Reputation Management

Demonstrating and providing evidence for what corporate reputation contributes to the value creation of companies are the main objectives of this book. Helm starts out with looking at definitions of corporate reputation, that form the basis for approaches to building and protecting this intangible. She elaborates on utilitarian and deontological drivers for companies to attain and evolve reputation. Helm stresses that the value of reputation is much more than the monetary value attributable to it and, therefore, is more than a corporate asset. In fact, the ability and willingness of a firm to act in line with stakeholder expectations and needs is the qualitative shape reputation takes. This refers to the past, present, and future handling of stakeholder relationships. Furthermore, Helm outlines the differences between corporate image, corporate brand, and corporate reputation. Sources of reputational perceptions and status are discussed. Helm concludes that reputation determines corporate stability.

The recent economic crisis has again highlighted the trend to question business’ intentions and strategies in the media and society as a whole. Additionally, social media has opened up new participative and ubiquitous means of communication. Liehr and Storck not only see a topic related shift of corporate communication towards corporate social responsibility (CSR) and business sustainability but also suggest a much broader approach to stakeholder dialogue. The authors show that traditional media has much less influence on stakeholder groups, which have direct contact to a corporation. Reputation being a key driver of corporate value, managing reputation thus needs to be treated as a key leadership responsibility in order to achieve the strategic goals of any organization.

The articles in this part of the book lay the foundation for understanding, analyzing, and managing corporate reputation. Liehr-Gobbers and Storck introduce this chapter by focusing on the concept of corporate reputation. They describe the shift from shareholder to stakeholder value as well as the added value of reputation resilience using the Vioxx case of Merck & Co. as an example and refer to the importance of taking the different reputation aspects into account before stakeholder perceptions can be managed.

Liehr and Storck introduce this chapter by focusing on the concept of corporate reputation. They describe the shift from shareholder to stakeholder value as well as the added value of reputation resilience using the Vioxx case of Merck & Co. as an example and refer to the importance of taking the different reputational aspects into account before stakeholder perceptions can be managed.

In this chapter, the author explains how human beings have a need for recognition. As the author clarifies, reputation is one kind of esteem that is acquired and conferred for a limited time, for a specific quality or achievement, and has public validity. Individuals as well as organizations can influence their reputation only in very limited ways as the formation of reputation involves a range of actors some of whom strive to damage the reputations of others. Profit-seeking organizations cannot function in a purely market-driven way but must take moral relations into consideration if they want to safeguard their legitimacy. Companies that want to be recognized for moral excellence and to build a corporate identity with a pronounced moral profile are exposed to especially high levels of risk because they easily inspire mistrust. With this observation, the author challenges reputation managers: Someone who wants to stand out in a positive way runs the risk of being more thoroughly scrutinized and examined whereas someone who does not stand out has a good chance of remaining unnoticed and shielding himself against harm to his reputation.

Corporate reputation is increasingly viewed as a behavioral process, which must be built from within and integrated across the organization, as da Camara expounds in his article “Identity, Image and Reputation.” In his article, da Camara explains the subtle differences between important constructs, i.e., identity, image, and reputation and examines their operation and co-existence. He points out that any attempt to understand the interrelation between identity, image, and reputation must focus ultimately on the relationship between internal and external stakeholders in organizations as the internal–external stakeholder interaction is at the heart of reputation building. He warns managers that reputation should not be managed by public relations or corporate communications functions, but to embed reputational concerns in core business functions and integrate data from all stakeholder groups in a holistic reputation management strategy.

The dynamics and internal roots of reputation are also emphasized by Fisher-Buttinger and Vallaster in their article “Corporate Branding and Corporate Reputation – divided by a shared purpose?” Increasingly, corporate reputation as well as corporate branding address the entire universe of internal and external stakeholders what raises the question whether a separation of corporate brand and reputation is possible and relevant. The authors suggest to not define or create artificial and impractical boundaries between the two disciplines and territories, but to instead focus on how reputation management and brand management can work together in order to make an organization successful. Offering many insightful examples from different industries, Fisher-Buttinger and Vallaster discuss the broadening of the strategic purpose and goals of both concepts in building meaningful relationships with key stakeholders with the ultimate goal to drive competitive advantage.

With their article on “Reputation in Relationships,” Money, Hillenbrand, and Downing respond to concerns with regard to existing measurement tools for corporate reputation. As topical issues concern stakeholder groups differently, and are likely to have varying levels of importance for different stakeholders, such insight gets lost in traditional rankings of reputation. The model introduced by Money, Hillenbrand, and Downing deals with these concerns and focuses on reputation in a particular stakeholder relationship. The application of structural equation modeling allows for prioritizing which aspects of reputation are likely to make the most impact on stakeholder behavior. With this approach, it is emphasized that reputation is not an end in itself. Rather, it aims at fostering favorable stakeholder behavior which can directly influence the financial performance of firms in terms of shareholder value. Therefore, the authors’ approach has the potential to be used as a tool by management to improve the performance of the firm.

The management of reputation inevitably requires measurement. However, the object, methodology, underlying research interest and further use of measurement findings may vary. This part provides an insight into the various aspects of measurement and its relevance for reputation management. It closes with a meta-study examining the financial impacts of reputation as measured by several researchers.

Liehr and Storck open with an introduction on how reputation can be measured in general. The paper stresses out the range of methods existing for both media evaluation and stakeholder research. The authors systematically list which cognitions the various methods are able to provide. The closing presentation of the “Barcelona Declaration of Measurement Principles” introduces the reader to the state-of-the-art of PR measurement.

In the second chapter, Helm and Klode describe the “Challenges in Measuring Corporate Reputation” which most communication professionals should be aware of when selecting a measurement tool. The authors expand on the pros and cons of single versus multiple-item measurement concepts, discuss formative versus reflective models, and evaluate the benefits of low and higher order factors. In a second part, Helm and Klode introduce common measurement tools used both by practitioners and in academia and discuss the need for nonstandardized tools.

“Measuring Media Corporate Reputations” is the primal yet most common measurement communication practitioners and researchers have focused on. Dowling and Weeks recapitulate the reasons for analysing media coverage, give hands-on suggestions for an effective presentation of the media analysis and explain which action steps should be derived from its findings.

Fiedler applies a type of measurement for his study on “Reputation Management in Different Stakeholder Groups”. Fiedler uses an innovative approach to scrutinize the components of corporate reputation and its effects on stakeholder commitment and to analyze the differences that occur between various stakeholder groups: he combines stakeholder theory with social network theory and thus takes into account the power of word-of-mouth communication. Based on his findings, “tailored reputation management strategies” can be derived.

Unlike Fiedler, Walsh, Beatty, and Holloway focus on just one stakeholder group: customers. Regarded from a marketing point of view, the measurement of corporate reputation can be used as a new tool to segment various customer groups. Combined with traditional segmentation techniques, important insights for a differentiated marketing planning can be gained.

Apart from stakeholder research, examinations on the financial impact of corporate reputation are a major field of interest within the communication community. De Quevedo Puente, Delgado García, and de la Fuente Sabaté close this chapter with a meta-analysis of studies on this issue. They systematically describe previous findings concerning the impact on corporate profitability, risk, and market value. Additional explanations for inconsistent measurement results are provided, too.

After having analyzed various measurement methods in the previous section, the following five chapters turn away from a theoretical scrutiny and focus on applied Reputation Management. Various case studies from blue-chip companies will provide the reader with hands-on examples of how to manage corporate reputation.

Liehr and Storck open this section with an illustration of the evolution of reputation management as a managing process. It explains how its status as being a regular management process inevitably asked for performance measurement. The authors describe how the need for evaluation methods has lead to various cooperations between communicators and management accountants over the last years. The article traces this collaboration and highlights its major outcomes. Liehr and Storck close the chapter with a business case exemplifying these transdisciplinary standards.

Einwiller and Kuhn then describe how Daimler has developed “SCORA,” its integrated system for corporate reputation analysis. To establish the system, Daimler firstly had to determine target variables, influencing factors, and relevant stakeholder groups. The authors explain how their company has identified relevant regions, benchmarks, and the appropriate methodology for its tool. “SCORA” combines media content analysis and stakeholder surveying to fully capture Daimler’s reputation. It additionally reveals relations between stakeholders’ perceptions and the depiction of the car manufacturer in the media. An example of such an analysis concludes this chapter.

In the third chapter, Stopford offers insight into the management framework the Coca-Cola Company has set up to monitor and steer its corporate reputation. In order to manage the stakeholder expectations around CSR systematically, Coca-Cola has introduced a five-step process including:

The final chapter of this section deals with the question how to build and maintain a positive reputation among the financial community, the most powerful stakeholder group concerning the monetary consequences of reputation damages. Gabbioneta, Ravasi, and Mazzola therefore describe the drivers influencing reputation among analysts and investors and provide recommendations for the vital communication of long-term strategic plans, knowledgeable managers, and corporate governance structures.

Reputation management is a crucial task for organizations. The previous chapters do not only demonstrate that the vital need for reputation management is generally recognized, but that measurement tools are constantly being improved and reputation management is an integral part of today’s corporate communications.

Liehr and Storck reveal a connection between corporate risk management, the need for management accounting, the challenges caused by social media, and the trend towards nonfinancial reporting. As reputational risks mostly derive from perception gaps, a consistent tracking of media and stakeholder analysis is crucial. The authors thus illustrate a new plea for implementing controlling processes. With the success of social media, communicators are facing another risk: they have to adapt to new rules of reputation building and to deal with stakeholder expectations. Liehr and Storck describe the transparent reporting of nonfinancial data (as described by Frank and Horst in article three) as one possible answer to these new developments.

Bronn and Dowling focus on the actual management of reputational risks. They demonstrate how the general awareness of reputation threats should be transferred into a formalized Corporate Reputation Risk Audit allowing a sound identification, prioritization, and management of reputational dangers. The authors provide reasons why reputation should be integrated into a company’s risk assessment and present an example of an audit process.

To gain and maintain reputation, corporate responsibility not only has to be managed, but also be reported adequately. Based on this conviction, Frank and Horst illustrate “the new ESG-reporting imperative” in the third chapter. The authors describe how several developments – besides the increased need to verify corporate responsibility towards stakeholders in general – have fostered a professionalization of ESG (ecological, social, governance) reporting over the last years. It has been legal provisions, self-imposed guidelines of a global stakeholder initiative and investment professionals which have set up new reporting standards that gradually bring ESG reporting in line with the reporting of financial data. Frank and Horst describe which quality requirements current ESG data have to meet and which further (structural) measures should be taken to ensure a state-of-the-art ESG reporting.

The last article by Brettschneider and Vollbracht is devoted to “personalization of corporate coverage” and the opportunities and risks omnipresent board members bear for corporate reputation management. The authors consider a CEO an intangible asset with the capability to increase or decrease a company’s value. Brettschneider and Vollbracht present a study which has examined the rise of personalized coverage between 2002 and 2007. Based on their findings, they scrutinize the interaction between the company’s reputation and the reputation of its CEO and designate chances and threats. To illustrate how CEO behavior affects corporate reputation, the development of various DAX 30 companies are analyzed.