How Do Diversity and Inclusion at Workplace Practices Shape Corporate Social Performance?

This paper aims to investigate the role of diversity, equity and inclusion policies and practices (DEI) in assuring corporate social performance, integrating a holistic approach. To this end, diversity and inclusion at workplace practices (DIW) and leadership diversity are discussed to identify how they may shape the social pillar of corporate performance. The sample consists of 4,136 company-year observations with data available on Thomson Reuters Eikon covering the period 2020-2024. Fixed effects robust regressions are employed in STATA18 software to respond to three research hypotheses addressing the paper’s objective. Results show significant positive influence of overall DIW practices on corporate social performance, maintained, but weakened, for the decomposed pillars separately measuring diversity and inclusion, respectively. The gender and cultural diversity-related mechanisms of corporate governance are found to not have a significant impact on corporate social performance. Muchmore, findings emphasize that the interaction effect between DIW and executive gender diversity, as well as the interaction between inclusion and diversity generate a decrease in the social pillar of corporate performance, while workplace controversies and executive gender diversity generate an increase in social performance. The findings highlight that leadership diversity may influence social outcomes when it is supported by robust organizational DEI policies and practices. Drawing on upper echelon theory and social identity theory, this research contributes to the literature by providing new insights into the mechanisms through which DEI policies and practices at organizational and managerial levels influence social outcomes. This study offers practical implications for organizations seeking to improve their social corporate performance through robust inclusive diversity practices.