New research examining publicly traded US firms has found that implementing LGBT+ friendly policies can create added value whilst doing so in conservative states won’t be detrimental to business performance, proving that no business concerns should stand in the way of LGBT+ inclusion.
Led by academics from two Finnish universities including Jukka Sihvonen, Assistant Professor at Aalto University School of Business and Veda Fatmy, John Kihn, and Sami Vähämaa from the University of Vaasa, they “examined the association between LGBT‐friendly corporate policies and firm performance.”
From collected data on 657 publicly traded US firms between 2003–2016, they found “strong evidence” that LGBT+ friendly firms have higher profitability and stock market valuations.
They discovered that increased firm performance as a result of being LGBT+ friendly manifested in a number of ways including “greater employee commitment, improved job satisfaction, increased employee productivity, and more altruistic workplace behaviour.”
They also found that being LGBT+ friendly could increase a firm’s “competitiveness in the job market” by making it a more attractive employer, leading to better recruiting and retention efforts.
However, LGBT+ friendly firms in more liberal states experienced greater business benefits, including higher profitability and market valuation while for those in conservative states these were “weaker or non‐existent.”
However, for firms based in conservatives states, they need not worry that LGBT+ friendly policies would harm their performance; as the researchers found “the effect of LGBT friendliness on firm performance is at worst neutral, suggesting that the adoption of LBGT‐friendly policies does not generally have detrimental repercussions.”
This finding should reassure firms and encourage them to implement inclusive policies for the equity and wellbeing of their own workforce, irrespective of outside forces or sentiments, and even in an age where the legacy of Trump’s politics has caused further divisions in the United States.
The researchers added: “Ultimately, on a broader scale, these findings can be considered to support the view that socially progressive corporate policies and diversity management is worthwhile, and should be considered across the board.”
Sihvonen concluded: “Our empirical findings demonstrate that LGBT‐friendly corporate policies pay off, and the documented positive relationship between LGBT friendliness and firm performance can be considered economically significant.”