Journal of Management: Corporate Reputations An Organizational Impression Management Perspective On The Formation of
Journal of Management: Corporate Reputations An Organizational Impression Management Perspective On The Formation of
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Journal of Management 35(6) 14811493 2009 Southern Management Association DOI: 10.1177/0149206309348788 http://jom.sagepub.com
Abstract Researchers have only recently turned their attention to the study of corporate reputation.As is characteristic of many early areas of management inquiry, the field is decidedly multidisciplinary and disconnected.This article selectively reviews reputation research conducted mainly during the past decade. A framework is proposed that views reputation from the perspective of organizational impression management. Corporations are viewed as social actors, intent on enhancing their respectability and impressiveness in the eyes of constituents. Keywords corporate reputation, self-presentation, organizational prestige, corporate image
The resource-based view of the firm places specific emphasis on corporate intangibles that are difficult to imitate (Barney, 1991; Boyd, Bergh, & Ketchen, in press; Peteraf, 1993). Reputation is one corporate intangible thought to enhance customer satisfaction and loyalty, employee attraction and retention, firm equity, and investor awareness (Fombrun, 1996; Roberts & Dowling, 2002). Dowling (2002) further proposed that reputation enhances bargaining power in trade channels, helps raise capital on the equity market, provides a second chance in the event of a crisis, provides access to the best professional service providers, facilitates new product introduction, and adds value (e.g., trust) to products and services. Reputation is thus a potentially priceless asset whose beneficial outcomes are much better understood than its formation. However, how are reputation judgments formed? What factors are considered? How can reputation judgments be influenced? These are questions that are appropriately addressed by behavioral science. Working from a view of reputation as a social constructionone that indicates the general, shared regard in which relevant constituents hold a companywe review
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Bowling Green State University, Bowling Green, OH, USA Singapore Management University, SINGAPORE
Corresponding Author: Scott Highhouse, Department of Psychology, Bowling Green State University, Bowling Green, OH 43403, USA Email: shighho@bgsu.edu
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literature that is relevant to the formation and foundation of corporate reputation. Despite the fact that reputation emerges from an amalgamation of individual judgments, there has been very little attention given to the psychology of corporate reputation. This article takes a micro perspective on the formation of corporate reputation and offers a model of corporate reputation formation that aims to clarify, integrate, and extend research to date. As an area of scholarship, corporate reputation is a relative newcomer, attracting attention from scholars in advertising, marketing, psychology, organizational behavior, strategy, and communications (e.g., Barnett, Jermier, & Lafferty, 2006; Brooks, Highhouse, Russell, & Mohr, 2003; Brown, Dacin, Pratt, & Whetten, 2006; Cable & Graham, 2000; Fombrun, 1996; Gatewood, Gowan, & Lautenschlager, 1993; Rindova, Williamson, Petkova, & Sever, 2005; Turban & Greening, 1996). Certainly the growing emphasis on corporate rankings has driven a lot of this emergent interest in reputation (Fortune magazine has only been ranking Most Admired Companies since 1983), as have high-profile corporate scandals. But there are other important drivers of interest in corporate reputation as a management construct. One of these is the assumed connection between reputation and applicant attraction. Influential pieces in the early 1990s emphasized the importance of applicants general impressions of organizations in making decisions about where to work (Gatewood et al., 1993; Rynes, 1991).1 Also, the emergence of corporate social responsibility (CSR) as an area of scholarship has placed corporate reputation as one of the central links between CSR and competitive advantage (e.g., McGuire, Sundgren, & Schneeweis, 1988). From this perspective, reputation is a product of a corporations attention to environmental, social justice, and ethical concerns. Despite contemporary interest in the construct, the meaning of corporate reputation remains a matter of ongoing debate (Balmer, 2001; Barnett et al., 2006; Brooks et al., 2003; Gotsi & Wilson, 2001). Indeed, Balmer (2001) referred to this area of scholarship as Byzantine in complexity. One problem is that constructs such as organizational image, identity, and legitimacy have all been used to refer to something resembling reputation (Barnett et al., 2006; Brown et al., 2006). Our goal in this article is to bring some clarity to the reputation literature by viewing the corporation as a social actor (Whetten, Felin, & King, 2009) with self-presentation goals. We offer a decidedly micro perspective on corporate reputation, in contrast to the sociological and economic perspectives that dominate the literature (see Rindova et al., 2005). Despite offering a new perspective however, we try to avoid introducing new terminology or using language that can make an area of study incomprehensible to all but those deeply entrenched in it.
Working Definition
Most organizational members presumably want their company to be respected and admired. Images that external audiences hold about companies (e.g., as producers of goods and services, as employers, as corporate citizens) when maintained over time and interactions develop into a general impression, reflecting the respect or admiration with which an organization is held. One person may hold a company in high regard, but a positive reputation requires multiple people holding that company in high regard (Barnett et al., 2006). Highhouse, Broadfoot, Yugo, and Devendorf (2009) reviewed definitions of reputation in a variety of disciplines, including advertising and marketing, industrial-organizational psychology, organizational behavior and strategy, and organizational communications. The authors distilled from these literatures a general consensus that corporate reputation is a global (i.e., general), temporally stable, evaluative judgment about a firm that is shared by multiple constituencies. This is similar but more detailed
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than Fombruns (1996) definition of reputation as the net reaction of customers, investors, employees, and the general public to the companys name. The Highhouse et al. (2009) definition is also similar to the definition used by Ferris and his colleagues (Ferris, Blass, Douglas, Kolodinsky, & Treadway, 2003; Zinko, Ferris, Blass, & Laird, 2007) in describing ones personal reputation in an organization; that is, an agreed on collective perception by others. Our working definition of reputation as a collective of individual impressions necessitates a micro view of impression formation as a foundation for understanding corporate reputation.
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suggests that the structure of personality is ultimately the structure of reputations (Hogan & Shelton, 1998). Hogans perspective reserves the term identity to describe ones inner aspirations and self-image, much like the management literature uses the term organizational identity to describe an organizations self-perceptions (e.g., Gioia, Schultz, & Corley, 2000). Our proposition that organizations strive for both approval and status is also compatible with literature on individual impression management strategies (Jones & Pittman, 1982; Wolfe et al., 1986). Specifically, corporate attempts to gain approval from and impress constituencies map on to the individual self-presentation strategies of exemplification (i.e., convincing others that you are a good person) and self-promotion (i.e., convincing others that you deserve respect). Jones and Pittman (1982) noted that exemplifiers and self-promoters both want to be admired, but the former are more concerned with projecting integrity than with projecting success. The vast majority of companies likely want approval and status, but they differ in (a) the degree of effort they place on satisfying one or the other motive and/or (b) their relative success in creating impressions that correspond with these motives. Organizations may face competitive pressures that constrain their ability to achieve approval and/or status. For example, fiscal constraints can lead to cost cutting or a focus on short-term profits. Poor leadership can lead to poor strategic decision making, or even unethical detours. Such actions can have a negative impact on constituent admiration for the company. In the next section, we present a model of how these impressions are created in the collective of external audiences, focusing on the individual constituent and the determinants of his or her contributing impression. In our view, individual impressions make up the collective reputation, which is merely a reflection of common impressions. We should note that we do not view a (collective) reputation as more than the sum of the individual impressions. Rather, we emphasize the notion of reputation as a shared impression: the resulting average of all individual impressions. Highhouse et al. (2009) presented multiple experts from finance, marketing, and human resources management (HRM) with a few general items (e.g., This company is among the best) in order to assess, among other things, how many judgments were needed to establish a reliable reputation assessment. These experts evaluated nine well-known companies using these general items and results indicated that stable estimates of reputation are achieved with as few as five or six experts. Moreover, these authors measured the experts images of the companies as employers, producers, and investment opportunities. They did not find differential weighting of these factors according to the experts area of expertise. For example, the HRM people did not differ much from the finance and marketing people in how much emphasis they placed on human resource activities. Furthermore, each expert group viewed a companys image in the marketplace to be the most important determinant of that companys reputation. Thus, the commonly found financial halo (i.e., use of financial performance as the singular determinant of a companys reputation; see Fryxell & Wang, 1994) was not evident in the expert judgments.
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of organizational prominence that, when aggregated with other peoples impressions, constitutes a corporate reputation. Each individual impression, within the collective, results from information exchanges and social influence among people interacting in an organizational field. Implicit in this illustrative model is the notion that formation of individual impressions flows from dynamic to stable and from specific to general. At the left of the model are environmental cues that signal particular images in the minds of constituents. Cues are specific pieces of information about the organization that signal certain images of the company (e.g., image as an employer, image as a provider of goods/services) in the mind of the constituent. Some of these cues are manipulated directly by the organization in hopes of providing signals of organizational qualities. Other cues are inadvertent and may signal unanticipated things to constituents. The signaling concept was originally introduced in the information economics literature, referring to activities or attributes in a market that convey information to others in the market (Spence, 1974). Many producers of high-end consumer goods, for example, have historically manipulated price to signal product quality. Understanding how environmental cues signal different images to observers requires an understanding of the inferences drawn by these observers (Highhouse & Hoffman, 2001; Highhouse, Thornbury, & Little, 2007).
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financial performance indicates industry dominance and prestige (Lease, Musgrove, & Axelrod, 2002). Also, Dowling (2004) and Fombrun (1996) emphasized the importance of positive labor relations (i.e., behaving responsibly toward employees) in developing an enduring positive reputation. Symbolic activities might include investments in advertising, public relations, or social responsiveness (Fombrun & Shanley, 1990). Previous research has found that advertising is one of the most effective strategies for increasing brand knowledge (Brady, Arndt, & Barrett, 2005; Dobson, 2005). Shapiro (1983) showed that price premiums can signal product quality to consumers. Efforts directed toward establishing CSR policy may show that an organization is concerned with more than financial gain. This may involve proactively promoting community growth and development and voluntarily curbing practices that harm the public interest. Business Ethics magazines list of the 100 Best Corporate Citizens is derived by taking expert ratings of companies that are seen as behaving responsibly and ethically toward their constituents. Investing in social initiatives is certainly one symbolic activity that could pay dividends to both the community and stockholders. External factors are outside of the organizations direct control and might include word-ofmouth (Van Hoye & Lievens, 2009) and media exposure (Fombrun & Shanley, 1990). Research on the propagation of rumors is certainly relevant here as an external cue (Heath, 1996). As Allport (1937) suggested years ago, reputation may be more based on gossip than actions. Cues may be perceived positively or negatively, and the more exposed one becomes to an organizations cues, the more familiar one becomes with the organization. Brooks et al. (2003) showed that corporate reputations may be influenced in both positive and negative ways by familiarity. They showed that a more familiar company may be simultaneously more liked and disliked than a less familiar company. This is consistent with Gardberg and Fombruns (2002) report of the Harris survey of best and worst companies, showing that one of the most frequently nominated best companies, Microsoft, was also one of the most frequently nominated worst companies. Similarly, Disney, Daimler-Chrysler, Procter & Gamble, and AT&T received almost equal nominations as the best and as the worst companies.2 With regard to the existing research related to these cues, few definitive conclusions can be drawn. Fombrun and Shanley (1990) measured reputation using Fortunes 1985 most admired company ratings. Most important to reputation perceptions were cues that signaled financial performance, conformity to social norms, and strategic management. Brammer and Millington (2005) found some support for philanthropic expenditures, and a couple of recent studies have shown that layoffs can negatively impact reputation (Flanagan & OShaughnessy, 2005; Love & Kraatz, 2009). Dawar and Parker (1994) looked at consumer attention quality signals (e.g., price, retailer reputation) in 38 countries and found few differences in a consumers use of such cues when evaluating product quality.
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Table 1. Organizational Constructs Commonly Confused With Corporate Reputation Organizational construct Reputation Image Identity Legitimacy Source Shared perception of knowledgeable constituents Individual constituent perception Shared perception of organizational members Shared perception of knowledgeable constituents Definition
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A global, temporally stable, shared evaluative judgment about a firm A dynamic perception of a specific area of organizational distinction A collective sense of organizational self (Who are we?) A shared global judgment about normative appropriateness
Note: In-depth discussions of these distinctions (with some variations) can be found in Barnett, Jermier, and Lafferty (2006); Elsbach (2006); Gotsi and Wilson (2001); Highhouse, Broadfoot,Yugo, and Devendorf (2009); and Wartick (2002).
talk about a companys image for or image as something (e.g., Barich & Kotler, 1991; Highhouse, Zickar, Thorsteinson, Stierwalt, & Slaughter, 1999). Moreover, we contend that images are something held in the mind of the individual, not something possessed by the organization.3 Table 1 contrasts constructs commonly confused with corporate reputation in the management literature. As we suggest in this article, image should refer to one individuals impression of an organization, whereas reputation is a collective judgment (Barnett et al., 2006; Highhouse et al., 2009). Moreover, images should refer to specific areas of organizational distinction (e.g., ones image of an organization as an employer), whereas reputation refers to a general, global impression. Organizational identities are most commonly considered as shared perceptions held by organizational members (Brown et al., 2006). Brown et al. (2006: 101) argued that identity is concerned with the question What are we as an organization? whereas reputation is concerned with the question What do stakeholders actually think of the organization? Finally, organizational legitimacy is a term more common in the strategy literature and refers to a corporations normative appropriateness (Elsbach, 2006). An organizations legitimacy is based on compliance with the minimum standards of typical organizations in its class (King & Whetten, 2008). With regard to employer image, for example, our model suggests that cues, such as Fortunes Top 100 Employers to Work for, signal to people that this is a choice employer. Our model suggests that a company can have multiple images, depending on the perceivers specific interests. These might include image as a producer of goods and/or services (market image), an investment opportunity (financial image), or a responsible corporate citizen (corporate social responsibility image). As Elsbach (2006) noted, prospective applicants, consumers, and investors all draw on the same reputations (e.g., good company), but may draw on distinct images (e.g., bad employer) related to their specific goals.
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defined perceived quality as the degree to which stakeholders evaluate an organization positively on a specific attribute, such as ability to produce quality products. This seems to be at a more specific level similar to our image construct (e.g., I have an image of this company as being highly able to provide/produce good X). The respectability and impressiveness dimensions are also closely aligned with the employee recruitment theory of symbolic attraction (Highhouse et al., 2007), which is based on social identity theory and the functional approach to attitudes. The fundamental idea is that affiliation with an organization allows applicants to gain social approval and establish an identity. This suggests that organizations motives for approval and status closely parallel applicant motives for communicating to others (through organizational affiliation) that they are honorable and successful. Highhouse et al. (2007) also found that respectability and impressiveness accounted for incremental variance, over and above instrumental features (i.e., benefits, location, opportunities for promotion), in predicting attraction to an organization as an employer. An examination of Fortunes best companies to work for criteria (i.e., credibility, respect, fairness, pride) corroborates the importance of these dimensions in the eyes of job seekers. Dowling (2004) noted that common descriptors of reputation include admiration, respect, trust, and confidence. Whereas admiration may encompass both impressiveness and respectability, respect seems to map on to impressiveness, and trust and confidence are certainly related to respectability. Similarly, MacMillian, Money, Sowning, and Hillenbrand (2005) discussed stakeholder commitment (i.e., holding the business in high esteem) and trust (i.e., expecting the organization to act with integrity) as two important reputation components. Taken together, the importance of an entitys respectability and impressiveness (or related constructs) has been discussed and highlighted in multiple literatures. Our model therefore suggests that individual impressions of organizations are the foundation of collective corporate reputation assessments. And the model suggests that these individual impressions include perceptions of company respectability and impressiveness. These perceptions are influenced by images constituents hold of the company, for example, as a producer of goods and services, an employer, an investment opportunity, and a corporate citizen. These images in turn are built by the substantive and symbolic actions of the company, as well as by external cues outside of the companys control. Although no studies have directly tested the assumptions of our model, Thornbury and Brooks (2009) examined the relation of publicly available data on organizations (e.g., stock price, ethics ranking) with impressiveness and respectability impressions. They found that advertising intensity was associated with a companys perceived impressiveness, and product quality ratings were associated with both impressiveness and respectability. Although this study had a number of limitations, it did provide some preliminary evidence that impressiveness and respectability impressions may be influenced by different organizational cues. Our view helps to reconcile perspectives on reputation that emphasize character and those that emphasize conformity or efficiency (see Love & Kraatz, 2009). Our model emphasizes two components of admiration (i.e., respectability and impressiveness) rather than a general impression of good or bad. Such a view can accommodate perspectives that emphasize corporate trustworthiness and reliability (e.g., Fombrun, 1996), along with views that emphasize trendiness (e.g., Staw & Epstein, 2000) or achievement (Shapiro, 1983).
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(b) the different financial and social criteria used to make these judgments. We believe that our model accomplishes these things. We proposed a testable model that provides a framework to explore multiple relations in reputation formation. This model can be tested using statistical modeling approaches that examine the correlational relation among cues, images, impressions, and the prediction of consensus reputation judgments. The constructs in this model can also be manipulated experimentally to determine causal ordering. For example, one could manipulate certain cues to examine their impact on images that are hypothesized to be related (e.g., Does increased advertising expenditure cause enhanced marketing images?). Also, if images are indeed less enduring than impressions of respectability and impressiveness, then we should not see the same effect of cue manipulation on these more general impressions. Understanding the formation of corporate reputation is a first step toward understanding how reputations develop (or can be changed). The proposed model could ultimately be used to identify specific issues that can be addressed by companies interested in improving or repairing reputations. The model also breaks general impressions down into specific factors that may be addressed separately to improve overall reputation; these factors could be measured to identify where a corporation should direct its attention. A deficiency in employer image, for example, might be remedied by including cues in recruitment materials that are positively related to this image. Our model is however silent on the issue of performance consistency. Whereas scholars on reputation emphasize the importance of consistency for establishing a sense of predictability (see Elsbach, 2006), research on individual reputation has found that reputations are only moderately related to behavioral histories (Anderson & Shirako, 2008). This suggests that external, word-of-mouth factors may play a larger role in reputation building than is often acknowledged. It may also suggest that memory-based heuristics, such as the peak-end rule (i.e., the tendency to base impressions on the most extreme event, together with the most recent event; Kahneman, 1999), may drive individual impressions. Research is needed to examine the effects of performance consistency on reputation building. More international work is needed to make the model more general to corporations worldwide. For example, the cues identified as important in the mature economies may not be as important in emergent economies. As one example, Fan (2007) found that Chinese companies rely heavily on relationships (i.e., ganxi), especially the relationship between the organization and the Chinese government, in the development and promotion of their reputations. Finally, our model views reputation as a slowly developing process that is resistant to the kind of fluctuations that occur for images. The model therefore does not attempt to explain the effects of catastrophic events that lead to precipitous drops in reputation. We believe that these are special cases that although highly available in memory, are quite rare (see Combs & Slovic, 1979; Tversky & Kahneman, 1973). Previous attempts to model such reputation shocks suggest that recovery from them is quite difficult and never fully complete (Tirole, 1996). It may be best to heed the counsel often attributed to Benjamin Franklin: It takes many good deeds to build a good reputation, and only one bad one to lose it.
Conclusion
The emerging corporate reputation literature has much to offer organizations interested in attracting and retaining talent, marketing themselves and their products, and optimizing their standing with internal and external stakeholders. Indeed, understanding the formation of corporate reputation is particularly critical given the prominence of intangible corporate assets in short- and long-term planning and strategy. We selectively reviewed the extant literature from
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roughly the past 10 years in an attempt to define, clarify, and differentiate from related variables the elusive corporate reputation construct. Furthermore, we provided a theoretical model to organize and test new research questions relevant to this burgeoning area. Acknowledgements
We are grateful to Dalia Diab for her helpful comments on the article.
Notes
1. In fact, the reputation construct has almost become indistinguishable from applicant attraction in some of the applied psychology literature (e.g., Collins, 2007; Collins & Han, 2004). Highhouse, Broadfoot, Yugo, and Devendorf (2009) noted that the applicant attraction literature and the corporate reputation literature appear to be progressing in fragmented ways (p. 145). 2. Brooks, Highhouse, Russell, and Mohn (2003) suggested that whether these highly familiar companies are evaluated positively or negatively is likely influenced in part by how perceptions of the company are elicited; questions about good aspects would bring to mind more positive associations for the familiar companies than for the less familiar ones; similarly, questions prompting bad aspects would bring to mind more negative associations for the familiar companies than for the less familiar ones. 3. A company may have a reputation, but we contend that it does not have an image (despite colloquial usage of the term). As such, one must ask a person what his or her image is of the company, as it might differ considerably from anothers image of the same company. If enough people hold the same image (e.g., image as an employer), then we might refer to this as a collective employment image. We contend that a reputation cannot be held at the individual (i.e., personal) level.
References
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