In the Eyes of the Stakeholders: Performance Implications of Incoherent Corporate Reputations

In the Eyes of the Stakeholders: Performance Implications of Incoherent Corporate Reputations

Abstract

Because a firm’s reputation is multidimensional (e.g., product quality, social responsibility), it can vary across dimensions. We term such a variance across dimensions as “reputation incoherence” and contribute to academic research on corporate reputation to help corporate and marketing managers understand how stakeholders perceive and assess firm reputations in the marketplace and how those perceptions can translate into financial outcomes at the firm level. Reputation incoherence could have varying effects on firms’ financial performance level and performance variability, depending on the extent to which stakeholders attend to the distinct dimensions. If each class of stakeholders focuses on only one or two distinct dimensions, this reputation incoherence likely will create greater performance variability than if all stakeholders attended to all dimensions. In that latter case, reputation incoherence might lead the stakeholders to discount all reputation information, with negative implications for its performance level. With data from 453 publicly listed firms, pertaining to 2017–2022, the current research confirms these hypotheses and reveals that a firm’s visibility moderates these effects. Because both lower performance levels and higher performance variability produce diminished firm value, managers should develop marketing strategies that ensure coherent reputations; to do otherwise means putting their firm’s market value at risk.

More information on Adnan Yusuf can be found here.

The talk will take place from 12:00-13:00 hrs. in RuW 1.201 and via Zoom.