Creating Corporate Reputations: Identity, Image and Performance

Grahame Dowling is Professor of Marketing at the Australian Graduate School of Management and also sits on the editorial boards for the journals Corporate Reputation Review and the Journal of Business‐to‐Business Marketing. In Creating Corporate Reputations: Identity, Image, and Performance, he attempts to demonstrate that a good corporate reputation can lead to a firm achieving higher profits than competitors in the same industry. A good reputation is claimed to provide “a potent set of strategic benefits”, enabling the firm to inhibit the mobility of rival firms, act as a barrier to entry into markets, issue signals to consumers about the quality of the firm's products and possibly enabling the firm to charge higher prices, attract better job applicants, enhance access to capital markets, and attract investors. These strategic benefits are not easily come by, and Dowling's book examines not only how a good reputation may be built up, but also the common traps that unenlightened companies fall into when addressing identity and reputation issues.

Two main points underlie the author's approach to the creation and management of corporate reputation. First, the need to acknowledge that for every firm, image and reputation need to be seen in the plural, not the singular, as every stakeholder group will hold its own image and reputation of the company. Second, how it is insufficient to rely on some frequently used strategies such as advertising, name changes, and corporate signage in order to create a good corporate reputation: “in essence, reputation reflects a firm's culture and performance much more than its packaging”. In place of the more superficial corporate actions such as name changes and visual identity overhauls, Dowling proposes two strategies for achieving corporate super‐brand status: either to have excellent operational performance, or to link the values in the corporate mission to the values of employees and target customers. It is, he suggests, futile for companies to proclaim their virtues and aspirations, when what they should be doing is changing some of the fundamental aspects of their behaviour.

Other ways are shown, in which firms commonly mismanage their corporate reputations: appeasing one group of stakeholders at the expense of the reputations held by other groups (to which problem there is no easy solution, as the author rightly points out), failing to assign a particular person or programme to oversee the firm's reputation, and the lack of a conceptual framework for measuring what various groups think of the company. Dowling thoroughly explores these issues and his lucid writing style is an excellent example of academic rigour applied to a real life business context.

Among several excellent chapters, one is devoted to measuring images and reputations held by different stakeholder groups. Straightaway, the author puts into perspective the usefulness of standard reputation rankings such as Fortune's “Most admired corporations”. Such rankings are, he claims, little more than “beauty contests” and inadequate as a basis on which to manage reputations because they give very little diagnostic information to a manager, they commonly do not discriminate among the images of different stakeholder groups, and they fail to distinguish between a measure of corporate image and corporate reputation. In place of these standard and widely diffused off‐the‐shelf rankings, a more robust measurement process is advanced by the author, combining qualitative research (“understanding images and reputations”) and quantitative research (“describing images and reputations”) and summarised in a figure illustrating the necessary steps to take in measuring corporate images and reputations. A brief case study is given of such a measurement process in action, based on a real example but with the name of the company disguised “to protect the innocent and the guilty”.

A crucial stakeholder group, and one which is often not adequately understood by company executives, is that of market analysts and institutional shareholders. Dowling notes that financial markets theory suggests that the value of a company is driven by a combination of realized value and market expectations, and that CEOs often feel that the public perceptions of both these factors are driven by a small group of market analysts and institutional shareholders. CEOs should therefore familiarise themselves to some degree with the various theories of corporate valuation used by market analysts when forming their image and valuation of a company. Companies need to go beyond their usual relationship with financial analysts: “Often, the primary vehicle for managing analysts’ expectations is a series of private briefings, and that for shareholders is an annual report that contains a great deal of sterile accounting information, glossy pictures, and glib statements rationalizing past poor performance and making rosy forecasts.” The solution proposed is for firms to provide more information and analysis for analysts and shareholders, with the Internet a useful vehicle for doing so.

Another chapter that will be of much practical use to consultants or managers involved in the management of reputation and identity focuses on vision and mission, which are what Dowling terms the internal foundations of a good corporate reputation. He uses the following four criteria when reviewing vision and mission statements:

1. 1.

   Do they motivate and focus all employees on a guiding philosophy or set of corporate values?

2. 2.

   Do they define the boundaries of the business, in terms of the enabling technology, business processes, and markets?

3. 3.

   Do they provide an overall unifying theme for the key stakeholder groups?

4. 4.

   Do they help differentiate the organization from its competitors?

Having expertly delineated the contours of the corporate reputation landscape, Dowling concludes his book with a review of the 12 most common traps that are fallen into by the unwary when grappling with the creation and management of reputation and identity. These pitfalls include making mistakes such as treating employees as second class citizens; approaching image and reputation in the singular instead of in the plural; companies being at war with themselves and plagued with internal divisions; assuming that a change in corporate visual identity will automatically lead to an improvement in corporate image or reputation; and failing to develop customised measures of corporate image or reputation used on a regular basis across different stakeholder groups. Creating Corporate Reputations: Identity, Image, and Performance is essential reading both for academics and practitioners, particularly in light of the increasingly critical and militant public gaze now being directed at the companies behind brands.