity and creating an inclusive organizational climate from inception, new small firms with growth objectives can increase their competitiveness, leading to better performance and long-term survival. Anchoring our arguments in intellectual capital theory, coupled with Cox and Blake’s seminal work on valuing diversity, we provide testable propositions that detail why new small firms should pursue and view racial diversity as a strategic business tool, even when they are not legally required to attend to these issues. We offer practical recommendations for small firms seeking to create an affirming climate for racial diversity and strategies that can be used to recruit, select, retain, and benefit from a racially diverse workforce.