Shaking Things Up: Disruptive Events and Inequality

Abstract

This paper develops a theory of how disruptive events could reduce racial and gender inequality in organizations. Despite efforts from regulators and advocates, racial and gender inequality in the workplace remains high. I theorize that because the persistence of such inequality is often reinforced by organizational inertia, disruptive changes that shake up old hierarchies, break down routines, and shift culture could offer an opportunity for racial minority and women workers to advance. To examine this theory, I explore a critical but seldom analyzed organizational event in the inequality literature – mergers and acquisitions. Using a difference-in-differences design on a nationally representative sample covering 37,343 acquisitions from 1971 to 2015, I find that although acquisitions lead to occupational reconfigurations that favor higher-skilled workers, they also reduce racial and gender inequality. In particular, I find improved managerial representation of racial minorities and women and reduced racial and gender segregation in the acquired workplace. This post-acquisition effect is stronger when (a) the acquiring firm had greater racial and gender equality and (b) the acquired workplace lower racial and gender equality pre-acquisition. These findings suggest that certain types of radical organizational change could significantly advance racial and gender equality.