We seek to understand the distinctive process of state-led category destigmatization, extending an emergent stream of research on category destigmatization that has so far focused on the efforts of stigmatized members of categories. When a category conflicts with a prevailing ideology, internal actors may face such substantial barriers to destigmatization that the state—often motivated by the pragmatic benefits of that category’s success—must take a proactive role in the effort. Focusing on an extreme case, we explore the revival of the private business category in China through a longitudinal case study. We develop a grounded process model that highlights the interplay among the state, category members, and the public as a framework for understanding this type of destigmatization process. Our model also addresses dynamics that can emerge within the state when political power is divided between category proponents and opponents with competing ideological stances. Our study highlights the need for the state to balance destigmatization efforts with maintaining legitimacy, prompting iterative strategic adjustments based on local feedback, evolving public opinion, and intrastate competition between political factions. Our findings show that such adjustments may be needed even in authoritarian states, which are typically more coercive. In addition, we find that states can effectively use backstage strategies (e.g., regulatory leniency) and frontstage strategies (e.g., legislative change) in complementary ways to advance destigmatization while safeguarding the state’s legitimacy. Finally, we show that starting a category destigmatization effort by emphasizing the category’s pragmatic values (prior to advocating for moral reevaluation of the category) can mitigate ideological conflict and increase chances of successful destigmatization.
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