How much value is truly created by a room full of women gathering to talk about women’s issues when the problem is a systemic product of social biases held by both women and men? Do these almost exclusively female events further tie “women’s issues” to a certain social stigma?
As a member of MIT Sloan’s Society for Women in Management (SWIM) and former co-president of my undergraduate Society for Women in Business organization with heavy exposure to inclusive leadership and diversity training, I have attended my fair share of conferences and events geared towards women’s empowerment in business – an issue that I care deeply about. Each event has been inspiring both personally and professionally and has offered me phenomenal networking opportunities. Read More »
We usually think of ethnic diversity as a matter of social policy, not a factor that could impede market bubbles. But new research by me and a team of colleagues suggests a surprising new reason to consider diversity as a hedge against speculative bubbles: in two studies, we find that markets comprised of ethnically diverse traders are more accurate in pricing assets than ethnically homogeneous ones. Our paper, which came out Nov. 17 in Proceedings of the National Academy of Sciences (PNAS), finds that ethnic diversity leads all traders, whether of majority or minority ethnicity, to price more accurately and thwart bubbles. The reason isn’t because minority traders had special information or differential skills; rather, their mere presence changed how everyone approached decision-making. Traders were more apt to carefully scrutinize others’ transactions and less likely to copy others’ errors in diverse markets, and this reduced the incidence of bubbles.
To conduct our research, we constructed experimental markets in the United States and Singapore in which participants traded stocks to earn real money. We randomly assigned participants to ethnically homogenous or diverse markets. We found that markets comprised of diverse traders did a 58 percent better job at pricing assets to their true value. Overpricing was higher in homogenous markets because traders are more likely to accept speculative prices, we found. Their pricing errors were more correlated than in diverse markets. And when bubbles burst, homogenous markets crashed more severely.
Companies promote diversity in the workplace as a moral imperative with “bottom line benefits.” But research on the value of diversity is mixed. Some studies have found diverse teams—meaning workgroups comprised of employees of different races, genders, and backgrounds—promote creativity, nurture critical thinking, and tend to make better, more thoughtful decisions because they consider a wider range of perspectives. Other studies indicate diverse teams fuel interpersonal conflicts, reduce cohesion, and slow the pace of learning.
While many graduating MBA students are still heading to traditional sectors like finance, consulting and technology, one of the biggest trends among top business schools is an increase in the diversity of students’ career interests. Perhaps it’s related to fallout from the financial crisis or even a generational trend, but more and more students are pursuing positions in a broader array of areas.
At MIT Sloan, about 60% of our MBA graduates in the past few years have gone to those traditional areas. Among our other MBA students, we are indeed seeing this trend toward diverse interests. Strong areas of focus for that group include: entrepreneurship; sustainability; energy; social enterprise; health care; operations and supply chain management; and entertainment, media and sports.
Silos are fairly common things in large organizations. While bridging those silos can lead to innovation and increased productivity, making those connections can be a tough thing to do. It’s easier to develop networks within the familiar silos than reach out to people in disparate areas.
And even if you do decide to reach out to new people, who do you select and from how many departments? It’s not like you can say you will have strong ties only with people who matter because you don’t know who those people will be and, even if you do know, there will be so many of them that you still will have to make choices.
In research focused on this issue, I studied the knowledge transfer relationships among several hundred scientists and found that when it comes to creating the right network for facilitating knowledge transfer, not all networks are equal. Read More »