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/Trustees Local Communities Financial Markets Local, Regional & National Government Competitors Pressure Groups Media National Population International Population A Stakeholder Model of the Organization

The Stakeholder Perspective 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 IDENTITYIMAGE VISION & 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 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 CULTURE HISTORY 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

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 ConcernedHonest Sincere Socially Responsible TrustworthyStraightforward Open Pleasant Cheerful EmpathyIntegrityWarmth Agreeable Supportive Copyright 2001

Adventure ENTERPRISE ModernityBoldness 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

INFORMALITYMACHISMO 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