Introduction

In early 2008, a heated public controversy unfolded in Germany due the Finnish telecommunications giant Nokia deciding to close a plant in Bochum and relocate production to Hungary and Romania. Leading newspapers, politicians, labor unions, and other stakeholders provided various accounts of Nokia’s decision that proliferated rapidly across social and traditional media making headlines for weeks. Nokia’s decision was widely, although not unanimously, considered a major organizational moral failure, defined as “noncompliance with the moral norms or expectations of a community” (Shadnam et al., 2020, p. 699). The controversy transformed Nokia’s image from a highly respected and morally commendable company (European Commission, 2008; Greenpeace, 2007) to one with a questionable moral integrity.

Research has noted that plant closures often lead to local uproars due to their damaging effects on local stakeholders (Fassin et al., 2017; McMahon, 1999, 2000; Millspaugh, 1990). Yet to date we know little about the processes that make these local protests escalate into nationwide controversies. The ‘Bochum case’ stands out in this respect. An initially local controversy over a plant closure drew increasing interest, first making headlines nationwide and then remaining in public discourse for years. Yet, while researchers have noted how stakeholders may impose moral framings on controversial actions (e.g., Adut, 2005; Palmer, 2012; Shadnam & Lawrence, 2011; Shadnam et al., 2020), we still lack insight into how such controversies gain widespread attention and become seen as noteworthy organizational moral failures beyond the local settings. For instance, controversies might start locally and then gain national attention because central actors initially ignore them, or alternatively the meanings attached to controversial actions might evolve over time so that they come to command greater attention (Sonenshein, 2007). We thus pose the following research question: How do local controversial actions, such as plant closures, escalate into national accounts of organizational moral failure?

To investigate how a local controversy escalates into an issue of nationwide interest, we adopt a process perspective, focusing on interconnected events over time to explain why and how controversial organizational actions become widely seen as moral failures. We build on recent insights by Shadnam et al. (2020, p. 699) on the roles that certain stakeholder groups have in drawing initial attention to controversial actions and triggering “the social construction of organizational moral failure” as its categorical condemnation. Understanding how local controversies expand and draw in broader audiences can help explain how these construction processes spread geographically and across stakeholder groups. To uncover the moral framings that portray the plant closure as a moral issue, we use the methodological technique of “semiotic codes” (Barley, 1983). Stemming from linguistics research, semiotic analysis allows to capture such framings as codes comprising signs (e.g., words and symbols) that constitute binary oppositions between meanings given to actions or events, for instance the perceived morality of specific organizational actions (Barthes, 1977).

Our semiotic analysis of the plant closure revealed two distinct semiotic codes, ‘opportunism’ and ‘egotism’ that helped us to organize the debate over the moral failure of Nokia’s plant closure. Scrutinizing the textual data, we noticed that the semiotic codes were associated with local stakeholders’ use of evocative labels (Ashforth & Humphrey, 1997), provocative and oftentimes metaphorical language. Labeling Nokia as ‘subsidy locust’ and characterizing it as having ‘addiction for profit,’ for example, imposed specific moral frames that cast the plant closure as morally irresponsible (Lange & Washburn, 2012; Shea & Hawn, 2019). Once the plant closure became framed in moral terms, the nationwide media coverage expanded, with more and more stakeholders engaged in the public controversy. Over time, Nokia’s plant closure came to represent and exemplify broader questions of corporate morality, increasing the stakes of public discourse for stakeholders.

Our main contribution is to the growing literature concerned with organizational moral failures (Cooper et al., 2013; Greve et al., 2010; Kuhn & Ashcraft, 2003; Logue & Clegg, 2015; Palmer, 2012; Shadnam & Lawrence, 2011; Shadnam et al., 2020). We develop an inductive process model of how local controversial actions, such as plant closures, escalate into widespread perceptions of moral failure in national media. Our analysis further contributes to the plant closure literature that has predominantly examined consequences of closures for relatively isolated local stakeholders (e.g., Erkama & Vaara, 2010; Fassin et al., 2017; McMahon, 1999, 2000; Millspaugh, 1990). Specifically, we show how the linking of closures to current political issues can exacerbate stakeholders’ moral concerns. Finally, our study makes a methodological contribution to the use of semiotic codes in the empirical study of moral controversies.

Plant Closures and the Emergence of Organizational Moral Failure

The Ethics of Plant Closures

Plant closures are a common and global phenomenon. They occur across industries, across sectors and in companies of all sizes (e.g., Fassin et al., 2017). McMahon (1999, p. 106; see also Stafford, 1991) defines a plant closure as “the shutdown of a facility or operating unit within a single production site and the layoff (voluntary or not) of more than 50% of the employees at work on this site.” The literature on plant closures has identified their role in increasing efficiency in global production networks (Labib & Appelbaum, 1994; McLachlan, 1992; McMahon, 1999; Watts & Kirkham, 1999), their antecedents, such as shifts in demand (Kirkham & Watts, 1997, 1998; Ratun et al., 2009; Rubenstein, 1987; Sutton, 1987), and the procedural justice of closures from the perspective of employees (Brockner et al., 2000).

From an ethical perspective, researchers have examined diverse aspects of plant closures, such as why companies engage in closures, how they are implemented, and what their consequences are on employees and other stakeholders (e.g., Erkama & Vaara, 2010; Fassin et al., 2017; McMahon, 1999, 2000; Millspaugh, 1990). While many authors are critical of plant closures, some have argued that they are not categorically unethical, but their moral acceptability depends on their motives and implementation (McMahon, 1999; Watson et al., 1999). Watson et al. (1999) contend that the perceived morality of a plant closure is connected to the underlying ideology and moral philosophy of the actors involved. For instance, libertarian individuals would be unlikely to condemn closures, while those who adopt a communitarian perspective might arrive at different conclusions. Moreover, when responses to plant closures play out in the media (Erkama & Vaara, 2010), struggles over perceived morality become an important topic. Fassin et al. (2017) studied eight plant closures and showed that they can create local uproars shaping businesses’ future decision-making processes. Likewise, McMahon (1999) documented that a plant closure by Chrysler in Kenosha, Wisconsin shocked the local stakeholders leading to an attempt to reverse the decision.

In summary, research on the ethics of plant closures has largely focused on their impacts, moral justifications, and related stakeholder reactions. To understand how the morality of plant closures is evaluated and how they may come to be seen as moral failures in the eyes of the public, we turn to research on organizational moral failure and moral illegitimacy.

Organizational Moral Failure and Moral Illegitimacy

Organizational moral failure represents a shared acknowledgment of certain transgressive actions as unacceptable (Shadnam et al., 2020). Moral failure is closely related to moral illegitimacy, a more diffuse umbrella term for evaluations of actions as not “the right thing to do” (Suchman, 1995, p. 579). Because organizational moral failure reflects the “noncompliance with the moral norms or expectations of a community,” (Shadnam et al., 2020, p. 699), it represents an explicit and shared judgment of moral illegitimacy. Shadnam et al. (2020) suggest that perceptions of organizational moral failure are socially constructed and often require some stakeholder group to direct a concerted effort to draw attention to illegitimacy and to accomplish framing certain actions as moral failure.

Because the categorical evaluation of organizational moral failure can influence how governments, consumers and employees perceive and interact with firms (Haack et al., 2014), it is important to understand how and why perceptions of organizational moral failure emerge. In this regard, Shadnam et al. (2020) have made significant conceptual progress by advancing an actor-centered and contingency-based typology of accounts of moral failure. They highlight the importance of heterogenous actors, such as professional groups, NGOs and the media, as members of moral communities who are likely to construct different accounts of organizational moral failure under different conditions (e.g., Cooper et al., 2013; Shadnam & Lawrence, 2011; Shadnam et al., 2020). Watchdog organizations, for example, can be particularly important in highlighting moral issues in domains that are characterized by low professionalization. These findings emphasize the importance of attending to distinct kinds of actors in the analysis of moral failures, such as controversial plant closures.

In elaborating the construction of organizational moral failure, it is vital to understand not only who initially “calls out” inappropriate behavior and the related accounts (Shadnam et al., 2020) but also why and how perceptions of inappropriateness are diffused across audiences (Adut, 2005; Haack et al., 2014; Lehtimaki & Kujala, 2017). Over time, perceptions of moral failure come to be shared within and across moral communities, “network[s] of organizational actors in which relationships are based principally around issues of morality, and for which there exist some set of rules, formal or informal, that govern community membership” (Shadnam & Lawrence, 2011, p. 385). For organizations embedded in various local, national, and global networks, the perceived morality of plant closures can vary across the plurality of moral communities (Palazzo & Scherer, 2006; Shadnam & Lawrence, 2011).

Diverse studies have emphasized the role of public discourse in establishing whether certain actions are legitimate and moral (Erkama & Vaara, 2010) or scandalous (Adut, 2005). In pluralistic moral communities, the morality of organizational actions, such as plant closures, is oftentimes not clear-cut, meaning that neither taken-for-granted conceptions of right and wrong nor the law can yield consensual judgments (Tost, 2011). As a result, discursive processes are central in constructing both perceptions of moral illegitimacy and the explicit categorization of actions or events as organizational moral failures (Greve et al., 2010; Kuhn & Ashcraft, 2003; Logue & Clegg, 2015; Mena et al., 2016; Palmer, 2012; Shadnam & Lawrence, 2011). Specific events and actions are open to multiple interpretations, and their evaluation depends on the moral framing imposed on them (Sonenshein, 2007). Even when the stakeholders agree that an organization had acted immorally, they can perceive and frame such an event as an “isolated, idiosyncratic problem in one organization” or they can understand it to be “representative of a larger and perhaps more deeply rooted set of problems in the community” (Shadnam et al., 2020, p. 6).

The research on scandals provides hints at how widespread and durable perceptions of moral illegitimacy, where actors or their actions are conceived to be in breach of moral norms, can suddenly turn into scandals that command public attention. Adut’s (2005) seminal work in particular suggests that illegitimacy turns into moral failure due to “disruptive publicity” that gives motive for third parties to participate in public discourse. Drawing on the homosexuality trial against Oscar Wilde, Adut (2005) highlighted two motives for public condemnation, the efforts to reinforce social norms and to distance oneself from the moral failure through public condemnation.

Finally, research has noted that the construction of moral failure is shaped by trusted actors, such as the media (Bitektine & Haack, 2015; Erkama & Vaara, 2010). Prior studies on the social construction of wrongdoing have argued that many controversial organizational actions are not scrutinized and collectively judged in the media (Mena et al., 2016) because public opinion and social-control agents pressure audiences to silence their own judgements (Bitektine & Haack, 2015; Greve et al., 2010). In line with these arguments, scholars have shown that judgements by high-status audience members likely have a larger negative impact on collective judgements (Adut, 2008; Devers et al., 2009).

These diverse processual observations point toward the role of public discourse and the involvement of new stakeholders, particularly those with high status or strong incentives for reinforcing the moral norms of specific moral communities, in creating widespread perceptions of organizational moral failure. To better understand how perceptions of illegitimacy turn into categorization of actions as moral failures, we next turn to the research on labeling.

The Role of Labeling in Organizational Moral Failure

Socially constructed labels used in public discourse can play an important role in signifying and signaling moral failure. Indeed, research on labeling suggests that perceptions of organizational moral failure arise when some actors actively call out specific actions as corrupt (Ashforth et al., 2008) or unethical (Treviño et al., 2014). Labels and the broader accounts in which they feature represent rhetorical devices that impose a specific moral framing on organizations and their activities (Joutsenvirta & Vaara, 2015; Piazza & Perretti, 2015; Vaara et al., 2006; Vaara & Tienari, 2008; Vergne, 2012) and thus shape how the public evaluates and perceives them (Ashforth & Humphrey, 1997). Although labels can be useful carriers of meanings that help actors make sense of complex realities (Jalonen et al., 2018), they can also prevent complex cognitive processing and thus foster the use of stereotypes and prejudices (Ashforth & Humphrey, 1997; Zuckerman, 1999). Finally, labeling can link an organization and its actions to a specific value system held by stakeholders, effectively framing the interpretation of transgressive actions (Carberry et al., 2018; Deephouse & Suchman, 2008; Shadnam et al., 2020).

Despite these advances in the study of organizational moral failure, the literature has offered surprisingly little scrutiny on how explicit views of moral failure evolve over time and across local and national stakeholders. Studies on scandals and corporate moral failures tend to emphasize why and how individual actors perceive events, without accounting for the escalation of attention and the shift from general illegitimacy to categorizations of moral failure. The development of a more refined processual understanding is therefore important because “organizational moral failure is a major societal and organizational problem in that it leads to negative social consequences for those impacted by the failure, and trust and legitimacy challenges for perceived perpetrators and those associated with them” (Shadnam et al., 2020, p. 699). Plant closures offer a theoretically insightful empirical case to examine the escalation of initial local concerns to nationally shared perceptions of organizational moral failure.

Methods

Empirical Context

We studied how a local controversy over Nokia’s decision to close its plant in Bochum and relocate production from Germany to Hungary and Romania in early 2008 became a matter of national concern in Germany. Bochum is a city of about 350,000 inhabitants in the center of the Ruhr region. The area, which is located in the state of North Rhine Westphalia (NRW), is one of Germany’s most important industrial clusters. The Ruhr industrial belt—similar to the “Rust Belt” in the US—was home to coal and steel firms. Later, firms from various sectors, such as automobile, manufacturing and telecommunications, opened facilities in the region. NRW had been under pressure because many residing multinational firms, including General Motors, BenQ and Motorola, had threatened or decided to relocate their production plants abroad. As firms left, unemployment rose and many cities in the region, including Bochum, became increasingly dependent on the manufacturing jobs that remained.

Nokia had opened its Bochum plant in 1989 to produce televisions. Like other major facilities in the region, Nokia’s plant became an integral part of the economy of the city and its identity. The residents called a metro stop close to the plant “Nokia,” and the train that carried passengers to it was often referred to as the “Nokia train.” Furthermore, many plant workers had developed an identity as “Nokians,” indicating a sense of pride in working for the company.

Economic struggles imperiled the political position of Jürgen Rüttgers, NRW’s Prime Minister from the center-right Christian Democratic Union (CDU). He had won the vote in June 2005, pushing the center-left Social Democratic Party (SPD) into opposition for the first time since 1966. The closure of Nokia’s plant was a major political challenge for Rüttgers and the CDU, who advocated business-friendly policies.

We chose the Nokia plant closure as an illustrative case that can “enlarge our understanding” (Weick, 2007, p. 18) of the spread of local controversies to the national level. We focused on the labels that local stakeholders attached to the closure and the manner in which those labels ignited a broader debate. Before the controversy, Nokia was among the most respected firms in the world. It had just reached its long-term target of a 40% global market share, making it the undisputed leader of the world cellphone market (Gartner, 2008). Nokia was the fifth most valuable global brand (BusinessWeek, 2008), and its strategic agility was widely admired (Doz & Kosonen, 2008). It was also recognized as a frontrunner in corporate social responsibility in the electronics industry (European Commission, 2008). Greenpeace reported that “Nokia is on top because they've already phased out PVC, and met or exceeded a wide set of benchmarks we've laid down to reduce the amount and toxicity of electronic waste piling up in Asia and Africa” (Greenpeace, 2007).

Nokia did not violate any laws or regulations when it shut the Bochum plant down, and some stakeholder groups (e.g., investors and industry analysts) assessed the decision favorably. Nokia’s rationale to close the Bochum plant was to maintain its competitiveness in the global cell phone market and to ease costs of production. However, the media controversy escalated when German politicians accused Nokia of abusing public subsidies. Between 1998 and 2006, the state of NRW had subsidized Nokia with around 60 million euro in exchange for a promise to provide 2860 jobs in Bochum until 2006.

Data Collection

We chose to collect newspaper articles because scholars have suggested that the media should be seen as an “arena” of controversies where public perceptions of firms are shaped (Bitektine & Haack, 2015; Deephouse, 2000; Etter et al., 2019; Lehtimaki & Kujala, 2017). This view implies that the public’s collective perception of what constitutes organizational moral failure is reflected in, and can emerge from, the media coverage of plant closures and stakeholders’ constructions thereof (Bitektine & Haack, 2015; Shadnam et al., 2020).

Our data consist of 422 newspaper articles and 21 Nokia press and stock exchange releases related to the Bochum closure (see Table 1). The articles include editorials, commentaries, columns, and opinion pieces published between January 2008, when Nokia announced the closure, and December 2012. We sampled on articles from Germany’s leading newspapers at the time of the plant closure and searched their databases for all articles containing the words ‘Nokia’ and ‘Bochum’ from January 1st, 2008, onwards. We downloaded all the resulting articles and stored them with unique identifiers. We excluded duplicates when our search results included print and online versions of the same article. The controversy surged rapidly in 2008, with the most intense period of escalation lasting 10 days. Afterward, mentions of the plant closure remained relatively frequent during 2008. Mentions of the plant closure were made occasionally during the next four years. We decided to end our data collection at the end of 2012, as hardly any articles mentioning Bochum were published after that year. Table 2 shows the distribution of articles on the plant closure across our study period.

Table 1 Summary of the data
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Table 2 Distribution of newspaper articles over years in percent
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Our sample includes five German newspapers. Süddeutsche Zeitung is a daily general-interest newspaper with a mid-left political orientation published Mondays to Saturdays. Its more conservative counterparts are the Frankfurter Allgemeine Zeitung (also published Mondays to Saturdays) and its sister newspaper the Frankfurter Allgemeine Sonntagszeitung (published Sundays). Handelsblatt is a more libertarian business newspaper published from Mondays to Fridays. Finally, Die Zeit is Germany’s leading weekly newspaper published every Wednesday with an orientation similar to Süddeutsche Zeitung.

We augmented our sample of newspaper articles with data from social media. The most significant forms of social media during our study period were YouTube and blogs, as Twitter (and similarly Facebook) was not widely used at the time in Germany. We retrieved videos from YouTube with the search string ‘Nokia Bochum’ that were directly connected to the plant closure, resulting in 24 relevant videos. We transcribed all the videos, and we added descriptions of their authors and the viewer comments to our dataset. As some of these videos had been uploaded by local branches of the Social Democratic Party (SPD) and the conservative Christian Democratic Union (CDU), we decided to retrieve blog posts by representatives of these parties that were contemporaneous to the plant closure. We enriched our video data through some of these blog entries. Table 3 summarizes the social media data that we collected.

Table 3 Summary of social media data
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Data Analysis

We analyzed our data in four steps, beginning with a description of the development of the media controversy, followed by a semiotic analysis, a systematic coding of the data, and finally the development of an inductive model. Because the controversy was most intensive during the first ten days, after which media attention had begun to vane, we decided to analyze the escalation during this time period more systematically.

Our first step was to create a timeline of the key events in Nokia’s plant closure, to identify the different stakeholder groups that participated in the controversy, and to describe how media coverage changed over time. We constructed a “temporal display” (Miles & Huberman, 1994) to capture how different stakeholder groups, including various media outlets (Patriotta et al., 2011), portrayed Nokia’s decision (see, e.g., Table 4 for a summary of this display). Going back and forth between the temporal display and earlier studies, we recognized that some of the metaphors and phrases used by local stakeholders were prominently displayed in the national media. We recognized that these metaphors and phrases, which we call “evocative labels,” were an example of labeling (Ashforth & Humphrey, 1997) that sought to portray Nokia’s plant closure as a moral failure.

Table 4 Key events, participating stakeholder groups, and summary of media coverage during the controversy
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The second step of our analysis focused on explicating the “semiotic codes” (Barley, 1983; Barthes, 1977) around the accounts of the plant closure with a view toward understanding better how the plant closure became conceived as organizational moral failure. Semiotic codes comprise signs (e.g., words and symbols) that members of a community perceive as being linked into binary oppositions (Barthes, 1977), thus allowing researchers to identify how actors frame entities as good/desirable and bad/undesirable (Weber et al., 2008). Semiotic codes are an analytical tool from linguistics that helps explicate sets of conventions shared by a cultural community. They show how different signs are linked to establish denotational and connotational meanings (Barthes, 2009; de Saussure, 1959). Semiotic codes help explicate the meanings based on institutionalized understandings for instance of what is morally (un)acceptable (Eliasoph & Lichterman, 2003; Nigam & Ocasio, 2010).

We relied on a technique called semiotic chain analysis (Barley, 1983; Weber et al., 2008) to elaborate how stakeholders linked signs to moral framings of Nokia’s plant closure, either to criticize or defend the company. We aggregated the associations and oppositions we identified into two semiotic codes that we call ‘egotism’ and ‘opportunism,’ both capturing the denotative and connotative aspects of the moral framings (see Figs. 1 and 2).

Fig. 1
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Semiotic code of egotism

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Fig. 2
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Semiotic code of opportunism

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The first semiotic code of ‘egotism’ (Fig. 1) organizes the labels related to moral expectations about how firms ought to behave toward their employees. ‘Opportunism,’ our second semiotic code (Fig. 2), organizes the labels related to how firms who received funding should behave. The lower parts of the corresponding figures represent the denotative meaning of the plant closure that establish the connotative meaning of the plant closure as moral failure depicted on the top.

In the third stage of our analysis, we went through statements in our empirical dataset to identify claims relating to the semiotic codes of ‘egotism’ and ‘opportunism.’ At this stage, we noted that metaphors and phrases used by stakeholders corresponded to the semiotic codes, and they appeared to play a major part in particular at the early stages of controversy. Going through the various statements, we coded passages related to semiotic codes, the stakeholder groups who made the statements, and the related evocative labels in those statements. We then coded these statements as either negative, neutral, or positive toward Nokia. The results of the coding are depicted in Fig. 3, while representative quotes for the coding are provided in Table 5. Table 6 provides a brief description of the most common evocative labels for each semiotic code and examples of their use, while Fig. 4 depicts the use of these central labels over time.

Fig. 3
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Coding of stakeholder statements relating to the semiotic codes of ‘egotism’ and ‘opportunism’

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Table 5 Exemplary quote from semiotic analysis
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Table 6 The most common evocative labels with illustrative quotes
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Fig. 4
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The use of central evocative labels over time

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In the fourth and final stage of our analysis, we developed an inductive theoretical explanation of the escalation process of local controversies into perceived organizational moral failure of national recognition. At this stage, we adopted a grounded theory approach: we used open coding to characterize the events and key accounts that we had identified in the first stage (Strauss & Corbin, 1994) and to identify relationships among them (Gioia et al., 2013) and their development over time (Langley, 1999). By reading theory and data iteratively, we developed the following inductive codes: “local stakeholders raise concerns through evocative labeling,” “moral conflict among stakeholders,” “new stakeholders engage in the controversy,” “plant closure exemplifies broader issues” and “widespread view of plant closure as organizational moral failure.” The fourth analytical stage culminated in the creation of an inductive model of the emergence and escalation of organizational moral failure, as depicted in Fig. 5. It explains how concerns that were local at the time of their inception come to command national attention. The model depicts “plant closure by the focal firm” as the trigger of a process that sees the controversy escalate and leads to the widespread adoption of the view that the closure of the plant constitutes organizational moral failure.

Fig. 5
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The emergence and escalation of nationally recognized organizational moral failure in public discourse

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Findings

We first elaborate the results of coding informed by semiotic analysis, as summarized in Fig. 3, revealing how public discourse evolved relating to the moral framings of Nokia as ‘egotistic’ and ‘opportunistic.’ We then elaborate our inductive findings concerning how and why the plant closure in Bochum escalated into a nationwide controversy, as depicted in Fig. 5.

The Semiotic Analysis of Public Discourse

The semiotic analysis shows how the debate about the morality of Nokia’s plant closure was organized around two distinctive moral framings, egotism and opportunism, relating to broader expectations toward firm conduct in Germany. Figure 3 depicts the reporting and commentaries in newspaper that attack Nokia (negative), report events in neutral tone, and defend Nokia (positive). Related use of the central evocative labels is depicted in Fig. 4.

Labor unions systematically tried to frame Nokia’s plant closure as an egotistical act that stood in contrast to the mutualistic relationship that corporations ought to have with their workers. According to this framing, Nokia’s behavior was a serious violation of the moral expectation that companies should consult with unions and employees before announcing a plant closure. Media echoed this criticism and explicitly stated that Nokia had violated the expectations of appropriate behavior. During the days following the announcement, critical voices that framed the plant closure as egotistical grew more common. Figure 3 underscores this, also showing that there was limited contestation against this framing. The labor unions used evocative labels, such as ‘addiction to profit’ and framed their opposition as a ‘battle’ to emphasize Nokia’s antagonistic relationship to the workers. While the unions used the labels early in their communications, they only gained widespread attention fairly late in the process on 22nd and 23rd of January (see Fig. 4).

The efforts to frame the plant closure as an opportunistic act employed evocative labels more prominently from the early stage. Labels such as ‘subsidy locust’ and ‘caravan capitalism’ were used initially by the local politicians, who suggested that Nokia acted opportunistically by moving production abroad after having received subsidies and had failed to reciprocate the funding offered by the state. As shown in Fig. 3, there were immediately prominent voices defending Nokia’s plant closure as a morally appropriate act in light of globalization, cost pressures, and other dynamics that Nokia was subject to. This opposition came prominently from the media, which accused Rüttgers and others of being dishonest, and suggested that relocations are widespread in the globalized world. Similarly, active commentary from more libertarian and center-right newspapers also defended profit-seeking and Nokia’s decision. Moreover, several national politicians countered the labeling of local politicians by calling for a calmer debate. Thus, while evocative labels seemed to be associated in particular with the opportunistic framing and helped to attract national and even EU-level politicians who adopted them, at the same time the framing associated voices that defended Nokia. We will next summarize our inductive qualitative analysis of these dynamics, following the model depicted in Fig. 5.

Plant Closure by the Focal Firm

Nokia announced its plan to shut down the plant in Bochum and to relocate production of mobile phones to Hungary and Romania on Tuesday, 15th January 2008. The company referred to its need to secure “long-term competitiveness” (01-15-08, Nokia press release) or, as the then-head of the advisory board of Nokia Germany Veli Sundbäck put it, “We have to close the Bochum plant in order to stay competitive” (HB, 01-16-08). Nokia’s decision meant that about 2000 workers would lose their jobs. The plant closure was politically sensitive, because the company had received around 60 million euro in local state subsidies in 1999 with the goal of creating 2860 jobs (01-16-08, FAZ). The subsidies had been accompanied by a formal commitment on Nokia’s part to maintain the factory until 2006.

The initial reactions in Germany’s leading newspapers were fairly neutral, covering the event in their business sections. The first accounts explained the closure as a strategic decision driven by competitive pressures. For example, on 15th January, the Süddeutsche Zeitung’s evening edition contained the following report: “Nokia announced plans to shift production from Bochum to more competitive locales in Romania, Hungary, and Finland earlier today. It is only for 280 employees of the Bochum plant that there seems to be no perspective for further employment.” Almost immediately, however, local stakeholders raised moral concerns about the closure. Those concerns were echoed by the media in the days that followed. Several local stakeholders from NRW and the city of Bochum reacted immediately. Ulrike Kleinebrahm, a Bochum-based representative of the labor union IG Metall who sat on the supervisory board of Nokia Germany, was informed of the decision at a routine meeting of the board on the same morning (01-16-08, SZ, see Table 1 above for all newspaper abbreviations). In one of the very first public reactions to the decision, Kleinebrahm stated that Nokia’s announcement was like being “hit by a bomb” (01-15-08, SZ). Hannelore Kraft, chairwoman of the SPD in NRW, claimed that “Nokia’s behavior is scandalous, […] inappropriate and cold-blooded. You should not treat employees like that. […] This is why NRWSPD is organizing broad societal resistance against the plans of Nokia’s management.” (NRWSPD Website on 01-18-08).Footnote 1

Local politicians quickly focused their attention on subsidies. NRW’s Secretary of Commerce, Christa Thoben (CDU), suspected Nokia of using EU funds to move the plant to Romania (01-16-08, SZ, FAZ) and of having delivered fewer jobs than they had originally agreed in 1999 as a condition for the NRW funding (01-16-08 and 01-17-08, SZ, FAZ). While Thoben acknowledged that Nokia’s contract with NRW had expired in 2006 (01-17-08, SZ), she also stated that “Nokia’s reports about how the funding was used were incomplete; the number of jobs that were created [in Bochum] was manipulated.” (FAZ 01-20-08) Even the state’s Prime Minister, Jürgen Rüttgers, participated in a public protest at the Nokia production plant with employees of Nokia, Thyssen Krupp, and Opel. He stated that “employees have made offers to help maintain production at Bochum, but Nokia’s management did not react” (01-16-08, https://youtu.be/eaYOgINqwBI). Rüttgers also expressed disdain for Nokia’s decision “to build a plant in Romania half a year after the formal agreement had expired” (SZ 01-16-08). The decision was also addressed in the social media, with one YouTube user uploading a video with the following description: “Sad but true! Nokia received more than 80 million Euros in subsidies in the last few years. Now that they have spent this money, they are closing the plant.” (01-16-08, https://youtu.be/eaYOgINqwBI).

Local Stakeholders Raise Concerns Through Evocative Labeling

Our analysis of media articles that were published during the first days following the announcement of the closure sensitized us for the importance that particular labels had for the escalation of the controversy. For example, Rüttgers stated that Nokia ran the risk of earning the image of a “subsidy locust” (“Subventionsheuschrecke”) on 16th January.Footnote 2 Similarly, the Federal Minister of Finance and former Prime Minister of NRW, Peer Steinbrück (SPD), declared that Nokia’s actions were “an instance of caravan capitalism that systematically undermines our economic and societal models” (01-18-08, SZ; our emphasis). The chairman of the SPD fraction in the federal government, Peter Struck, and the Minister of Food and Agriculture, Horst Seehofer from the center-right Christian Social Union in Bavaria (CSU), called for a boycott on Nokia (01-18-08 and 01-19-08, SZ, FAZ). Martin Schulz (SPD), a member of the European Parliament, described Nokia’s plans as “Manchester liberalism in its purest form” and declared that “we have to do whatever is possible against subsidy locusts” (01-18-08, HB; our emphasis).

Similar to politicians using particular labels, unions also used them to depict the closure. The spokesperson for the local union, IG Metall, stated that Nokia would “want to close the plant because Nokia’s management is addicted to profit, and the plant cannot satisfy that addiction. This is a huge mess.” (01-18-08, SZ; our emphasis). These labels were picked up quickly by Frankfurter Allgemeine Zeitung, the Süddeutsche Zeitung and Handelsblatt so that the closure began to become widely recognized in Germany. Evocative labels were also in evidence on social media, which were nascent at the time. In a video from 16th January 2008, employees called Nokia “a gang of thieves” (01-16-08, https://youtu.be/hLJF7oUH5UA).

It seemed particularly striking that media picked up the labels and quickly began to discuss more fundamental moral questions related to plant closures. Because labeling by politicians was mainly related to questions of using and misusing subsidies, media responded to these labels by discussing whether a firm such as Nokia can legitimately close a plant after having received subsidies. Likewise, labeling by unions was mainly related to how Nokia implemented the plant closure so that media responded by more fundamentally discussing what adequate ways of closing plants would look like. We summarized the key labels used in the discourse in Table 6, while their use over time is depicted in Fig. 4. The labels occupied a prominent role in reporting and concurred with a far-reaching debate of the moral implications of Nokia’s plant closure.

Moral Conflict Among Stakeholders

The two moral framings of Nokia’s plant closure as egotism and opportunism pitted different stakeholders as opponents in a conflict over the public interpretation of Nokia’s actions. The evocative labels continued to be evoked during the first week of the crisis, drawing attention to the morality over the plant closure. Media coverage shifted from the initial neutral reporting of the closure to an intensifying debate around the moral strictures that underlie the social market economy. Given the implied accusation of Nokia’s actions as a moral failure, pro-business actors had to make a counterargument. This concern over moral norms of corporate conduct turned the plant closure into a topic of national interest in Germany.

From the perspective of our semiotic codes, it became evident that newspapers related differently to the labels that were raised. Labels that were related to the semiotic code of ‘opportunism’ were taken up and usually responded to by criticizing those who had introduced them. For example, an ironic article in Handelsblatt from 17th January had the headline “Mess vs. subsidy locust.” The article argued that Nokia had not violated any legal requirements and mocked conversative Jürgen Rüttgers by labeling him the “head of the new labor party” (01-17-08, HB). The Frankfurter Allgemeine Zeitung wrote on 19th January that “Peer Steinbrücks’ rant that Nokia’s ‘caravan capitalism’ would undermine society needs to be restated more precisely […] Steinbrück would not talk like that as long as the ‘caravan’ would head to Germany” (01-19-08, FAZ). Similarly, the Süddeutsche Zeitung wrote, “Many politicians accuse Nokia of abusing subsidies, but their behavior is hypocritical. NRW’s Prime Minister Jürgen Rüttgers speaks of a ‘subsidy locust’.” (01-18-08, SZ) Several opinion pieces suggested that the politicians’ evocative labels revealed a lackluster understanding of basic economic principles. An article in the Frankfurter Allgemeine Zeitung highlighted this moral conflict in the following words: “The new enemy is from the north. He guides the capitalistic caravan away from Germany, he is a subsidy locust, a capitalist from the stone age, he engages in investment hopping, he acts inappropriately, he is a rogue, and he exploits peoples and locales. This selection of insults shows how creative politicians can be and how strong their will to denigrate managers is. However, this also proves that leading politicians understand the principles of the market economy less and less” (01-21-08, FAZ). Die Zeit (01-24-08) ironically announced “subsidy locust” and “caravan capitalism” as their phrases of the week.

The newspapers took a more critical stand toward Nokia in relation to egotism. The liberal Handelsblatt wrote that “The 2300 employees affected by the closure deserve empathy” (01-23-08, HB). While Süddeutsche Zeitung and Frankfurter Allgemeine Zeitung reiterated these calls, they also expressed fierce criticism of how Nokia conducted the plant closure. In an article entitled “A communication catastrophe” Süddeutsche Zeitung called Nokia’s announcement to close the plant an “’attack’-like announcement made to the 2300 employees that they were no longer needed” (01-15-08, SZ). Further articles published during these days were titled “Nokia thanks its employees by giving them the boot” (01-22-08, SZ), “Doing instead of talking” (01-22-08, SZ), or “Betrayed, sold, and driven away” (01-23-08, SZ). Frankfurter Allgemeine Zeitung stated that “in the headquarters of foreign companies, nobody cares about German workers” (01-17-08, FAZ) and went on to publish articles with titles such as “Straight away to the east” (01-20-08, FAZ), “The search for solutions that do not appear ice-cold” (01-23-08, FAZ) and “The dirty side of the markets” (01-24-08, FAZ) altogether making one core argument: “Nokia can be rightfully blamed for insensitive behavior toward its employees and for having harmed the economic system on a whole. Many employees would have expected from a Scandinavian firm that it would not be necessary to fight for talks about social compensation plans or a rescue company.” (01-22-08, FAZ)

New Stakeholders Engage in the Controversy

As the Bochum controversy increasingly turned into a generic debate about corporate morality, competing accounts of Nokia’s moral failure drew further interest and new voices. Growing numbers of stakeholders began engaging with the controversy, with politicians from all the major parties issuing statements on the matter. For example, the chairman of the Social Democratic Party, Kurt Beck, accused Nokia of “leaving employees in the lurch and betraying taxpayers” (01-17-08, FAZ) and “ruthless profit maximization [and] inappropriate behavior” (01-18-08, FAZ), later claiming that leaving Bochum shortly after the expiration of the contract with NRW would be “almost fraud” (01-30-08, FAZ). Engaging in further evocative labeling, the conservative party members Hans Michelbach, Peter Ramsauer and Hermann Stahl accused Nokia of “fraud” (Michelbach, 01-18-08, FAZ), “sloppiness” and “investment hopping” (Ramsauer, 01-18-08, FAZ) as well as acting like “modern nomads” (Stahl; 01-17-08, FAZ). Other voices were more sober, avoiding moralistic labeling of Nokia, but condemning its actions. The libertarian Hermann Otto Solms avoided imposing an explicitly moral framing by noting that “Nokia’s behavior is a huge mess” (01-18-08, FAZ). Similarly, European Commissioner Günther Verheugen criticized Nokia for its “hectic decision to close the plant in Bochum that indicates substantial managerial mistakes” (01-20-08, FAZ).

Representatives of nationwide unions also increased their involvement in the controversy. The chairman of IG Metall, Berthold Huber, reiterated threats of “a battle that will harm Nokia’s image” and said that Nokia had “shot” at its employees (01-22-08, FAZ). Dietmar Muscheid of the umbrella organization of German unions, Deutscher Gewerkschaftsbund (DGB), called for Nokia to be boycotted (01-18-08, FAZ) and claimed that “everyone who buys a cell phone should consider the catastrophic consequences that Nokia’s behavior has for thousands of employees” (01-18-08, FAZ, SZ). DGB and IG Metall proposed a federal reform that would strengthen the regulation of closures in order to prevent “ruthless policy” (01-19-08, FAZ, SZ) of the kind adopted by Nokia and demanded that firms pay a share of the “societal costs” (01-19-08, SZ) caused by layoffs. There were further responses on Tuesday, 22nd January 2008, when 20,000 people attended a public protest against Nokia in Bochum (01-28-08, https://youtu.be/dMvs1NE8L6s). The head of the work council, Gisela Achenbach, bemoaned the “unbelievable coldness with which Nokia’s management presented its plans to us” and suggested the whole country needed to attend the event (01-29-08, https://youtu.be/qR2bmGzehYY). The protest garnered extensive media coverage and soon led to comments by Chancellor Angela Merkel, who said, “I cannot understand Nokia’s communication surrounding the closure” (01-22-08, SZ).

Eventually, the controversy reached a point where most high-ranking German politicians took a stance toward the plant closure with all major German political parties represented (see Table 4). At this stage, Nokia’s CEO Olli-Pekka Kallasvuo became involved through interviews published in Frankfurter Allgemeine Zeitung and Handelsblatt in which he publicly apologized for Nokia’s poor communication and emphasized several strategic reasons for the decision (01-23-08, FAZ, HB). National politician and former Prime Minister of the state of Baden-Württemberg, Lothar Späth (CDU), pointed out that subsidies help firms adapt to structural changes (01-23-08, HB). Chancellor Angela Merkel stated that the German government would help Nokia’s employees “as much as possible” (01-23-08, SZ) while National Minister of Science and Technology Michael Glos (CSU) reiterated that Nokia should execute the closure in a socially responsible way (01-23-08, SZ). Finally, Nokia repeated its apology for the manner in which it had communicated the closure at its annual results conference on 24th January 2008.

Plant Closure Exemplifies Broader Issues

As the struggle over the closure as a potential organizational moral failure gained attention through the media coverage, it became linked explicitly to more abstract political and moral concerns of national interest. Over time, various actors articulated the implications that Nokia’s alleged moral failure had for the societal norms governing corporate actions, in line with the moral framings of opportunism and egotism. As the conversation shifted from the local actions of Nokia to the moral norms of German capitalism from 19th of January onwards, the conflict among different stakeholder groups became even more accentuated.

The pro-business media discussed at length how businesses no longer comply with the traditional norms of the social market economy, highlighting, for example, that “it is not scandalous that multinational firms use subsidies to advance their own interests” and that “the real scandal is that politicians think that they can entice firms to certain locates by offering subsidies” (01-19-08, FAZ). The following quotes exemplify the shift to broader questions of moral order:

“Europe has become a larger, international economy... [and] Germany lies within this economy... Therefore, a Finnish company is free to move its production from Germany to Romania.” (01-21-08, SZ)

“Consumers do not pay more only because a product was produced at a certain locale. […] As hard as it may sound, wise decisions, such as Nokia’s, reflect respect for the customer.” (01-25-08, FAZ)

Consequently, the constructions of the plant closure increasingly turned into an exercise in constructing a shared view of an evolving moral order for German capitalism. Indeed, the media coverage of the events in Bochum seemed to focus less on the closure and more on questions of interpretative authority. Connecting the plant closure to the broader theme of corporate morality, the union representative Berthold Huber called Nokia: “a global company that destroys this region” (01-28-08, https://youtu.be/dMvs1NE8L6s).

Widespread View of Plant Closure as Organizational Moral Failure

After Nokia’s CEO apologized for how the company communicated in the context of the plant closure, media attention began to wane from January 24th onwards. Articles were published in newspapers on a weekly rather than daily basis. However, the intensity of the debate over these days turned the closure into a symbol of organizational moral failure that would sever as a point of reference to for years to come. For example, echoing the widespread agreement that Nokia had failed to fulfil moral expectations of how to execute plant closures, Handelsblatt referred to Nokia to highlight how corporate communication failures can result in long-term reputational losses (06-30-11, HB). The Frankfurter Allgemeine Zeitung warned that the car manufacturer General Motors might have faced a similar uproar if it had used subsidies to relocate jobs from Bochum to the United Kingdom (12-05-22, FAZ). German media even drew analogies between Nokia, closures at other multinational companies, and a bribery case at Volkswagen. Table 7 shows evidence of media references to the Bochum plant closure over the years that followed it. Due to the magnitude of the controversy that surrounded the closure, it became a widely accepted symbol of organizational moral failure.

Table 7 Representative examples of the significations that German media attached to Nokia's plant closure
Full size table

Summary

Taken together, the semiotic codes that capture moral framings and the evocative labels that actors used to impose those framings on Nokia’s actions helped elucidate how local efforts to frame controversial actions lead to the escalation of nationwide controversies and moral condemnation. These dynamics contributed to making the local controversy surrounding a plant closure an explicit contest about underlying moral norms of capitalism. The Nokia case exemplifies the proposition that accounts of moral failure can gain prominence even when the moral illegitimacy of the actions in question is widely contested. Curiously, our analysis shows how corporate actions that do not break any laws can linger in public discourse for a long time if they connect with broader political struggles or moral concerns in society.

Discussion

The Escalation of Organizational Moral Failure

We contribute to the literature on organizational moral failure (Cooper et al., 2013; Granovetter, 2007; Greve et al., 2010; Kuhn & Ashcraft, 2003; Logue & Clegg, 2015; Palmer, 2012; Shadnam & Lawrence, 2011; Shadnam et al., 2020) by shedding light on the processes that escalate accounts of organizational moral failure from local contexts to national discourse. In doing so, we extend the work of Shadnam et al. (2020), which concerned the actors and accounts that accentuate initial attention to controversial or illegal firm actions. Our inductive model suggests that the construction of organizational moral failure is a dynamic process that involves a shifting understanding of organizational actions and an expanding set of stakeholders who are driven by salient moral conflict (Adut, 2005).

Our analysis drew attention to the role of evocative labeling in creating moral framings that connected the concrete plant closure to the moral character of Nokia. While prior work has recognized stakeholder concerns as triggers for moral anger among stakeholder groups (Antonetti & Maklan, 2016) and examined how various actors evaluate firms (Dorobantu et al., 2017; Gomez‐Carrasco & Michelon, 2017; van den Broek et al., 2017), labeling can help frame corporate actions as moral concerns for groups that are not directly affected by them. Labeling can “elevate” a specific plant closure to be an exemplar of a broader moral failure that warrants widespread public attention. These findings are in line with the previous arguments that breaches of societal norms do not become scandals unless stakeholders feel compelled to reinforce, erode, or display compliance with the norms in question (see Adut, 2005).

Resonant moral framings can shape the content and volume of media coverage (Cornelissen & Werner, 2014; Lange & Washburn, 2012) and motivate new stakeholders to join the controversy. Condemning corporate action as a moral failure provides opportunities for stakeholders to reinforce general moral norms. In our case, a national union representative connected the closure to “egotism,” to link it with the norms that govern company-union relationships in Germany. Implied in these comments was the notion that friendly relationships with unions are a sign of corporate morality.

Our findings thus suggest that the role of media should not be perceived merely, or even predominantly, as an evaluator that validates the moral judgments and maintains the norms of moral communities (Bitektine & Haack, 2015), but rather as an amplifier of moral contestations. The media has a self-serving motive to increase its perceived relevance by drawing attention to moral controversies, not unlike the watchdog organizations discussed by Shadnam et al. (2020). By funneling attention to moral disagreements, media coverage encourages new stakeholders to become involved in the moral conflict. While insiders and local actors are often the first to highlight organizational moral failure (Shadnam et al., 2020), the dynamic media processes influence the set of actors who are involved in creating these accounts and those who are influenced by them. It is this escalation of attention that can turn local into national controversies.

Finally, our study also contributes to the literature on plant closures. Specifically, we highlight the importance of moral framings in shaping public responses to plant closures. Local stakeholders can use evocative labels to generate interest in plant closures that are often confined to topics of local significance (Fassin et al., 2017; McMahon, 1999). When a plant closure comes to represent a more generic moral issue, its connection to broader societal norms can amplify attention it receives beyond the affected local stakeholders (Dorobantu et al., 2017; Gomez‐Carrasco & Michelon, 2017; van den Broek et al., 2017). The framing thus helps explain why moral concern spreads from a directly affected local community into new, broader moral communities (Shadnam & Lawrence, 2011) that are not directly impacted by the closure. As our analysis shows, in extreme cases, a plant closure can become a battleground for pre-existing national moral conflicts about the conduct of business firms and the acceptable forms of capitalism.

How Semiotic Analysis Enriches Our Understanding of the Emergence of Organizational Moral Failure

Our study also provides a methodological contribution to the study of organizational moral failures. We demonstrate the potential of semiotic analysis for elucidating the moral framings that stakeholders develop and attribute to firm actions that they deem to breach moral norms (Sonenshein, 2007). While recent studies have begun to investigate how stakeholders use different discourses to create, alter and challenge conceptions of moral failure (Breit, 2010), our study focuses on how public conversations are organized around framings captured by semiotic codes. As our study shows, semiotic codes provide a methodological tool to link purposeful labeling (Ashforth & Humphrey, 1997) to the subsequent developments in public discourse.

Semiotic analyses help explain how organizational moral failures are created by linking firm actions to widely shared ethical or moral principles that distinguish between moral good and moral bad (Barthes, 1977; Weber et al., 2008). By providing methods for analyzing how stakeholders construe links between firms and the fundamental ethical principles of society (Donaldson & Dunfee, 1994), semiotic analysis helps explicate meaning-making processes that are central to the rationalization and evaluation of controversial actions, practices, or behaviors by firms as moral failures. Because the views of stakeholders on what counts as moral failure are typically established through meaning making in traditional and social media (e.g., Mena et al., 2016), semiotic analysis is particularly suited to ascertaining how stakeholders participate in media discourse to give meaning to controversial corporate behaviors.

Limitations and Future Research

A limitation of our research—beyond our focus on a single case—is that the Bochum plant closure received limited coverage on social media. We only incorporated data from YouTube and blogs because nowadays popular social media such as Twitter and Facebook were only scarcely used in Germany at the time. While conventional media still play a dominant role in setting the agenda of public discourse, analyses of more recent cases can benefit from incorporating more social media data and for instance distinguish political orientations of various social media channels such as TikTok, Instagram, and Telegram as we have done for the traditional media. Yet, while we consider it possible that social media may increase the speed at which controversies attract attention and decrease their duration, we believe that the general dynamics of our model are likely to remain unaltered.

Another promising avenue for future research would be to focus on the application of the semiotic analysis of media data on moral conflicts between firms and their diverse stakeholders. While our analysis of evocative labeling drew on the German context and identified two central dichotomies, mutualistic-egotistic and reciprocal-opportunistic, future research can identify other general means of framing organizational moral failure. In this vein, future research could leverage semiotic analysis to investigate common moral norms in different fields of business and the use of controversial events to erode or reinforce acceptance and compliance.

Conclusion

Our study examined how a plant closure escalated from a local concern to command national attention as an organizational moral failure. We analyzed the media controversy over Nokia’s decision to close its factory in Bochum through a combination of semiotic analysis and inductive coding. Based on this, we developed a process model that explains how evocative labeling can link controversial firm actions to moral framings that subsequently transform a particular local case into a broader moral concern that draws in new stakeholders to participate in public discourse. By specifying this process, we contributed to the work that has pointed out that organizational moral failure can reflect both local and general societal problems (e.g., Shadnam et al., 2020), elaborating how morally controversial actions can evolve from local concerns to organizational moral failures of national significance.