Empirical analysis of the relationship between corporate reputation and financial performance: A survey of the literature (original) (raw)
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Various researchers have investigated the reputation and firm performance relationship with the perspectives of different disciplines. This study is a semisystematic literature review that examines articles in top-ranked journals to analyze how the reputation and firm performance relationship has evolved in terms of theoretical backgrounds, variables, methodologies and the scope of the reputationperformance relationship. Classifications of the reputation and firm performance relationship articles are highlighted in four broad areas: financial performance, sustainability performance, marketing performance and organizational performance. The results of this study showed that the number of the published articles has increased gradually through the analysis period, and majority of the articles investigated the firm reputation and financial performance relationship. Due to the results a research agenda is developed for future research.
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In order to operationalize difficult concepts (corporate reputation, corporate social responsibility, and stakeholder orientation) researchers have generally turned to the Fortune Reputation Index (FRI) as a readily available measure. Despite the heavy reliance on the Fortune Reputation Index as a valid measure of a firm's reputation or social responsibility, the results of a study conducted by Fryxell & Wang (1994) questioned the usefulness of the FRI as it is currently constituted. To be more specific, it has been suggested that the FRI is merely an amalgamation of financial metrics that reflects a firm's overall financial health. In response to such an accusation, more recent research conducted by Lee & Hall (2008) that revalidates the veracity of the FRI. Even after controlling for any financial-halo‖ effects, the validity of the FRI as an acceptable proxy for firm reputation and social responsibility has been reestablished. In an effort to extrapolate on these more recent findings, the present study seeks to investigate corporate reputation from an international context. Results confirm a positive correlation between firm performance and firm reputation and highlight the importance of firm reputation as a critical strategic asset that needs to be managed.
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Corporate reputation is a construct that has gained widespread recognition in the disciplines of strategy, corporate social responsibility, management and marketing because a good reputation is thought to be more commercially valuable than a bad reputation. However, recent reviews of the scholarly literature suggest that because the construct of corporate reputation has been defined in a wide variety of ways it is difficult to understand the antecedents and consequences of the construct. To illustrate this problem 50 different definitions of corporate reputations are reviewed. This analysis suggests that some of the most prominent measures are not grounded in the definitions that are thought to underpin them. This phenomena presents a challenge to anybody wanting to meta-analyze findings and to build new theories of corporate reputation. To help advance the field a framework is presented to guide the refinement of scholarly definitions so that they are well constructed and thus capable of guiding the development of valid measures of the construct. To illustrate this framework a new definition and some new measures are provided.
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Corporate reputation is an interesting intangible asset for a corporation. Recently, its link to financial performance seems to be important in the banking industry. Prior financial performance is hypothesized as an antecedent, a variable that influence the reputation of a company. The purpose of this paper is to empirically examine corporate reputation measurement and the link of prior financial performance to corporate reputation in the Malaysian banking industry. The Reputation Quotient is used in this paper as a measurement of corporate reputation. It is because the Reputation Quotient has been cross cultural tested among countries in the United States, Europe, and Australia. This paper resorts to the typical CFA and SEM tests. The CFA has resulted with a success structure of corporate reputation dimensions and prior financial performance. These include first order and second order tests of Reputation Quotient dimensions and financial performance. The dimensions were successfull...
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Strategic Management Journal, 2002
Good corporate reputations are critical because of their potential for value creation, but also because their intangible character makes replication by competing firms considerably more difficult. Existing empirical research confirms that there is a positive relationship between reputation and financial performance. This paper complements these findings by showing that firms with relatively good reputations are better able to sustain superior profit outcomes over time. In particular, we undertake an analysis of the relationship between corporate reputation and the dynamics of financial performance using two complementary dynamic models. We also decompose overall reputation into a component that is predicted by previous financial performance, and that which is ‘left over’, and find that each (orthogonal) element supports the persistence of above-average profits over time. Copyright © 2002 John Wiley & Sons, Ltd.
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This study describes the concept of corporate reputation and reviews some of the major points that exist when it comes to measuring it. It thus suggests a new index for measurement and its advantages and disadvantages are pointed out. The consistency of the seven key variables for the collecting indicator is described by the results of a factor analysis and correlations. Finally, the indicator is put to test by gathering the perception of corporate reputation of 1500 individuals for 69 companies belonging to 15 different industrial sectors, in Peru. The results indicate that the proposed index variables are not necessarily of greatest interest to the study sample in which companies have a better performance. Also greater memorial companies aren't necessarily those that enjoy a greater corporate reputation. Managerial implications for the organizations in the process of managing and monitoring the dimensions involved of this key asset are also referenced.