North America,Corporate Reputation in

Corporate reputations in North America reflect the diversity of the region. The term North America varies in its usage from only including the United States and Canada at one extreme to a continent-based definition including all countries in the Western Hemisphere north of and including Panama at the other. While the United States plays a dominant role, the region contains several other distinct influences. In addition, the United States is itself far from a monolithic entity, with significant within-country differences that could also influence corporate reputations. In addition to geographic diversity, the region differs significantly in economic development level, culture, and history, all of which frame perceptions of corporate reputation in the region. This entry discusses corporate reputation matters within the United States and Canada, Mexico and Central America, and the Caribbean.

The United States and Canada

As the two major developed countries within the region, the United States and Canada stand out from the rest of North America. As highly developed economies, expectations of firms in the United States and Canada may be significantly higher than expectations of firms in developing countries within North America, affecting the assessments of firm reputations. The United States plays a particularly central role in the corporate reputation field due to the prominence of studies based on Fortune’s “America’s Most Admired Companies” list, which is the most utilized reputation database in academic research on the topic. As such, the reputations of U.S. firms are significantly more likely to be studied than those of any other country. As the “America’s Most Admired Companies” list is based on the evaluations of financial analysts and business insiders, financial performance–based factors have a strong influence on these scores. While this is only one approach to reputation assessment, it is nonetheless generally consistent with the shareholder value focus that has dominated much of the business landscape of the United States. In contrast, the Reputation Institute’s RepTrak Pulse examines reputations among the general public across a large number of countries, thus helping eliminate this bias.

A major conceptualization of reputation notes that firm reputations are socially constructed. When examining reputations within specific national contexts, the collective viewpoints of a country’s society thus become very influential. Related to their country size, development levels, and colonial heritage, the United States and Canada both have well-established corporate traditions that may affect the expectations of firms operating within their borders. Some evidence suggests that expectations of firms in these contexts may be higher than in developing countries given the well-established societal roles of firms. Higher expectations may lead to a more critical assessment of corporate reputations in these two countries. Associated with their development levels, the United States and Canada also have long traditions of inward foreign direct investment. In terms of the reputation landscape, this means that foreign firms are well established within their borders and the societal mind-set and that, in general, a firm’s foreignness may have a relatively lesser impact on assessments of firm reputations than in other country contexts examined elsewhere within this encyclopedia. However, foreign firms from specific countries may still face reputation consequences based on their country of origin. For example, during the 1980s, Japanese firms faced considerable negative public perceptions based on their increased investment in the United States, even though this investment was still lower than that of the more culturally close United Kingdom.

The overall country reputations of the United States and Canada may also affect the reputations of their firms, particularly when viewed from outside their home countries. The Reputation Institute’s Country RepTrak ranks the reputations of countries based on three dimensions: (1) appealing environment, (2) advanced economy, and (3) effective government. Canada is ranked first in the Reputation Institute’s “2015 Country RepTrak,” suggesting a large amount of goodwill toward the country. The United States, however, is ranked 22nd out of the 55 countries studied—above the global mean but much more toward the center of the distribution. Looking specifically at the advanced-economy dimension within the overall score, which may be more directly applicable to perceptions of firms, Canada ranks 5th and the United States ranks 10th; both are in the upper 20 percent of countries studied on this dimension.

As large countries, significant within-country differences are also noteworthy within both the United States and Canada. Within the United States, differences in state-level institutional environments translate to strong differences in political ideologies, education rates, income levels, the prominence of various religions, labor rights, and laws affecting the actions of businesses, among others. All these frame the assessment of corporations in a particular state or region. For example, in “right-to-work” states that have statutes limiting the ability of unions to require membership, unionized firms will be viewed differently than in other states. Within Canada, similar differences exist, most notably between French-speaking Quebec and the English-speaking Canadian provinces. Differences in language and culture between Quebec and the rest of Canada have led to conflicts, which have been characterized by terms such as Quebec bashing. These broader societal conflicts may also extend to interprovince perceptions of firms.

Besides state- and province-level differences, within-country demographic differences may also influence the perceptions of firms. For example, in the United States, the Hispanic population in 2014 was estimated to be about 55 million, or approximately 17 percent of the U.S. population, making this the largest minority group. As such, Hispanic cultures and viewpoints may increasingly affect the reputations of firms, particularly in areas such as New Mexico, California, Texas, and South Florida with large Hispanic populations. Similar effects may also be present among other prominent demographic groups, such as blacks, Asians, and Native Americans.

Mexico and Central America

Apart from the United States and Canada, the other major portion of North America in terms of geographic region is Mexico and the Central American countries extending south until Panama. Although they are diverse, a large number of these countries nonetheless share a common heritage of Spanish settlement, which identifies them more closely with the countries in South America than with the United States and Canada. This common heritage may shape the perceptions of company reputations within the region. Additionally, although it varies, a generally lower development level among countries suggests different expectations of companies in the region compared with the United States and Canada.

Mexico stands out among this group of countries, both for being by far the largest economy and for being the one most closely integrated with the United States and Canada due to its membership in the North American Free Trade Agreement since 1994. This may have a positive influence on companies within the country’s borders due to their ability to access U.S. markets, and indeed, this has been a factor influencing foreign direct investment in Mexico. Mexico is also considered a prominent emerging market, being included in several emerging market lists, such as BRICM (Brazil, Russia, India, China, and Mexico), MINT (Mexico, Indonesia, Nigeria, and Turkey), and Next Eleven (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam) countries, in contrast to the more commonly discussed BRICS (Brazil, Russia, India, China, and South Africa). Top companies, such as America Movil in the telecommunications industry, Cemex in the cement industry, and Grupo Bimbo in bakery goods, are demonstrating the ability of Mexican multinationals to successfully compete internationally. This suggests that some Mexican companies have the ability to overcome the broader reputation effects associated with their country of origin.

Despite these positive aspects, Mexico currently suffers from a poor political reputation associated with corruption and violence, which may create a negative bias toward companies from the country. The country ranked 37th out of 55 countries in the “2015 Country RepTrak” study, below BRIC countries Brazil and India but above China and Russia. Given that Mexican companies are generally not well-known outside Mexico, with a few exceptions as noted earlier, the country reputation of Mexico as a whole is likely to have a strong influence on evaluations of Mexican firms outside Mexico. In the case of limited company-specific information, reputation evaluators are more likely to rely on overall country-level cues to make their assessments.

Outside Mexico, the countries in Central America are generally much less developed with fewer prominent firms. In these countries, the institutional development is much lower, making it relatively more difficult for the countries to thrive—particularly outside their home country and region. However, even in this environment, notable exceptions exist, such as Copa Airlines in Panama. Nonetheless, even more so than in the case of Mexico, companies in these countries are likely to be evaluated based on the reputations of their home countries. Within these countries, subsidiaries of foreign companies also tend to be prominent. As such, a dominant distinction in reputation assessments tends to involve the contrast between foreign and domestic firms. On the one hand, foreign firms are often seen in terms of their role in providing jobs and economic development within these countries, boosting their reputations. On the other hand, they may, in some instances, also be associated with prior colonial domination of their home countries and cultural exportation, negatively affecting firm reputations. In either case, the distinction between the reputations of foreign and domestic firms may be more pronounced here than in the developed countries of the region—namely, the United States and Canada.

The Caribbean

While exact definitions of the region vary, the Caribbean generally comprises 13 sovereign states and 17 dependent territories located in the Caribbean Sea, while also including the surrounding coasts of the bordering countries, such as Belize, Colombia, Costa Rica, Guatemala, Honduras, Mexico, Nicaragua, Panama, and Venezuela. The region contains a mix of indigenous cultures combined with colonial influences from multiple European countries and the United States, all of which shape the attitudes of the residents of the various islands. These attitudes in turn could influence their perceptions of firms from various host countries, with firms from particular nations being more highly, or in some cases less, reputed in some countries than in others based on these prior ties. As a whole, the Caribbean is lacking in both economic and institutional development, perhaps providing a unifying influence regarding perceptions of firms within the region. Given this common background, firms, and in particular foreign multinationals, may be seen relatively positively as sources of potential jobs and development within the region. As in Central America, the development of local firms, and by extension their reputations outside the region, has been limited. However, a few notable exceptions exist, such as Bacardi Limited—famous for its namesake rum and other alcoholic beverages.