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Article
Publication date: 9 November 2010

Pekka Aula

This paper aims to discuss the emergence of corporate reputational risk in terms of social media, exploring its threats to and possibilities for organizations' strategic

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Abstract

Purpose

This paper aims to discuss the emergence of corporate reputational risk in terms of social media, exploring its threats to and possibilities for organizations' strategic reputation management.

Design/methodology/approach

Reputation risk, the possibility of damaging one's reputation, presents a threat to organizations in many ways. Little is known, however, about the connections between reputation risk management and social media as a mediated business environment. Following the latest conceptualizations of strategic reputation management and social media, the paper identifies several challenges for organizations. To make sense of this issue, the paper proposes a novel context for strategic reputation management, founded on the metaphor of ambient publicity, which involves not only social media, but also organizations and their stakeholders.

Findings

The paper argues that social media expands the spectrum of reputation risks and boosts risk dynamics, and that social media can have notable effects on corporate‐level strategic endeavors, which must be considered in order to be successful in the modern business environment. Nine tenets for corporate leaders involved in strategic reputation management are presented.

Originality/value

The paper offers new insights on social media's relation to reputation risk and its management. The ambient publicity, for example, has value to leaders involved in strategic reputation management when trying to identify factors characterizing the changing business environment. Understanding ambient publicity as an environment of meaning indicates that organizations, their stakeholders, and the public create a “complex narrative web” surrounding reputation. The more unified this web is, the stronger the organization is in terms of reputation risk.

Details

Strategy & Leadership, vol. 38 no. 6
Type: Research Article
ISSN: 1087-8572

Keywords

Article
Publication date: 18 January 2016

Nadine Gatzert and Joan Schmit

The purpose of this paper is to present a coherent and effective enterprise risk management (ERM) framework that includes necessary steps and processes for integrating…

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Abstract

Purpose

The purpose of this paper is to present a coherent and effective enterprise risk management (ERM) framework that includes necessary steps and processes for integrating reputation risk management into an organization’s overall ERM approach which is intended to support corporate strategic success. In particular, reputation creation, enhancement, and protection are critical to an organization’s success, yet highly challenging given the wide ranging and somewhat opaque nature of the concept. These qualities call for a strong ERM approach to reputation that is holistic and integrative, yet existing knowledge of how to do so is limited.

Design/methodology/approach

The paper evaluates and synthesizes existing reputation literature in developing an enterprise-wide reputation risk management framework incorporating necessary steps, processes, and considerations. We address risk strategy, risk assessment, risk governance, and risk culture as key elements of ERM and conclude with suggestions for future research.

Findings

The results suggest several important ideas which are of great relevance when integrating reputation risk management into an ERM framework. Among these are the importance of: identifying and understanding the purpose of key stakeholders, appreciating the multidimensional and layered effect of events on organizational reputation and monitoring the influence of technological advances.

Originality/value

The authors contribute to the literature by developing a framework for enterprise-wide reputation risk management that applies across industries. In contrast to previous work, the authors offer a broader perspective on the underlying causes and consequences of reputation damage based on empirical evidence and insight from the academic literature and provide additional detail in identification of reputation determinants, antecedents, and drivers. While much of this information exists in various places in the literature, it has not been organized into a cohesive framework nor used in developing an ERM strategy.

Details

The Journal of Risk Finance, vol. 17 no. 1
Type: Research Article
ISSN: 1526-5943

Keywords

Article
Publication date: 20 January 2021

Nischay Arora, Ridhima Saggar and Balwinder Singh

The study aims to explore the unexplored domain by examining the impact of risk disclosure on corporate reputation in an emerging economy, like India, characterized by…

Abstract

Purpose

The study aims to explore the unexplored domain by examining the impact of risk disclosure on corporate reputation in an emerging economy, like India, characterized by huge information asymmetry and uncertainty.

Design/methodology/approach

In total two measures of corporate reputation, i.e. market capitalization and excess of market value over book value have been deployed to measure reputation. Automated content analysis has been executed to measure the extent of total risk disclosure. The empirical analysis is premised on a sample of S&P BSE-100 index spanning over the period of ten years from 2009–2010 to 2018–2019; which eventually gets reduced to 58 nonfinancial firms. In order to unearth the riskreputation relationship, a panel regression technique has been employed.

Findings

The main findings unmask that corporate risk disclosure has a positive bearing on corporate reputation. Substantiating legitimacy theory, its alternative measures like market capitalization and excess of market value over book value divulged to positively influence corporate reputation.

Research limitations/implications

The study has certain limitations: since there is no standard method of measuring reputation, the results may vary subject to the changes in proxies of corporate reputation. The study also analyzed S&P BSE 100 index in India, and future research needs to approach a larger sample and in other emerging economies to fill up enough empirical evidence in this domain.

Practical implications

The findings provide insight into the managers on making higher divulgence of material risk information for augmenting corporate reputation. In other words, it indirectly propels the firm to exhibit higher risk information for building reputational capital. From the investor's standpoint, they should admire such firms which dispel more risk information and should have positive outlook toward them, which in turn prompts them to disclose more risks.

Originality/value

This study is unique as it is the first longitudinal study examining the impact of risk disclosure on corporate reputation in Indian settings. It, thus, assists in furthering the risk disclosure literature where there is hardly any study that comprehensively looks into riskreputation liaison among Indian nonfinancial companies.

Details

Journal of Strategy and Management, vol. 14 no. 4
Type: Research Article
ISSN: 1755-425X

Keywords

Article
Publication date: 29 April 2021

Varthini Rajagopal, Prasanna Venkatesan Shanmugam and Ratnapratik Nandre

Reputation risk onsets in focal firm whenever any entity of its supply chain (SC) faces risk-crisis event. A framework for modeling and predicting holistic SC reputation

Abstract

Purpose

Reputation risk onsets in focal firm whenever any entity of its supply chain (SC) faces risk-crisis event. A framework for modeling and predicting holistic SC reputation risk is proposed by integrating operational risk (OR) drivers originating from upstream and downstream partners and focal firm. A fuzzy cognitive map (FCM) is then developed to predict and quantify Pharmaceutical SC reputation risk.

Design/methodology/approach

Using event study methodology, SC reputation risk framework with 13 input OR drivers was developed. Based on pharmaceutical supply chain experts’ opinion, the correlation between reputation risk and its input drivers was estimated. The developed FCM tool was validated using nine real-life instances. A series of “what-if” scenario analyses were performed to demonstrate effectiveness of proactive and reactive mitigation strategies against reputation risk.

Findings

Quality and unethical governance risks significantly impacted reputation in Pharmaceutical SC and a firm should prefer “risk avoidance” against these risks. The upstream risks significantly affect reputation in a Pharmaceutical SC as compared to the downstream risks. Proactive mitigation strategies and assertive crisis communication are suggested for upstream risks while diminishment/ bolstering/rebuilding reactive crisis communication is recommended for downstream risks.

Originality/value

Reputation risk is often overlooked in SC literature. This work develops a model to quantify the reputation risk considering the indirect consequences of the ORs that originates at any point in a SC. The proposed FCM tool aids SC manager to focus on higher attribution risk events and devise an optimal combination of proactive and reactive mitigation strategies to avoid/minimize the economic loss due to reputation crisis.

Details

Journal of Advances in Management Research, vol. 19 no. 1
Type: Research Article
ISSN: 0972-7981

Keywords

Article
Publication date: 13 October 2021

Kristine L. Beck, James Chong and Bruce D. Niendorf

This study aims to examine whether a good corporate reputation leads to superior investment returns. Theory and empirics provide support for the idea that a good corporate…

Abstract

Purpose

This study aims to examine whether a good corporate reputation leads to superior investment returns. Theory and empirics provide support for the idea that a good corporate reputation improves firm value, but much of the previous research fails to consider the risk of the companies they study and relies only on accounting measures of performance such as return on assets. A complete picture of the relationship between corporate reputation and shareholder value should include risk-adjusted returns and correlation with benchmark returns.

Design/methodology/approach

The Harris Poll Reputation Quotient (RQ), based on the reputations of the 100 most visible companies, suggests that companies with a “solid reputation” are more likely to be attractive investments. The authors construct portfolios using deciles and the RQ categories, rebalancing annually as RQ rankings are updated. Returns are adjusted for risk using Jensen's alpha, the information ratio, the Sharpe ratio, Modigliani and Modigliani's M2 measure, and Muralidhar's M3 measure.

Findings

The results indicate that choosing a portfolio based on the highest RQ-ranked firms does outperform the market on a risk-adjusted basis, and that the relationship between rankings and time-weighted returns is roughly monotonic. The authors also observe that corporate reputation is persistent, and that the best and worst most-visible firms are more likely to be privately held.

Originality/value

This research adds to the literature by including both market-based return measures and risk in the examination of the relationship between corporate reputation and financial performance.

Details

American Journal of Business, vol. 37 no. 3
Type: Research Article
ISSN: 1935-5181

Keywords

Article
Publication date: 20 March 2017

Christian Eckert

The corporate reputation of a firm and reputation risk is becoming increasingly important because of the rise of social media and the ongoing globalization. While defining…

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Abstract

Purpose

The corporate reputation of a firm and reputation risk is becoming increasingly important because of the rise of social media and the ongoing globalization. While defining and measuring corporate reputation and reputation risk represent the first steps in corporate reputation (risk) management, there is no general agreement in defining and measuring these two terms. Hence, this paper aims to give an overview of the existing literature in this regard, discuss it with respect to the operability in corporate reputation (risk) management and, based on this, present a holistic and consistent approach to define and measure corporate reputation and reputation risk.

Design/methodology/approach

The paper gives an overview of the literature regarding definitions and measurement methods of corporate reputation and reputation risk. Moreover, it discusses such definitions and measurement methods with respect to the operability in corporate reputation (risk) management.

Findings

Based on an overview of the literature regarding definitions and measurement methods of corporate reputation and reputation risk, the authors present a holistic and consistent approach to define and measure corporate reputation and reputation risk.

Originality/value

The authors present an holistic and consistent approach to define and measure corporate reputation and reputation risk with focus on (risk) management purposes.

Details

The Journal of Risk Finance, vol. 18 no. 2
Type: Research Article
ISSN: 1526-5943

Keywords

Article
Publication date: 15 May 2017

Gianfranco Walsh, Mario Schaarschmidt and Stefan Ivens

Given the strategic importance of firm reputation because of its potential for value creation, extant reputation research focuses on favorable customer outcomes. This…

2104

Abstract

Purpose

Given the strategic importance of firm reputation because of its potential for value creation, extant reputation research focuses on favorable customer outcomes. This study proposes and tests a model that relates the customer-based corporate reputation (CBR) of fashion retailers to customer-perceived risk and two relational outcomes – trust and commitment. In addition, this study aims to test whether or not the hypothesized paths are equally strong for male and female shoppers.

Design/methodology/approach

Data for this study were collected through an online survey approach. Using a sample of more than 300 retail customers and structural equation modeling, the authors tested the hypotheses.

Findings

Drawing on previous research, the commitment–trust theory of relationship marketing and signaling theory, the authors find support for direct and indirect links between retailers’ reputation and relational outcomes, the intervening role of perceived risk and the partially moderational role of gender.

Practical implications

The findings of this research suggest that a retailer’s positive reputation can reduce customers’ risk and engender trust, which in turn promotes customer commitment.

Originality/value

A growing number of examples suggests that retailers (specially fashion retailers) need to manage their reputation, which can come under threat in myriad ways, and its outcomes. However, so far, no individual study empirically investigated any of these reputation outcomes simultaneously or considered gender differences. Thus, the authors address an important research gap by examining the mechanism through which CBR affects relevant customer outcomes and by considering contextual factors.

Details

Journal of Product & Brand Management, vol. 26 no. 3
Type: Research Article
ISSN: 1061-0421

Keywords

Article
Publication date: 3 June 2022

Yen Thi Hoang Nguyen, Tommi Tapanainen and Hai Thi Thanh Nguyen

Recently, traditional financial institutions are facing strong competition from disruptive innovators (Fintech firms) forcing them to increasingly invest in new IT…

Abstract

Purpose

Recently, traditional financial institutions are facing strong competition from disruptive innovators (Fintech firms) forcing them to increasingly invest in new IT solutions to maintain their competitive edge. However, there are still advantages that traditional financial institutions enjoy, of which the primary one may be reputation. Surprisingly, the firm reputation link to use intention has not received much attention in the literature, prompting this research. The purpose of this study is to examine the firm reputation link to use intention in the context of mobile banking.

Design/methodology/approach

The results are based on a survey of 783 participants in Vietnam.

Findings

The study confirmed that reputation plays an important role in promoting use intention for mobile banking. Additionally, perceived risk and trust are also linked to perceived usefulness (PU) and perceived ease-of-use (PEOU).

Originality/value

This study is among the first to link perceived risk and trust to PU and PEOU in a mobile banking context. Based on the Theory of Reasoned Action, the study adds to the literature by connecting two separated research themes: technology adoption and reputation. It also suggests avenues for both traditional banks and Fintech firms to set their business strategies to enhance their reputation or collaborate for mutual benefits.

Details

International Journal of Bank Marketing, vol. 40 no. 7
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 11 June 2013

Fred Lemke and Henry L. Petersen

In the supply chain context, professionals manage various risks that have the potential to disrupt supplies. Surprisingly, one kind of risk is often overlooked…

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Abstract

Purpose

In the supply chain context, professionals manage various risks that have the potential to disrupt supplies. Surprisingly, one kind of risk is often overlooked: reputational risk. It is critical to recognise the risk potential that impacts on the reputation of the organisation. Furthermore, managers require an appropriate tool set to control it. The present paper aims to have a twin focus: first, it will lay out the basic premises behind corporate reputation, reputational risk, and corporate social responsibility (CSR). Second, the practical implications will be addressed that lead to a substantial teaching component.

Design/methodology/approach

The present paper is based on two research stages. Initially, the authors adopted the “reflective practitioner” philosophy that aimed at discovering the common beliefs in practice that explain working processes and management thought. In particular, they explored the foundation of CSR, reputation and risk management with specialists in dedicated workshops (electronics, energy, life sciences, telecommunications and defence industries, located at different stages of the supply chain). To gain more insight, the authors subsequently conducted in‐depth interviews in these topic areas with key informants. The combination allowed them methodological triangulation.

Findings

Reputation can be created and controlled as soon as its nature is fully understood (Reputational Owner). Interestingly, it is a transceiving business phenomenon that crosses organizational boundaries. Spillover effects can thus be observed at all stages of the supply chain by mere business association (Reputational Borrower). Reputation can range from positive to negative extremes and needs to be managed. The results of the authors' exploratory work are presented as quotations to provide the substance of the current and relevant subject.

Research limitations/implications

The present work is exploratory in nature. Quantitative research methods are now required to validate and substantiate the findings.

Practical implications

CSR is a contemporary foundation to mitigate reputational risk throughout the supply chain. The authors outline the reputational risk factors in this context and the ways of managing those.

Social implications

In the market place, reputation is a reflection of the supply chain offering (products, services), communication (promotion, PR), and action (behaviour and views expressed). Consumers adopt supply chain reputation as a yardstick when making purchase decisions. It is therefore critical to manage reputational risk in the supply chain and this paper outlines the cause and effect relationships that this topic entails in modern society.

Originality/value

This paper discusses the importance of reputational risk in the supply chain. It also explains the ways it can be mitigated via CSR. This is the management baseline that adds tremendous value for theory builders and present and future managers. Having the education of Master students in mind, the authors outline three specific teaching units that bring the conceptual underpinnings alive in an interactive learning environment.

Details

Supply Chain Management: An International Journal, vol. 18 no. 4
Type: Research Article
ISSN: 1359-8546

Keywords

Open Access
Article
Publication date: 26 November 2021

Francesca Bernini, Paola Ferretti and Antonella Angelini

This paper aims to focus on the relation between digital transformation and banks’ reputation, as examined through the information disclosed by the five largest Italian…

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Abstract

Purpose

This paper aims to focus on the relation between digital transformation and banks’ reputation, as examined through the information disclosed by the five largest Italian banking groups’ efforts to extend and enhance their digital resources. Considering digitalization as a key strategy for managing reputation, which, in turn, can leverage financial and value performance management, the paper investigates whether and how digital activities might affect banks’ reputation. Therefore, this paper proposes the relationship between digitalization and reputation as a lever for performance management and for increasing efficiency.

Design/methodology/approach

The authors use content analysis to generate a digital disclosure index, categorizing activities human, structural and relational. For banks’ reputations, the proxies are a measure of corporate reputation and a reputational risk index. Methodologically the study used multiple case studies, considered as particularly suitable to gain an in-depth understanding of the topic in the case of the five banks. A collection of secondary data and semi-structured interviews are included.

Findings

Overall, the digitalization-reputation link shows that banks’ reputation is variously affected, not only by exposure to risk (including reputational risk) but also by strategic issues such as digitalization and the effectiveness of the corresponding communication. Consequently, banks should view digitalization as a key driver to be considered not in a stand-alone perspective, but in a combined approach.

Research limitations/implications

Continued research should include the Covid-19 implications. Additionally, it would be important to compare a larger number of banks, with different characteristics, also including variables indicating the corporate governance mechanisms.

Practical implications

The analysis contributes to fostering scholars’ and practitioners’ management of the digital transformation challenge that is a current key-factor, capable of increasing banks’ value. It considers not only the drivers directly affecting monetary value but also the institutions’ social and relational value, as well as their reputation.

Originality/value

This paper extends prior research on the digitalization-reputation relation by investigating digital transformation through disclosure of activities in this area within the Italian banking sector. It allows to leverage the key-factors that can contribute to increasing banks’ value, considering not only the drivers directly affecting monetary value but also the institutions’ social and relational value, as well as their reputation.

Details

Meditari Accountancy Research, vol. 30 no. 4
Type: Research Article
ISSN: 2049-372X

Keywords

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