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Managing repugnance: how core-stigma shapes firm behavior

Published online by Cambridge University Press:  23 November 2022

Erwin Dekker*
Affiliation:
Mercatus Center at George Mason University, Fairfax, USA
Julien Gradoz
Affiliation:
Clersé, Université de Lille, Lille, France
*
*Corresponding author. Email: edekker@mercatus.gmu.edu

Abstract

This article argues for the need for the empirical analysis of how firms manage repugnance and core-stigmatization. To develop our empirical perspective, we compare the work on repugnance with the existing empirical literature in management on core-stigma and argue that core-stigmatization results from the mobilized repugnance. The core-stigmatized firm faces higher transaction costs. We demonstrate, through a case-study of the strategies of MindGeek/Pornhub in the online pornography market, how transaction costs economics can explain the choice of strategies to deal with core-stigma. Under most conditions, the increased transaction costs lead to vertical and lateral integration of the firm. In a dynamic setting, rival firms might use stigmatization to prevent the entry of a new competitor. Our second case-study on the early decades of the mail-order company Sears, Roebuck, and Company illustrates that repugnance, including racial discrimination, was mobilized by competitors to block the entry of the firm into the market.

Type
Research Article
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

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