The Persistence of a Stigmatized Practice: A Study of Competitive Intelligence
| DOI | http://doi.org/10.1111/1467-8551.12106 |
| Date | 01 January 2016 |
| Published date | 01 January 2016 |
| Author | Patrick Reinmoeller,Shaz Ansari |
British Journal of Management, Vol. 27, 116–142 (2016)
DOI: 10.1111/1467-8551.12106
The Persistence of a Stigmatized Practice:
A Study of Competitive Intelligence
Patrick Reinmoeller and Shaz Ansari1
Cranfield School of Management, Cranfield University, Cranfield, Bedford, MK43 0AL, UK, and 1Judge
Business School, University of Cambridge, Trumpington Street,Cambridge, CB2 1AG, UK
Corresponding author email: patrick.reinmoeller@cranfield.ac.uk; s.ansari@jbs.cam.ac.uk
Studies on the diusion of practices provide valuable insights into how organizations
adopt, adapt, sustain and abandon practices over time. However, few studies focus on
how stigmatized practices diuse and persist, even when they risk tainting the adopters.
To address this issue and understand how firms manage stigmatized practices, we study
US organizations associated with the practice of competitive intelligence (CI) between
1985 and 2012. CI includes legitimate information gathering practices that are some-
times also associated with infringements and espionage. Our findings suggest that CI
became highly diused and persisted despite the risk of stigmatizing its adopters. We
identified three factors to explain CI’spersistence: (1) keeping it opaque to avoid the neg-
ative eects of stigmatization, (2) ‘constructing’ usefulness to justify its ongoing use by
leveraging accepted beliefs and invokingfear of unilateral abandonment and (3) adapting
it by developing multiple versions to increaseits zone of acceptability. These three factors
contribute to practice persistence by allowing firms to dilute the potential stigma from use
of the practice. Our contribution lies in explainingthe adoption, diusion and ongoing use
of a stigmatized practice whose benefits cannot be overtly acknowledged or made public.
Introduction
Practices such as golden parachutes for CEOs
of failing banks and executive bonuses are
now widely criticized but endure and are even
supported by taxpayers’ money to keep banks
solvent. While abundant research has examined
how controversial industries arise (Baum and
McGahan, 2013; Humphreys, 2010) and polemic
practices diuse (Briscoe and Murphy, 2012; Davis
and Greve, 1997), scant research has addressed
their persistence (Colyvas and Jonsson, 2011). For
practices to persist they need to be perceived as
adding either technical or social value; they ‘do
good’ or ‘look good’ (Kennedy and Fiss, 2009).
Some widely diused and clearly legitimate prac-
tices, such as advertising, consulting and external
hiring, persist in the light of perceived commercial
gains, even if sometimes questionable (e.g. Bid-
well, 2011; Sturdy, 2011; Verhoef and Leeflang,
2009). Some legal practices, such as downsiz-
ing (Ahmadjian and Robinson, 2001), golden
parachutes (Fiss, Kennedy and Davis, 2012) and
retiree benefit cuts (Briscoe and Murphy, 2012),
persist because of commercial benefits, even if
they do not look good. Illegal practices such as
deceptive accounting, price-fixing, environmental
degradation (Greve, Palmer and Pozner, 2010),
sweatshop labour (Lamin and Zaheer, 2012),
bribery (Martin et al., 2007), paying protection
money (Vaccaro and Palazzo, 2014) and modern
day slavery (Crane, 2013) put adopters at risk
of stigma (Jonsson, Greve and Fujiwara-Greve,
2009) but continue because of commercial gains,
even if these gains need to be hidden. It is worth
exploring how and whyrisky stigmatized practices
persist when their benefits cannot be overtly
acknowledged or made publicly visible.
A prominent exemplar of a stigmatized prac-
tice that persists is competitive intelligence (CI).
Based on the assumption that ‘high-quality intel-
ligence is, on balance, desirable’ (Wilensky, 1967,
© 2015 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
The Persistence of a Stigmatized Practice 117
p. xi), CI refers to legal practices of gatheringmar-
ket information that have sometimes been associ-
ated with legal infringements and espionage (e.g.
Calof and Wright, 2008). Nearly every major firm
has a CI oce designed to gather market informa-
tion and/or to discover the ‘trade secrets of com-
petitors’. CI practitioners operate in virtually ev-
ery form of enterprise, including non-profits(King
and Bravin, 2000a; Nasheri, 2005, p. 9). CI has
diused1and persists, despite patchy evidence of
competitive gains2(Richardson and Luchsinger,
2007; Saayman et al., 2008) and reputational risk
from its illegal deployment (espionage).
Given limited research on stigmatized practices
(cf. Crane,2005; Hemphill, 2002), we examine how
CI has evolved, diused and persisted. We iden-
tify three factors to explain CI’s persistence. First,
keeping a practice opaque may allow a stigma-
tized practice to persist. Due to reputational and
financial risks, users justify keeping CI ‘under the
radar’. Second, since adopters and other stake-
holders cannot overtly show performance bene-
fits to justify utility and ongoing use, they con-
struct usefulness by leveraging accepted beliefs
or ‘endoxa’ (Green, Li and Nohria, 2009, p. 14;
Wilensky, 1967) and by invoking fear about
the risks of unilateral abandonment. Third, they
adapt the practice by developing multiple ver-
sions, thereby increasing the ‘zone of acceptabil-
ity’. These three factors contribute to practice per-
sistence by allowing firms to dilute the potential
stigma from using the practice.
We contribute to the literature on controversial
practices in three ways. First, while much research
has focused on the diusion of practices,we extend
the limited number of studies on practice persis-
tence (Colyvas and Jonsson, 2011; Zhu and West-
phal, 2011). Second, we explain the diusion and
persistence of stigmatized practices whose com-
mercial benefits need to be actively kept opaque to
avoidreputational risks and how firms justify their
ongoing use beyond just rhetorical defence (e.g.
Carberry and King, 2012; Elsbach and Sutton,
1Penenberg and Barry (2000) speak of the ‘Intelligencing
of Corporate America’ and Warrelland O’Murchu (2013)
and Rigby (2013) report on many bluechips among more
than 100 companies in the City of London that deploy CI
practices.
2A former Vice President at Lancome and L’Oreal em-
phasizes the non-rational, intuitive dimension of CI and
the diculties of gauging its eectiveness (Salmon and de
Linares, 1999).
1992). Third, we shed light on a practice associated
with intelligence studies that has received scant
attention in organization theory, despite absorb-
ing considerable resources without overt benefits
(Grey, 2009).
Theoretical motivations
In explaining practice adoption and persistence,
scholars have moved beyond conceptualizing in-
stitutional and technical forces of adoption as
separate and distinct (Ansari, Fiss and Zajac,
2010; Greve, 1995; Tolbert and Zucker, 1983;
Westphal,Gulati and Shortell, 1997) by emphasiz-
ing the social embeddedness of technical factors
(e.g. Kennedy and Fiss, 2009; Lounsbury, 2007).
Once practices diuse organizations seek either
technical or social benefits, if not both, accruing
from continued implementation. At times, prac-
tices persist despite questionable technical benefits
(e.g. Abrahamson, 1991); the accounting practice
of managing gross margins in agriculture persists
because it is simple, popular and largely unchal-
lenged even by those in the know(Jack, 2005). Sim-
ilarly, Soin and Huber (2012) show how a meta-
form of financial regulation has persisted overtime
in UK retail financial services despite lacking sys-
tematic evidence of benefits.
At times, new controversial practices may dif-
fuse and persist despite social disapproval be-
cause organizations strategize to deflect criti-
cism or defend against potential stigmatization
(Desai, 2011). Practices may also persist because
organizations proclaimto engage in legitimate ver-
sions of the practice, or dissociate themselvesfrom
scandal-prone firms. An example is mixed mar-
tial arts, where practitioners have distanced them-
selves from more extreme versions of the prac-
tice (Helms and Patterson, 2014). Similarly, firms
in the arms industry straddle multiple categories
to dilute their association with the stigmatized
category (Vergne, 2012). Organizations may also
be able to ‘insulate’ themselves from institutional
pressures against controversial practices, which ex-
plains whymodern day slavery still persists (Crane,
2013; Kara, 2009).
Clearly, stigmatized practice may continue be-
cause adopters are attracted by commercial gains,
such as cheap labour in the case of modern
day slavery or lucrative loyal fans in the case of
violent sports. Yet, the degree of stigma varies. In
© 2015 British Academy of Management.
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