Is LGBT inclusion motivated by organizational performance? Exploring the relationships between performance feedback and LGBT inclusion in firms

Abstract

Aligned with changing societal norms toward lesbian, gay, bisexual, and transgender (LGBT) individuals, many firms strive to become more inclusive toward their LGBT stakeholders. Despite this positive trend, not all firms embrace LGBT inclusion; some choose to be less inclusive. We assert that considering organizational factors can explain why such disparities exist. We used the organizational performance feedback theory to understand the antecedents of LGBT inclusion in firms. Performance feedback theory proposes that firm performance relative to an aspiration level drives organizational actions. Using the Human Rights Campaign Corporate Equality Index of 269 US firms between 2012 and 2020, we demonstrated that as firms’ financial performance decreases below aspirations, or as it increases above aspirations, LGBT inclusion decreases. We also showed that the firm’s prior LGBT inclusion performance feedback moderates these relationships. Our study has important implications for performance feedback theory and LGBT inclusion in firms.