Diversity Is Good for Business in Hollywood, according to UNC Kenan-Flagler Business School Study

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Box-office revenues are 149% higher in films with multiple black actors in leading roles compared to films with no black actors, according to a new study.

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Films with multiple black actors in leading roles achieve significantly higher domestic box-office revenues than films with no black actors, according to a new study from the University of North Carolina Kenan-Flagler Business School.

“Hollywood should take note – box-office revenues are 149% higher in films with multiple black actors in leading roles compared to films with no black actors,” says Venkat Kuppuswamy, assistant professor of strategy and entrepreneurship at UNC Kenan-Flagler.

Peter Younkin, assistant professor of strategy and organization in the Desautels Faculty of Management at McGill University, co-authored the study, “Blaming the Customer: The Effect of Cast Racial Diversity on the Performance of Hollywood Films.”

They evaluated the commercial and artistic performance of films released theatrically within the U.S. between 2011-2015 as a function of their casts’ racial diversity.

“We provide a rare direct test of the consumer discrimination hypothesis and find that increasing the number of black actors or actresses does not diminish critical or commercial appeal. Further, hiring black actors or actresses in leading roles increases domestic sales but does not harm global sales,” said Kuppuswamy. “We conclude that the evidence of persistent discrimination in Hollywood can’t be attributed to the preferences of the consumer, but must instead rest at the feet of the employer.”

They found that employing black actors for less prominent roles has no effect on commercial box-office performance – the prominence of the role matters significantly.

“The higher commercial performance domestically doesn’t occur at the expense of artistic success or international box-office appeal,” the authors write. “Specifically, we find no evidence of a penalty with respect to Academy Award nominations or international film revenues for films with more black actors. These results indicate that the persistent underemployment of minorities in Hollywood is not the product of consumer discrimination.”

About the University of North Carolina Kenan-Flagler Business School
Consistently ranked one of the world's best business schools, UNC Kenan-Flagler is known for its collaborative culture that stems from its core values: excellence, leadership, integrity, community and teamwork. Professors excel at both teaching and research, and demonstrate unparalleled dedication to students. Graduates are effective, principled leaders who have the technical and managerial skills to deliver results in the global business environment. UNC Kenan-Flagler offers a rich portfolio of programs and extraordinary, real-life learning experiences: Undergraduate Business, full-time MBA, Executive MBA Programs (Evening, Weekend and global OneMBA®), online MBA@UNC, UNC-Tsinghua Dual-Degree EMBA, Master of Accounting, PhD, Executive Development, and UNC Business Essentials programs. It is home to the Frank Hawkins Kenan Institute of Private Enterprise.

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