Branch identity can be defined as a mix of properties or characteristics common to all companies inside a particular industry. For instance, organizations in the same industry share many of the same goals, core competencies, shareholders, products or services, and other characteristics, which makes them not only competitive and distinctive but comparable as well. As such, branch identity, also known as industry-wide identity or industry identity, refers to common characteristics of companies operating within a respective industry. The key question is not what the distinguishing characteristics of a company are but, rather, what the shared features are among companies in a particular branch. In addition, customers and other stakeholders share similar expectations and demands of the companies that directly compete for their attention and affection. That forces companies not only into differentiation but into uniformity as well. For example, an airline must have its own planes, competent crews, the right to fly in and out of airports, safety and security as a number one priority, and reliable services. By not having these features, a company fails to meet the basic elements for being competitive in the airline industry.
When a company’s goals are based on its knowledge, resources, capabilities, and core competences, the public is willing to accept the company as a competent, qualified, and relevant supplier of a particular product or service. In general, a particular company has to have these similarities in order to gain a license to operate inside the respective branch or industry. This entry covers the interrelationships between branch identity and corporate identity and discusses how branch identity relates to corporate reputation.
Branch Identity Interrelated With Corporate Identity
Branch identity and corporate identity are closely interconnected. Branch identity is considered to be a preliminary condition for building corporate identity. It is a cornerstone on which an attractive and relevant uniqueness of the firm is constructed. In the early works on corporate identity in the literature, one of the prevailing ideas is that the industry itself and its specificities shape the character of companies that operate in a particular sector.
The process of determining corporate identity attributes for a particular company and its market positioning does not start by formulating unique characteristics. Rather, it is based on research about identity characteristics that are pivotal and common for all companies in a particular industry. Only by possessing these characteristics can a company build its distinctiveness and its corporate identity. Thus, every company that wants to enter and stay in a particular branch or industry needs to first possess certain characteristics that make the company competent in the eyes of its stakeholders and then build its distinctiveness on those characteristics. A set of these characteristics is based on stakeholders’ perceptions and expectations of what is common to all companies in the industry. As such, industry identity can be seen as one of the two identity dimensions of an organization, which must be perceived as “like others” (sameness) as well as “like no other” (distinctiveness).
How fundamental and decisive branch identity can be has been recognized in the case of a reputable company that attempted to launch a new product in the market without having the necessary properties defined in a branch identity. Because the consumers belonging to the target market for the new product did not recognize that the company has the characteristics required for companies in this particular sector, the new product has been condemned to failure.
Studies also show that the role of branch identity differs across specific industries. Furthermore, even inside specific sectors, branch identity has its own evolution, but it appears to be enduring and unchangeable. To fully understand the specific branch identity, it must be considered through three dimensions: (1) characteristics that are recognized as “typical” of a specific industry (content), (2) number of characteristics per specific industry (complexity), and (3) intensity of the branch identity in one sector compared with others (external strength) and relative strength of a particular characteristic of a branch identity compared with others within the industry (internal strength). Authors have noted that in industries where branch identity is very content specific and strong, it is very difficult for companies to project their distinctive corporate identities.
Branch Identity Influence on Corporate Reputation
There is general consensus in the literature that branch identity and corporate reputation have a cause-effect relationship. Reputation researchers have indicated that corporate reputation depends not solely on companies’ characteristics and actions but rather on different factors, including their interorganizational interdependence. This means that characteristics and actions of surrounding firms also shape a firm’s reputation and, ultimately, its performance. As such, branch identity directly affects the perception of companies within an industry.
In industries where branch identity is clearly expressed, companies may have a hard time differentiating themselves from competitive companies. In addition, different stakeholders often judge all companies within the same branch equally by clustering firms together when they are making assumptions and assessments. In such cases, companies have a “common/collective/shared” reputation, where branch identity prevails over the distinctive and individual attributes and actions of an individual firm. If stakeholders can differentiate between rival companies, no commons exists, but when this is not the case, the reputation commons arises. When stakeholders do not differentiate among firms and do not see the unique reputation of a firm within a particular industry, reputation commons exists. Reputation commons suggests that stakeholders impose one common reputation for the whole group of firms in the industry they are evaluating. And when reputation commons arises, it intertwines the fate of firms in an industry, because they are not seen as a “one and only” but rather as a group. The more branch identity prevails over corporate individuality and the more ties between rival organizations exist, the more likely the organizations will share a common reputation from stakeholders, as well as a common fate.
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