Losing Liberals without Winning Over Conservatives? How Retaining Versus Removing DEI Policies Influences Stakeholder Reactions Amidst Organizational Misconduct

Abstract: As debates over diversity, equity, and inclusion (DEI) intensify, organizations must decide whether to retain or roll back their DEI policies, especially when reputations are threatened by misconduct. Across three preregistered studies (N = 2,455), the current work documents an asymmetry between liberals and conservatives’ reactions to organizations’ DEI policy removal. Removing (vs. retaining) DEI policies during organizational misconduct leads to harsher judgments from external stakeholders, particularly liberals, and this is mediated by perceived value misalignment. Notably, conservatives evaluate organizations similarly whether the organization removes, possesses, or omits mention of DEI policies. These effects are exacerbated in non-misconduct contexts and also extend to participant behavior, such that participants prefer to shop at a retailer that retained (Costco) rather than removed (Target) its DEI policy. Our findings reveal that walking back DEI policies may heighten organizations’ reputational and financial risk, as such decisions alienate liberal stakeholders without gaining favor among conservatives.

Keywords: diversity, politics, consumers