Stigma is a label held by a number of people that something is flawed. Many organizations have to deal with and interact with stigma, usually created by a person within the organization doing something illegal or unethical, or due to the nature of the business, such as sex work, cannabis, etc. However, in our research published in the Journal of Management Studies, we study how new ventures interact with stigma based on their geographical location, which is not the fault of the new venture, nor does the new venture have sole power to change/influence such stigma. Because of the nature of this stigma, we find that entrepreneurs may embrace and co-opt locational stigma to benefit their new or existing venture.

Motown and The Motor City: This Rise and Fall and Rise?

To understand this better, we interviewed several entrepreneurs in Detroit, MI. Detroit has a storied past with many ups and downs over the last century. While it has a unique history, it is not the only geographic location that faces stigma. Within the US, there are many stigmatized cities that once demonstrated growth, but now fall within the rust belt where more traditional industries either moved oversees or cease to exist. This phenomenon is not isolated to the US, such that we have seen the rise and fall of many cities throughout history across the globe. Other aspects of stigma also play out in other geographic zones, such as “Made in China” or as of late, entities associated with Russia. Thus, locational stigma is present for many organizations all over the world.

An Underdog Narrative and Comeback Story

From our interviews, we found that locational stigma could be used for new ventures by creating an underdog narrative and being part of the comeback story of the city. First, the underdog narrative allows entrepreneurs to co-opt some aspects of the location to be associated with their new venture, such as grit, determination, and strength. This association with toughness was a signal to outsiders that the new venture also had these qualities. As a result, the new ventures were able to differentiate themselves from other ventures in more prosperous or “pampered” cities. This differentiation might allow them to stick out from the crowd when it comes to gaining customers or investment.

Locational Stigma Creates a Default Social Mission

The second benefit of embracing the location stigma was that it gave entrepreneurs a social mission to be part of the fight of the collective to help remove the stigma of the city. This sense of purpose shows a positive drive for each entrepreneur that they must be successful not only for themselves and their company, but also for their community. As a result, we also found that those that engaged in this broader goal to help the city received more in-group advantages, such as access to local resources.

Thus, we find that new ventures can utilize stigma that is not directly assigned to them. Locational stigma is something that cannot be erased, rewritten, or ignored. With this, our data indicate that locational stigma should be embraced, along with the good and bad elements of the city’s history. It is only from this perspective that a realistic “new future” can be approached. Perhaps this approach is useful for local institutions to empower entrepreneurs in their city to gather the benefits of locational stigma. Thus, a stigmatized location may serve as an ideal launching pad for certain entrepreneurial ventures.