Do LGBT Workplace Diversity Policies Create Value for Firms?

Document Type

Article

Source of Publication

Journal of Business Ethics

Publication Date

1-1-2019

Abstract

© 2019, Springer Nature B.V. We show that the U.S. anti-discriminatory laws prohibiting discrimination in the workplace based on sexual orientation and gender identity (i.e. lesbian, gay, bisexual, and transgender (LGBT) identities) spur innovation, which ultimately leads to higher firm performance. We use the Human Rights Campaign’s Corporate Equality Index (CEI) of 398 (1592 firm-year observations) U.S. firms between 2011 and 2014, and find a significantly positive relationship between CEI and firm innovation. We also find that an interacting effect of CEI and firm innovation leads to higher firm performance. We use our understanding of Rawls’ Theory of Justice and stakeholder theory to show that firms with workplace diversity policies are likely to be more innovative and perform better than those without such policies. Our results are robust to endogeneity, reverse causality and simultaneity issues. Our results will trigger debate in similar markets around the globe on the economic benefits of LGBT workplace diversity policies for firms.

ISSN

0167-4544

Publisher

Springer Science and Business Media B.V.

Volume

167

Issue

4

First Page

775

Last Page

791

Disciplines

Business

Keywords

Firm performance, Innovation, LGBT, Workplace diversity

Scopus ID

85065144518

Indexed in Scopus

yes

Open Access

yes

Open Access Type

Green: A manuscript of this publication is openly available in a repository

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