An organization’s name is a key symbol of its identity. A name expresses the core attributes that define the firm as central, distinctive, and enduring, and in so doing, it describes who the firm is and what it does. An organization’s name is an important reputational signal, for both its internal employees and its external audiences of consumers, investors, analysts, the media, and the public. As a reputational signal, a name functions to (a) position the organization strategically as a credible player within a market niche, but differentiating it from its competitors; (b) serve as a touchstone for the organizational audiences’ understanding, legitimation, and valuation; and (c) drive organizational survival and financial performance.
Organizational names are rich and varied and can be different on a number of diverse dimensions. Names can be quite long, as they once were in colonial times in America (e.g., Long Wharf in the Town of Boston in New England), or short or abbreviated, consisting of just a few letters (e.g., IBM, 3M), as many organizational names are today. Names may be somewhat ambiguous about the organization’s identity (e.g., Chevron, Google, Xerox) or richly descriptive of its products (e.g., Goodyear Tire & Rubber, United Parcel Service, Marathon Oil, Tyson Foods), its geographic location (e.g., American Motors, Northwest Airlines, New York Life Insurance), its industry membership (e.g., Bank of America, Dow Chemical), its founder (e.g., Martha Stewart Living Omnimedia), and even its location in cyberspace, using its Internet domain address (e.g., Amazon.com).
Beyond their functionality, organizational names can be whimsical or even playful (e.g., Apple) or might reference cultural forms, such as Hollywood movies (e.g., Florist Gump), television shows (e.g., Lawn & Order), or even Shakespearean plays (e.g., The Merchant of Tennis). Like people’s names, organizational names come in a wide assortment of denotative and connotative forms, ranging from a straightforward description (e.g., Toys “R” Us, Capital One Financial) to something more abstract or ambiguous (e.g., TJX, NuCor). All this variety in organization naming raises several questions. This entry addresses the patterns in organizational names, the factors that influence the choice of a particular organizational name, and the organizational consequences of choosing a particular name.
Patterns in Organizational Names
The names that organizations choose for themselves are not random. Rather, they follow trends or observable patterns that change over time, with regard to economic conditions and to the name choices of other firms, particularly those in its industry or market category. One discernible trend has been the historical shortening of the organization name. Through the 1990s, there was a noticeable decline in the length of organizational names, from an average of six words (e.g., The Proprietors of the Boston Pier) to half that (e.g., Engelhard Industries Inc.). This was partly due to changes in the types of organizational names that come into favor, which included acronyms (e.g., Conoco), and partly due to the cultural taken-for-grantedness that organizations achieved so that they no longer needed a long explanation of who they were or what they did.
Accompanying the shortening of the organizational name were two features of the newer names: (1) increasing ambiguity and (2) less specificity about the organization’s identity. As organizations grew in size and scope, they were no longer tied to specific products or geographic regions; they could claim identities that were broader and could be more adaptive or flexible as the world of business was becoming more uncertain and complicated. For example, the American Can Company, in shedding its canning business with its move into financial and other services, became Primerica.
In addition to changing their names to adapt to changing economic realities, organizations also copied or imitated the name choices of other organizations, partly to militate against the encroaching environmental uncertainty, partly to yield to institutional pressures for conformity, and partly to locate their identities in new or emerging market categories. As a result, certain kinds of names came to dominate during certain periods of time and certain segments of the market. Around the 1800s, the dominant form that organizational names took paralleled people’s names: a first name (that reflected organizational ownership or geographic location), a second or middle name (that reflected the organization’s products or services), and a third or last name (that reflected the organization’s legal status as a corporation or company). A century later, with increasing numbers of interorganizational mergers and broad geographic and business expansion, the format of organizational names shifted to reflect this, incorporating words such as united or allied as well as broader market references such as national and international.
Around the middle of the 20th century (ca. 1960), organizational names changed again, from their lengthier and century-old three-part form (of first, middle, and last names) to become more abbreviated and less specific with regard to products or locales. One exemplar of this trend was the American Sugar Company, which changed its name to Amstar in 1970, although in 1991, it changed its name again to Domino Sugar Corp., reverting to its brand name from the early 20th century.
In the 1990s and 2000s, organizational names redounded to the three-part name. For instance, USX reclaimed its original name of United States Steel Co. In the era of “Internet euphoria” (1998–1999), organizations rapidly appended dot-com to their names, with Egghead software (egghead.com) being the first of these, in 1998. This was to change again as the nature of business on the Internet changed.
Influences on Organizational Name Choices
When an organization changes its name, it is not simply a cosmetic event. Rather, it is often accompanied by broader changes in the firm, including leadership changes; moreover, it can result in improved financial performance, particularly if firms demonstrate their social fitness through their choice of a new name. Social fitness, important in boosting a firm’s reputation, is the appearance that a firm—and especially its name—is appropriate, comprehensible, and legitimate. Organizations achieve social fitness by conforming to prevailing naming practices, prevalent at different time periods (as discussed earlier) or prevalent among similar organizations in their market niche, industry, or field. Yet this conformity in naming can put organizations at a strategic disadvantage by not differentiating them from their competitors. The solution for an organization, then, is to choose a name that is similar enough to its competitors (to gain legitimacy) but different enough from its competitors to gain strategic advantage; in other words, its name must be optimally or legitimately distinctive within its industry category.
This naming solution is evident. Many organizations adopt names that are similar to those prevalent in their own industry, but they vary these to make them distinctive. For example, bank names such as Bank of America, BancAtlanta or Security First Trust, and Federal Reserve exhibit social fitness and connote legitimacy, while a name like Tony’s Bank does not. In a survey of more than 600 people by Mary Ann Glynn and Christopher Marquis published in 2004, where the respondents were asked to express their preferences for organizational names, the majority (53%) saw BancAtlanta as an appropriate bank name, while very few (1.3%) saw Tony’s Bank as such. Conversely, the majority (58%) saw Tony’s Pizza as an appropriate name for a pizzeria, but only a scarce few (less than 1%) saw First National Pizzeria as appropriate. Thus, organizational names can be an effective dual-edged sword, conferring both legitimacy (through conformity to naming conventions) and strategic differentiation (through variations on conventions). By using their names to signal this duality, organizations can enhance their survival and performance.
Consequences of Organizational Name Choices
In William Shakespeare’s classic tale of star-crossed lovers, Romeo and Juliet, Juliet confesses her devotion to Romeo in spite of the warring feud between their families. She loves Romeo and feels that his family name (Montague), symbolizing his clan, is meaningless and inconsequential. Juliet famously dismisses the power inherent in his name with one of Shakespeare’s most quoted lines: “What’s in a name? That which we call a rose by any other name would smell as sweet.”
Although a name may seem inconsequential to the love-struck Juliet, this is not the case for organizations. The name an organization chooses is highly consequential to its reputation, legitimacy, survival, market positioning, and appeal, as well as to its performance, as a number of scholarly studies have attested.
The name of an organization is a very visible and important way of succinctly representing itself. An organization’s name codifies its identity on which legitimacy may be granted (or denied) and on which resource commitments (including investments and purchases) may (or may not) be made. Because the organizational name signals the organization’s reputation and social fitness, it can influence consumer choices, analysts’ evaluations, investors’ funding, and financial performance.
Organizational names that conform to naming norms, aligning with other firms within specific time periods or industry standards, tend to perform better while those that do not tend to struggle. For instance, Glynn and Marquis found that organizations affixing dot-com to their name during the heyday of Internet commerce (1998–1999) were perceived as less legitimate, with lower market valuations, following the dot-com crash; they were perceived to be out of sync with new understandings of what it took to succeed. Of the 59 firms that amended their name with dot-com suffixes in 1998, only 7 (12%) were trading at more than $1 five years later. Thus, the market devalued the organizations with outdated and seemingly out-of-touch names.
In a different example, a 1996 study by Paul Ingram found that individual hotels that were part of a larger hotel chain had better performance when they adopted names consistent with that of the chain; in this case, naming conformity enabled the hotels to gain positive reputation spillovers from the larger, more prominent chain. Naming conformity, thus, can yield desired outcomes for organizations; however, it needs to be dynamic, flexible, and adaptable enough to enable organizations to align with, or realign with, changing norms.
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