Over the past couple of decades, we’ve witnessed enormous progress on LGBTQ+ issues. As a result, the closet remains largely off people’s radar – but for the generation of those who occupy corporate leadership positions, it’s very much a live issue. Consider Tim Cook, Apple’s legendary CEO, who was still frightened to come out on his own despite his position as one of the most privileged and powerful men in the world.[1]

Existing efforts at corporate inclusion fail to meaningfully address the closet. In 2020, California passed a mandate for corporate boards to include LGBTQ+ people as one among several racial and ethnic groups.[2] That law did not survive a constitutional challenge,[3] but presaged a rule that has survived: That same year, Nasdaq, the world’s second largest stock exchange, adopted a similar comply-or-disclose rule for board diversity. It required that firms meet a certain threshold of board diversity for women, racial and ethnic groups, and LGBTQ+ people, or explain why they failed to do so.

After the SEC approved the use of this rule, plaintiffs sued to derail it.[4] In October 2023, the Fifth Circuit rejected the challenge, stating that the SEC’s approval complied with its obligations to foster transparency in the governance of listed firms.[5] With the imprimatur of the SEC and the Fifth Circuit, Nasdaq’s inclusion of the “queer community” and the “Q” serves as an invitation to explore inclusion with a critical eye. What is the place of queers in corporate leadership? More broadly, what can queer theory contribute to corporate governance?

Queer Theory in the Corporate Context 

Queer theory started as a technique for exploring sex, gender, and sexual identity in more careful ways but came to develop in a variety of theoretical and political directions. While on its face, the notion of queer theory seemingly does not align with the corporate world, it holds the power to understand corporate governance in several important respects. First, in the narrow sense, queer theory helps us comprehend several elements of human relations, including how we grapple with difference, particularly in leadership contexts. Second, queer theory provides fresh ways of looking at how diversity and identity fit into corporate governance. Last, it provides us with theoretical tools to question the obvious and literal meanings of corporate decision-making.

Perhaps the most unlikely of places for “queer” as an identity to appear is in the rules governing Nasdaq described above.[6] There, they drew on a Credit Suisse study that found a correlation between LGBTQ+ employee diversity, corporate performance, and shareholder value.[7] In support of this reasoning, the inclusion of LGBTQ+ people was in recognition of their protection from employment discrimination in the Civil Rights Act of 1964 as determined by the 2020 Bostock v Clayton County decision.[8] Thanks to this ruling, Nasdaq found that including LGBTQ+ status within board diversity reporting is “reasonable and in the public interest.”[9]

While the Nasdaq rule’s inclusion of the term “queer” as an identity proves revolutionary and compelling, it doesn’t fully capture the deeper and more challenging analytical import of “queer,” as in queer theory. This requires complicating our understandings of identity itself and in particular the queer continuum ranging from people in the closet to those who proudly subvert heteronormativity,[10] as helpfully seen in corporate spaces.

Corporate Heteronormativity

The corporate world is dominated by straight men. Only 39 out of 5,400 board seats in Fortune 500 companies were held by openly LGBTQ+ individuals, representing a mere 0.7 percent of board members and .078 percent of companies.[11] But LGBTQ+ leadership matters for two reasons. First, and most notably, for LGBTQ+ people to feel free to be who they are, they must be able to see role models in leadership contexts. Second, LGBTQ+ representation in business leadership matters because U.S. corporate governance continues to be plagued by groupthink, where decision-making bodies contain too many people from a similar background.[12] This commonality creates blind spots in which the benefit of critical thinking provided by multiple minds, eyes, and ears diminishes because the members of the group see things the same way.

To understand how LGBTQ+ people fit into (or are excluded from) the corporate hierarchy, we must assess how firms’ focus on notions of expertise, skills, and fit to fill officer positions. Because commonplace anti-discrimination norms do not apply to the C-Suite,[13] it is important to look how “corporate heteronormativity” dynamics – firms’ explicit and implicit bias in favor of straight people[14] – drive corporate leadership and play a crucial gatekeeping role in keeping LGBTQ+ people out of the corporate elite.

The promotion to the apex of the corporate entity is  centered on total devotion to the firm, as one struggles to “fit” into elite positions. An incentive towards homogeneity molds this fit, emphasizing the dominance of maleness and homosociality in corporate spaces, with a core part of this homogeneity being the central presumption that leaders are straight. Masculine work patterns dominate, with traits such as hubris,[15] over-confidence,[16] narcissism,[17] a desire to build empires,[18] rivalry,[19] and envy (such as a desire to keep up with peer CEOs)[20] undergirding decision-making by leaders. The leaders who embody these traits, predominantly men,[21] view themselves as the standard-bearers for the corporation’s success and in turn identify subordinates whose skills mirror their own. Maleness, as pointed to above, is also the trait that binds nearly all CEOs to each other, serving as a marker for skills and fit.[22]

This homogeneity incentive fits neatly with the idea of corporate heteronormativity, Corporate policies maintain expectations regarding marriage, family, and leisure,[23] as well as police physical appearance “according to essentialized masculine and feminine scripts.[24] Most relevant to the context of leadership, heteronormativity in corporate environments plays a role in occupational sex segregation,[25] with risk-taking defining the corporate decision-making for openly LGBTQ+ people who fear reprisals for being openly out in certain fields or in higher-up positions.[26]

The Corporate Governance Closet

While there is significant value in leaders coming out, including as an important part of defining one’s leadership and showcasing a bravery that reflects a deeply personal form of experience in risk-taking, it remains very costly and constrained by corporate societal mandates. In a performance of “executive realness,” LGBTQ+ people must thus engage in identity management[27] to handle their exclusion from workplace socialization centered around heterosexuality.[28] Identity management is the term social scientists use to describe the agile behavior LGBTQ+ people engage in so they can manage an open or closeted identity, such as pretending to like playing or watching sports or engaging in other typical “masculine” activities that build social networks. It is this performance that allows LGBTQ+ corporate leaders to “climb the straight ladder” for the purpose of fitting into the heteronormative corporate situation described above.

Less discussed is that in the mandate to perform “executive realness,” everyone – including cisgender straight men as the majority of corporate leaders – must engage in a “manning up” to display one’s leadership capacities in the competitive corporate elite. For example, “executive realness” is performed when members of the top leadership desire to “conque[r] and control”[29] their marketplace and to outperform their colleagues. Thus, while queer theorists seem to avoid engaging with the corporate context, their emphasis on performativity reflects the identity management of the closet and the attendance straight cisgender men also give to their gendered behavior.

Conclusion

A closeted life permits LGBTQ+ people with corporate ambitions to mimic straight people on their way up the hierarchy. In so doing, they ensure their identity does not detract from their work skills. Straight higher-ups can then recognize that the closeted people deserve to rise to the top.[30] It is for this reason that remedies for inclusion cannot simply add LGBTQ+ people like sprinkles on the top of a sundae. For corporate governance to reflect the strands of queer theory referenced above, three policy projects come to mind. First, firms must adopt more proactive efforts to advance inclusion efforts regarding LGBTQ+ people and communities. Second, firms can take a fuller account of power and how it works within firm elites to police outsider identities. Third, a queer agenda for corporate governance may force the questioning of established frameworks for leadership that center around heteronormativity. While measures to include LGBTQ+ people such as in California AB 979 and the Nasdaq rule constitute progress, the real goal must go beyond the neatness in these articulations and dismantle the messy borders of heteronormativity that confine corporate leadership to those who act straight.

ENDNOTES

[1] Ryan Tate, Tim Cook: Apple’s New CEO and the Most Powerful Gay Man in America, Gawker (Aug. 24, 2023), https://www.gawker.com/5834158/tim-cook-apples-new-ceo-and-the-most-powerful-gay-man-in-america.

[2] Cal. Assemb. B. 979, 2020 Leg. (Cal. 2020).

[3] All. for Fair Bd. Recruitment v. Weber, 2023 U.S. Dist. LEXIS 85662 § 3(e)(1) (E.D. Cal. May 15, 2023).

[4] In fact, it was the President of petitioner Alliance for Fair Board Recruitment, Edward Blum, who three years later filed Students for Fair Admission (SSFA) v Harvard as the president of SSFA, gutting college affirmative action (Students for Fair Admissions Inc. v. President & Fellows of Harvard College 600 U.S. 181 (2023)).

[5] All. for Fair Board Recruitment v. SEC, No. 21-60626 at 2 (5^th Cir. filed Oct. 18, 2023). The Court stated: “…even if the petitioners’ theory were right, substantial evidence supports the SEC’s finding that NASDAQ’s rule would provide ‘information that would contribute to investors’ investment and voting decisions…evidence is sufficient to support the SEC’s determination that regardless of whether investors think that board diversity is good or bad for companies, disclosure of information about board diversity would inform how investors behave in the market,” id. at 28–29.

[6] Nasdaq Rule 5605(f)(1)(“For this purpose, “Underrepresented Minority” means an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian, Pacific Islander, or [t]wo or [m]ore [r]aces or [e]thnicities.”)

[7] Nasdaq Stock Market LLP, Notice of Filing of Proposed Rule Change to Adopt Listing Rules Related to Board Diversity (Form 19b-4), at 19, SEC (Dec. 4, 2020), https://listingcenter.nasdaq.com/assets/rulebook/nasdaq/filings/SR-NASDAQ-2020-081.pdf (citing Credit Suisse ESG Rsch., LGBT: The value of diversity 1 (Apr. 15, 2016), https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&document_id=807075590&source_id=emcsplus&serialid=YU6DApYK4XIb4Ht4%2FE2TIMxtC7zr6wSCpdiQ92fLI5U%3D&cspId=null).

[8] Id. at 54 (citing Bostock v. Clayton Cty., 140 S. Ct. 1731, 1742 (2020)).

[9] Id. at 84.

[10] I first wrote about this in Darren Rosenblum, Queer Intersectionality and the Failure of Recent Lesbian and Gay “Victories”, 4 Law & Sexuality 84, 90–93, 108–114 (1994). (In that article, I adapted Adrienne Rich’s lesbian continuum to queer existence. She argued that “lesbian” should follow the most expansive definition possible, even including female homosociality, because it resists compulsory heterosexuality. See Adrienne Rich, Compulsory Heterosecuality and Lesbian Existence, in Lesbian And Gay Studies Reader 239 (Henry Abelove, Michèle Aina Barale, David M. Halperin eds., 1993).

[11] Out Leadership, LGBTQ+ Board Diversity: Progress & Possibility (April 2023), https://outleadership.com/wp-content/uploads/2023/04/Out-Leadership-OutQUORUM-Report-DIGITAL-FINAL_April18_2023.pdf.

[12] Darren Rosenblum & Yaron Nili, Board Diversity by Term Limits?, 71 Ala. L. Rev. 211, 221 (2019) (Discussing how the term limits that increase turnover can lead to increased sex diversity on corporate boards and thwart the proclivity towards groupthink).

[13] This is in part due to the difficulty of regulating anti-discrimination law and how businesses are more likely to be self-regulating “window-dressers” rather than change their institutional practices. See Devon Carbado, Catherine Fisk & Mitu Gulati, After Inclusion, 4 Ann. Rev. L. Soc. Sci. 83, 88-89 (2008).

[14] Heterosexism, which is sometimes described as homophobia, describes the marginalization of people who are LGBTQ+ based on the belief that heterosexuality is the norm, and that anyone who engages in non-heterosexual activity is deviant. (Joseph Marchia & Jamie M Sommer, (Re)Defining Heteronormativity, 22 Sexualities 267, 282, 287 (2019). See Paul Johnson, Challenging the Heteronormativity of Marriage: The Role of Judicial Interpretation and Authority, 20 Soc & Legal Stud. 349, 350, 354 (2011); Marcus Herz & Thomas Johansson, The Normativity of the Concept of Heteronormativity, 62 J. Homosexuality 1009, 1011–1012 (2015); Bethy Leonardi, The “Box”ing Match: Narratives from Queer Adults Growing up through the Heterosexual Matrix, 14 J. LGBT Youth 93, 96 (2017); Alfonso Pezzella, ‘Out’ and about at work: Institutionalized heteronormativity on relationships and employment, in Sexuality, Sexual and Gender Identities and Intimacy, in Social Work and Social Care 101, 108 (Priscilla Dunk-West & Trish Hafford-Letchfield, eds., 2018); Janice M. Habarth, Beyond Simple Differences: Moderators of Gender Differences in Heteronormativity, 67 J. Homosexuality 740, 740 (2020); Janice M. Habarth, Development of the Heteronormative Attitudes and Beliefs Scale, 6 Psychology & Sexuality 166, 167 (2015)). Heterosexism has various elements, including a gendered-heteronormativity that defines socialization, making people of all sexes, genders, and sexualities presumptively favor heterosexuality. (Marchia & Sommer, supra note 18, at 282, 287; Charlotte Bendall & Rosie Harding, Heteronormativity in Dissolution Proceedings: Exploring the Impact of Recourse to Legal Advice in Same-Sex Relationship Breakdown, in Philosophical Foundations of Children’s and Family Law 134, 135–136 (Elizabeth Brake & Lucinda Ferguson eds., 2018); Oscar Holmes IV, The Antecedents and Outcomes of Heteronormativity of Marriage, inOxford Research Encyclopedia of Business and Management 2 (Donald D. Bergh et al., eds, 2019); Janice M. Habarth, Development of the Heteronormative Attitudes and Beliefs Scale, 6 Psychology & Sexuality 166, 168 (2015)). Heteronormativity also interacts with other systemic exclusions such as race, class, and gender (Marchia & Sommer, supra note 18, at 282).

[15] See Mathew L. A. Hayward & Donald C. Hambrick, Explaining the Premiums Paid for Large Acquisitions: Evidence of CEO Hubris, 42 Admin. Sci. Q. 103, 103 (1997); Richard Roll, The Hubris Hypothesis of Corporate Takeovers, 59 J. Bus. 197, 212 (1986).

[16] See Ulrike Malmendier & Geoffrey Tate, Who Makes Acquisitions? CEO Overconfidence and the Market’s Reaction, 89 J. Fin. 20, 20–21 (2008); Ulrike Malmendier & Geoffrey Tate, CEO Overconfidence and Corporate Investment, 60 J. Fin. 2661, 2661 (2005); Donald C. Langevoort, Resetting the Corporate Thermostat: Lessons from the Recent Financial Scandals About Self-Deception, Deceiving Others and the Design of Internal Controls. 93 Geo. L. J. 285, 288 (2004).

[17] See Arijit Chatterjee & Donald C. Hambrick, It’s All About Me: Narcissistic Chief Executive Officers and Their Effects on Company Strategy and Performance, 52 Admin. Sci. Q. 351, 351–52 (2007).

[18] See Christopher Avery et al., Why Do Managers Undertake Acquisitions? An Analysis of Internal and External Rewards for Acquisitiveness, 14 J.L. Econ. & Org. 24, 24–28, 42 (1998); Bernard S. Black, Bidder Overpayment in Takeovers, 41 Stan. L. Rev. 597, 627–28 (1989).

[19] See. e.g. Deepak Malhotra et al., When Winning Is Everything, Harv. Bus. Rev., May 2008, at 78, 80 (identifying “three principal drivers of competitive arousal in business settings: rivalry, time pressure, and audience scrutiny”).

[20] See Anand M. Goel & Anjan V. Thakor, Do Envious CEOs Cause Merger Waves? 23 Rev. Fin. Stud. 487, 510 (2010); Wei Shi et al., Ripple Effects of CEO Awards: Investigating the Acquisition Activities of Superstar CEOs’ Competitors, 38 Strategic Mgmt. J. 2080, 2081 (2017).

[21] See. e.g Jiekun Huang & Darren J. Kisgen, Gender and Corporate Finance: Are Male Executives Overconfident Relative to Female Executives?, 108 J. Fin. Econ. 822, 822–23, 835 (2013).

[22] The homogeneity incentive drives the exclusion of women from these positions do not necessarily mean that the skills themselves are sexed, but that leaders presume the skills reside in people with executive experience, a group that is overwhelmingly male. Although Judith Butler rejects assigning a “cultural” meaning to gender because sex is also culture, one may say that corporate elite reproduction is gendered male, in that the skills involved arose from skills typically possessed by men. “It would make no sense, then, to define gender as the cultural interpretation of sex, if sex itself is a gendered category.” See Judith Butler, Gender Trouble: Feminism and the Subversion of Identity 505 (1990). Butler clarifies how the purportedly fixed meaning of sex serves a function: “gender is also the discursive/cultural means by which ‘sexed nature’ or ‘a natural sex’ is produced and established as ‘prediscursive[]’” In this sense, one may think of corporate elite reproduction as not sexed reproduction, and not genderless reproduction either. It may be that CER is sexless but gendered reproduction. See id. See also Darren Rosenblum, Unsex Mothering: Toward a New Culture of Parenting, 35 Harv. J. L. & Gender 57 (2012) (Rethinking corporate elites around the element of reproduction allows us to focus as well on presumed core distinction between men and women – their reproductive roles. One may wonder to what extent corporate elite reproduction parallels baby-making. Indeed, in many firms, (male) leaders describe their (male) protégés as “sons,” although we should note the lack of a female equivalent. With the levels of devotion to the firm endemic to the contemporary corporate world, viewing one’s successors as one’s children may be second nature to corporate leaders. Would the inclusion of women’s bodies in these roles create a new cycle of reproduction, where women in the corporate elite will choose “daughter” proteges?).

[23] Helen Woodruffe-Burston, Countering Heteronormativity: Lesbians and Well-Being in the Workplace, in Handbook on Well-Being of Working Women 47, 48–49 (Mary L Connerley & Jiyun Wu, eds., 2016).

[24] Paul Skidmore, A Legal Perspective on Sexuality and Organization: A Lesbian and Gay Case Study, 11 Gender, Work, & Org. 229, 234 (2004).

[25] Oscar Holmes IV, The Antecedents and Outcomes of Heteronormativity of Marriage, in Oxford Research Encyclopedia of Business and Management 11 (2019)

[26] Id.

[27] Justin W Moore, A Phenomenological Study of Lesbian and Gay People in Leadership Roles: How Perspectives and Priorities Shift in the Workplace as Sexual Orientation Evolves Through Social Constructs (EdD Dissertation, The University of San Francisco, 2017) [unpublished] at 44.

[28] Naomi Shoenbaum, Heteronormativty in Employment Discrimination Law, 56 Washburn L. J. 245, 256 (2017); Christin A. Compton, Managing Mixed Messages: Sexual Identity Management in a Changing U.S. Workplace, 30 Mgmt. Commc’n. Q. 415, 417 (2016); Robert W. Lent et al., Predictors of workplace sexual identity management behaviors: A test of the social cognitive career self-management model, 127 J. Vocational Behav. 1, 2, 8 (2021).

[29] Deborah Kerfoot & David Knights, “The Best is Yet to Come” The Quest for Embodiment in Managerial Work, in Men as managers, managers as men: Critical perspectives on men, masculinities and managements 83 (David L. Collinson & Jeff Hearn eds., 1996).

[30] Rosabeth Moss Kanter, Men and Women of the Corporation (1997).

This post comes to us from Professor Darren Rosenblum at McGill University, Faculty of Law. It is based on their recent article, “Queers, Closets, and Corporate Governance,” available here.