Transforming scandals into entrepreneurial opportunities: The case of the hospitality industry

Abstract

Scandals are frequently considered as detrimental for involved businesses. When hotels serve as a backdrop and are collateral victims of scandals caused by high-profile individuals, we argue that entrepreneurially minded executives can envision scandals as an unexpected opportunity, likely to bring good news to the involved hotels. Tourism businesses offer supportive evidence. In a constructivist perspective, scandals and their consequences do not result from the transgression seriousness, but are socially constructed. Entrepreneurially minded individuals influence this social construction and seek to transform scandals into entrepreneurial opportunities. We analyse whether and how hospitality executives can channel the a priori destructive forces involved in a scandal eruption towards a direction aligned with their own interests. We identify three potential mechanisms by which hospitality executives can make the best of scandals, namely, by increasing exposure and attracting attention at a low cost, offering a basis for differentiation and innovation and generating useful marketing data. We identify some conditions that make this outcome more likely. Rather than just avoiding or containing the scandal consequences, we propose to equip hospitality executives with a scandal management plan that explicitly considers the bright side of scandals.