Institutional protection of minority employees and entrepreneurship: Evidence from the LGBT Employment Non-Discrimination Acts
Keywords: 
Discrimination
Entrepreneurship
Gender
Institutions
Start-ups
Discriminación
Emprendimiento
Género
Instituciones
Empresa emergente
Issue Date: 
22-Sep-2021
Publisher: 
John Wiley and Sons
ISSN: 
1097-0266
Citation: 
Conti, R., Kacperczyk, O., & Valentini, G. (2021). Institutional protection of minority employees and entrepreneurship: Evidence from the LGBT Employment Non-Discrimination Acts. Strategic Management Journal, 1– 34. https://doi.org/10.1002/smj.3340
Abstract
A diverse workforce has long been associated with multiple firm benefits, but this is sometimes difficult to achieve due to employer discrimination. Although multiple institutional arrangements have been put in place to ban discriminatory behavior, the effects of such regulations remain relatively unexplored, often neglecting start-ups. We propose that institutional changes aiming to outlaw employment discrimination will trigger two main effects: they will (a) depress start-up founding rates through enhancement of wage-work appeal, and (b) increase the average start-up quality due to a higher threshold for leaving wage-work. We test our predictions by exploiting the staggered enactment of Employment Non-Discrimination Acts in the U.S. Consistent with our theory, we find that this institutional protection reduced the quantity of entrepreneurship but increased its quality.
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