Stigmatized Categories and Public Disapproval of Organizations: Theory and Evidence from the Global Arms Industry (1996-2007)



This paper draws on the categorization and stigmatization literatures to explain cross-firm variation in disapproval in contested industries. Disapproval represents the negative evaluations publicly conveyed about a firm. It is a strategic outcome that affects performance. Audiences categorize firms along several dimensions and some categories are stigmatized. Disapproval may be higher for firms associated with stigmatized categories, but firms can decrease disapproval by straddling additional categories, a phenomenon called stigma dilution. The paper argues that the effect of stigma dilution along any dimension of categorization is moderated by the saliency of that dimension among industry audiences. The theory is tested using qualitative and quantitative data from the global arms industry. Empirical results support the theory and show that 9/11 dramatically modified the saliency of the dimensions used by audiences to categorize arms producers.
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Patricia de Wilde