Stigmatisation can drive businesses to make positive change, says Imperial study

Businesses facing ostracism can turn hostility into positive outcomes that reinforce their identity and purpose, according to new research.

The word stigma is commonly associated with hostility, shunning or shame. A connotation that most organisations strive to avoid.

However, a new study by Imperial College Business School and Cambridge Judge Business School has found that stigmatisation, if handled properly by an organisation, can bring unexpected positive outcomes. It can reinforce a company’s sense of identity and purpose, enhance its visibility and bring fresh financial resources.

Professor Nelson Phillips, co-author of the study and Acting Dean of Imperial College Business School, said: “Stigma forces organisations to clarify their identity, refocus their core activities, and seek out and develop new relationships with supportive stakeholders. It also explains why mission driven organisations, whether firms or not-for-profits, are particularly prone to stigmatisation through what we call stigma transfer. So for charities, social enterprises, and NGOs who work with stigmatised groups, this poses a potentially critical management issue. But this is equally true for companies with a strong mission.”

The study focussed on the work of a social enterprise, the Keystone Development Trust, which supports eastern European migrants in Thetford, Norfolk. Keystone looks after people from some of the least affluent areas in England with many doing low-paid jobs in agriculture and meat packing. The town’s population swelled following the accession of eight Eastern European countries to the European Union in 2004, growing from around 22,000 in 2001 to about 32,000 in 2011.

The researchers examined how the organisation responded to stigmatisation and hostility caused by resentment of longer-term locals to recent migrants.

Longer-term residents complained that migrants were taking jobs and housing. In supporting these migrants, Keystone became stigmatised by local residents, triggering an organisational crisis within the enterprise.

Members of the research team spent up to three days a week at Keystone for a nine-month period in 2011, interviewing employees from Keystone and examining various aspects of their interactions with the community. The researchers looked at how the organisation addressed poverty and inequality through enterprise and turned the crisis to their advantage.

They found that rather than backing down in the face of opposition, Keystone, led by then-Chief Executive Dr Neil Stott, decided that helping new migrants was essential to the company’s identity and long-term future. This was achieved by deepening its association with the migrant population, where they emphasised the migrants’ benefits to the economy and their essential role in providing public services.

Keystone decided that celebrating its role in helping migrants would embed into the company’s identity and reinforce the idea that the organisation was designed to tackle difficult social issues. By taking this approach, Keystone strengthened its identity internally, instilling staff with a clearer sense of purpose and greater confidence in their ability to tackle difficult issues.

Keystone’s role helped attract press attention and led to new contracts to deliver a range of community projects and services, many of them unconnected to migrant support. The company benefited from what the researchers term an “image transfer”, where other organisations publicised Keystone’s work in order to share its success and show they were aligned with the company’s values.

Keystone’s work with migrants drew praise from the Commission for Rural Communities and the Audit Commission, leading to an unexpected re-commitment to their mission in the face of stigma. This resulted in an increase in support from important stakeholders.

The study, “Managing the consequences of organisational stigmatisation: identity work in a social enterprise” is published in the Academy of Management Journal.

This article was adapted from a news story produced by Cambridge Judge Business School.