Abstract
While sexual orientation diversity can potentially serve as a source of competitive advantage, researchers have largely failed to fully articulate the theoretical linkage between this diversity form and organizational effectiveness. As such, we propose a theoretical framework to understand these dynamics. Sexual orientation diversity is posited to positively contribute to organizational effectiveness through three mechanisms: enhanced decision making capabilities, improved marketplace understanding, and goodwill associated with engaging in socially responsible practices. We also propose two approaches to leveraging the benefits of sexual orientation diversity: targeting the categorization process and creating a proactive and inclusive diversity culture. Contributions and implications are discussed.