Abstract

Extensive interest in human capital ethnic diversity has produced somewhat conflicting findings on the benefits of human capital diversity in the strategic management literature. I argue that human capital ethnic diversity cannot be standalone without considering its integration. Building on previous research on human capital diversity and integration, I examine whether both are indeed required to increase firm performance and investigate the extent to which firms should achieve diversity and integration. By proposing a simple measure of excessive ethnic imbalance at a firm, I illustrate how and why ethnic integration is as crucial as ethnic diversity to the firm's innovation outcomes. The empirical analyses on the patent data from all U.S. patenting firms provide support for the importance of ethnic integration in the firm.

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