Abstract

In addition to their conduct, organizations can be stigmatized for conduct they did not engage in. Advancing a conceptual foundation of illusory conduct stigma, I explain how it stems from a perceptional process that is distinct from the one underlying conduct stigma. I use conspiracy theory as an illustrative source of illusory conduct stigma and explain how the former evolves in the absence of evidence, differs from an official narrative, and incorporates organizations. The study proposes that organizations are likely targets when they have higher status, larger size, and recent media coverage, and the targeting is persistent when organizations are complex, diversified, and carry strong emotional appeal. Moreover, organizations are at times participants in the production, facilitation, and forbearance of illusory conduct stigma. The study contributes by explicating how organizations are affected as well as how they participate in the development and propagation of illusory conduct stigma.