Glenn Carroll: How Do Local Businesses Affect Social Policy?

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An Apple employee waves a rainbow flag before marching in the San Francisco Gay Pride Festival, 2014. (Reuters photo by Noah Berger)

Many types of organizations can influence social policy change. Lobbying efforts by an association can have an impact, protests and rallies can sway public opinion, and nonprofits and interest groups can use litigation to change laws.

Indeed, social scientists have devoted decades to studying these types of “social movement organizations” and how they impact social-legal policy.

But there’s one sector that has been largely overlooked by social scientists until recently: commercial businesses and the role they play in shaping policy.

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Businesses can have a real impact on getting social policy laws implemented, particularly at the local level, according to research by Professor Glenn Carroll. (Associated Press photo by Jeff Chiu)

Research coauthored by Glenn Carroll, professor of organizational behavior at Stanford Graduate School of Business, suggests that businesses, which have previously been regarded as “politically mundane” since they don’t deliberately try to shape laws or policies, can have a real and measurable impact on getting social policy laws implemented, particularly at the local level.

Carroll started examining business as a social movement after conducting research that discovered that the origins of many established industries looked more like social movements rather than commerce. New types of businesses, he says, often start out looking for a way to change the world — or a piece of it — with the profit motive coming into play much later. Microbrewers, for example, were essentially rebelling against mass-produced beer brewing giants when they started out, Carroll and another researcher noted in 2000.

In his most recent research Carroll finds that gay and lesbian owned businesses had an impact on the promulgation of local ordinances banning discrimination based on one’s sexual orientation.

In analyzing the data from the period between 1972 and 2008, he and co-researchers, Giacomo Negro from Emory University and Fabrizio Perretti from Bocconi University, found that cities with greater numbers of lesbian and gay businesses show higher rates of implementation of non-discrimination policies by local governments. The impact was not limited to those owned by gays and lesbians, however. Businesses run by heterosexuals that target a gay and lesbian clientele made a difference as did the diversity among gay and lesbian businesses — meaning a broad mix of services as retail, entertainment, financial services, and more.

Such businesses linked to a “challenger” group — an ad hoc group that challenges the status quo — can generate revenues to support political campaigns and to help elect officials that support challenger-related causes.

Their influence also goes beyond money, the research found. On a sociological front, businesses can serve as a “bridge” to foster relations between “challengers” and the rest of the community. For instance, stores and warehouses allow owners, customers, employees, and suppliers to interact on a regular basis. These everyday interactions can serve to keep the challenger group more visible in a local community, and can produce more positive attitudes — or at least greater tolerance — from the outside public.

“What we tried to highlight in this study is how challenger businesses impact policy by providing a bridge that allows one community to interact with another community, and helps them to understand each other,” says Carroll.

Organizational diversity can also validate the social presence of the challenger group, says Carroll. “The diversity of businesses is important because the more it resembles the outside community, the more likely you are to think it as part of the community,” he explains. He recalls how in the early days of the gay movement in San Francisco, people used to associate the gay community with bathhouses and nightclubs. But as the gay community became more entrenched and began to expand into more conventional businesses, the more they were regarded as “ordinary” members of the community.

Having a proliferation of diverse “challenger” businesses can have a positive impact on enacting policies that favor the group, Carroll says. “The way in which social changes occur is through organizations, but there can be background factors such as challenger organizations that, in addition to the obvious factors, contribute to social change.”

Glenn Carroll is the Laurence W. Lane Professor of Organizations at Stanford Graduate School of Business and the Senior Associate Dean for Academic Affairs.