Argenti, (1998); Balmer and Grayzer, (2003) define reputation as the combination of identity and corporate brand that the organization is responsible of but the image results from the stakeholders and customers and their view so the organization doesn’t control it. But to be reputed the organization must manage between all these facts to proceed.
Several combined factors play a role to build for an organization its reputation, its image and its identity and performance. Scholars relate the corporate reputation with other variables such as “commercial performance employee and customer satisfaction”.
Corporate reputation is the commitment of the organization toward its customers, employees, overall its stakeholders and the reputation explains the performance of the organization, it is the image of an organization through years and it is integrated on its identity and programs.
Corporate reputation is when stakeholders behave toward an organization as employees’ retention customer commitment. Top management sees corporate reputation as a valuable asset. It attracts good staff, retains customers and encourages the investment.
An organization desires a reputation that encourages both consumers and qualified workers to choose its organization over its competitors.
To stay competitive the organization tries to maintain its corporate reputation to achieve its goals. Some of large organizations’ example “Arthur Anderson” learned hard lessons about how a bad reputation harms employee and customer loyalty.
Not only logos and names are the most important elements of an advertisement that reflect a reputation. Kitchen and Shultz, (2001) define:
- Identity is that “ what the organization is “consist on a organization that defines its employees clients and market
- Desired identity “ what the organization says it is” it should know itself before worrying about what others are saying to them, and this is what gives organization its competitive advantage
- Image “what the customers think it is” an organization is seen from different point of views from stakeholders. The objective is to prove who you are in the market to answer their questions.
Financial statements do not accurately reflect the value of an organization’s intangible assets such as customer relationships, talent, innovation, patents and reputation. Intangible assets such as reputation are now central to organization attractiveness and effectiveness. Alan Greenspan, (2012) says: “In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward.”
The value of a good reputation lasts to propagate generally because of the competitive advantage and market distinction it delivers higher sales generated by satisfied customers and their referrals; relationships with the right strategic and business partners; ability to attract, develop and retain the best talent; benefit of the doubt by stakeholders if crisis strikes; spread of positive word of mouth; potential to raise capital and share price; and in some cases, the option to charge premium prices. Dutton et al; Gioa and Thomas (1996) explain that the key benefits of a good corporate reputation can be found in:
- Customer preference in doing business with an organization while other firms’ products and services are available at a similar cost and quality;
- The ability to charge a first-class for products and services;
- Stakeholder support for an organization in times of storm;
Although reputation is an intangible concept, research universally shows that a good reputation obviously raises corporate value and offers continuous advantage. A business can achieve its objectives more easily if it has a good reputation among its stakeholders, especially key stakeholders such as its largest customers, opinion leaders in the business community, suppliers and current and potential employees (Lloyd 1990, 182).
Figure II: Sample of International Reputation
Source: (Barnett ET al.2006 p.33)