Audience Diversity and the Transfer of Stigma: Evidence from the U.S. Luxury Hotel

Abstract

Recent developments in the field of organizational stigma suggest that moral transgressions by an organizational actor can elicit stigma and thereby affect the way evaluators perceive organizations that appear somewhat similar or associated to the transgressing actor. However, this line of research assumes that evaluators share a unified assessment about the stigmatized organizational actor and attribute the same degree of stigma to other organizations that appear to be related or associated with the stigmatized one. To shed light in this direction, this study aims at exploring the role of diversity among evaluators and its impact on evaluators’ attribution of stigma to organizations. Building on a dataset comprising over 20.000 guests’ reviews of 129 luxury hotels in major U.S. cities and modelling Trump’s election as president of the United States as an exogeneous shock to the industry, we find that not only more negative ratings negative words are attributed to luxury hotels after the elections but also the evaluating population changed in regards of its demographical characteristics due to the transgression of having elected a President who was often associated with travel-bans and unwelcoming comments, and which violated the ideal of hospitality. Our results further show that because the reviewer population changed, stigma is attributed differently to Trump-associated hotels.