The Reputation Paradigm

Corporate Reputation and Competitiveness

Lecture 3

Lecture Objectives

• To identify what people working with reputation believe about reputation management

Tenets of the Reputation Paradigm

(1) The perspectives of multiple stakeholders need to be considered

In the Maltese Falcon, Sam Spade remarks, ‘That kind of reputation might be good for business - bringing in high priced jobs and making it easier to deal with the enemy.’

THE ORGANIZATION

Suppliers Management

Employees

Owners/TrusteesLocal Communities

Financial Markets Local, Regional & National Government

Competitors

Pressure Groups

Media

National PopulationInternational Population

A Stakeholder Model of the Organization

The Stakeholder Perspective

RELIABILITY FOR CUSTOMERS

TRUST FOR EMPLOYEES

CR

ED

IBIL

TY

FO

R.

IN

VE

ST

OR

S

RE

SP

ON

SIB

ILIT

Y F

OR

. T

HE

CO

MM

UN

ITY

Generate TrustInstil PrideEmpower

Promote QualityProvide CustomerService

Show ProfitHave GrowthProspects

Serve theCommunityGreen theEnvironment

Adapted from Fombrun (1998)

Tenets of the Reputation Paradigm

(1) The perspectives of multiple stakeholders need to be considered

(2) The main elements of reputation are linked

Definitions

• Image is taken to mean the view of the company held by external stakeholders, especially that held by customers

• Identity is taken to mean the internal, that is the employee’s, view of the company, following Albert and Whetten's (1985) notion of 'How do we see ourselves'.

• Reputation is taken to be a collective term referring to all stakeholders’ views of corporate reputation, including identity and image.

Gaps in Reputation

IDENTITY

(How the company sees itself)

(How external stakeholders see the

company)

DESIRED IMAGE

(What the company says it is)

IMAGE

Organisation Culture, Identity and Image

Adapted from Hatch & Schultz (1997)

ORGANISATION CULTURE

IDENTITY IMAGEVISION &

LEADERSHIP

EMPLOYEE’S WORK EXPERIENCES

EXPERIENCES OF EXTERNAL

GROUPS

Tenets of the Reputation Paradigm

(1) The perspectives of multiple stakeholders need to be considered

(2) The main elements of reputation are linked

(3) Tenet 3 Reputation is Created through Multiple Interaction

What is reputation?

The net result of the interaction of all the experiences, impressions, beliefs, feelings and knowledge that people have about a company, Bevis(1967)

The consistency of outcomes with market signals over time, Herbig et al. (1994)

‘If you have a reputation for always making all the money there is in a deal, you won’t make many deals’. J. Paul Getty,

How Reputation is Created

Company

Industry

Country

Of Origin

PersonalContactDesign

AdvertisingMediaComment

Word of

Mouth

Pri

orE

xper

ienc

ePrice

Points

Dir

ect

Mai

l

From Bernstein (1984)

Tenets of the Reputation Paradigm

(1) The perspectives of multiple stakeholders need to be considered

(2) The main elements of reputation are linked

(3) Reputation is Created through Multiple Interaction

(4) Reputations are Valuable and have Value

Reputation has Value

• Imagine that you had to give up the use of your company’s name, but that you had the chance to pay a percentage of your annual revenue, as a license fee to continue to use the name. What percentage of your turnover do you think it is worth?

• Now estimate how long you would make a contract for, to license back the use of your own name.

Tenets of the Reputation Paradigm

(2)The main elements of reputation are linked

(3)Reputation is Created through Multiple Interaction

(4)Reputations are Valuable and have Value

(5) Reputation can be Managed

Managing Reputation

ENVIRONMENT

CULTUREHISTORY STRATEGY

BEHAVIOUR

COMMUN-ICATIONS

SYMBOLISM

CI MIX

REPUTATION

OUTCOMES

FINANCIAL

HRM

SALES

Source: vanRiel &Balmer (1997)

Tenets of the Reputation Paradigm

(2)The main elements of reputation are linked

(3)Reputation is Created through Multiple Interaction

(4)Reputations are Valuable and have Value

(5) Reputation can be Managed

(6) Reputation and Financial performance are linked

A Positive Reputation

A Favourable Customer

Disposition

A Favourable Employee

Disposition

A Positive Interaction

Employee Retention and

Motivation

Customer and Employee

Satisfaction

Customer Satisfaction and Loyalty

How Does Reputation Create Profit?

Tenets of the Reputation Paradigm

(3)Reputation is Created through Multiple Interaction

(4)Reputations are Valuable and have Value (5) Reputation can be Managed (6) Reputation and Financial performance are

linked (7) Relative Reputation (Ranking) drives

Financial performance

Fortune’s AMAC survey

• Survey of Business Executives• Quality of management, Quality of

Products/services, Innovativeness, Long-term investment value, Financial Soundness, Employee Talent, Use of Corporate Assets and Social responsibility

• Reputation Performance or Performance Reputation?

Tenets of the Reputation Paradigm

(4)Reputations are Valuable and have Value

(5) Reputation can be Managed

(6) Reputation and Financial performance are linked

(7) Relative Reputation (Ranking) drives Financial performance

(8) Reputation can be measured

Measuring Reputation

• Rankings: Fortune AMAC, Fombrun’s RQ, FT ranking of Business Schools

• Qualitative techniques, projective techniques.

• Standardised scales: Aaker (1997) Brand Personality Scale; Davies et al (2001) Corporate personality Scale

Qualitative Techniques

• If MBS came to life as a person, What newspaper would it read? Where would it go on holiday? What car would it drive?

• Compare MBS, LBS and Cranfield. Which is the odd one out and why?

• If MBS came to life as a person, what kind of personality would it have?

Corporate Personality

Agreeableness

Enterprise

Competence

Chic

Ruthlessness

Machismo

Informality

The Corporate Personality Scale

Copyright 2001

AGREEABLENESS

Reassuring

Concerned Honest

Sincere

Socially Responsible

TrustworthyStraightforward

Open

Pleasant

Cheerful

Empathy IntegrityWarmth

Agreeable

Supportive

Copyright 2001

Adventure

ENTERPRISE

Modernity Boldness

Imaginative

Up to Date

Exciting

Extrovert

Daring

Cool

Trendy

Young

Innovative Copyright 2001

COMPETENCE

Technocracy

Corporate

Technical

Leading

Achievement Oriented

Ambitious

Hardworking

Secure

Reliable

Conscientiousness Drive

Copyright 2001

Prestige

CHIC

Snobby

Elitist

Refined

Exclusive

Prestigious

Elegant

Stylish

Charming

SnobberyElegance

Copyright 2001

RUTHLESSNESS

Dominance

Authoritarian

Inward Looking

Selfish

Aggressive

Arrogant

Egotism

Controlling

Copyright 2001

INFORMALITY MACHISMO

Rugged

Tough

Masculine

Easy going

Simple

Casual

Copyright 2001

Tenets of the Reputation Paradigm

(5) Reputation can be Managed (6) Reputation and Financial performance are

linked (7) Relative Reputation (Ranking) drives

Financial performance (8) Reputation can be measured (9) Reputation can be lost more easily than

it can be created

Why is Reputation So Fragile?

• ‘At every word a reputation dies’ Alexander Pope

• ‘Many a man’s reputation would not know his character if they met on the street.’ Elbert Hubbard,’

• Reputation appears fragile because many reputations do not reflect reality

Tenets of the Reputation Paradigm

(8) Reputation can be measured

(9) Reputation can be lost more easily than it can be created

(10)Reputation can best be studied using an Interdisciplinary Approach

Perspectives on Reputation

The Study of Reputation

HR

Marketing/ Branding

Organisational Behaviour

Visual Identity

Finance

Corporate Strategy

Summary

• There are a number of beliefs about reputation management

• Key among these are that what happens inside the firm affects the way it is seen externally