Stigma and Settling Up: An Integrated Approach to the Consequences of Organizational Misconduct for Organizational Elites

Journal of Business Ethics · 2008 · Volume 80 · Issue 1

Abstract

In this article, I address the question of the apportionment of the consequences of organizational misconduct to individual members of the organizational elite. I argue that this process can be best understood by marrying the behavioral aspects of stigma theory to the economic mechanisms ofex postsettling up. Viewed in conjunction with stigmatization,ex postsettling up following organizational misconduct can be seen as the result of attempts to avoid stigma by association. Efforts at stigma avoidance on the parts of various stakeholders produce the diminished social interaction associated withex postsettling up: departure from the focal firm, and loss of seats on other boards. This also suggests that the process of stigmatization, and henceex postsettling up, can be influenced by characteristics of social interaction unrelated to the misconduct itself.

Keywords

legitimacy, organizational misconduct, settling up, stigma

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