We present the results of a case study of Keystone Development Trust, a social enterprise designed to promote social and economic development in the East of England. As part of its activities, Keystone initiated a program of support for a highly stigmatized group of migrant workers. Its association with this group led to the transfer of stigma from the migrants to Keystone, a process we refer to as stigma contagion.

As a result of the organization’s stigmatization, Keystone faced a crisis of organizational legitimacy externally and a crisis of organizational identity internally. We examine Keystone’s responses to stigma contagion, highlighting the forms of legitimacy work and identity work in which managers engaged. Interestingly, we find not only that the effects of organizational stigma can be managed, but that stigmatization may have positive effects for organizations in addition to the negative consequences that have already been well documented.