LGBTQ-friendly policies have a positive impact on innovation, reveals new research.
Experts at Aalto University School of Business and the University of Vaasa find that scoring higher across LGBTQ-friendly metrics boosts the quantity and quality of patents in large US firms.
The researchers analysed scores from the Corporate Equality Index (CEI) in conjunction with data from the US Patent and Trademark Office and public databases on patent counts, citations, quality and the number of innovators in firms, spanning the years 2003–2017.
Their findings show that the number of patents rises by 20% for every standard deviation increase in a company’s CEI.
LGBTQ-friendly firms also demonstrate an almost 25% increase in the number of patent citations, indicating how other companies value the innovativeness of a patent.
“Our results demonstrate that firms with progressive LGBTQ policies produce more patents, have more patent citations, and have higher innovation quality as measured by patent originality, generality, and internationality,” says co-author Jukka Sihvonen from Aalto University School of Business.
The researchers have also processed additional data up until 2024, with indications that the positive trend may be intensifying over time.
These findings do not just apply to “blue states”, which are majority Democrat-supporting and more inclined to hold socially progressive values.
“It’s not as politically polarised as one might think. The results get marginally stronger when most conservative states are excluded, but the difference is really minor, and the findings remain largely the same when the most liberal states are left out,” says co-author Sami Vähämaa from the University of Vaasa.
With diversity, equity and inclusion (DEI) currently a subject of immense controversy in the US, this study offers crucial data on the impact of corporate policy in shaping effective business strategies.
“Innovation is the fuel that drives growth and profitability. Companies need innovation. The magnitudes of impact linked to LGBTQ-friendliness are big, and that means the economic significance is too,” says Sihvonen.
The study has been accepted for publication in the peer-reviewed journal International Review of Financial Analysis. A pre-publication version is available here.
- BlueSky Education