The Broad versus the Pointed Brush: Status Change, Stigma, and Blame Following Fast Organizational Failure

The paper explores labor-market mechanisms of intra-professional status change following fast organizational failure. Extant research focuses on status change over extended periods of time. We complement that research by undertaking a mixed-method case study of the fast organizational decline and bankruptcy of a former market leader in the global bunker-oil industry. We use unique qualitative and quantitative data to examine the global careers of this firm’s displaced employees. On the one hand, we find that they suffered no general loss of status. On the other hand, we find that the displaced employees most prone to status loss were those who worked organizationally and geographically proximate to the locus of the organization’s failure. We theorize that status change in our case is driven by a mechanism of blaming—the perceived culpability of those displaced employees with comparatively strong association with the organizational failure. We compare this new theoretical notion of blame with the extant notion of stigma, and suggest that while both compensate for imperfect information, stigma entails weaker association with failure. As such, it taints with a “broad brush” compared to blame’s “pointed brush.”