The idea that diversity should be implemented in order to gain market share in diverse markets is sometimes called the Access and Legitimacy Paradigm.
Hiring diverse workers can give you access to markets that otherwise might be tough to conquer. The legitimacy portion refers to the trust that is inherent when dealing with people that look similar to you.
Having already gone over the basic assumptions, I will delve further into the strengths and weaknesses of this theory.
First, consider why a manager would want to use this theory to build a workplace diversity program.
The positives are pretty obvious. The access and legitimacy paradigm works in practice, as people do feel more comfortable dealing with people who look like they do. It gives companies immediate access to different demographic groups. Businesses who engage in this sort of diversity program usually deal with many different ethnicities and groups of people. That is why it is so easy for them to see the positives of using this theory.
One example could be Anheuser's expansion into the Chinese or Indian beer market.
Although they have extensive knowledge of brewing, marketing and distributing, they have little knowledge of the Chinese beer market. Cultural differences can sometimes be quite significant when breaking into new market.
For instance, beer markets in China are segmented and rely on smaller microbrews as opposed to a large nationalized brand such as Budweiser. The tastes of each region are also significantly different because of the sheer size of China and different traditions. Also, legal and cultural issues can arise when trying to form partnerships and alliances with distributors and brewers in foreign nations.
Another example is India, where drinkers prefer higher alcohol content items such as whiskey and other hard liquors. How can Anheuser break into a market that does not have an existing preference or taste for beer? Also, India does not allow the explicit advertising of alcohol on television. This is another obstacle for a marketing giant such as AB.
This is where the access and legitimacy theory takes hold. When expanding into another market, it is safe to say that a little local knowledge can go a long way. For those reasons, a company like Anheuser may hire foreign born and raised students that get their MBAs in the United States. This gives them fresh perspective from a qualified professional that is willing to return to their home and operate for them. Knowledge of local laws, customs and connections to the business community are also a positive.
If Anheuser installs a Chinese team across the pond, however, there are several problems that can arise. What if the members of that team quit? There are potential problems if there is not an existing communications network so that the knowledge of team members can be assimilated throughout the company. However, foreign workers may be hesitant to facilitate this communication process because they see part of their value tied to the fact that they have extensive knowledge of the local customs and laws. Therefore, knowledge silos can exist between the corporation and their satellite teams.
This is the major weakness of the access and legitimacy theory.
If you use these people to enter a market, you must be certain to learn from those people and their differences.
The worst thing that a company using this paradigm can do is to use their diversity as a tool to enter a market, and then forget to learn from those people.