Asset Divestment as a Response to Media Attacks in Stigmatized Industries

Strat. Mgmt. J., 36: 1205–1223 (2015)

HEC Paris Research Paper No. SPE-2014-1041

19 Pages Posted: 27 Mar 2014 Last revised: 6 Jul 2015

See all articles by Rodolphe Durand

Rodolphe Durand

HEC Paris - Strategy & Business Policy

Jean-Philippe Vergne

University College London - School of Management

Date Written: March 25, 2014

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. Our 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 us to rethink impression management theory.

Keywords: stigma, impression management, divestment, media, categories, reputation, defense industry

JEL Classification: L6, M10, L14, L60

Suggested Citation

Durand, Rodolphe and Vergne, Jean-Philippe, Asset Divestment as a Response to Media Attacks in Stigmatized Industries (March 25, 2014). Strat. Mgmt. J., 36: 1205–1223 (2015), HEC Paris Research Paper No. SPE-2014-1041, Available at SSRN: https://ssrn.com/abstract=2415019

Rodolphe Durand

HEC Paris - Strategy & Business Policy ( email )

Jouy-en-Josas Cedex, 78351
France

Jean-Philippe Vergne (Contact Author)

University College London - School of Management ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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