Political stigmatization across US host government agencies and strategic responses by Chinese MNEs

Abstract Research Summary Chinese MNEs face political risks from decoupling policies, particularly in the United States. Prior research explains when such policies arise but pays limited attention to divergent or conflicting treatment of the same firm by different government agencies within the same host market. Extending organizational stigma theory, we argue that severe decoupling occurs when labeling a firm as politically dangerous reaches a cross‐audience tipping point, while lesser decoupling arises at audience‐specific tipping points. We further conceptualize how such labeling diffuses across agencies and how firms can avoid or slow this process through audience dependence, division, and diminution strategies. Effectiveness depends on which audiences firms prioritize and when they intervene in the labeling process. Managerial Summary Amid intensifying geopolitical rivalries, Chinese multinational enterprises face decoupling risks that can vary across government agencies within the same host country. We explain how such divergent treatment emerges, arguing that severe decoupling occurs when labeling a firm as politically dangerous reaches a cross‐audience tipping point, while more limited measures arise when labeling remains confined to specific agencies. We also show that firms can influence these outcomes by actively managing how political labels spread through audience dependence, division, and diminution strategies. Our perspective highlights that successfully managing political risk depends on which audiences firms prioritize and when they intervene in the labeling process.