Reputational Stickiness

Reputational stickiness refers to that which makes reputations difficult to alter or erase. Organizations are embedded in specific industries, and these industries have broadly held reputations that may not accurately reflect the reputation of an individual firm in that industry. In the oil industry, for example, highly visible events (Shell’s decision in the early 1990s to sink the Brent Spar oil platform, which it later reversed, and the 2010 oil spill from the Deepwater Horizon drilling rig in the Gulf of Mexico, which was leased by BP) have tarnished the reputation of all oil firms. The financial meltdown worldwide in 2008 has also deepened the negative reputation of firms in the financial industry. As such, changing the reputation of individual firms in such industries can be increasingly problematic. This entry deals with critical elements that make a reputation stick and how to deal with sticky reputations.

Critical Elements That Make a Reputation “Sticky”

Reputation endowments are essentially the past actions and the historical basis of a current reputation and are the starting point for any organization’s reputation. If an organization has a history of negative events, the reputation is resistant to change (i.e., it is stickier). Activities, logos, and other visible and tangible contributions over time that affect reputation serve to anchor that reputation and contribute to its stickiness. Where stakeholders of the organization have relationships with one another and with the focal firm, reputational stickiness is further embedded and more difficult to change.

In addition to these historical impacts on reputation, the actual content of the reputation can further increase stickiness. Emotional attachments, symbols, and the like can influence the identification of the firm with a particular reputation among stakeholders and make changing the reputation more challenging. Curiously, the simpler the reputation, the more difficult it is to change. For example, when many think of Exxon, the Exxon Valdez oil spill in Alaska comes to the fore very quickly and Exxon finds that its reputation as a “polluter” sticks. BP currently suffers from lingering negative reputational effects of the Gulf spill.

The greater the link of a corporate reputation to strongly held positive or negative social impact, the stickier the reputation. Videos released in 2015 regarding Planned Parenthood’s use of fetal tissue are an example of this type of reputational stickiness. The stronger the “embeddedness” of the reputation, the harder it is to change. The Planned Parenthood example is clearly related to external parties’ historical view of the organization and its link to deeply held societal impacts and values over time.

Familiarity with the organization’s reputation also serves to anchor a reputation. Several years ago, Coca-Cola attempted to change its formula, but the taste of Coke had very deep familiarity with customers, and many started hoarding the “old” Coke, and the firm was compelled to reissue the old product.

Both the Planned Parenthood and the Coke examples illustrate the challenge of changing a reputation when different external actors view the reputation itself differentially. Where the external actors themselves are different from one another, numerous, and dispersed, the challenge of getting a new reputation to replace the old one becomes steeper. As an example, consider Merck’s Vioxx drug—the firm recalled the product under increased pressure and evidence that there were significant negative side effects from using the drug, yet there was a large segment of product users who did not want the drug withdrawn as they had positive drug interactions. As such, the reputation of Merck was clearly bifurcated between those who loved the drug and those who saw severe problems with its use. Finally, reputations that have credibility, either positive or negative, especially over time, are difficult to change.

Dealing With Sticky Reputations

What actions, then, can a firm with a negative or less than optimal reputation undertake to change this reputation? All of these actions are attempts to move the reputation away from the organization in some manner. One broad approach is dumping or concealing—that is, to shed or discard those aspects of the firm that serve as the basis for the reputation. Many argue that Philip Morris changing its corporate name to Altria is such an example. Now, all of the Phillip Morris corporate entities (e.g., Kraft Foods) do not have to note that they are a division of Phillip Morris, but rather, they can say that they are a division of Altria. Another approach is an attempt to transform or redefine the overall image of the firm—so banking firms become financial service firms, oil firms become energy firms, and the like.

The point is that firms with reputations that are negative and sticky pursue alternatives to move, conceal, or transfer the reputation (and there are numerous approaches not addressed here that can achieve this result—including sale of elements of the organization that have negative reputations, symbolic actions to cause separation of the negative reputation from the organization). These approaches clearly have different degrees of success.

Reputational stickiness is and should be of importance to all organizations as well as to external actors engaged with those organizations. Not all reputations are positive, and managing negative reputations is becoming increasingly important for continued organizational success.