Managing diversity in minority business enterprises: the impact of employee homogeneity on financial performance

PurposeThe purpose of this paper is to investigate the impact of employee homogeneity on the financial performance of minority business enterprises (MBEs). It is widely postulated that MBEs tend to hire minorities that resemble the ethnicity of the founder(s) and that this is beneficial by helping to decrease minority unemployment rates as well as providing new opportunities to minorities that they might not otherwise receive at White-owned firms.Design/methodology/approachThe study used hierarchical linear regression on archival data of 271 MBEs to determine if employee homogeneity will be a factor in understanding their financial performance. The authors also conducted exploratory interviews with a convenience sample of MBEs to gain insight into the concept of employee homophily.FindingsThe research uncovered that as homogeneity increases, MBE financial performance decreases, and this effect is more pronounced the longer the MBE is in business.Research limitations/implicationsThe data set is cross-sectional in nature and lack the perspective and clarity of time. The paper only contains a small set of exploratory interviews. The most significant implication from the study is that a lack of diversity decreases the long-term financial viability of MBEs which is to counter mainstream arguments that speak only to the positive aspects of MBEs hiring their own.Originality/valueThe research builds on the scant literature on the impact of diversity within MBEs. It also provides guidance to MBEs by suggesting they be strategic in diversifying their employee base in order to improve performance.

How Do Large Purchasing Organizations Treat Their Diverse Suppliers? Minority Business Enterprise CEOs’ Perception of Corporate Commitment to Supplier Diversity

Supplier diversity programs were created in the United States nearly 50 years ago to encourage private sector companies to provide business opportunities to underutilized minority business enterprises. In order to assess the experiences that minority business enterprise CEOs have with large purchasing organizations and their perceptions of justice and commitment of large purchasing organizations to the buyer–supplier relationship (BSR), this study utilizes survey data collected from 206 minority business enterprise CEOs who supply large purchasing organizations that espouse a strong commitment to supplier diversity. The theoretical framework of organizational justice is utilized to establish testable hypotheses. The results from hierarchical linear regression show minority business enterprise CEOs’ perception of large purchasing organizations’ commitment to the BSR is positively related to the distributive and informational dimensions of organizational justice. Surprisingly, the procedural dimension was found to have a significantly negative relationship. This research also found a significant, negative relationship between minority firm CEOs’ perception of distributive and informational justice and their perceptions of unethical behavior by large purchasing organizations.

Challenges and Approaches to Purchasing from Minority-Owned Firms: A Longitudinal Examination

Historically, large corporations and minority-business enterprises (MBEs) have encountered many impediments as they have worked together. As a result, the government has adopted public policy to help promote greater interaction between large firms and MBEs. At the same time, the competitive environment has changed in ways that make it important for large corporations and MBEs to work more closely. This paper presents the results of a study that examined the impediments and approaches to buyer/supplier relationships between Fortune 500 firms that have corporate minority purchasing programs and MBEs.