Reputation Orientation

Reputation orientation is a company-wide strategic orientation to build, manage, and influence a positive corporate reputation among key external stakeholders. Strategic orientations are internal preferences that can distinguish an organization in the marketplace and can facilitate the implementation of strategies that result in performance advantages. Organizations with strong reputation orientations know what reputation they seek, what decisions are consistent with that reputation, and how to balance the needs of all stakeholders in the effort to build and maintain a sustainable corporate reputation. This entry focuses on the origins, characteristics, and managerial implications of reputation orientation.

Origins

The concept of reputation orientation is based on the commitment of senior management to make a conscious choice to build a strong reputation that is embraced by internal stakeholders and reflected by the perceptions and expectations of external stakeholders. Reputation orientation is based on the theoretical work of Mary Jo Hatch and Majken Schultz and their theory of organizational identity dynamics. They suggest that a strong corporate reputation requires the alignment of identity, culture, and image at all levels of the organization. Upholding and maintaining the corporate reputation is the responsibility of all internal stakeholders, not merely the purview of the corporate public relations function. Identity, culture, and image are defined as follows.

Corporate identity is a distinct, enduring, authentic character or personality that is developed and sustained by organizational members. It is what the company wants to be known and recognized for. Culture is the context in which identity is shared and valued. Image is the process by which an organization communicates its desired identity to its stakeholders. Corporate images can be symbols, behaviors, or actions that circulate within the company and flow externally from the company.

When these elements align, a strong reputation orientation emerges. This orientation is a distinct inclination to achieve a positive corporate reputation among key stakeholders via strategic decision making. This alignment results in an actively managed identity, a strong sense of shared culture, and a credible corporate image.

Characteristics

Reputation orientation is conceptualized as having three dimensions: (1) a purposeful identity, (2) a shared culture, and (3) an impactful image. These reputational building blocks are valued by companies in their efforts to build positive, enduring corporate reputations that will enable them to consequently earn tangible and intangible performance benefits.

Purposeful identity is articulated by top management to ensure the appreciation, care, and protection of corporate identity. A purposeful identity emphasizes the importance of long-term identity management, such that managers may preclude a decision if it is not aligned with the corporate identity, even if there are short-term benefits. For example, an ingredient may be demanded by the target market to increase a product’s shelf life; however, the company has made a conscious decision not to include certain preservatives because of its identity as a company that makes pure and natural products.

Shared culture is the expression of the purposeful identity in both informal and formal communication to internal stakeholders. This communication is articulated frequently to maintain the cultural history and instill a sense of the value of these rituals, artifacts, and behaviors. Internal stakeholders have an understanding of how all levels of employees from the entry-level hourly worker all the way up to the C-level executive interact with one another in a way that is consistent with the corporate identity. Examples of how communication is facilitated in the creation of mutual understanding include internal branding campaigns, intranets, and corporate social networks.

Impactful image is a continuous process of assessing the consequences of strategic and tactical decisions on external stakeholders and how this will affect the desired corporate image. Organizations with a strong reputation orientation routinely optimize a variety of potentially competing external stakeholder interests against their corporate identity. A product or service offering for a particular stakeholder group affects how other stakeholders perceive this strategy in the context of the company’s desired corporate image. For instance, in 2014, CVS, a major pharmacy chain, voluntarily stopped selling all tobacco products even though this decision inconvenienced its smoking customers and was expected to cost the company billions of dollars in revenue annually. This short-term revenue impact was weighed against the long-term benefits of having a corporate image of helping people get and stay healthy.

Thus, a reputation orientation enables internal stakeholders to engage in deliberate strategies and tactics, supported and encouraged by top management, that are the result of the alignment of a purposeful identity, a shared culture, and an impactful image. Earning a positive corporate reputation results from the participation of all internal stakeholders and is not mere image building with disconnected cause marketing or perceived greenwashing (efforts by firms to make themselves look more environmentally responsible than they are). Reputation orientation is a unique construct that focuses on the antecedents and not just on the well-understood consequences of corporate reputation.

Implications

Reputation orientation has implications for managerial practice and society. Reputation orientation describes the mechanism through which a company is committed to building and maintaining a strong corporate reputation from a company-wide, proactive perspective. Superior performance in a competitive environment is driven by critical success factors, one of which is a strong corporate reputation. The company-wide commitment to a strong reputation orientation improves corporate reputation, financial performance (e.g., market share, revenue growth, and profitability), and market performance (customer satisfaction, price premium, and customer loyalty), beyond companies that take a more passive or reactive approach to reputation management. A reputation-oriented member of the organization is keenly aware that there are a diverse range of stakeholders who deserve consideration at all phases in the value delivery process. Moreover, the conscious choice to seek a reputation orientation is more than altruistic; it is motivated by tangible and intangible performance rewards.

Companies that have a strong reputation orientation make decisions that enable the organization and its members to be more ethical. A corporate culture exclusively emphasizing profitability and short-term metrics is associated with unethical practices. Managers with a strong reputation orientation consider that the social impacts of their decision making are part of their moral responsibility and the social responsibility of their company, such that stakeholders are not viewed as the sole means to profitability.

If an organization seeks to pursue a strategy of having a distinct concern for its corporate reputation, then all organizational decisions should stem from a keen understanding of the corporate identity and be made keeping in mind the direct impact that these decisions will have on key stakeholders and the images that will endure with other significant stakeholders.