Categorical Cleaning: Divestitures as a Strategic Response to Sustainability Concerns

Joel Gehman
Joel Gehman
  • Speaker
SMEAL College of Business, Pennsylvania State University

Event Information

Research Seminar
Strategy & Entrepreneurship
Tue. 24 Jan. 2012
13:00-14:30 hours
Mandeville Building T3-29


Sustainability has emerged as an increasingly important category of concern. Reflecting this shift, organizations are being evaluated on the basis of sustainability criteria. Firms in particular may find themselves rated as unsustainable because of their portfolio of businesses. I theorize that when confronted with negative sustainable ratings, rather than decoupling their unsustainable practices symbolically or displacing them substantively, firms might instead choose to divest them altogether. Seen from this perspective, firms achieve sustainability by dissociation. Using an unbalanced panel of diversified firms from 1992 to 2010, I test whether negative sustainability ratings are related to divestitures, and whether the strength of this relationship is moderated by a firm’s sustainability reporting practices, sustainability activism on the part of a firm’s shareholders, and changes in the legitimacy of sustainability as a category of concern over time. Drawing on my analysis, I suggest a cultural perspective on organizational boundaries, as well as implications for divestitures research, categorization theory, and sustainability research.
Contact information:
Carolien Heintjes
Pursey Heugens
Professor of Organization Theory, Development, and Change, Scientific Director ERIM, Dean of Research RSM
  • Coordinator
Justin Jansen
Professor of Corporate Entrepreneurship
  • Coordinator