RESEARCH BRIEF | Diversity and inclusion linked to corporate innovation
Suggested audience: Corporate Citizenship Professionals, D&I Practitioners, Top Leaders, Large Firms, High Innovation Firms
Takeaway: Firms that earn higher D&I ratings from their employees' perspective are significantly more innovative, in terms of the quantity, quality, and economic value of their patent outputs.
Researchers analyzed data from Glassdoor.com reviews submitted by employees across 1,864 firms between 2008 and 2021. They also looked at firm-level patent data obtained from databases of previous studies. The purpose of the study was to measure the effect of a company’s perceived D&I on its innovation output. Via Glassdoor, employees were able to rate their workplace D&I from a scale of one to five stars. Innovation was measured using patents and patent citations.
Patent measurement was conducted in three parts. First, for quantity of patents, researchers looked at the number of new patents filed by firm i in year t that were ultimately granted. Second, for patent quality, they used patent citations, calculated as the number of citations each patent received in subsequent years. The final measure of innovation was based on the economic value of patents, which looked at movements in stock prices during the three days following the patent grant announcement.
Key Findings:
- Firms with employee-generated higher D&I scores were found to be more innovative
- Firms ranking one star higher in their D&I ratings, on average, had 13.5% more patent counts
- Having one star higher in the D&I rating increased firms' total patent citations and patents' economic value by 11.5% and 22.8%, respectively
If citing, please refer to original article: Covington T, Dat Le T, Ngo J. (2025). Diversity and inclusion in the workplace and corporate innovation. Finance Research Letters. 76. 1-8. https://doi.org/10.1016/j.frl.2025.106938.
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