B&E study concludes private businesses not serving customers due to religious beliefs has negative impact

March 28, 2016

A national study by West Virginia University and other researchers concludes that consumers are less likely to buy from a business which does not serve certain persons because of the business owner’s religious beliefs. The study began in August 2015 following the reaction of for-profit businesses to the passage of the Religious Freedom Restoration Act in Indiana.

The research was conducted by Paula Fitzgerald at WVU’s College of Business and Economics, Karen Russo Donovan, Duquesne University in Pittsburgh, and Alison Mora, the Eugene P. Beard Research Fellow at Duquesne University. In late February, Fitzgerald presented findings of the research at the Winter Educators Meeting of the American Marketing Association, as well as to Morgantown City Council.

A similar bill died in the West Virginia Senate March 2, one day after amending the measure to calm fears from business that it would sanction discrimination in the name of faith. With those amendments, state senators voted the bill down by a margin of 27-7.

In the study, 294 U.S. citizens evaluated a bed and breakfast after reading a mock-up website promoting the business. In the “About Us” page of the website, the owners stated that they were either Christian or Muslim and were active in their respective religious organizations. Photos on the website portrayed the owners as either African American or Caucasian.

Each website used a label, patterned after the signs posted by Indiana businesses reacting to the passage of Indiana’s religious freedom law. Approximately half of the participants saw a website that included a label stating, “We practice an open economy. We serve all.” The others saw a label stating that the business practiced the couple’s religion and did not serve same-sex couples.

While feelings about the bed and breakfast were the same regardless of the owners’ religion or race, there was a large difference in how citizens felt about the business based on whether it served everyone or did not serve some because of religious beliefs.

“There is a big impact on how consumers view the firm when it explicitly does not serve same-sex couples due to the owner’s religious beliefs," Fitzgerald said. "The U.S. citizens who participated in this study had more negative attitudes about the bed and breakfast and were less likely to book a room there than participants who saw the ‘We Serve All’ label.

“These results suggest that, when firms practice their religion in a for-profit business by limiting services to certain consumer groups, fewer tend to use those services. In fact, our results show that consumers are very likely to view such practices as ‘discriminatory,’” she said.

Donovan said, “The research is very timely given recent developments and decisions in the public and private sectors."

HB 4012, known as the Religious Freedom Restoration Act, was the subject of heated debate during West Virginia’s 2016 legislative session, which ended two weeks ago. Opponents of the bill said that religious protections already existed in the state constitution and under the First Amendment, and that the legislation was an attempt to legalize discrimination. Supporters of the bill said it was meant to make sure the government does not impose on the religious liberty of its citizens.

Similar laws have been passed in Arizona, Arkansas and Indiana, but have been met with growing opposition. That opposition ranged from business boycotts and public disapproval by large corporations such as Walmart to an act last year by Connecticut Governor Dannel Malloy banning all state travel to Indiana.

The study was prompted by reaction to Indiana’s adoption of its own Religious Freedom Restoration Act, signed into law by Indiana Gov. Mike Pence on March 26, 2015. Public reactions about the law came from major corporations headquartered or with business locations in Indiana such as Eli Lilly and Co., Angie’s List, Cummins, Salesforce.com, convention organizers and the NCAA’s headquarters, to name a few.

After nine CEOs signed a letter calling on Pence to reform the law, an amended version was created and signed by the Indiana governor on April 2, 2015. However, many companies remained unhappy with the law including Angie’s List, which scrapped plans for a $40 million headquarters expansion and the addition of 1,000 new jobs in Indianapolis. Tourism group Visit Indy said that the law may have cost Indiana as much as $60 million last year in lost hotel profits, tax revenue and other economic benefits.