Ethnic Diversity and Corporate Interstate Investments

Ying MAO; Zheng WANG; Hong ZOU

doi:10.1017/S0022109025102202

Ethnic Diversity and Corporate Interstate Investments

Ying MAO^*
, Zheng WANG
, Hong ZOU

^*Corresponding author for this work

FACULTY OF BUSINESS

Research output: Journal Publications › Journal Article (refereed) › peer-review

Abstract

We document that firms prefer counties with higher ethnic diversity in locating their interstate investments, especially for those pursuing innovation, seeking to establish service centers, or managing a diverse workforce. We also find some evidence that interstate investment in high ethnic diversity locations results in increased patent applications, sales growth, positive media coverage, and overall operating performance. Taken together, we show that firms prefer to invest in ethnically diverse locations as they recognize the potential benefits of leveraging a diverse labor supply, such as enhancing problem-solving, innovation, and performance.

We must recognize that difference is a reason for celebration and growth, rather than a reason for destruction. (Audre Lorde)

Original language	English
Pages (from-to)	1-39
Number of pages	39
Journal	Journal of Financial and Quantitative Analysis
Early online date	29 Sept 2025
DOIs	https://doi.org/10.1017/S0022109025102202
Publication status	E-pub ahead of print - 29 Sept 2025

Bibliographical note

We thank the many constructive comments of Ran Duchin (Managing Editor), an anonymous reviewer, Ke Da (discussant), Zhaoran Gong, Stan Hoi, Brandon Julio, Zhenpin Lin, Jiaping Qiu, Lixin Nancy Su, Rui Wang, Feng Wu, Qiang Wu, Yue Zhang, Zoey Zhou, and participants at the Asian Finance Association conference and the research seminar of Lingnan University. We thank Professor Dane M. Christensen for sharing the data on executives’ political leaning and Professor Bill McDonald for making public the headquarter location information extracted from 10-K filings.

Publisher Copyright:
© 2025 Cambridge University Press. All rights reserved.

Funding

Zou acknowledges the financial support of University of Hong Kong Seed Fund for Basic Research (2402101958).

Keywords

Ethnic diversity
interstate investment
greenfield investment
business locations
local culture

Access to Document

10.1017/S0022109025102202Licence: CC BY

Cite this

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title = "Ethnic Diversity and Corporate Interstate Investments",

abstract = "We document that firms prefer counties with higher ethnic diversity in locating their interstate investments, especially for those pursuing innovation, seeking to establish service centers, or managing a diverse workforce. We also find some evidence that interstate investment in high ethnic diversity locations results in increased patent applications, sales growth, positive media coverage, and overall operating performance. Taken together, we show that firms prefer to invest in ethnically diverse locations as they recognize the potential benefits of leveraging a diverse labor supply, such as enhancing problem-solving, innovation, and performance. We must recognize that difference is a reason for celebration and growth, rather than a reason for destruction. (Audre Lorde)",

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doi = "10.1017/S0022109025102202",

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N2 - We document that firms prefer counties with higher ethnic diversity in locating their interstate investments, especially for those pursuing innovation, seeking to establish service centers, or managing a diverse workforce. We also find some evidence that interstate investment in high ethnic diversity locations results in increased patent applications, sales growth, positive media coverage, and overall operating performance. Taken together, we show that firms prefer to invest in ethnically diverse locations as they recognize the potential benefits of leveraging a diverse labor supply, such as enhancing problem-solving, innovation, and performance. We must recognize that difference is a reason for celebration and growth, rather than a reason for destruction. (Audre Lorde)

AB - We document that firms prefer counties with higher ethnic diversity in locating their interstate investments, especially for those pursuing innovation, seeking to establish service centers, or managing a diverse workforce. We also find some evidence that interstate investment in high ethnic diversity locations results in increased patent applications, sales growth, positive media coverage, and overall operating performance. Taken together, we show that firms prefer to invest in ethnically diverse locations as they recognize the potential benefits of leveraging a diverse labor supply, such as enhancing problem-solving, innovation, and performance. We must recognize that difference is a reason for celebration and growth, rather than a reason for destruction. (Audre Lorde)

KW - Ethnic diversity

KW - interstate investment

KW - greenfield investment

KW - business locations

KW - local culture

UR - https://www.scopus.com/pages/publications/105017459342

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JF - Journal of Financial and Quantitative Analysis

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Ethnic Diversity and Corporate Interstate Investments

Abstract

Bibliographical note

Funding

Keywords

Access to Document

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