Diverse small businesses are more successful and innovative
Existing research shows that diverse teams are more innovative, they make better and faster decisions, and diversity leads to better financial performance. In fact, a McKinsey report on public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean. But the advantages of diversity in small businesses are rarely explored.
The 2022 Hiscox Diversity in Small Business Report investigates the benefits enjoyed by US small businesses that are diverse in gender and racial/ethnic makeup, and whether the events of the past two years have driven lasting change.
It pays to value diversity
The advantages enjoyed by companies with higher gender and/or racial and ethnic diversity impacted both the top and bottom line.
- Sales increased, particularly among small businesses that reported high gender diversity in managers and owners.
- More businesses that identified themselves as having moderate to high racial and ethnic diversity reported growth over the past two years than those that have little or no diversity.
- And the percentage by which diverse businesses grew was larger.
Diverse small businesses are more successful and innovative. Businesses with more diversity displayed more innovation, outpacing their less diverse counterparts in the introduction of new products and services. They also tended to refresh their branding more frequently, pointing to increased creativity and adaptability.
Some have yet to recognize the value of diversity. The benefits of diversity are clear to many small businesses, but there are still some that don’t consider it a high priority. And some have taken no action at all to improve their business’s diversity and inclusion.
Learn more about the benefits of making your small business more diverse and inclusive, and how to do so.
The Hiscox Diversity Survey was conducted by Wakefield Research among 400 US small business owners, between December 21st, 2021 and January 10th, 2022, using an email invitation and an online survey. Results of any sample are subject to sampling variation. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.9 percentage points for the main sample, and 9.8 percentage points for the oversamples, from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.