LGBTQ-friendly employee policies and corporate innovation

Abstract

This paper examines the association between LGBTQ-friendly employee policies and corporate innovation. Using data on large U.S. firms, we document that LGBTQ friendliness has a positive influence on innovation intensity and quality. Specifically, our results demonstrate that LGBTQ-friendly firms produce more patents, have more patent citations, and are associated with higher innovation quality as measured by patent originality, generality, and internationality. Furthermore, our empirical findings indicate that LGBTQ friendliness is positively associated with the firm-level concentration of innovative talent. Overall, our results are consistent with the view that diversity management policies may lead to competitive advantages for the firm.