Diversity and Business Legitimacy

Discussions of why corporations should cultivate a diverse workforce emphasize justice- and profit-based reasons. This paper defends a distinct third rationale of legitimacy-based reasons for diversity. I articulate and defend the market power account of firm legitimacy, which holds that private firms, much like governmental institutions, have a moral obligation to justify the power they exercise over stakeholder groups when those groups lack meaningful rights of exit from their relationship with the firm. Firms can discharge this obligation by incorporating moral diversity into managerial teams that decide company policy. Moral diversity confers both epistemic and moral advantages onto teams tasked with solving complex problems that impact disparate stakeholder groups. These advantages confer proceduralist legitimacy onto implemented policies, giving impacted groups reason to accept those policies, even when those groups find those policies objectionable on other grounds.