Stigmatized Industries: Implications for Director Characteristics

Abstract

In recent years, research has explored stigma at the organizational and industry level. However, most studies have exclusively explored sin industries which are subset of stigmatized industries. To advance a better understanding of how industry stigma can affect a firm, we explore the stigma literature to advance a better understanding of stigmatized industries and how operating in such industries can cause the organization to become stigmatized. In turn, when a firm experiences organizational stigma, members of the firm, such as the strategic leaders of the firm, can also become stigmatized. Specifically, we explore how the composition of boards of directors of firms in stigmatized industries differs from boards in non-stigmatized industries as a result of a restricted or altered director labor market. Theoretical propositions are developed related to board composition, director social capital and director pay.