Corporate (or organizational) reputation refers to what is generally said about an organization. Corporate reputation is different than organizational identity by its focus on what other people say about the organization, rather than what the organization itself or its members say. Corporate reputation is distinguished from organizational image in the sense that it is generally more durable and substance-based rather than fleeting and impression-based. Generally, there is some story, an activity, or a topic associated with the firm, which is, in effect, regarded as remarkable.
Corporate reputation gains credence because it is believed to be something that is widely held; that is, it is a form of public opinion. Having a reputation, without specifics to its contents, has social value for an organization. Reputations can be for various things or of being or doing something. There are different kinds of reputations, and more than one reputation can exist. Reputations may exist within networks or be geographically distributed across unrelated groups. A reputation does not necessarily correspond to the truth. Instead, general sufficiency is found in that it is supposed to be true. Once organizational reputation moves from being a general public opinion to being accepted as a social fact, additional information-seeking behavior about the organization’s nature, or whether to even become involved with the organization, is reduced. Public interest in corporate reputation began in 1983 when Fortune Magazine first published its rankings of the “Most Admired Corporations.” The edition was so popular that the magazine turned it into an annual survey. Since then, many other magazines in the US have published their own reputation rankings, including Wall Street Journal, the Financial Times, and Business Week. Reputation rankings have become popular worldwide. Similar reputation assessments are made and published by NGOs, social monitoring organizations, and other third parties issuing their own assessments of reputation. Besides the promotion and proliferation of reputation studies through the news media, reputation affords an opportunity for advocacy groups to exert pressure on companies.
There are three general components of corporate reputation: name recognition, sentiment, and attributes and associations. Before a firm can be said to have a reputation, people must be familiar with the company’s name. This raises the question of whether all firms even have or desire a reputation. Some firms do not; rather, they prefer to be anonymous and under the radar. This allows firms to stay out of the public’s eye. Other firms, typically businessto-consumer (B2C) firms, are well known for being well known. The second component is sentiment or emotional appeal. This is largely the degree of favor that the firm has, whether positive, negative, neutral, or mixed. Then finally, firms usually have a reputation for something, but not always. The most common attributes in corporate reputation research are executive leadership, workplace culture, and environmental and social responsibility. Attributes that are receiving increasing attention are innovation, litigation, legislation, corporate governance, and ethics. An emerging area of scholarship concerns associations (distinct from issues or attributes). Firms may develop reputations by being linked to larger social or public issues, their involvement with other organizations (in the same industry or not), and their affiliation with individuals of particular repute (such as their CEO), or other firms in the same market or industry. For example, firms that operate in larger markets or industries are more likely to gain recognition faster because there are other players in the same field.
A central question in corporate reputation scholarship is whether it can be managed or whether one should try. Certainly, a focus should be placed on improving the character and nature of the organization, rather than on the reputation. Yet, the general view is that it is easier to adjust the organization’s symbolic environment than it is to adjust its behavior. The can-reputation-be-managed question is often tied to where the focus should be placed. In theory, the debate is framed in terms of reputation vs organization–public relationships; in practice, advertising vs public relations.
In theories of corporate reputation management, Carroll (2006) noted there have been two general views. One camp, at the University of Maryland, suggests that organization– public relationships leads to corporate reputation, and that firms should be concerned with managing their relationships rather than their reputation. This view focuses primarily on existing stakeholder relationships and how they contribute to reputation, but it does not consider whether or how reputations may affect the quality of the relationship. The other major camp, at the University of Texas, suggests that corporate reputation leads to relationships. That is, individuals who are largely unfamiliar with the organization may base their decision on whether to become associated with the firm based on the firm’s reputation. The two camps are not incompatible, but simply reflect a difference in starting points, particularly whether concern is with existing stakeholder relationships, or with the potential for relationships with new or unidentified stakeholders. Both camps agree that the focus should be on reputation-cultivation, rather than on reputation management.
In practice, the answer to the management question has largely come through where the focus should be placed – on advertising or public relations. The answer has been mixed. Firms with favorable reputations benefit more from public relations because there is an upper limit to the payoff achieved through advertising, at which point any more money spent is simply wasted. On the other hand, research has found that firms with poor reputations are better off postponing news releases until there is a considerable change, which is achieved through advertising, including advocacy and issue ads.
The proliferation of corporate reputation research indicates that corporate reputation can be measured. The earliest academic study on corporate reputation was Charles Fombrun and Mark Shanley’s (1990) study of Fortune Magazine’s Most Admired Corporations. They used the original survey data, though stripped of information from the respondents. Since this study, most reputation studies using secondary data have had to rely on the top-level published rankings available through the news media. Still others have conducted primary research using personal interviews, media content analysis, survey questionnaires, case studies, Q methodology, scorecards, experiments, and focus groups. An underexplored methodology waiting to be examined is the quasi-judicial case study method.
Valuation remains a priority across disciplines involved in corporate reputation scholarship, but still remains as an unexplored topic in communication research.
- Bromley, D. B. (1993). Reputation, image, and impression management. Chichester: John Wiley.
- Carroll, C. E. (2006). Corporate reputation management. Paper presented at the Arthur W. Page Society Academic Conference, Tuck Business School, Dartmouth College, Hanover, NH, May.
- Carroll, C. E., & McCombs, M. E. (2003). Agenda-setting effects of business news on the public’s images and opinions about major corporations. Corporate Reputation Review, 6(1), 36 – 46.
- Fombrun, C., & Shanley, M. (1990). What’s in a name? Reputation building and corporate strategy. Academy of Management Journal, 33, 233 –258.
- Grunig, J. E. (ed.) (1992). Excellence in public relations and communication management. Hillsdale, NJ: Lawrence Erlbaum.
- Hutton, J. G., Goodman, M. B., Alexander, J. B., & Genest, C. M. (2001). Reputation management: The new face of corporate public relations. Public Relations Review, 27(3), 247–261.