A diverse workforce has long been associated with mul- tiple firm benefits, but this is sometimes difficult to achieve due to employer discrimination. Although mul- tiple institutional arrangements have been put in place to ban discriminatory behavior, the effects of such reg- ulations remain relatively unexplored, often neglecting start-ups. We propose that institutional changes aiming to outlaw employment discrimination will trigger two main effects: they will (a) depress start-up founding rates through enhancement of wage-work appeal, and (b) increase the average start-up quality due to a higher threshold for leaving wage-work. We test our predic- tions by exploiting the staggered enactment of Employ- ment Non-Discrimination Acts in the U.S. Consistent with our theory, we find that this institutional protec- tion reduced the quantity of entrepreneurship but increased its quality.
Institutional protection of minority employees and entrepreneurship: Evidence from the LGBT employment non-discrimination acts / Conti, Raffaele; Kacperczyk, Olenka; Valentini, Giovanni. - In: STRATEGIC MANAGEMENT JOURNAL. - ISSN 0143-2095. - 43:4(2022), pp. 758-791. [10.1002/smj.3340]
Institutional protection of minority employees and entrepreneurship: Evidence from the LGBT employment non-discrimination acts
Giovanni Valentini
2022
Abstract
A diverse workforce has long been associated with mul- tiple firm benefits, but this is sometimes difficult to achieve due to employer discrimination. Although mul- tiple institutional arrangements have been put in place to ban discriminatory behavior, the effects of such reg- ulations remain relatively unexplored, often neglecting start-ups. We propose that institutional changes aiming to outlaw employment discrimination will trigger two main effects: they will (a) depress start-up founding rates through enhancement of wage-work appeal, and (b) increase the average start-up quality due to a higher threshold for leaving wage-work. We test our predic- tions by exploiting the staggered enactment of Employ- ment Non-Discrimination Acts in the U.S. Consistent with our theory, we find that this institutional protec- tion reduced the quantity of entrepreneurship but increased its quality.File | Dimensione | Formato | |
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