Pollution Stigma and Manufacturing Firms’ Disengagement Effort: Interactive Effects of Pressures From External Stakeholders

Abstract

Firms’ stigmatization due to deviation from social norms has received extensive attention in recent years. The increasing significance of the social norm requiring firms to protect the natural environment contributes to the emergence of pollution stigma over the heavily polluting firms. We apply the stigma theory to the National Specially Monitored firms of China and expand past research by developing a framework to understand the interactive effects of external stakeholder’s pressure on the tendency for these firms to disengage from the pollution stigma. We find that (a) there is diminishing returns to scale in the joint effect between hard and soft regulative pressure and in that between regulative and normative pressure, (b) the positive effect of mimetic pressure from environmental protection exemplary firms is exacerbated when dilution of stigma responsibility is low, and (c) dilution of stigma responsibility weakens the positive effect of stigma intensity on firms’ disengagement tendencies.