Reputational Criteria

Reputational criteria are the standards of judgment used to measure, evaluate, and conceptualize the worth or quality of an organization compared with those of other organizations. The criteria serve as the bases for judging the degree of notoriety or fame of a corporation for specific quality or characteristics compared with its peers. A criterion often assumes an ideal standard, as it is used to determine whether an organization is viewed favorably against the ideal standard, and thus held in great esteem by its stakeholders, or falls short of the expected ideal threshold, so as to be discounted by the stakeholder. Reputation criteria thus differentiate one corporation from the others and involve assessing where an organization stands versus peer organizations (often of the same type).

A corporation’s reputation speaks of how it is known to the public and various other stakeholder groups. Reputation is an intangible and multidimensional organizational asset, which makes it hard to define reputation especially under a universal consensus. The elusive nature of corporate reputation also makes it difficult to develop and define the criteria for measuring it. Reputation and criteria have a close interdependent relationship. Oftentimes, the definition of reputation can depend on the criteria used. Thus, developing appropriate criteria directly influences how reputation is defined and shaped. This entry discusses the development of reputational criteria and the challenges to their development.

Developing Reputational Criteria

To develop appropriate criteria, a number of factors need to be taken into consideration, including the unit of measurement (individual or group level), the time (reputation as a past, current, or future construct), the theme to be measured (e.g., most admired, greenest), the type of the industry, the dimensions and types of the attributes (cognitive, affective, or evaluative), and the stakeholder group(s) it serves, among others. For instance, criteria can be set up to reflect the opinions of multiple types of stakeholders, including the consumers, the public, the media, journalists, industrial analysts, critics, academic researchers, practitioner researchers, and even activist groups (e.g., Greenpeace) or the organizations and industries themselves who, it has been found, can actively shape the construction of their own reputation.

The news media help grant legitimation of corporate reputation and certain organizational behaviors and have been an important external source for setting up reputational criteria. Media organizations such as Businessweek, Financial Times, and Fortune have created some of the most widely known ranking systems to rate organizations. For instance, Fortune’s initial list of America’s “Most Admired Companies” in 1984 and Businessweek’s initial rankings of U.S. business schools in 1988 started the trend of public rankings of organizations by media outlets. Other such public rankings include Fortune’s ranking of the best places to work, Financial Times’ best business schools, and so on. These media’s rankings of corporations have received wide criticism as well as defense. Many think that these media organizations do not reveal the criteria of what is really being measured, and there is little consensus about the criteria among different such measurements. In addition, the sampling frame used often focuses on a designated group such as the executives and the journalists.

Academics and research institutes are another source for creating criteria. The most famous one is Reputation Quotient, a comprehensive scale made up of 20 items divided into six areas ([1] emotional appeal, [2] products and services, [3] financial performance, [4] vision and leadership, [5] workplace environment, and [6] social and environmental responsibility) to measure a corporation’s comprehensive ability to provide high-value output. The Reputation Institute has since created the RepTrak to conduct an annual Global RepTrak Pulse reputation study in 25 industries across 40 countries. Academics have also focused on customer’s view to develop criteria. For instance, in 2007, Gianfranco Walsh and Sharon Beatty created a customer-based reputation scale based on five dimensions ([1] customer orientation, [2] good employer, [3] reliable and financially strong company, [4] product and service quality, and [5] social and environmental responsibility) to measure reputation as a customer-oriented evaluation.

Challenges With Developing Reputational Criteria

Those designing, developing, and defining the construct and attributes of reputational criteria are faced with several challenges and issues, some of which are methodological.

• There are many variables that need to be considered when developing criteria, and it is difficult to exhaust all of them in developing one standard, which makes no one criteria perfectly complete.
• The elusive nature of corporate reputation makes it difficult to define the construct used to measure the reputation and operationalize it in the research. For instance, when designing a construct and attributes to measure the “most respected companies,” how can one do so objectively with strict construct validity to reflect the true meaning of “most respected”?
• It is hard to obtain very objective criteria to judge the reputational quality of a corporation. Reputational criteria can be rather subjectively developed to reflect a certain rater group’s standard about what counts as quality reputation. Mark Thomas Kennedy, Jay Inghwee Chok, and Jingfang Liu show how companies’ press releases win over journalists in shaping new criteria of what green business means. It is thus hard to reach commonly agreed-on criteria.
• Environment, time, location, and other factors can influence the applicability of reputational criteria. In the increasingly complex operational environment nowadays, many new requirements are put on corporations including fulfilling more social and environmental responsibilities. Reputation can also be time sensitive, as the criteria for what made a reputable corporation 20 years ago can be quite different from the standard now. Thus, how to develop criteria to examine corporate reputation in a more complex environment and across different industries, geographical locations, and time dimensions can be challenging.

Despite the challenges, it is crucial to develop appropriate and reliable criteria for measuring corporate reputation. Perhaps one needs to use two or three criteria to get a more triangulated and objective result of the reputational quality. Regardless, reputational criteria play a key role in setting up the standard against which corporations are judged, in guiding the public’s understanding about corporation performance, and in incentivizing corporations to manage their reputation and the overall quality of the organizations toward a higher standard.