Does Political Diversity Predict Organizational Dissatisfaction? Salience of Presidential Elections

Abstract

Political polarization is linked to increasing out-group hostility, as recently observed at the U.S. Capitol. Organizations are known to vary in their political leanings, but it is unknown how political diversity among coworkers affects organizational outcomes. Based on theorizing around similarity-attraction of values and identities, we propose that organizations with more political diversity evoke lower organizational satisfaction, specifically during national elections when political views become salient. With a sample of the S&P100 organizations and multi-source archival data starting in 2008, we find that U.S. organizations with greater political diversity (aggregated variability of employee donations to liberal or conservative political groups) elicit lower organizational satisfaction (averaged ratings from Glassdoor.com) than more homogeneous companies. Further, time-varying effect modeling (TVEM) shows that these negative relationships change across the election cycle, with strong inflections during the 2008 (Obama-McCain) and 2016 (Trump-Clinton) election years. A post-hoc test also showed that political diversity related negatively to performance (i.e., return on assets; ROA). Overall, organizations whose employees hold more diverse political views have worse outcomes during election years than organizations that more strongly lean in one direction, likely due to emergent conflict that is otherwise dormant. We provide directions forward for researchers and managers.