Breaking the rainbow ceiling: LGBTQ+ firm policies

Erasmus School of Economics

Behavioural economist Dr Georg Granic of Erasmus School of Economics and his co-authors have found evidence that younger firms, those with more financial resources, that cater to retail customers and are in politically liberal areas, have overall more LGBTQ+-friendly policies.

LGBTQ+ equality is a widely discussed and polarising topic. This debate is reflected in the large heterogeneity of different workplace policies adopted by large companies. Some firms have been open about their support to the LGBTQ+ community while others have publicly opposed same-sex marriage and stripped benefits from same-sex partners of their employees. But why do we observe such divergent choices?

In a recent paper, titled “Determinants of LGBTQ+ Corporate Policies” Georg Granic, together with his co-authors, Tanja Artiga González (VU Amsterdam), Paul Calluzzo (Queens University) and Nathan Dong (Boston College), identify factors that can explain differences in LGBTQ+ related corporate policies. A key insight is to realize that LGBTQ+ firm policies are quite distinct from other Corporate social responsibility firm policies. They are often met with less societal agreement and spark more backlash. This divisive nature of the societal debate around LGBTQ+-rights can be used to inform us about the circumstances under which firms are more likely to adopt LGBTQ+ friendly firm policies. The authors acknowledge that like other CSR policies, LGBTQ+ corporate policies are the results of internal or external pressures, but the paper highlights that specific factors drive LGBTQ+ policy.

In the view of the researchers, providing knowledge and understanding the heterogeneity in firm LGBTQ+ policies and the role shareholders’ involvement plays in this process, could directly benefit LGBTQ+ employees. For example, higher sensitivity to LGBTQ+ rights can lead to the creation of a safer workspace and therefore benefit members of the LGBTQ+ community. A higher sensitivity to LGBTQ+ rights can, therefore, also benefit other stakeholders of the business.

About Georg Granic

Georg Granic is an associate professor in the Applied Economics Department of Erasmus School of Economics. He is an interdisciplinary researcher and his interests lie at the intersection of Economics, Political Science, and Psychology. He strongly believes that insights from Psychology and Political Science can help us bear on important economic and social phenomena enriching our understanding of human behaviour. Granic is also Programme Coordinator of the school’s Bachelor Honours Class.

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The Review of Corporate Finance Studies, a major forum for the promotion and wide dissemination of significant new research in financial economics, has recently paid attention to the paper. You can read it here.

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