Organizational Actions in Face of Institutional Contestation: Diffusion of LGBT-Friendly Policies

Abstract

Institutional contestation, the conflicting and often contradictory demands of multiple institutions within modern society, has received increasing attention since the introduction of the concept. However, little attention has been paid to the actions of those organizations at the boundary of such competing or contradictory institutional pressures. We examine one set of such organizational responses to conflicting institutional demands, the implementation of work place policies for Lesbian, Gay, Bisexual, and Transgender (LGBT) employees by major U.S. firms. Examining firm adoption of LGBT policies by 627 firms across 3114 firm-year observations between 2002 and 2011 as measured by the Human Rights Campaign Corporate Equality Index (CEI), we first find that normative pressures stemming from their home state's educational level and liberal political ideology positively influence CEI scores. Next, coercive pressures stemming from state-level gay non-discrimination employment laws positively influence CEI scores, while stigmatizing, anti-gay marriage constitutional amendments negatively influence these scores. Third, mimetic pressures from industry competitors' GLBT policies positively impact CEI scores. Finally, factors influencing organizational discretion (professional service industry and profitability) increase the adoption of CEI policies.