A stigma is a label that evokes a collective stakeholder-specific perception that an organization possesses a fundamental, deep-seated flaw that de-individuates and discredits the organization. Recent growing awareness of the ubiquity and persistence of organizational stigma as a part of organizational life has led to increased attention to it and to how organizations and stakeholder audiences negotiate that stigma. Furthermore, as this attention has increased, insights have been gained about a broader range of organizational phenomena such as boundary management and investment portfolios, which might have been overlooked otherwise. These discoveries have reinforced the importance of an awareness of organizational stigma not only for itself but also for a greater understanding of the fullest range of organizational life. This entry further defines organizational stigma and discusses the organizational responses to it.
What Is Organizational Stigma?
Organizational stigma includes the following characteristics: (a) it is a tainted or spoiled image, (b) it is the result of an evaluation by stakeholders and social audiences, and (c) the organization is judged by those audiences to somehow fail to measure up to expected organizational standards of conduct or in some way violate socially derived norms. Importantly, organizational stigma is a collective perception held by others about the organization. The potential negative outcomes of being stigmatized include loss of access to critical resources and loss of network partners and key relationships. These losses may be due to negative judgements by the network partners themselves or due to the fear of stigma transfer that results from the association of the partners with the stigmatized organization.
Organizational stigma can be categorized as event stigma or core stigma. Event stigma is due to some anomalous or episodic event, such as an industrial accident (the BP Gulf oil spill in 2010) or a corporate scandal (Enron in 2001), whereas core stigma is due to some core attribute or attributes of the organization, as is the case with abortion service providers or nuclear energy firms. Industrial accidents, such as the radiation leaks at the Fukushima nuclear power plant after the tsunami triggered by the Tōhoku earthquake of 2011, or failures of corporate governance, such as the collapse of the financial institution Lehman Brothers in 2007 and the subsequent bailouts of Royal Bank of Scotland and ABN AMRO Bank in the Netherlands in 2008, can be understood as corporate events that are out of the ordinary or exceptional in nature, which then result in possibly severe stigmatization due to those events.
Early studies of event stigma focused on firm bankruptcies and social movement organizations’ political protests. More recently, event stigma has primarily been studied as an example of organizational misconduct or failure in management ethics.
Core stigma is due to the nature of the core attribute or attributes of the organization, such as its core products, core customers, or core processes. Products such as cigarettes, customers such as immigrants, or processes such as nuclear power generation or genetically modifying foods are all stigmatized by some and can all be seen as core aspects of the firms engaged in them. This results in the core stigmatization of these firms. Even well-known and often liked firms such as the giant retailers Walmart and Amazon.com are stigmatized due to core operational factors including driving out local competitors and low-wage policies. Studies of core-stigmatized firms have increased in recent years and have included studies of global arms manufacturers, medical cadaver and tissue providers, pornographers, state-run lotteries and casino operators, providers of services to the homeless, tobacco firms, mixed martial arts organizations, and men’s bathhouses.
Rather than label such organizations as core stigmatized and focusing on organizational-level considerations, some have argued that the phenomenon of core stigma does not properly belong at the organizational level of analysis but should instead be considered from an industry-level perspective. The list of core-stigmatized organizations affected and studied lends support to this argument. These critics suggest that categorical stigma, meaning stigma that results from belonging to a category such as arms manufacturers, is a better label for the construct. However, industry-wide studies of at least some core-stigmatized organizations have shown variation within the industry in levels of and responses to that stigma, suggesting that perhaps the phenomenon applies at both levels of analysis. Furthermore, examples of firms such as Walmart suggest that core-stigmatized attributes may not apply industry-wide.
How Do Organizations Respond?
Stigmatized organizations respond to or manage stigmatization in several ways. These include impression management routines, hiding, industry disinvestment, co-opting, boundary management, and reframing and organizational reconfigurations.
Impression management is particularly important for event-stigmatized firms. Impression management after a stigmatizing event includes attempting to enhance an organization’s public image by engaging in sequential processes of enhanced structural and procedural conformity, such as establishing new corporate offices or implementing new procedures to ensure against future violations. Another means adopted is decoupling and disassociating the event from normal routines and primary organizational actors and using justifications to reframe it and to highlight the positive outcomes resulting from it. For example, firms found to be engaged in or accused of corporate fraud have used impression management techniques of declaring employee stock options as an expense in financial statements, in keeping with accounting regulators’ subsequent recommendations. Doing so allowed the firms to make claims of the positive outcomes of the fraud by stating that they are abiding by enhanced norms of financial transparency.
Many core-stigmatized firms use hiding as a default strategy to minimize the potential negative outcomes of stigma. By hiding and thereby minimizing scrutiny, these organizations are able to avoid outward demonstrations of stigmatization that may threaten critical inputs or ongoing operations. Abortion clinics hide to avoid protests and bomb threats, while pornographers hide filming locations to avoid similar protests and disruptions. Small, single-location operations; out-of-the-way locations; minimal or obscuring signage; and precisely targeted and coded “in the know” marketing techniques are used by many core-stigmatized organizations.
Some firms that potentially suffer from the effects of core stigma are able to divest themselves of the stigmatized attributes themselves. For instance, diversified firms engaged in military armaments production were able to reduce their exposure to the negative effects of stigmatization through divesting or minimizing their investment in such production.
Some core-stigmatized firms are able to use co-opting and category blending to lessen the stigma they face. For example, producers of pornography in Denmark combined the content of their movies with comedic storylines, thus blending the categories of comedy and pornography in films, allowing these firms to gain a measure of acceptance more broadly. Mixed martial arts organizations in the United States used category blending to characterize the industry both as an ultimate fighting sport and as a professionalized sport so that they were able to lessen the effects of stigma in a relatively short time.
Careful boundary management by core-stigmatized organizations is also used to avoid the effects of stigma and to protect various constituencies from stigma transfer. Stigma transfer occurs when organizational network partners, either other firms or individuals, such as suppliers or contractors, are exposed to stigma as a result of their association with the core-stigmatized firm. Men’s bathhouses in the United States reconfigure architectural arrangements to allow outside vendors and repairmen to enter the facilities without being exposed to the core elements of the firm. Hiding strategies also allow such outsiders to deny their potentially stigmatizing relationship.
Industry reframing and reconfigurations of stigmatized practices may also allow firms to minimize the effects of stigma. For example, the trade in human tissue and cadavers for medical training and research in the United States used reframing to tout the medical and research benefits of their trade and disguise the nature of their products through the use of technical (Latinized) jargon. Firms located in areas with a high homeless population, and stigmatized due to their presence, use reframing to offset the stigma. By reframing the homeless as a community and regional problem, and by making physical and architectural reconfigurations of their premises to provide acceptable space and services for the homeless, these organizations are able to minimize the effects of stigmatization.
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