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Asset Divestment as a Response to Media Attacks in Stigmatized Industries

Author

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  • Durand , Rodolphe
  • Vergne , Jean-Philippe

Abstract

In stigmatized industries characterized by social contestation, hostile audiences, and distancing between industry insiders and outsiders, firms facing media attacks follow different strategies from firms in uncontested industries. Because firms avoid publicizing their tainted-sector membership, when threatened, they can respond by divesting assets from that industry. The authors' analyses of the arms industry demonstrate that media attacks on the focal firm and its peers both increase the likelihood of divestment for the focal firm. Specifically, attacks on the focal firm are the most consequential, followed by attacks on peers in the same industry subcategory, and by attacks on peers in different subcategories. These findings shed new light on divestment as a response to media attacks in stigmatized industries and lead the authors to rethink impression management theory.

Suggested Citation

  • Durand , Rodolphe & Vergne , Jean-Philippe, 2014. "Asset Divestment as a Response to Media Attacks in Stigmatized Industries," HEC Research Papers Series 1041, HEC Paris.
    • Handle: RePEc:ebg:heccah:1041
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    Cited by:

    1. Bryant Ashley Hudson & Karen D. W. Patterson & Thomas J. Roulet & Wesley S. Helms & Kimberly Elsbach, 2022. "Organizational Stigma: Taking Stock and Opening New Areas for Research," Journal of Management Studies, Wiley Blackwell, vol. 59(8), pages 1899-1914, December.
    2. Fabrizio Ferraro, 2019. "Going political? Towards deliberative corporate governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(1), pages 3-20, March.
    3. George Ferns & Kenneth Amaeshi & Aliette Lambert, 2019. "Drilling their Own Graves: How the European Oil and Gas Supermajors Avoid Sustainability Tensions Through Mythmaking," Journal of Business Ethics, Springer, vol. 158(1), pages 201-231, August.
    4. Anandasivam Gopal & Brad N Greenwood, 2017. "Traders, guns, and money: The effects of mass shootings on stock prices of firearm manufacturers in the U.S," PLOS ONE, Public Library of Science, vol. 12(5), pages 1-29, May.
    5. Thomas Roulet, 2015. "“What Good is Wall Street?” Institutional Contradiction and the Diffusion of the Stigma over the Finance Industry," Journal of Business Ethics, Springer, vol. 130(2), pages 389-402, August.
    6. Jia, Ming & Zhang, Zhe, 2016. "What influences the duration of negative impacts from organizational deviance on other innocent firms?," Journal of Business Research, Elsevier, vol. 69(7), pages 2517-2530.
    7. Grougiou, Vassiliki & Dedoulis, Emmanouil & Leventis, Stergios, 2016. "Corporate Social Responsibility Reporting and Organizational Stigma: The Case of “Sin” Industries," Journal of Business Research, Elsevier, vol. 69(2), pages 905-914.
    8. Aranda Gutierrez, Ana, 2016. "Thank you for (not) smoking : Essays on organizational theory and strategy in a contested industry," Other publications TiSEM ec7e4803-0702-496c-8b36-8, Tilburg University, School of Economics and Management.
    9. Coudounaris, Dafnis N. & Orero-Blat, María & Rodríguez-García, María, 2020. "Three decades of subsidiary exits: Parent firm financial performance and moderators," Journal of Business Research, Elsevier, vol. 110(C), pages 408-422.
    10. Joep P. Cornelissen & Rodolphe Durand & Peer Fiss & John C. Lammers & Eero Vaara, 2015. "Putting Communication Front and Center in Institutional Theory and Analysis," Post-Print hal-02276731, HAL.
    11. Shon R. Hiatt & W. Chad Carlos, 2019. "From farms to fuel tanks: Stakeholder framing contests and entrepreneurship in the emergent U.S. biodiesel market," Strategic Management Journal, Wiley Blackwell, vol. 40(6), pages 865-893, June.
    12. Dulak, Thomas & Gnabo, Jean-Yves, 2024. "Climate litigation and financial markets: A disciplinary effect?," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    13. Christopher Groening & Vamsi K. Kanuri, 2018. "Investor Reactions to Concurrent Positive and Negative Stakeholder News," Journal of Business Ethics, Springer, vol. 149(4), pages 833-856, June.
    14. Jean-Philippe Vergne & Colette Depeyre, 2015. "How do firms adapt? A fuzzy-set analysis of the role of cognition and capabilities in U.S. defense firms’ responses to 9/11," Post-Print hal-01274005, HAL.
    15. Alessandro Piazza & Fabrizio Perretti, 2015. "Categorical Stigma and Firm Disengagement: Nuclear Power Generation in the United States, 1970–2000," Organization Science, INFORMS, vol. 26(3), pages 724-742, June.
    16. Barkemeyer, Ralf & Faugère, Christophe & Gergaud, Olivier & Preuss, Lutz, 2020. "Media attention to large-scale corporate scandals: Hype and boredom in the age of social media," Journal of Business Research, Elsevier, vol. 109(C), pages 385-398.
    17. Thomas Roulet, 2019. "Les Evaluations Sociales en Stratégie : Légitimité, Réputation, Statut, Stigmate et Cie," Post-Print hal-01970557, HAL.

    More about this item

    Keywords

    stigma; impression management; divestment; media; categories; reputation; defense industry;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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