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Diversity and inclusion in the workplace and corporate innovation

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  • Covington, Thomas
  • Le, Thanh Dat
  • Ngo, Julie

Abstract

We employ a novel D&I rating that captures employees’ perceptions of their firms’ D&I practices and find that firms with higher D&I ratings are more innovative. Using the Seventh Circuit Court ruling in 2013 as an exogenous shock to firms’ D&I practices, we show this relationship is causal. The effect of D&I on innovation is stronger in firms where employees are more important for the innovation process and in firms with larger workforces. Our findings highlight that fostering an inclusive work environment can enhance a firm’s innovative capacity, offering practical implications for both policymakers and corporate leaders.

Suggested Citation

  • Covington, Thomas & Le, Thanh Dat & Ngo, Julie, 2025. "Diversity and inclusion in the workplace and corporate innovation," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002028
    DOI: 10.1016/j.frl.2025.106938
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    References listed on IDEAS

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