Designing a Formative Measure for Corporate Reputation

Abstract

The construct of reputation has attracted much attention among researchers and practitioners alike. The growing body of literature in this area has led to a wide variety of measurement approaches, albeit most publications do not point out the epistemic nature of reputation as a construct. It is not clear (1) if reputation is a formative or reflective construct and (2) how it should be conceptualized using a formative approach. The incorrect specification of the construct would produce misleading results, which in turn would provide no solid basis for reputation management. Based on a study among German consumers, this paper conceptualizes reputation as a formative construct consisting of ten indicators. The findings suggest that this conceptualization is a solid method on which to build reputation measures, which in turn are an important step for efficient reputation management.