by Raffaele conti -Full Professor and holder of the CY chair of excellence in Strategy and Innovation at ESSEC Business School.
Regulations and policies aimed at preventing workplace discrimination have a significant impact on entrepreneurship. A recent study by Raffaele Conti, Olenka Kacperczyk, and Giovanni Valentini examined the effects of the Employment Non-Discrimination Act (ENDA) in the United States on startups, with a particular focus on its impact on sexual orientation and gender identity discrimination.
The study found that when ENDA was enacted at the state level between 1980 and 2006, there were fewer new startups in those states. However, the startups that did emerge were of higher quality. The quality was measured in terms of patent applications, venture capital raised, and firm survival rates. The researchers observed a positive correlation between the implementation of antidiscrimination laws and increased startup quality.
Additionally, the impact of antidiscrimination laws was more pronounced in states with larger LGBT populations and higher levels of discrimination. In such states, there were fewer new firms, but the ones that emerged were of higher quality.
The study also considered startups founded by all minority groups and found that the presence of antidiscrimination policies made individuals from minority groups less likely to transition to entrepreneurship. In an experiment with over 400 employees, those who were exposed to workplace policies enacted as a result of ENDA reported higher satisfaction with their employer and were less likely to consider leaving their job to become entrepreneurs. This indicates that antidiscrimination policies enhance the appeal of the workplace.
At the firm level, companies in states that implemented ENDA were more likely to adopt antidiscrimination and pro-diversity practices. These firms also displayed higher corporate social responsibility scores. The presence of these policies at the firm level was associated with fewer new ventures but higher-quality ones.
In conclusion, this research highlights that antidiscrimination policies not only improve the work environment for minority populations but also enhance the quality of entrepreneurship. These findings provide valuable insights for policymakers looking to promote both employee welfare and the quality of new business ventures.
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