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Centre for Building Sustainable Value

Brian Seongyup Park

Brian Seongyup ParkBrian Seongyup Park
INSEAD

(Un)Forgettable: When Wrongdoing Leads to Organizationall Stigma

Organizational stigma, a form of negative social labeling marked by the social exclusion of a focal organization by stakeholders, is triggered by wrongdoing. Yet most wrongdoing goes unnoticed, and only in a small number of cases does it actually lead to organizational stigma. We argue that wrongdoing must be both severe and controllable to lead to stigma. We also posit that organizational reputation plays a significant role in affecting organizational stigma. Organizations of low reputation are more likely to be stigmatized than those of high reputation in the event of severe wrongdoing. However, when organizational wrongdoing is controllable, the buffering effect of reputation declines. We find support for our arguments in an analysis of interstate gas transmission pipeline incidents in the United States over a ten-year period. We observe a significant reduction in exchange by gas shippers with the pipeline operators following incidents that are both severe and controllable, and find support for a buffering effect of reputation contingent on the controllability of wrongdoing. Our results provide insights into the interactive social process through which organizational stigma is created, and offer a clearer, more nuanced view of the role of organizational reputation in the stigmatization process.

Biography

I am a doctoral candidate in Strategy at INSEAD. My research interest lies at the intersection of Organizational wrongdoing/misconduct, Corporate Strategy, and Organization Theory. To put it specifically, I am interested in the antecedents and consequences of organizational wrongdoing/misconduct and firms’ strategic behavior following their wrongdoing. My dissertation investigates 1) where organizational stigma comes from, 2) how organizations move strategically after their wrongdoing, and 3) how regulatory agencies influence organizational wrongdoing.