Abstract

Existing research on organizational stigma has predominantly focused on its origins, as well as for the consequences of stigma for the organizations that are subjected to it. By contrast, the stigmatization process has remained relatively unexplored from an empirical standpoint. In this paper, therefore, we theorize about the stigmatization process and we suggest that its effectiveness in eliciting market-based sanctions will be a function of: 1) the labels used in framing stigmatizing judgments; 2) the audiences using those labels; 3) the “fit” between vilifying labels and the audiences using them. Through an analysis of cumulative abnormal returns (CAR) in the wake of stigmatizing judgments formulated by various audiences and targeting firms active in the defense industry between 1998 and 2016, we find broad support for our arguments.

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