Mark James

University of Wisconsin - Milwaukee

Department of Management

3202 N. Maryland

Milwaukee, WI 53211

Telephone: (414) 229-2537

e-mail:  Mjames@uwm.edu

Acknowledgments: I would like to acknowledge the help, guidance, support and encouragement of Dr. Richard Priem and Dr. Paul Nystrom in writing this paper.  Thank you.

Abstract

This study examines the role of managerial discretion, environmental uncertainty, CEO power and CEO tenure on the adoption domestic partnership benefits by Fortune 500 companies. Using a logistic regression, I found that high managerial discretion and high environmental uncertainty increased the likelihood of a Fortune 500 company adoption domestic partnership benefits. Additionally, CEO tenure was negatively related to the likelihood of the adoption of domestic partnership benefits. Finally, CEO power was found not to have an impact of the adoption of domestic partnership benefits in Fortune 500 companies.

In 38 States it is legal to fire an employee because of real or perceived sexual orientation. Nine percent of gay, lesbian, bi-sexual and trans-gendered individuals report dismissal or being fired unfairly because of sexual orientation, while eight percent report pressure to quit a job because of harassment or a hostile workplace (Witeck- Combs Communications/Harris, 2002). Croteau (1996) reports one survey of gay and lesbian employees where between 25-66% of the respondents indicated some form of discrimination based on sexual orientation. Because of fears about potential discrimination, gay and lesbian employees may be particularly sensitive to signals from employers about the working environment. 299 of the Fortune 500 companies currently have non-discrimination policies that include sexual orientation. Non-discrimination policies that include sexual orientation are a non-monetary signal to the job market that gays and lesbians will not be discriminated against. The granting of domestic partnership benefits is a much stronger signal, which shows that a firm is willing to commit financial resources to attract gay and lesbian employees. For gay and lesbian employees these may be especially salient employment issues because of discrimination concerns.

This study examines factors that contribute to firms’ decisions to offer certain human resource policies to their employees. Specifically, how managerial discretion, environmental uncertainty and chief executive officer (CEO) power affect the likelihood of introduction of domestic partnership benefits in Fortune 500 companies. The following sections argue first that the adoption of such benefits is a Human Resource decision that is designed to attract a diverse set of employees in order to widen the scope of information and strategic options generation. Second, firms in industries characterized by high managerial discretion are more likely to adopt domestic partnership benefits than are firms in low managerial discretion industries. Third, an interaction effect exists between managerial discretion and environmental uncertainty. Managers in high discretion high turbulence environment will be more likely to adopt domestic partnership benefits to increase internal variance in order to cope with external environmental demands. Finally, an interaction effect exists between managerial discretion, CEO power and the adoption of domestic partnership benefits. CEOs with high organizational power in high managerial discretion environments will have greater probability of adopting domestic partnership benefits because of the potential benefits of a heterogeneous workforce.

THEORETICAL BACKGROUND

Employee Benefits

Most large employers offer fringe benefits such as health, dental, and life insurance to employee spouses and legal dependents. Domestic partner benefits extend those benefits to un-married and same sex couples. Some firms grant domestic partnership benefits only to same sex couples because heterosexual couples can marry. Currently, 181 Fortune 500 companies offer domestic partnership benefits to same sex couple and opposite sex couples.

The potential financial costs of extending employee benefits to domestic partners are hard to quantify. According to the 2000 United States Census, 93,000 or 1.6% of California’s couples were same sex and 47,000 or 1.4% of New York’s couples were same sex. The 2000 Census may have undercounted the same sex domestic couples population because all same sex couples may not have identified themselves as such on the Census.  Additionally, the granting of domestic partnership benefits may encourage gays and lesbians to identify their relationships as domestic partnership in order to qualify for employee benefits. Certainly not all potential domestic partners would sign up for benefits. The actual costs to any single firm may not be large relative to the total employee benefits expenses already incurred. The question remains why would firms voluntarily offer to incur additional expenses to offer such employee benefits?

Employers do not offer benefits due to institutional altruism. Firms serve the competing needs of stakeholders. A firm’s decision to offer expanded benefits coverage and incur additional costs can be viewed as a form of economic analysis. When the potential benefits of a particular policy outweigh the potential costs, then a firm generally adopts the policy under review. The analysis may not be simple because of non-tangibles. For example, Ragins and Cornwell (2001) found that gays and lesbians who work at firms with Human Resource policies that include domestic partnership and non-discrimination language perceive less workplace discrimination, and are less likely to report a desire to leave their current employers, and have higher organizational commitment. Organizational benefits from creating human resource policies directed at gays and lesbians exist.

Curiously, a search using ABI Inform and EBSCO of the mainstream peer reviewed business literature reveals that there has been very little research on issues affecting gays and lesbians in the workplace and no research has examined the issue of domestic partnership benefits. This study examines the organizational and environmental factors associated with firms offering such benefits.

Managerial Discretion

Do managers matter? That question is at the heart of any discussion of managerial discretion. Managerial discretion (Hambrick and Finkelstein 1987) reflects the latitude managers have in strategic decision-making. High managerial discretion implies that managers and managerial choice have a large effect on the outcomes of a company, and low managerial discretion implies that the actions of managers have a small effect on the outcomes of a company. Theoretically, the impact of managerial discretion lies along a continuum from not at all to absolutely, with most managerial impact somewhere in-between.

Hambrick and Finkelstein (1987) outlined three sources of managerial discretion: 1. the characteristics of a firm’s environment, 2. the characteristics of the firm and 3. the personal traits of the manager. Each source represents an important aspect of managerial discretion, and each aspect represents multiple factors, which may be independent. Empirical support for this theoretical view of managerial discretion exists. Finkelstein and Boyd (1998) found that CEO pay was higher in high discretion industries reflecting the greater impact of managerial decisions on organizational outcomes. Finkelstein and Hambrick (1990) found an interaction between team tenure, organizational outcomes, and managerial discretion. The correlation between team tenure and organizational outcomes was much stronger in high managerial discretion industries than in low managerial discretion industries offering support for the view that managers, in high discretion industries, generate greater impact on the outcomes of their firms. These studies suggest larger variances in potential outcomes in high discretion industries than in low discretion industries, and that managers in high discretion industries are unable to apply mimetic solutions to strategic problems.

HYPOTHESIS DEVELOPMENT

Organizational Diversity Benefits

Several studies establish the link between the diversity of a group and outcomes. At the organizational level, Richard (2000) found that racial diversity within an organization influences a firm’s strategy and has a beneficial impact on firm outcomes. Wright, Ferris and Kroll (1995) found that the stock market rewarded companies recognized by the government for diversity policies. In the strategic management literature, consistent empirical support for the relationship between the diversity of top management teams (TMTs) and positive organizational outcomes exists. In the airline industry, Hambrick, Cho and Chen (1996) found that diverse functional backgrounds, education, and organizational tenure positively related to the propensity for strategic action and performance. Other studies have found relationships between younger TMTs, shorter tenure, and high education levels with strategic innovation (Bantel and Jackson, 1989).   Overall the findings indicate that TMT diversity leads to the generation of greater numbers of strategic options and enhanced strategy quality.

Organizational Diversity Costs

Potential internal costs associated with diversity within an organization exist. Research finds that homogeneous groups appear more socially integrated (Pfeffer1983) and reach agreement easier about organizational goals. Group decision-making may be hindered by heterogeneity. Pelled (1996) found that certain types of diversity, such as age, race and gender promote emotional conflict between group members, which slows down group decision-making. Frequency of communications is lower among heterogeneous group members, which inhibits consensus building and decision-making within a group.

Additionally, the costs of promoting organizational heterogeneity may not only be internal. The Disney Company, which is in a high discretion industry, was in 1996 an early adopter of domestic partnership benefits. As a result of its domestic partnership benefits policy, Christian groups around the United States implemented economic boycotts of Disney, which have continued into the year 2002. Disney constitutes an entertainment company that sells an image of family entertainment and the potential loss of sales and goodwill to the Disney Corporation were high. Disney followed through with a domestic partnership benefits policy and the boycotts have not been universally embraced. It is likely that Disney’s management viewed the potential benefits of offering domestic partnership benefits as higher than the costs of boycotts and bad publicity.

Managers in low discretion industries are constrained by industry and environmental factors and have less impact on the outcomes of the firm and as a result need to generate a narrower scope of managerial options. Managers in low discretion industries receive a lower marginal benefit from promoting a diverse workforce through human resource policies such as domestic partnership benefits. The internal costs created by group diversity may not be offset by the more limited benefits, which accrue in the low manager discretion environment. Therefore, managers in low discretion industries are more likely to abstain from human resource policies such as domestic partnership benefits, which promote internal diversity, so as not to create internal organizational conflict and potentially irritate powerful stakeholder groups, leading to hypothesis 1.

Hypothesis 1. The greater the level of managerial discretion the higher the probability that a firm will adopt domestic partnership benefits.

Moderator Variables

Firm specific and individual traits may moderate the relationship between managers’ discretion and the adoption of domestic partnership benefits. Moderator variables (Howell, Dorfman, and Kerr 1986) neutralize or enhance the predictive relationship between the predictor variable and the variable of interest or change the form of the relationship. Neutralizer variables diminish a predicted relationship and enhancers increase or augment a predicted relationship. 

The environment may be a key moderating variable on the relationship between managerial discretion and the adoption of domestic partnership benefits. Firms in complex environments need to generate ‘internal variety’ (McGrath 2001) in order to cope with the high demands of the external environment. Effective organizational adaptation to the environment requires a high enough degree of internal variance in order for an organization to learn, change, and adapt to changing environments. Eisenhardt (1989) found that computer firms that generated more information, decision options and made faster decisions had better performance outcomes. Clearly a diverse workforce that is capable of generating wide ranging strategic options and choices is of value in some industries.

Managers in high discretion industries facing uncertain environments need to generate wider ranges of options in order to successfully cope with environmental uncertainty. Managers of firms operating in high managerial discretion industries and with high environmental uncertainty therefore have very strong reasons to recruit a diverse workforce. However, firms in high managerial discretion and low uncertainty industries firms need to respond to fewer external environmental stimuli. As a result, managers in high discretion - low uncertainty industries do not need to generate as large a number of managerial options because of the less complex environment. Therefore, we should see an interaction between managerial discretion and environmental uncertainty on the likelihood of the adoption of domestic partnership benefits. The table below shows the expected interactions between the managerial discretion and an uncertain environment, leading to hypothesis 2. 

Hypothesis 2A. High environmental uncertainty will be positively associated with rates of adoption of domestic partnership benefits.

Hypothesis 2B. Companies in High Managerial Discretion industries and in Highly Uncertain Environments will see the highest adoption rates for domestic partnership benefits.

Hypothesis 2C. Companies in Low Managerial Discretion industries and in Low Uncertainty Environments will see the lowest adoption rates for domestic partnership benefits.  

Theory suggests that the personal traits of the chief executive officer such as CEO power, and CEO tenure will affect the relationship between managerial discretion and the adoption of domestic partnership benefits. Additionally, theory suggests that organizational traits such as size, and organizational slack will affect the relationship between managerial discretion and the adoption of domestic partnership benefits.

CEO Power

Potential positive organizational benefits to concentrating power within the office of the CEO exist. Finkelstein and D’Aveni (1994) suggest that ‘strong and unambiguous CEO leadership is an integral part of the success of an organization….non-duality…weakens and disrupts CEOs’ ability to manage the task environments their organizations face.’  Mueller and Barker (1997) found that for declining firms, CEO duality (CEO is also the Chairman of the Board of Directors) was positively related to successful turnarounds. These findings suggest that CEO’s with high power are clearly in charge, have fewer centers of power to deal with politically and can offer strong leadership by setting a clear organizational direction. Haleblian and Finkelstein (1993) found that CEO dominance and firm performance were correlated in high discretion environments but were not significantly correlated in a low-discretion environment, reflecting the ability of powerful managers to affect organizational performance in high discretion industries. These studies show that CEO power can be associated with positive performance.

Organizations in high managerial discretion industries face high degrees of uncertainty and can address that uncertainty by recruiting a diverse workforce to ensure variance in the environmental coping process. A high power CEO has the clear leadership authority and power to implement human resource policies that are directed at creating the internal diversity or variance generating ability that is critical to operating within a complex environment.

This is a contingency view of the use of CEO power. When a CEO has a high degree of organizational power and managerial discretion is high, it may be in a CEOs interest to use their power to adopt diversity policies because of the potential benefits of heterogeneity within a firm. However, when managerial discretion is low a CEO with high power has less incentive to exercise their power to implement domestic partnership benefits policies. Diversity policies on balance have either a positive or an adverse impact on organizational performance because of the positive and negative effects of group diversity.  If this view is correct an interaction effect between managerial discretion and CEO power exists, leading to hypothesis 3.

Hypothesis 3A. Companies headed by CEOs with high power will have a greater probability of adopting domestic partnership benefits.

Hypothesis 3B. The adoption of domestic partnership benefits is more strongly related to CEO power in high managerial discretion industries than in low managerial discretion industries.   

CEO Tenure

Research on Top Management Teams (TMTs) has consistently shown that the longer the tenure, the fewer organizational risks taken by the CEO, and the more they become committed to the organizational status quo. Studies of executive tenure have shown that executives with longer tenure are less flexible, consider fewer strategic options, and exercise less managerial discretion (Finkelstein & Hambrick, 1990). Therefore, as CEO tenure increases CEOs become more conservative and the probability of adopting potentially controversial policies such as the granting of domestic partnership benefits decreases, leading to hypothesis 4.

Hypothesis 4. The longer the tenure of the CEO the less likely it is that a firm will adopt domestic partnership benefits.

Figure 1 shown below is a schematic of the hypothesized relationships.

Diffusion of Innovation

Diffusion of innovation is the spread of an idea, process or product within a community (Strang and Soule 1998) and denotes flow from one party to another within a community. Innovations are unique or novel ideas that are understood within a community as being progressive and beneficial to the members of a community.  Administrative innovations (Damanpour 1987) ‘change an organization’s structure or its administrative processes’ and include new human resource policies pertaining to the hiring of new employees.

A common finding from the diffusion of innovation research has been that adoption rates follow a normal distribution (Rogers 1962, Rogers and Shoemaker 1971) and when the cumulative adoption rate is plotted over time the graph resembles an S-shaped curve (Rogers 1995). The rate of diffusion of successful innovation is low in the beginning as two groups, innovators and early adopters accept the innovation. Those two groups account for 0% to 15% of the total adopters. After a critical mass has been reached, greater than 20% of the potential adopters (Rogers 1995), the adoption rate accelerates and the innovation becomes the norm. The S-shaped curve can be explained as a process where innovators and early adopters communicate information about the innovation through channels in a social system. Early adopters’ choices influence the remaining members of the social system, who subsequently adopt the innovation. If offering domestic partnership benefits follows this same logic we should see the classic S-shaped curve in its cumulative adoption rates, leading to hypothesis 5.

Hypothesis 5. The adoption of domestic partnership benefits is a diffusion of administrative innovation and will be characterized by an S-shaped adoption curve. 

METHOD

Sample

The initial pool for this study included all 2001 Fortune 500 companies. I excluded 95 service companies that were in the 6000 range of the SIC codes. These companies were mainly in the banking and insurance industries and were excluded from the analyses because many of the accounting rules that govern these firms are substantially different than for non-financial companies. Of the remaining 405 companies, 81 companies were excluded from the analysis because measures of managerial discretion or environmental uncertainty were not available. The total sample size used for analysis was 324 companies.

Measures

Domestic Partnership Benefits.  The dependent variable, domestic partnership benefits, was defined as the presence (coded 1) or absence (coded 0) of benefits. The Human Rights Campaign Foundation, an organization which works for lesbian, gay, bi-sexual and transgender equal rights, provided the domestic partnership benefits policies data for the Fortune 500 companies. Of the 181 Fortune 500 companies that have domestic partnership benefits, 109 companies remained in the study after firms were eliminated due to missing data.

Managerial Discretion. Managerial discretion measures the extent to which a manger has influence over the performance outcomes of a company. Hambrick and Abrahamson (1995), and Finkelstein and Hambrick (1996) sought to quantify the aspects of managerial discretion. They calculated numerical values for 70 standard industry codes (SIC) based on seven industry factors: 1. product differentiability, 2. market growth, 3. demand, 4. capital intensity, 5. competition, 6. legal constraints and 7. the power of stakeholders. Measures are available for 70 different 4 digit SIC code industries, which did not include all of the fortune 500 companies. The number of companies include in the sample was enlarged by assigning managerial discretion values to companies first based on 3 digit SIC codes and then 2 digit SIC codes.

Environmental Volatility. Sorensen (2002) used industry Beta estimates from the Capital Asset Pricing Model as a measure for volatility. He argued that ‘industries undergoing fundamental change are likely to be characterized by greater uncertainty among investors and hence greater than average volatility in stock-market return’. Using 5 years of monthly returns for each stock Damodaran (2002) calculated betas for one hundred industry sectors based on SIC codes, which I used for this study. For SIC codes missing from Damodaran, I calculated a weighted average industry beta from Value Line data.

CEO Power. CEO duality (CEO is also Chairman of the Board of Directors), is a measure of CEO power. CEO power was determined for the year that a company adopted domestic partnership benefits. CEO power from non-adopting companies was determined for the year 2001. CEO’s who were also Chairman of the Board were coded 1 and those who were not were coded 0.  Data for this variable were obtained through the COMPUSTAT’s Executive Compensation files.

CEO Tenure. CEO tenure measures the amount of time that an individual had been CEO.  CEO tenure was determined by subtracting the year that the individual became CEO from the year of adoption of domestic partnership benefits. CEO tenure from non-adopting firms was calculated from the year 2001. These data were obtained through  COMPUSTAT’s Executive Compensation files.

Control Variables

Five control variables were added to control for potential spurious correlations: 1. Non-discrimination legislation by state 2. airlines 3. gay population by state proxy 4. firm size and 5.  a measure for organizational slack.

State legislation. Companies operating in states that ban discrimination based on sexual orientation may be sensitized to gay and lesbian issues and may be more likely to adopt domestic partnership benefits.  States that have such legislation were coded 1 and all others were coded 0.  This data was obtained from the Human Rights Campaign foundation, which maintains a database that tracks the non-discrimination policies of states

Airlines. In 1997 the City of San Francisco passed an ordinance requiring city contractors to provide domestic partnership benefits to their unmarried employees. Airlines that flew into San Francisco International Airport (SFO) were required to offer domestic partnership benefits to their local employees. This may have prompted airlines to offer domestic partnership benefits company wide for the sake of consistency. Airlines were coded 1 and all other companies were coded 0.

Gay Population. A large local gay population may create a social climate that is conducive for companies to offer gay and lesbian friendly human resource policies. I used the percentage of self-reported same sex couples on the 2000 United States Census as a proxy measure for the overall gay population by state.

Firm Size. Firm size may affect the adoption of domestic partnership benefits because generally larger firms are less nimble than smaller rival resulting from having greater product and or task diversity which requires greater structural complexity to manage (Blau and Schoenherr 1971), more formalized structure and or behaviors (Blau and Schoenherr 1971) with more decentralized decision making. Making larger firms less willing to adopt innovative human resource policies. Firm size was measured as the natural log of the net sales of each company for the year 2001. Using the natural log of a firm’s sales is a standard measure of size. Data for this variable were obtained through COMPUSTAT.

Organizational Slack. Organizational slack is the presence of resources beyond the immediate needs of an organization. When an organization possesses slack resources it has the ability of make choices that are unavailable to firms with more constrained resources. The presence of sufficient organizational resources or slack is a necessary but not sufficient condition for many managerial decisions. Firms with a low level financial slack may be more cautious and more reactionary than firms with high levels of slack. For example, Haveman (1993) found that small savings and loan institutions were unable to enter new markets because they lacked the financial resources. The adoption of domestic partnership benefits by a company may not, by itself significantly increase a company’s expenditures on employee benefits however, a firm with low levels of slack may be particularly sensitive to any un-necessary organizational expenditures. Organizational slack was measured by as the ratio of a companies assets over its long-term liabilities (Weinzimmer, Nystrom and Freeman 1998). Data for this variable were obtained through COMPUSTAT.

Data Analysis

Using SAS version 8, I performed a hierarchical logistic regression to examine the data. Four logistic regression analyses were conducted. In the first model I entered the control variables. In the second model I tested the main effects model by regressing domestic partnership benefits on the control variables and managerial discretion, environmental uncertainty, CEO power and CEO tenure. In the final two models I tested the interaction effects predicted by Hypotheses 2B, 2C and 3B.

Results

Descriptive Statistics

Descriptive statistics are reported for all variables in the data in table 1. An examination of the correlations shows that the correlation between managerial discretion and the number of years that a firm had offered domestic partnership benefits was positive and significant, offering preliminary support for hypothesis 1.

Table 2 shows the results of the Hierarchical logistic regression models that were used to test the hypotheses.

A hierarchical logistic regression was used to test the hypotheses. In Model 1 the control variables were entered. The Chi-square of the likelihood ratio for model 1 was 64.06 and the model was significant at the .001 level.

Hypothesis 1 predicts a positive association between Managerial Discretion and the adoption of domestic partnership benefits. Model 2 in Table 2 shows the regression results for the model that includes the addition of Managerial Discretion, Environmental Uncertainty, CEO Power, and CEO Tenure. The concordant percentage, or the number of cases that were correctly classified was 83.6% and the Chi-Square of the likelihood ratio increased by 48.48, which is significant at the .001 level. The overall model has a good fit and I can conclude that at least one of the three variables contributes significantly to the model. The coefficient for Managerial discretion was positive and significant at the .001 level. These results offer strong support for hypothesis 1 that managerial discretion is positively related to the adoption of domestic partnership benefits. 

Hypothesis 2A predicts that high environmental uncertainty will be associated with the adoption of domestic partnership benefits. Model 2 shows that the estimate for environmental uncertainty is significant at the .01 level, offering strong support for hypothesis 2A that environmental uncertainty is positively related to the adoption of domestic partnership benefits.

Hypotheses 2B and 2C predict an interaction between managerial discretion and environmental uncertainty. Model 3 on table 2 shows the results. The interaction term was not significant. The concordant percentage, or the number of cases that were correctly classified was 83.8%, an increase of .2% over model 2. The Chi-Square of the likelihood ratio was 112.88, which was an increase of .34 over model 2. The increase in Chi-square was not significant and the addition of the interaction term does not contribute to the model. There is no support for the hypotheses 2B or 2C.

Hypothesis 3A predicts that companies headed by CEOs with high power will have a greater probability of adopting domestic partnership benefits. Model 2 on table 2 shows that the coefficient for CEO Power was not in the predicted direction and the coefficient was not significant which does not support hypothesis 3. The negative sign of the coefficient may indicate that the relationship between CEO power and the adoption of these benefits is negative but the lack of significance does not allow us to draw firm conclusions.  Model 4 on table 2 shows the results for the test of hypothesis 3B, The concordant percentage, or the number of cases that were correctly classified was 83.0 %, which was no increase over model 2. The Chi-Square of the likelihood ratio was 112.64, which was an increase of .10 over model 2. The increase in Chi-square was not significant and the addition of the interaction term between CEO power and managerial discretion does not contribute to the model. The coefficient is in the hypothesized direction but it is not significant. There is  no support for hypothesis 3B.

Hypothesis 4 predicts that CEO tenure will be negatively related to the adoption of domestic partnership benefits. Model 2 on table 2 shows that the coefficient for CEO tenure is in the predicted direction and is significant at the .01 level. Offering strong support for hypothesis 4.

Hypothesis 5 predicts that the adoption of domestic partnership benefits will follow the classic S shaped curve seen in other diffusion of innovation studies. Fitting a quadratic line to the data tests the hypothesis that the early shape of the curve resembles an S shape. Using the curve estimation function in SPSS a quadratic line was fitted to the data (See Table 3). The adjusted R squared was .993 and the model was significant at the .001 level, offering strong support for hypothesis 5.

Discussion and Conclusions

This study examined the relationship between the adoption of domestic partnership benefits, managerial discretion, environmental uncertainty, CEO power and CEO tenure. I argued that at least four factors would influence companies’ decisions to adopt such benefits: high managerial discretion industries, highly uncertain environments, high CEO power, and length of CEO tenure. Several important finding emerged. First, managerial discretion was positively and significantly associated with the adoption of domestic partnership benefits. Companies where mangers have a large impact on performance outcomes are more likely to adopt domestic partnership benefits. This may reflect the desire by those managers to create organizational diversity and capture the benefits of a workforce with diverse backgrounds.  From the results of the model, it appears that managers in high discretion industries value workplace diversity and are willing to signal to the job market through their human resource policies that they value a heterogeneous workforce.

The second major finding was that environmental uncertainty was positively and significantly associated with the adoption of domestic partnership benefits. In highly uncertain environments companies need to generate internal variety in order to cope with changes in the external environment. One way firms may generate internal variety is through the use of human resource policies such as domestic partnership benefits, which are designed to attract a diverse workforce.

Third, CEO tenure had a significant negative effect on the adoption of domestic partnership benefits. This supports the research done on Top Management Teams that CEO tenure is negatively related to risk. Finally, neither of the interaction terms nor CEO power contributed significantly to the models.

These results may be generalizable to other types of Human Resource policies that companies adopt. Firms in high managerial or those that operate in environments of high uncertainty may in general be risk takers and or innovators of new human resource polices. Those policies may be an effort on the part of companies to attract and retain the best and brightest employees regardless of their personal demographics. Additionally, these types of companies may have ‘family friendly’ human resource policies such as flexible working schedules, family medical leave, educational reimbursement and others. Additional, research might focus on the broader question of the factors that lead to companies adoption of such benefits.

An interesting finding was that company size was positively related to the adoption of domestic partnership benefits. Past research has shown that large firms tend to be more bureaucratic and less innovative. These results suggest that larger firms are more likely to adopt domestic partnership benefits. It may be that the larger companies on the Fortune 500 list are better known and sensitive to their public images. At some point when an administrative innovation becomes sufficiently diffused throughout the business community then offering domestic partnership benefits becomes more acceptable and at that point well known companies may be more likely to adopt domestic partnership benefits to conform to the prevailing institutional or community norms.

References

Bantel, K. A. & Jackson, S. E. (1989). Top management and innovations in banking: Does the composition of the top management team make a difference? Strategic Management Journal, 10, 107-124,  Sp. Iss.

Blau, P. M. & Schoenherr, R. (1971). The structure of organizations. New York: Basic Books. -

Croteau, J. M. (1996). Research on the work experiences of lesbian, gay and bi-sexual people: An integrative review of methodology and findings. Journal of Vocational Behavior, 48, 195-209.

Damanpour, F. (1987). The adoption of technological, administrative, and ancillary innovations: Impact of organizational factors. Journal of Management, 13 (4), 675-688.

Eisenhardt, K. M. (1989). Making fast strategic decisions in high velocity environments. Academy of Management Journal, 32 (3), 543-576.

Finkelstein, S. & Boyd, B. K. (1998). How much does the CEO matter? The role of managerial discretion in the setting of CEO compensation. Academy of Management Journal, 41 (2), 179-199.

Finkelstein, S. & Daveni, R. A. (1994).CEO duality as a double-edged sword: How boards of directors balance entrenchment, avoidance, and utility of command. Academy of Management Journal, 37 (5): 1079-1108.

Finkelstein S. & Hambrick, D. C. (1996). Strategic Leadership: Top executives and their effects on organizations. St. Paul, MN: West Publishing Company.

Finkelstein, S., & Hambrick, D.C. (1990). Top management team tenure and organizational outcomes: The moderating role of managerial discretion. Administrative Science Quarterly, 35 (3), 484-503.

Haleblian, J. & Finkelstein, S. (1993).Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Academy of Management Journal, 36 (4): 844-863.

Hambrick, D. C. & Abrahamson, E. (1995). Assessing Managerial Discretion Across Industries: A multimethod approach. Academy of Management Journal, 38 (5), 1427-1441.

Hambrick, D.C., Chou, T. S. & Chen, M. J. (1996). The influence of top management team heterogeneity on firms’ competitive moves. Administrative Quarterly, 40,  649-684.

Hambrick, D. C. & Finkelstein, S. (1987). Managerial discretion: A bridge between polar views on organizations. In L. L. Cummings & B. M. Staw (eds), Research in organizational behavior.  Greenwich, CT: JAI Press.

Haveman, H. A. (1993), Organizational size and change: Diversification in the savings and loan industry after deregulation. Administrative Science Quarterly, 38, 20-50.

Howell, J.P., Dorfman, P. W., & Kerr, S. (1986). Moderator variables in leadership research. Academy of Management Review, 11 (1), 88-102.

http://www.gaydemographics.org/USA/2000Census_Gay_state.htm

http://www.harrisinteractive.com/news/allnewsbydate.asp?NewsID=122

<