Post-bankruptcy stigmatization of entrepreneurs and bankers’ decisions to finance

Abstract

Studies of post-bankruptcy stigmatization generally adopt a sociocultural, determinist reading, in which an entrepreneur who has suffered a business failure will be stigmatized and discriminated against by society. Our research aims to take the debate back to its interpersonal foundations. In this article, we have chosen to study the stigmatized/ stigmatizing dyad—through the prism of the banker—in order to shed light on the interpretative process of stigmatization, as well as on the factors that may attenuate or reinforce the stigma. In order to understand how post-bankruptcy stigmatization affects the banker’s decision on whether or not to finance a new entrepreneurial project, we have combined semistructured interviews with an exploratory experimental method involving small-business advisors from banks. Using the “Gioia” methodology, we develop a theoretical model, enabling us to improve our understanding of the development of post-bankruptcy stigma and the different processes that it implies.