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Do LGBT Workplace Diversity Policies Create Value for Firms?

Author

Listed:
  • Mohammed Hossain

    (Griffith Business School
    Sohar University)

  • Muhammad Atif

    (University of Essex)

  • Ammad Ahmed

    (Zayed University)

  • Lokman Mia

    (Griffith Business School)

Abstract

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.

Suggested Citation

  • Mohammed Hossain & Muhammad Atif & Ammad Ahmed & Lokman Mia, 2020. "Do LGBT Workplace Diversity Policies Create Value for Firms?," Journal of Business Ethics, Springer, vol. 167(4), pages 775-791, December.
    • Handle: RePEc:kap:jbuset:v:167:y:2020:i:4:d:10.1007_s10551-019-04158-z
    DOI: 10.1007/s10551-019-04158-z
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