A processual view of organizational stigmatization in foreign market entry: The failure of Guggenheim Helsinki

Abstract

Multinational organizations increasingly face strong resistance to their market entry by some local audiences, reflecting growing ideological divisions and populism in societies. We turned to the organizational stigma literature for the conceptual tools and vocabulary to uncover why multinationals can simultaneously be praised by some audiences and tainted by others. Drawing on a longitudinal explanatory case study of an unsuccessful market entry, we develop a process model of organizational stigmatization in a foreign market entry. Our model explains how and why some local audiences may taint the core attributes of an entry-seeking organization and its market entry process, while others may embrace the foreign entrant. We also introduce the notion of cross-border stigma translation where negative audience evaluations are amplified across geographic contexts. A focus on competing local audiences is important for understanding the generative mechanisms of the liability of foreignness and liability of origin and how to manage them. Our study grounds a conversation on the processes and mechanisms of organizational stigmatization that may cause permanent liabilities to foreign organizations.