Discriminatory practices in hiring: institutional and rational economic perspectives

A number of research studies have analysed the causes, conditions and consequences of discrimination. Most of these have focused on either gender or racial discrimination. Studies of discrimination on other grounds, including disability, have been relatively less common. This study attempts to theoretically and empirically explore the nature of discrimination against disabled job applicants from the rational economic, as well as institutional theory, perspectives. The rational economic perspective emphasizes individual self-interest, conscious decision-making, and economic optimization. Institutional theory focuses on organizational actions taken to gain legitimacy rather than for monetary or utility optimization. Legitimacy is important to secure stakeholders' trust and recognition, and translates into favourable outcomes, such as resource support, customer loyalty, and ease in attracting qualified personnel. We test these two theories, using data drawn from 227 New Zealand organizations, which collectively employ approximately 10 per cent of that country's workforce. The evidence suggests that both theories to some extent predict discrimination based on disability. Employer behaviour reflects both rational concerns for cost minimization and institutional concerns for perceived legitimacy in the eyes of key stakeholders. The strength of each concern appears to vary with each employer's circumstances.