Euro College
                                             Faculty of Business Economy and
University Studies in Kumanovo
 ...
MEASURING MEDIA IMPACT ON REPUTATION: THE CASE OF
TELECOMMUNICATION COMPANIES IN MACEDONIA
By Branka Bugariska



Abstract...
Therefore my goal with this research is to find out whether – and how—the existing
reputation measurement methods could be...
Contents 
I. Introduction ...................................................................................................
VI. Conclusion ..............................................................................................................
MEASURING MEDIA IMPACT ON REPUTATION:
        THE CASE OF TELECOMMUNICATION COMPANIES IN
                         MACEDONI...
With regular measurements of reputation an organization could accurately identify weak,
strong and critical elements of re...
Griffin (2002), Dunn (2006), Dalton and Croft (2003), and so on. They have all contributed
to defining corporate reputatio...
professionals, and second, the need of adjustment and standardization of methodology which
to be applied to smaller market...
As overall result, this research will present an applicable tailor-made model for measuring
media impact on corporate repu...
II. Definitions and key concepts


Reputation can generally be described as ‘1: overall quality or character as seen or ju...
The free-content internet encyclopedia, Wikipedia, offers the following definition:
Reputation is the opinion (more techni...
long-term success; and 2) trust is both a process and an outcome; it’s at the heart of dealing
with every relationship. Za...
increase their reputation resilience and diminish their reputation risk, providing themselves
with a “halo effect” that ca...
organization’s perspective (as an intangible asset), it is closer to what he actually describes as
corporate image further...
focuses on the prominence dimension which captures the degree to which a company
receives large-scale collective recogniti...
II.1.4. Reputation as a state of awareness, assessment and asset


In his white paper on reputation management, Dr. Nicos ...
based on stakeholders’ assessments of the financial, social and environmental impacts
attributed to a company over time.

...
Figure 3: Reputation Molecule (Macnamara, 2006).



“Not only is every type of molecule different, but molecules are const...
This chain places reputation within a framework that seeks to understand the origins or
antecedents of reputation, in othe...
of a firm. This is in line with the large amount of literature that identifies corporate reputation
as a key intangible as...
create value for a business. Understanding how reputation is developed at a perceptual level
is important because it can f...
Figure 9: Placing existing Reputation Models within the integrated framework (Money and Carola, 2005)



A framework that ...
II.1.7. Overview of approaches and definitions


To summarize, here is an overview of the definitions exhibited and discus...
something of value and significance to a     (stakeholders have an awareness of
                              firm)       ...
industry; they represent organization’s internal (employees, members) and external public
(customers, shareholders, opinio...
Figure 11: Two aspects that help explain the difference between corporate image and corporate reputation
                 ...
“The terms image, reputation, good name and prestige are very similar in their definitions and
barely distinguishable in m...
However, the more traditional concept of brand is connected closely with product marketing.
Some of the key characteristic...
financial performance, vision and leadership, working environment, social responsibility,
emotional appeal, sector specifi...
As a part of the presentation given at the Reputation Conference, Schreiber (2008b) presented
his view to the connection b...
and Croft (2003: 11). They discuss that corporate identity should include at its core the
visual expression of a corporati...
Once corporate identity and image are established and communicated, a positive or negative
corporate reputation results. I...
Figure 14: Identity, reputation and stakeholder management (Cornelissen, 2004)



Recent research firmly suggests that org...
Figure 15: The Corporate Reputation Chain (Davies et al. 2003)



“Two of the more important questions in the management o...
Although he claims that “the two definitions of both brand and reputation can be seen as two
aspects of the same thing”, i...
stakeholders at this stage form an organization’s full reputation. Given that it is rooted in the
substance of an organiza...
•     Fair treatment by the media; and
     •     Most importantly, all stakeholders allowing organizations more latitude ...
Although CEOs did not identify one monumental threat to reputation, they suggested that
there are many of equal concern. T...
Figure 19: Fombrun’s six key reputational drivers. Photo by TrendsSpoting:
                        http://www.flickr.com/p...
Figure 20: The RepTrak™ model tracks 23 key performance indicators (attributes) grouped around 7 core
                    ...
than print media, and the Internet, legislators, and labor unions were viewed as having
negligible impact.




Figure 21: ...
which is not necessarily same as that presented by the corporate sources. Word of mouth
about a company is often spread am...
II.4. Drawing the lines


Before I move on to the reputation measurement methodologies, I will shortly conclude by
summari...
First, for the purposes of this research paper, I will once again emphasize that under the term
“reputation” I mean “corpo...
Figure 23: Drawing the lines between image, brand, reputation and identity



Regarding the factors that influence reputat...
III. Overview of existing measurement methodologies

Exploring and analyzing the influence that media has on corporate rep...
The Reputation Institute uses a measure called RepTrak™, which has been developed
through factor analysis with respondents...
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
Measuring Media Impact on Corporate Reputation (master thesis)
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Measuring Media Impact on Corporate Reputation: The Case of Telecommunication Companies in Macedonia (master thesis)

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  • Bravo! Ms. Bugariska, on a job well done. This was indeed a fine piece of work on Corporate Reputation. I'm currently doing my dissertation and have chosen Corporate Reputation as a topic. If you don't mind, may I quote your work in my thesis - I shall certainly accredit you accordingly. Congratulations, -Aisha
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  • hi can u share your thesis at spurgeonsugumar@yahoo.com. I am researching on the impact of corporate communications on company's image building activities........your thesis will help.......I promise appropriate referencing
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  • Wow! this is looking good so far! Still reading. Gonna be helpful for my own dissertation. Good work!
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  • thanks much
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  • Branka Bugariska, this is a brilliant job. Congratulations. My MSC project at the University of Lagos Nigeria is Reputation Management in Politics; A case study of two state governors in Nigeria. I ll surely find your thesis useful and will be glad if you can send it to me on tobilobami@yahoo.com. I promise appropriate referencing. Thanks
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  1. 1. Euro College Faculty of Business Economy and University Studies in Kumanovo Administration MEASURING MEDIA IMPACT ON REPUTATION: THE CASE OF TELECOMMUNICATION COMPANIES IN MACEDONIA Candidate: Mentor: Branka Bugariska Prof. Aleksandar Dimitriev, Ph.D. June 2010 1
  2. 2. MEASURING MEDIA IMPACT ON REPUTATION: THE CASE OF TELECOMMUNICATION COMPANIES IN MACEDONIA By Branka Bugariska Abstract Nowadays more and more companies are aware that reputation is their greatest asset. High level of reputation increases company’s profitability by attracting customers or clients to purchase its products or services, investors to invest into its stocks and the best workers to employ themselves in the company. With regular measurements of reputation an organization accurately identifies weak, strong and critical elements of reputation, which is crucial for building successful programs of reputation management. And at the same time regular measurements render ongoing verification of successfulness possible. Measuring corporate reputations accurately is crucial if they are to be managed. Yet measures of reputation proliferate, encouraging chaos and confusion about a company’s reputational assets. Some are arbitrarily performed by private panels and so are not replicable. Some are carried out with private information and so are unverifiable. The result has been a veritable cacophony of ratings, few of which are directly comparable. To overcome the inherent biases of different rating systems, in 1998 the Reputation Institute and the market research firm of Harris Interactive collaborated to create a standardized instrument that could be used to measure perceptions of companies across industries and with multiple stakeholder segments. They differentiated 20 attributes (under 6 dimensions) according to which a corporate reputation should be measured. Today, these attributes are a basis for the most popular reputation measurement methods in world’s markets. Several factor shape people’s perception about corporate reputation and one of the most important factors of all is the mainstream media and the media reality they present to the public. Measuring the impact the mainstream media have on public perception about company’s reputation is a challenge. 2
  3. 3. Therefore my goal with this research is to find out whether – and how—the existing reputation measurement methods could be applied on the companies in Macedonia and to make the adjustments of the method that will work. In other words, to find the most adequate way to measure the media impact on corporate reputation of the Macedonian business. For that purpose, I will first make a small survey to examine the experience in application of reputation measurement in Macedonia. Then I will analyze the existing measurement methods, with their advantages and disadvantages in context of application to small markets, and make the adjustments needed. I will then apply the adjusted measurement methods to Macedonian business, measuring the reputation of telecommunication companies in Macedonia. The objective is to examine what image (picture) for telecommunication companies’ reputation the Macedonian media are presenting to the public. To do that, I must first find the right model for analysis, taking into consideration the standardized key reputational drivers as defined by Charles Fombrun and the Reputational Institute. For the purposes of this research, I call the tailor‐made model MICRa (Media Impact on Corporate Reputation analysis). As a result, this research should present the corporate reputation of Macedonian telecommunication companies as a media reality, and to give further recommendations for application of media and reputation measurement models, as well as directions for further research and development. Key words: reputation, image, brand, PR, evaluation, measurement, methodology, analysis, media, monitoring, clipping. 3
  4. 4. Contents  I. Introduction ............................................................................................................................ 6  II. Definitions and key concepts .............................................................................................. 11  II.1. Defining Reputation ..................................................................................................... 11  II.1.1. Reputation from organization’s and stakeholder’s perspective ............................ 13  II.1.2. Reputation for individuals vs. Reputation for businesses ..................................... 15  II.1.3. Institutional vs. Socio-economic perspective ........................................................ 15  II.1.4. Reputation as a state of awareness, assessment and asset ..................................... 17  II.1.5. Reputation as a molecule....................................................................................... 18  II.1.6. Reputation in a strategic and personal/perceptual context .................................... 19  II.1.7. Overview of approaches and definitions ............................................................... 24  II.2. Reputation, Image, Identity and Brand ........................................................................ 26  II.3. What Influences Corporate Reputation? ...................................................................... 37  II.3.1. Reputation drivers (internal forces)....................................................................... 37  II.3.2. Factors influencing the perception of reputation (external forces) ....................... 41  II.4. Drawing the lines ......................................................................................................... 44  III. Overview of existing measurement methodologies ........................................................... 47  III.1. Methods of measuring corporate reputation ............................................................... 47  III.2. Media measurement and PR evaluation methods ....................................................... 51  III.2.1. Measuring PR outputs, PR outtakes and PR outcomes........................................ 52  III.2.2. Measuring media content ..................................................................................... 53  IV. The practice of Corporate Reputation measurement in Macedonia .................................. 57  V. Measuring Media Impact on reputation: The case of telecommunication companies in Macedonia (MICRa model) ..................................................................................................... 64  V.1. Overview of telecommunication market in Macedonia ............................................... 66  V.2. MICRa analysis of telecommunication companies in Macedonia ............................... 69  V.2.1. Measuring visibility .............................................................................................. 71  V.2.2. Measuring tonality ................................................................................................ 73  V.2.3. Media content analysis .......................................................................................... 77  V.2.4. Measuring media exposure ................................................................................... 84  V.2.5. Relative performance ............................................................................................ 94  V.2.6. Reputation media portraits .................................................................................... 97  4
  5. 5. VI. Conclusion ....................................................................................................................... 116  VII. Reference List................................................................................................................. 120  VIII. ANNEXES .................................................................................................................... 130  VIII.1. Overview of reputation definitions ........................................................................ 131  VIII.2. Overview of reputation measurement methodologies ........................................... 133  VIII.3. Measuring corporate reputation in Macedonia – Survey results............................ 136  VIII.4. MICRa: Measuring media impact on corporate reputation of telecommunication companies in Macedonia.................................................................................................... 145  VIII.5. Reputation media portraits ..................................................................................... 170  5
  6. 6. MEASURING MEDIA IMPACT ON REPUTATION: THE CASE OF TELECOMMUNICATION COMPANIES IN MACEDONIA I. Introduction Nowadays more and more companies are aware that a good reputation, particularly in an increasingly competitive world, is a must for all companies and organizations. High level of reputation increases company’s profitability by attracting customers or clients to purchase its products or services, investors to invest into its stocks and the best workers to employ themselves in the company. There is considerable evidence to suggest that a company’ reputation is extremely important intangible asset and should always be taken seriously, because losing a reputation often means losing a lot more besides (Rossides, 2008). A good reputation is essential in crisis situations and can help to reduce the impact of negative events and press. In addition, if those vital to the success of one organization perceive it as trustworthy then it will be taken more seriously and seen as more credible to all audiences. There are many reasons why an organization would measure its reputation. Essentially, measuring corporate reputations accurately is crucial if they are to be managed and it is important to understand how the company or organization is perceived so they can ensure success across all areas of the business. At a minimum, it is essential for CEOs to understand their company’s reputational strength among employees, customers, the media, and the financial community. These stakeholders are intersecting forces in the formation of a corporation’s reputation. 6
  7. 7. With regular measurements of reputation an organization could accurately identify weak, strong and critical elements of reputation, which is crucial for building successful programs of reputation management. And at the same time regular measurements provide ongoing verification of successfulness possible. Measuring reputation can show how effectively a company is communicating with the media, stakeholders and employees, among others. This information can then be incorporated into future planning to help improve the effectiveness of PR, and subsequently, reputation. Most organizations probably have a gut feeling for whether their reputation is good or poor, but this is not necessarily reliable or accurate. Yet measures of reputation proliferate, encouraging chaos and confusion about a company’s reputational assets. Some are randomly performed by private panels and so are not replicable. Some are carried out with private information and so are unverifiable. The result has been a veritable cacophony of ratings, few of which are directly comparable. To overcome the inherent biases of different rating systems, in 1998 the Reputation Institute and the market research firm of Harris Interactive collaborated to create a standardized instrument that could be used to measure perceptions of companies across industries and with multiple stakeholder segments. They differentiated 20 attributes (under 6 dimensions) according to which a corporate reputation should be measured. Today, these attributes are a basis for the most popular reputation measurement methods in world’s markets. Literature overview As one of the valuable corporate intangible assets, corporate reputation has received a great attention from both academics and business community. However, they are focused rather on the reputation management than on measurement and evaluation methodology. That does not mean that steps are not taken in practice (in the business world mainly), but only speaks about the lack on academic research on reputation measurement. A substantial contribution in the area of reputation and brand management was provided by Schreiber (2006, 2008a, 2008b), as well as by Macnamara (2006), Marconi (2001), Garry 7
  8. 8. Griffin (2002), Dunn (2006), Dalton and Croft (2003), and so on. They have all contributed to defining corporate reputation and development of communication and marketing strategies towards building and maintaining better corporate reputation to help companies and organizations. In this regard, several other names are worth mentioning, such as Davies (2003), Doorley and Garcia (2007), Gaines-Ross (2008), Andrew Griffin (2008), Rossides (2008), Taylor (2001)... Neef (2003) and Rayner (2003) on the other hand focused their researches specifically on managing reputational risks, and Brady (2005) and Solove (2007) re-think the future of corporate reputation. Studies with theoretical approach to the problem of reputation measurement (especially in terms of methodology) are an exemption. I would single out Charles Fombrun, a professor at NY University and Executive Director of the Reputation Institute, who is one of the rare ones who has contributed most to the development and standardization of reputation measurement methods, both in theoretical and practical context (Fombrun 2002, 2005). Attempts to put existing research models in a theoretical framework are made by Money and Hillenbrand (2005) and Cravens, Oliver and Ramamoorti (2003). Figini, Giudici and Gomez (2009) from the Italian Institute of Statistics have also contributed with a paper to propose a methodological approach to measure reputation risk at financial institutions. Measuring reputation, related to reputation management, is only briefly elaborated by Hannington (2004), Haywood (2005), and so on. My preliminary work on the topic is also more professionally practical than academic, although theoretical approach was always employed, in order to propose and apply the best research model according to client’s needs. Nevertheless, my experience in this context consists of many different research models applied on brands and companies, related to measurement of brands, image, reputation, consumers’ perceptions, or effects of company’s PR and media relations efforts. Methodology The Macedonian business however knows little to none about reputation management and reputation measurement. The gaps in research and practice in Macedonia, related to reputation measurement exist on two levels: first, the lack of knowledge at the domestic 8
  9. 9. professionals, and second, the need of adjustment and standardization of methodology which to be applied to smaller markets as for instance Macedonian business, or even smaller (industry-only). Therefore the research question in this context would be how the existing reputation measurement methods could be successfully applied to measure the media impact on corporate reputation of companies from one market segment and bring useful and applicable results? In other words, my goal with this research is to find the most adequate way to measure the media impact on corporate reputation of the Macedonian business. For that purpose, I will first make a small survey to examine the experience in application of reputation measurement in Macedonia. Then I will analyze the existing measurement methods, with their advantages and disadvantages in context of application to small markets, and make the adjustments needed. I will then apply the adjusted measurement methods to Macedonian business, measuring the reputation of telecommunication companies in Macedonia. The objective is to examine what image (picture) for telecommunication companies’ reputation the Macedonian media are presenting to the public. To do that, I must first find the right model for analysis, taking into consideration the standardized key reputational drivers as defined by Charles Fombrun and the Reputational Institute. For the purposes of this research, I call the tailor‐made model MICRa (Media Impact on Corporate Reputation analysis). The analysis will be made upon data base of media clippings from 2008 that cover telecommunication issues, including 11 daily newspapers, 18 magazines, 12 TV channels, 2 radio stations and 30 web sites and news portals. A top 5 ranking of telecoms, according to their overall reputation values presented as media reality, will be provided as an output of this research.1 1 Although it is pretty clear that unethical corporate steps taken by companies affect negatively on the reputation, the ethical aspects are not in the focus of this research, due to the fact that the market is not regulated in terms of code of ethics. As a developing market, in Macedonian business there are still no accepted standards and no solid legal regulations, so upholding high ethical practices is left to the consciousness of individual companies. Corporate code of conduct is driven rather by daily targets of winning customers, increasing markets share or making profits, than by preserving ethical values. 9
  10. 10. As overall result, this research will present an applicable tailor-made model for measuring media impact on corporate reputation on the local market and specifically telecommunication industry in Macedonia. In addition, the research will also provide recommendations for further research and development of reputation measurement methods. 10
  11. 11. II. Definitions and key concepts Reputation can generally be described as ‘1: overall quality or character as seen or judged by others; 2: fame, celebrity; 3: recognition by other people of some characteristic or ability’.2 This seems fairly clear, right? Well, if only it was that simple… When it comes to corporate reputation, it apparently gets more complicated. Plenty of definitions exist for ‘corporate reputation’. Corporate reputation has been the focus of much academic and professional/business research lately. In recent years, there has been increasing evidence of the value of the concept to both practitioners and scholars alike. As a result, more effort has been placed into putting reputation in theoretical frameworks, drawing out definitions of the key reputation concepts, and at the same time using those frameworks in purpose of reputation measurement, which helped more and more models of reputation measurement to emerge. I will make an overview of and discuss the key concepts and definitions in the following pages, suggesting a synthesized concept, based on which the main research of this paper will be done. II.1. Defining Reputation The term “reputation” is pretty abstract and all-embracing. It is not easy to define since the perception of what is and what is not reputable is different for different individual. According to the Oxford English Dictionary,3 reputation is defined as the beliefs or opinions that are generally held about someone or something. In the glossary of the Princeton University, reputation is defined as the state of being held in high esteem and honor, notoriety for some particular characteristic, or the general estimation that the public has for a person.4 2 As in, for instance, The Penguin English Dictionary (via: Griffin, 2008; p. 11) 3 Compact Oxford Englush Dictionary: http://www.askoxford.com/concise_oed/orexxputation?view=uk 4 Glossary of Princeton University, Princeton, NJ, USA: http://www.princeton.edu, wordnetweb.princeton.edu/perl/webwn) 11
  12. 12. The free-content internet encyclopedia, Wikipedia, offers the following definition: Reputation is the opinion (more technically, a social evaluation) of the public toward a person, a group of people, or an organization. It is an important in many fields, such as education, business, online communities or social status.5 A variety of definitions of reputation have been also offered from a number of different academic and professional backgrounds. Elliot S. Schreiber (2008a) organized the variety of those definitions in a table, suggesting that they intersect and give an integrated view of reputation: a) Reputation is an intangible asset: As an intangible, reputation represents a firm’s past actions and describes a firm’s ability to deliver value outcomes to multiple stakeholders (Mahon, 2002; Fombrun, 1996); b) Reputation is a derivative of other actions and behaviors of the firm: It is difficult to isolate one variable that influences perceptions to a greater degree than others across all stakeholders (Schultz, et. al, 2006). Reputation is the collective representations shared in the minds of multiple publics about an organization over time (Yang and Grunig, 2005), and is developed through a complex interchange between an organization and its stakeholders (Rindova and Fombrun, 1999). c) Reputation is judged within the context of competitive offerings: (Fombrun, et. al, 1990; Shapiro, 1983; Schultz, et. al, 2006). Reputation is not normative for all companies. This differentiation is not necessarily the same for all attributes of the firm and for all stakeholders. d) Reputation is the way in which stakeholders, who know little about an organization’s true intent, determine whether an organization is worthy of their trust (Stigler, 1962). Madhok (1995) noted that trust is essential in a world in which business operates through cooperation and relationships). Golin (2003) coined the term “trust bank” and notes that: 1) trust is the most basic element of social contact—the great intangible at the heart of truly 5 Wikipedia, Free-content Internent Encyclopedia: en.wikipedia.org/wiki/Reputation 12
  13. 13. long-term success; and 2) trust is both a process and an outcome; it’s at the heart of dealing with every relationship. Zaballa et. al of Deloitte Spain (2005), noted that “corporate reputation of an enterprise is the prestige maintained through time which, based on a set of shared values and strategies and through the eminence achieved with each stakeholder, assures the sustainability and differentiation of the company via the management of its intellectual capital (intangibles)” (p. 61). e) Reputation is based on the organization’s behaviors, communications and relationships: Doorley and Garcia (2007) provide a formula as a definition, which they state as “sum of images= (performance and behavior) + Communication = sum of relationships” All of these definitions give opportunity to see reputation from different points of view. In the following pages I will exhibit several different approaches in defining reputation. II.1.1. Reputation from organization’s and stakeholder’s perspective Schreiber (2008a) brought these various definitions together, and suggested that there are two definitions of reputation, one from the perspective of the company and the other from the perspective of stakeholders. It is important, he believes, that organizations keep these two perspectives in mind: From the perspective of the organization, reputation is an intangible asset that allows the company to better manage the expectations and needs of its various stakeholders, creating differentiation and barriers vis-à-vis its competitors. From the perspective of stakeholders, reputation is the intellectual, emotional and behavioral response as to whether or not the communications and actions of an organization resonate with their needs and interests. To the extent that stakeholders believe that the organization meets their needs better than can competitors, they will behave toward the organization in desirable ways, e.g., invest, join, support, etc. As companies meet the needs and interests of stakeholders over time, they 13
  14. 14. increase their reputation resilience and diminish their reputation risk, providing themselves with a “halo effect” that can serve them well in times of trouble. He also proposes the following conceptual model of reputation, as shown in Figure 1: Figure 1: Conceptual Model of Reputation, by Elliot S. Schreiber 2004© Where: Company Attributes = Organization’s value proposition (attributes) to stakeholders Stakeholder Values = The importance of the company’s attributes to stakeholders Experience = How stakeholders perceive they have been treated by the organization and whether its Promise is valid In number of the strategic management studies reputation is viewed as a key source of distinctiveness that differentiates the company from its rivals, and a valuable and a fragile asset at the same time that provides firm with a sustainable competitive advantage (Balboni 2008; Fombrun, 1996). It enables consumers, but also investors, suppliers, and employers to assess relevant company attribute. This framework has limited the researches of corporate reputation only to a specific business-to-consumer perspective, while reputation influences decision makers’ choice of inter-organizational partners (Balboni, 2008). On the other hand, Dennis Wilcox, professor emeritus of public relations and past director of the School of Journalism & Mass Communications at San Jose State University, sees reputation from the stakeholders’ point of view. He says that (corporate) reputation is the collective perceptions of an organization's various stakeholders (Wilcox, 2009).6 “It represents the collective perceptions and opinions of individuals who have some relationship with the organization as customers, suppliers, employees, members of a community where the organization has a store or plant, government regulators, investors, financial analysts, journalists who cover the organization, etc.”, he explains. Regarding the reputation from 6 Dennis L. Wilcox, interview on corporate reputation given for the PR blog “Воглавно Јавно” (2009): http://bugariska.crnaovca.mk/2009/11/intervju-wilcox/. English version of the interview: http://my- ventilator.blogspot.com/2009/11/dennis-wilcox-5-q-on-corporate.html 14
  15. 15. organization’s perspective (as an intangible asset), it is closer to what he actually describes as corporate image further in his interview. II.1.2. Reputation for individuals vs. Reputation for businesses Barry Hurd, President of 123SocialMedia,7 a Seattle consultancy specializing in online reputation and media management, brings out the following approach: For individuals: a reputation is created by an inspired professional, detailing an ability to execute strategic business decisions, display a talent for a niche, and noting critical situations that were expertly handled. For businesses: a reputation is perceived by the parts of all the individuals that create it, the attitude of the team from top to bottom, the ability to manage financial changes, market shifts, product issues, workforce evolutions, corporate responsibility, social culture, and the ethics of the leadership. In both cases, “real world reputation created over years of established relations can now be devastated with a single keystroke”, adds Hurd.8 II.1.3. Institutional vs. Socio-economic perspective A number of academic studies are devoted to the interpretation and conceptualization of corporate reputation (Balboni, 2008). In this sense, two different mainstreams of thought in academic literature can be identified: institutional and socio-economic perspective. The institutional perspective, partly influenced by stakeholder theory, suggests that the extent to which an organization is widely recognized among counterparts and stakeholders in its organizational fields, and the extent to which it stands out compared to competitors, represents the basic dimension of corporate reputation (Shapiro, 1983). This perspective 7 http://123socialmedia.com/reputation-management-service/ 8 http://www.slideshare.net/BuzzProfile/reputation-value 15
  16. 16. focuses on the prominence dimension which captures the degree to which a company receives large-scale collective recognition (Rindova et al., 2005). Socio-economic perspective focuses on the emergent quality dimension. It captures the degree to which stakeholders evaluate a company on specific attribute. This second stream of studies tends to define corporate reputation as the counterpart’s expectations of a particular attribute of an organization developed over long time. Reputation forms on the basis of past actions; it’s a specific evaluation based on the perceived “stock” of all the expectations fulfilled by company during time. These views are not antithetic but they focus on specific objects of the individual representation’s transmission process. In fact, reputation is a social phenomena associated with any individual impressions; it forms as a result of social and information exchange within an informal network where various actors interact (Balboni, 2008). It consists of four distinct but interrelated objects: 1) a subjective representation of the firm – i.e. corporate image; 2) a network object; 3) an emergent evaluation; 4) institutional appraisals. Figure 2: Corporate reputation's transmission process (Balboni, 2008) While the institutional perspective emphasizes the width of network, the socio-economic perspective focuses on the emergent quality of the corporate image’s propagation process. 16
  17. 17. II.1.4. Reputation as a state of awareness, assessment and asset In his white paper on reputation management, Dr. Nicos Rossides, Group CEO of MASMI Research (2008) discusses that one issue that has hindered the development of research on reputation has been the multiplicity of definitions and lack of consensus amongst academics as to what corporate reputation is. However, recent research has shown that, despite the widely differing meanings attached to the term reputation, there are broad underlying similarities to many of the definitions, which tend to have three distinct clusters of meaning – reputation as a state of awareness, reputation as an assessment, and reputation as an asset (Rossides, 2008). Broadly, awareness comprises definitions indicating that stakeholders have an awareness of a company without judging it; assessment signifies that stakeholders are judging or evaluating a firm; whilst asset denotes that reputation is something of value and significance to a firm. Whilst some overlap between these terms may exist, they are relatively distinct in that awareness does not imply an assessment, which in turn does not imply transformation into an asset. Using these constructs, a tighter and more focused definition of corporate reputation can be constructed, one which untangles the concept from corporate identity and image. Identity, it can be argued, is the underlying “core” or character of a firm, which makes it distinctive from other companies, and which endures whatever the circumstances a company may find itself. Corporate image is then the impressions that observers, whether external or internal, have of a firm when they hear its name or see its logo, with the transition from identity to image shaped by factors such as media coverage, government actions, public relations and marketing. The term corporate reputation, in such instances, is reserved for judgments made by observers about a firm. While such judgments may have their source in perceptions of a company’s identity and image, they often occur as a consequence of a triggering event, which may arise from a firm’s more visible actions and mistakes (e.g. an oil company and a pipeline spill) or external events. As a consequence, it can be argued that corporate reputation then is 17
  18. 18. based on stakeholders’ assessments of the financial, social and environmental impacts attributed to a company over time. II.1.5. Reputation as a molecule In approaching the measurement and management of reputation, as well as identifying its differences from brands, Dr. Jim Macnamara (2006) singles out three key criteria which need to be recognized, including: 1. Reputation is perception. It is what people think, not necessarily a reality. It is what psychologists and researchers term as cognitive. Just because an organization tries to act responsibly it does not mean people will think it is responsible. 2. Not everyone’s perceptions matters. Not everyone’s perceptions have the power to impact a company or organization. Many people have opinions about many companies and organizations. Some matter because an organization’s future depends on them. But there are also individuals and groups which have little impact on an organization. 3. Not everything matters. The weakness of measuring predetermined criteria is that they may not be what key stakeholders judge the organization on. How do we know that vision and leadership or corporate citizenship matter to groups who matter to an organization? Deciding internally what criteria determine reputation is putting the cart before the horse. Drawing all three of these criteria together, Macnamara develops an important formula: Reputation is what the people who matter think about what THEY think matters (Macnamara, 2006: 5). From this standing point, he furthermore suggests a concept he named Reputation Molecule, which helps explain corporate reputation. Similar to the molecule we know from basic chemistry (made up of atoms which, in turn, are made up of protons, neutrons and electrons), Macnamara’s reputation molecule is comprised of multiple elements, such as customer relations and satisfaction; shareholder relations; business partner experiences; analyst views; media opinion; and so on (Figure 3). 18
  19. 19. Figure 3: Reputation Molecule (Macnamara, 2006). “Not only is every type of molecule different, but molecules are constantly dynamic. Elements literally buzz around, interacting with each other and changing the electrical charge and energy of the molecule. One negatively charged element can affect other elements in the molecule”, explains Macnamara (2006: 5). Positive reputation coalesces as a consensus of perception when a company or organization has established a consistently positive set of experiences and interactions with the key groups that matter to its operations. If some key groups have negative experiences and interactions, these will ‘bump into’ other elements in the Reputation Molecule and destabilize them. (Macnamara, 2006: 6) II.1.6. Reputation in a strategic and personal/perceptual context In order to understand the development and value of reputation for a business, Money and Carola (2005) have placed reputation within a theoretical framework, using Walsh and Wiedmann basic theoretical chain (Figure 4). Antecedents Corporate Reputation Consequences Figure 4: Placing Corporate Reputation within a Causal Framework, based on Walsh and Wiedmann, 2004 (Money and Carola, 2005) 19
  20. 20. This chain places reputation within a framework that seeks to understand the origins or antecedents of reputation, in other words what can be done to develop a good reputation, as well as consequences of reputation, that is the value of reputation. “It is only by understanding antecedents and consequences of reputation that a business can actively build intangible assets and create value”, say the authors. They explore this basic framework in a strategic context from the perspective of business and in a perceptual context from the perspective of individuals. Reputation in a strategic context. At a strategic level reputation is often placed as an asset within models that seek to explain the performance of the firm. A good example of such a strategic model is that of Wiedmann and Prauschke (Money and Carola 2005: 3-5). This model is presented below (Figure 5): Figure 5: A strategic model of firm performance, adapted from Wiedmann and Prausche 2005 (Money and Carola, 2005) It is here discussed that the concept of corporate reputation can either be a market asset or a mediator or a moderator between internal intangible assets and market assets. Corporate reputation as a determinant of corporate success would be regarded as a market asset. Figure 6: Integrating strategic variables within the Casual Framework of Reputation (Money and Carola, 2005) Integrating these models at the strategic level (as in Figure 6), antecedents can thus be seen as asset generating activities of the firm, corporate reputation can be conceptualized as an intangible asset and consequences are understood as market assets and improved performance 20
  21. 21. of a firm. This is in line with the large amount of literature that identifies corporate reputation as a key intangible asset. The integrated model presented above is the first step of a process to place corporate reputation within a model of value creation. Reputation in the perceptual context. While reputation is clearly an asset of the firm, it is also clearly a concept held in the minds, or cognitions of stakeholders (Money and Carola, 2005: 5). It should be noted that reputation is often conceptualized as either perceptions, attitudes and/or beliefs of stakeholders. For example Fombrun (1996) suggests the following definition: “A Corporate Reputation is a perceptual representation of a company’s past actions and future prospects that describe the firm’s overall appeal to all of its key constituents when compared with other leading rivals.” (p.72). It is clear that reputation is here both conceptualized as perceptual construct, in terms of perceptions of a company’s past actions, as well as an attitudinal construct, in terms of a firm’s appeal. In addition to this other reputation models include other concepts as such as experience, intentions and behaviors of stakeholders. Money and Carola offer here the theory of Fishbein and Ajzen (1975), which is suggesting how concepts, such as beliefs, attitudes, intentions, and behaviors can be interlinked. This model is also integrated into causal framework of corporate reputation, its antecedents and consequences. In this way antecedents of corporate reputation can be seen as stakeholder experiences and observations, corporate reputation is conceptualized as stakeholder beliefs and attitudes about an organization and the consequences are the intentions and behaviors one has with regard to the organization. Figure 7: An Integration Fishbein and Ajzen’s model and the Causal Framework of Corporate Reputation (Money and Carola, 2005) Integrating approaches and placing reputation into a theoretical framework. It is important to take both approaches into account, say Money and Carola: Understanding how reputation fits into a strategic framework helps to understand how reputation can be used to 21
  22. 22. create value for a business. Understanding how reputation is developed at a perceptual level is important because it can facilitate the development of reputation at grass roots level. It is therefore important to bring both approaches together to understand how the strategic and the perceptual approaches interact and impact each other. Integration would inform business about what can be done to influence the development of positive perceptions and therefore bring benefits back to a business (Money and Carola, 2006: 7-13). Figure 8: Integrating the strategic and perceptual approaches to place Reputation within a causal framework of value creation (Money and Carola, 2005) Figure 8 above provides the way to integrate the strategic and the perceptual approaches to corporate reputation within the causal framework. This focuses on three aspects: corporate reputation, its antecedents and its consequences. The value of the framework is demonstrated by placing aspects of existing reputation models within it (Figure 9). This allows researchers to identify gaps in the scope of issues addressed by current models, to develop strategies about how different models can be linked together and to test the utility of different models, which will in turn allow practitioners to assess the value and appropriateness of different measurement techniques. 22
  23. 23. Figure 9: Placing existing Reputation Models within the integrated framework (Money and Carola, 2005) A framework that places reputation at the heart of value creation has been provided here. Value creation is seen as the development of intangible assets, market assets and ultimately firm performance. The framework integrates a causal model seeking to conceptualize corporate reputation with its antecedents and its consequences with two approaches of looking at corporate reputation, one from a strategic level and the other from a perceptual level. By placing existing models of reputation within this integrated framework a number of practical and academic implications are drawn. 23
  24. 24. II.1.7. Overview of approaches and definitions To summarize, here is an overview of the definitions exhibited and discuses above: Definitions of Reputation: Overview Company as a focal point (company Individual as a focal point activities/strategy, company values, and (perception of the Author of definition images it projects about itself) individual/stakeholder about the company) Stigler, 1962 Reputation is the way in which stakeholders determine whether an organization is worthy of their trust. Fombrun, 1996 Reputation is an intangible asset: As an A Corporate Reputation is a Rindova and Fombrun, 1999 intangible, reputation represents a firm’s perceptual representation of a Mahon, 2002 past actions and describes a firm’s ability company’s past actions and future to deliver value outcomes to multiple prospects that describe the firm’s stakeholders. overall appeal to all of its key constituents when compared with other leading rivals. Zaballa et. al, 2005 Corporate reputation of an enterprise is the prestige maintained through time which, based on a set of shared values and strategies and through the eminence achieved with each stakeholder, assures the sustainability and differentiation of the company via the management of its intellectual capital. Yang and Grunig, 2005 Reputation refers to the collective representations shared in the minds of multiple publics about an organization over time. Money and Carola, 2005 Reputation in a strategic context: asset Reputation in the generating activities of the firm, corporate personal/perceptual context: while reputation can be conceptualized as an reputation is clearly an asset of the intangible asset and consequences are firm, it is also clearly a concept understood as market assets and improved held in the minds, or cognitions of performance of a firm. stakeholders. Macnamara, 2006 Reputation Molecule: Reputation is what the people who matter think about what THEY think matters. Doorley and Garcia, 2007 Reputation is based on the organization’s behaviors, communications and relationships: sum of images= (performance and behavior) + Communication = sum of relationships Hurd, 2007 Reputation for businesses: a reputation is Reputation for individuals: a perceived by the parts of all the reputation is created by an inspired individuals that create it, the attitude of professional, detailing an ability to the team from top to bottom, the ability to execute strategic business manage financial changes, market shifts, decisions, displaying a talent for a product issues, workforce evolutions, niche, and noting critical situations corporate responsibility, social culture, that were expertly handled. and the ethics of the leadership. Rossides, 2008 Reputation as an asset (reputation is Reputation as a state of awareness 24
  25. 25. something of value and significance to a (stakeholders have an awareness of firm) a company without judging it). Reputation as an assessment (stakeholders are judging or evaluating a firm). Balboni, 2008 Reputation from institutional perspective: Reputation from socio-economic an organization is widely recognized perspective: stakeholders evaluate among counterparts and stakeholders in its a company on specific attribute; organizational fields; it stands out defines corporate reputation as the compared to competitors, represents the counterpart’s expectations of a basic dimension of corporate reputation. particular attribute of an organization developed over long time. Schreiber, 2008 Organization’s perspective of reputation: Stakeholder’s perspective of reputation is an intangible asset that reputation: reputation is the allows the company to better manage the intellectual, emotional and expectations and needs of its various behavioral response as to whether stakeholders, creating differentiation and or not the communications and barriers vis-à-vis its competitors. actions of an organization resonate with their needs and interests. Wilcox, 2009 Corporate image: what the organization Corporate Reputation: collective believes it is and wants to project. perceptions of an organization's various stakeholders. Figure 10: A table of most common definition on corporate reputation, according to their focus (Bugariska, 2009) From the table above, we can conclude that in the variety of definitions of reputation, the focus is most often put on the company or on the individual. Within the definitions where the company is put in the focus, reputation is understood as closer to company activities or strategy, company values, and images it projects about itself. It is rather seen as the key intangible asset of the company, and is understood as a performance (outcome) of the firm. In all approaches where the individual is put in the focus, reputation is defined as collective representations, a perception of the individual/stakeholder about the company. In this research paper, I will build the thesis development upon the premise that reputation is a perception about a company, hold in the mind of its stakeholders. It is a perception of who and what the company is, where does it come from, who it does business with, how it runs the business, how it treats its employees, how it builds credibility and trust. This perception, or knowledge, is formed on a basis of all experiences an individual (stakeholder) has with the company. Regarding its stakeholders, they are different for each company or 25
  26. 26. industry; they represent organization’s internal (employees, members) and external public (customers, shareholders, opinion leaders, specific target audiences, broader community). II.2. Reputation, Image, Identity and Brand Multiplicity of definitions leads to a lack of consensus amongst academics as to what is corporate reputation and how it defers from concepts such as corporate identity, corporate image and brand. Although much confusion exists about terminology, it is important to try and distinguish these terms. Sometimes wrongly used interchangeably, they do not quite refer to the same ideas and concepts, although there is considerable overlap and the terms are not mutually exclusive. These concepts are often used interchangeably with little distinction made between them. “When these terms are not used interchangeably, scholars argue for a hierarchy amongst them – for example, image as a subset of reputation”, says Rossides (2008). The most common bias is mixing reputation with corporate image. Reputation is not same with image. According to SPEM communication group, it is much more: “Reputation is an evaluation of an image, presented externally by an organization”.9 The authors of the “Reputation Management” guide (Elearn 2005) also agree that image and reputation are closely related but they are not the same. They argue that some organizations have difficulties coming to terms with reputation, especially new companies that have a need for instant awareness and sales and so focus their efforts on image building. But for an image to remain credible in the longer term an organization must also focus on building some substance – its reputation – to back it up (p.1). They have presented the two main aspects that help explain the difference between these two concepts, in a simple table (as shown in the following Figure): 9 SPEM Communication Group (Slovenia), corporate web site: http://www.spem.si/eng/Activities/Researches/Reputation-Measurement/ 26
  27. 27. Figure 11: Two aspects that help explain the difference between corporate image and corporate reputation (“Reputation Management”, Elearn training materials, 2005) Balboni (2008) sees the two terms as a part of the process of corporate reputation's transmission is an evaluative belief about a particular company – i.e. corporate image (p. 3- 4). Corporate image is defined as the individual estimation about a company as reflected by the corporate associations held in memory. Corporate reputation, on the other hand, is the effect of the transmission of the corporate image trough an informal network. It proceeds from the level of individual cognition to the level of social propagation through gossip, word- of-mouth, and institutional refraction that includes media contagion. In order to explain methods of reputation measurement, the editorial of Communication Controlling, web portal about value creation and evaluating communication, starts with the definitions of reputation and image.10 “Reputation is fundamentally based on stakeholder group specific images. Image is generally used to mean a simplified, typified, value- judgmental and action-guiding idea formed on the basis of impressions, perceptions and thought processes in the minds of persons or sections of the population about products, persons, facts and circumstances, or entire organizations.” 11 They describe reputation and image relationship as a long-term, dynamic, mutual relationship determined by corporate images in various manifestations. Reputation can be influenced only indirectly – via a kind of image network based on cumulative corporate identity perception and association processes. Reputation is also bound up with other attributes such as trust and credibility, reliability and responsibility, and comprises support potentials as well as certain expectations of behavior. A high reputation is considered to promote trust and confer a competitive advantage over rivals. 10 Communication Controlling, the web portal about value creation and evaluating communication: http://www.communicationcontrolling.de/ 11 Reputation management at Communication Controlling: http://www.communicationcontrolling.de/en/methods/value-creation/reputation-measurement.html 27
  28. 28. “The terms image, reputation, good name and prestige are very similar in their definitions and barely distinguishable in measurements”, they add. Simply and logically, Dennis Wilcox (2009) puts it this way: “A corporate reputation is formed by stakeholders involved or affected in some way by the organization. Corporate image, on the other hand, is more internalized. Image is what the organization believes it is and wants to project. A bank, for example, may wish to project the ‘image’ that its staff is friendly and helpful, or that the bank is successful and well managed. Public relations and advertising campaigns are often focused on projecting an ‘image’ of an organization or that its product brands represent quality and good value. Customers, for example, may feel that the ‘image’ being projected is wrong or misleading. They find that the bank staff is not particularly helpful or friendly -- or that the product is of poor quality. Thus, the bank might have the ‘reputation’ of being unfriendly although the bank continues to project the image that it is friendly through its advertising”.12 Another considerable debate has been going on in both business and academic world: the one on corporate reputation and brand.13 The multiplicity of definitions of brand as well, only contributes to the confusion. Several authors have tried to make things clear by drawing lines between the two concepts. Dr. Jim Macnamara (2006), for instance, believes that the argument that brand encompasses corporate reputation mainly comes from brand managers and advertising agencies which see themselves as ‘custodians of the brand’ (p. 2). “To some extent, this reflects a colored view”, he says. “In staking a claim to reputation management, it could be argued that brand managers are mounting a rearguard action to retain or regain ground in the corporate and marketing communication mix” (p. 2). Notwithstanding, the concept of ‘360- degree brand’ has considerable similarities with reputation, as it suggests that everything emanating from and existing in the environment surrounding a company or organization collectively comprises its brand – i.e. the experiences and opinions of customers, employees, business partners, government, media, and so on. 12 Dennis L. Wilcox, interview on corporate reputation given for the PR blog “Воглавно Јавно” (2009): http://bugariska.crnaovca.mk/2009/11/intervju-wilcox/; English version: http://my- ventilator.blogspot.com/2009/11/dennis-wilcox-5-q-on-corporate.html 13 Under the term “brand” here I understand “corporate brand”, not a “product brand”. 28
  29. 29. However, the more traditional concept of brand is connected closely with product marketing. Some of the key characteristics of brand and reputation that affect how we measure and manage each are as follows: 1) emotions versus behaviors, 2) promotion versus reality, and 3) customer versus other stakeholders. Under the first factor, brands have been described to be largely an emotional concept, identities that people relate to and often take up as artifacts of culture to create their identity. “While the difference between brand and reputation is not a clear cut, reputation is comprised mainly of perceptions based on experience and rational thinking”, says Macnamara (p. 2). “Brand loyalty is love; reputation is respect”, he adds. This is also useful in suggesting that brand and reputation are not competing concepts, but complementary. Because of this key difference in the nature of brand and reputation, the way each is built and maintained is different. Brands can be and are often created through advertising and promotion. Reputation cannot be created by advertising or built by public relations. Reputation is primarily based on experiences and observation. Reputation is more to do with behavior and reality than image and promotion (p. 2-3). The third key difference between brand and reputation is that brand is primarily a property identified and seen as valuable among customers and consumers. Reputation exists among consumers, but also is currency among a number of key non-customer groups which can have significant influence on the company’s or organization’s operations (such as, for instance: shareholders, government, regulators, NGOs, employees, key influencers, etc; p. 3). Hannington (2004) discusses definitions of corporate brands and reputations focusing to (primarily, but not exclusively), business-to-business situations. He discusses how brand and reputation interact and the ways many organizations view this issue. “The key differentiation between brand and reputation is that reputation is created by responses to a set of questions the answers to which define the qualities of the organization; brand, however, is very much linked to the reaction to a visual symbol”, says Hannington (p. 9). Reputation is defined by the responses to the types of questions stakeholders ask about a company to form their perception of the organization. It is the answers to specific questions such as those contained in the list below which are grouped for convenience by subject: products and services, 29
  30. 30. financial performance, vision and leadership, working environment, social responsibility, emotional appeal, sector specific. Reputation is the attitudes and feelings to the specific qualities of the organization. It is an assessment of the performance of an organization’s products, services, activities and employees. It may well vary from market sector to market sector if the organization operates in multiple markets. It is the current opinions of a group of people who have some form of a relationship with the organization. A corporate reputation is a perception of an organization’s ability to meet the expectations of its stakeholders. It describes the rational and emotional attachments that they form with the organization (p. 9). Hannington tends to view brand and reputation more as two complimentary entities. They merge into one another and making a precise division between them is neither necessary nor useful. In his view a brand is “a visual symbol that represents an organization or product” (p.10). In essence that is all that a brand is. However, over time this visual symbol becomes attached to an abbreviated set of emotions. These emotions are highly personal and not necessarily the ones intended to feel by the owners of the brand (p. 10). Figure 12: The Brand-Reputation Connection (Schreiber, 2008b) 30
  31. 31. As a part of the presentation given at the Reputation Conference, Schreiber (2008b) presented his view to the connection between reputation and brand. He describes the brand as a self- definition of how the company wants to be seen and differentiated from its competitors, and reputation as the ‘vote’ by stakeholders as to whether or not the brand attributes and behaviors resonate. “The brand is owned by the company, and reputation is owned by stakeholders”, he concludes. But things start to become really complicated when authors mix not only reputation with image, or reputation with brand, but also involve corporate identity and performance in this mess of definitions. “Depending on your perspective, reputation can mean rather different things”, say Dalton and Croft (2003: 8). “One can consider it from the point of view of customers, competitors, activists, suppliers or employees.” These authors explore in details identity, image, and their role of positioning in helping to shape reputation. They try to draw lines between ‘corporate reputation’, ‘corporate identity’ and ‘corporate image’, discussing the attributes where they overlap and suggesting definitions in order to explain each of them. At the heart of corporate reputation must be core values that help guide external and internal operations. The authors argue that “corporate reputation is the sum of the values that stakeholders attribute to a company, based on their perception and interpretation of the image the company communicates and its behavior over time” (p. 9). Corporate reputation should be considered in terms of its historical context, i.e. a corporation’s track record. A company’s standing in the community and in the marketplace all help shape its reputation. Whereas corporate image can be seen as the latest thoughts or beliefs stakeholders may hold about a company, corporate reputation represents the long-term collective assessment of a corporation’s integrity. Although corporate identity has traditionally referred to the physical ways an organization defines itself (logos, typography, colors, signage, packaging, uniforms, and so on), the idea that corporate identity is just the visual elements of a corporation and how these distinguish one organization from another is too narrow. “Such a view fails to take into account the day- to-day operational reality that employees, suppliers, distributors and consumers experience; In this regard, corporate identity and corporate image overlap considerably”, argue Dalton 31
  32. 32. and Croft (2003: 11). They discuss that corporate identity should include at its core the visual expression of a corporation, but it also refers to the wider issues of how employees and internal markets interpret this identity compared with the projected, external identity, which alongside positioning, helps create the desired image. Therefore, identity is not the only determinant of image as both help form the other to some extent (p. 11). Corporate image reflects the set of beliefs or attributes that people ascribe to an organization. It is in part, the identity. Identity is evaluated and what different stakeholders ‘perceive’ can be called ‘image’. In essence, corporate image is all the knowledge and beliefs that individual stakeholders hold about a corporation at any one time. Image is formed as a mixture of cognitive (rational/functional) and emotional attributes, with brands being best at conveying the emotional attributes. This holistic evaluation involves interpreting and recognizing the identity, then developing a set of beliefs and feelings about that product or organization, based on the stakeholders own experience of the company, its integrity and behavior. It is important to distinguish between corporate image and brand image. In authors’ Report, the term corporate image refers to a corporate brand (such as SONY or Virgin), whereas a brand image more specifically refers to a product brand (such as a typical food brand, e.g. Kit Kat; p. 12). Figure 13: Corporate reputation – The interplay of identity and image (Dalton & Croft 2003) 32
  33. 33. Once corporate identity and image are established and communicated, a positive or negative corporate reputation results. If an individual’s own values seem to fit with a company’s image, then that person is more likely to be of the opinion that the company has a good reputation. In essence, corporate reputation can be explained in terms of how audiences make value judgments over time, based on collective assessments of knowledge and beliefs. Irrespective of the method of influence, individuals within stakeholder groups will form their own reputation assessment, which can often differ significantly (p. 12). Cornelissen (2004) draws lines between identity, image and reputation, offering the following definitions of the three. He defines corporate identity as the profile and values communicated by an organization (p. 25). Corporate identity involves the self-representation of an organization through communications, products and services, and employee behavior. It is based on the basic, distinct and enduring values of an organization that guide its operations and that, when figuring in communications, set it apart from rival organizations in the eyes of important stakeholder groups (p.56). Corporate image is seen as the immediate set of meanings inferred by an individual in confrontation/ response to one or more signals from or about a particular organization at a single point in time (p. 25). Corporate reputation, on the other hand, is an individual's collective representation of past images of an organization (induced through either communication or past experiences) established over time (p. 25). In other words, the ways in which stakeholder groups regard and value the organization is defined as corporate reputation. Ideally, from a corporate perspective, such a corporate reputation is in line with the communicated corporate identity and thus broadly consistent with the way in which the organization wants itself to be understood (p. 56). Figure 14 suggests nonetheless that successful companies realize and work from the position that their own communications, products and behavior have a key impact on the reputations that stakeholders hold, and that their own corporate identity mix needs to be managed accordingly. In this process, organizations need to link the corporate identity – the picture of the organization that is presented to external stakeholders – to the organizational identity – the values that members of the organization themselves associate with the organization and ascribe to it (p. 69). 33
  34. 34. Figure 14: Identity, reputation and stakeholder management (Cornelissen, 2004) Recent research firmly suggests that organizations with stronger identities have more positive reputations. That is, a strong identity is more visible to stakeholders outside the organization and serves as a differentiation signal. When a reputation is indeed broadly consistent with that organization’s corporate identity, it also ensures that the organization is respected and understood in the way in which it wants and aims to be understood. Alternatively, when there is a discrepancy between the identity of an organization and the way in which it is regarded, an organization is not standing out on its own turf and may not have a strong enough reputation as a result. Its reputation is then based, rather, upon more general associations with the industry in which the organization is based or is informed by reports from the media (p.79-80). Davies et al. (2003) use the Corporate Reputation Chain to illustrate how reputation is managed using a study of one of the organizations we have worked with. The chain (Figure 15), represents an ideal, a series of linkages that should be present, but all too often in our experience are not. At the heart of the chain are the key elements of image and identity (p. 159). 34
  35. 35. Figure 15: The Corporate Reputation Chain (Davies et al. 2003) “Two of the more important questions in the management of corporate reputation are ‘Who are you?’, the question most likely to be asked by an external stakeholder and ‘Who are we?’, the question most likely to be asked by an internal stakeholder”, say the authors. They explain that the first question concerns the external image of the organization. The second concerns the way employees view the organization they work for, its identity. Identity and image are believed to be linked, either through their mutual dependency on factors including the company culture, mission, and strategy, or because they share a common core, or because any gaps between what a company is and what it is seen to be, can be a source of concern. The picture such ideas present is of organizations needing to and trying to make the way customers and employees see them as similar as possible, while at the same time being seen in as positive a way as possible. As the aim of any commercial organization in promoting such initiatives is to improve company performance both financially and in terms of employee and customer satisfaction, there should be evidence that harmonizing image and identity is beneficial to both (p. 159-160). Chris Cooke (1999), an associate director in Context Consulting, a London-based consultancy specializing in brand, reputation and communication, thinks that generally, marketing people tend to talk about ‘brand’ and ‘brand management’, and communication people tend to talk about ‘reputation’ and ‘reputation management’. He argues that brand management is principally concerned with the consumer and uses marketing techniques; the management of reputation is concerned with other audiences and uses corporate communication (or PR) techniques. 35
  36. 36. Although he claims that “the two definitions of both brand and reputation can be seen as two aspects of the same thing”, in order to distinguish them, he proposes a model in which the two aspects of brand and reputation are separated according to whether they are controlled by the organization or by the stakeholder (Figure 16). Figure 16: Cooke model of brand and reputation (Cooke, 1999) In his model, identity is the way an organization wishes to be seen. The organization develops "brand values" and "brand identity" to represent these wishes. The values do this through words, and the identity through visual cues with which the values can be associated. The second part of the model is image. This is the way an organization’s stakeholders interpret its brand values and brand identity. Stakeholders will look at an organization’s identity and, depending on how well it is constructed and communicated, they will interpret it correctly or incorrectly, positively or negatively. The third part of the model is performance. At the point where stakeholders interact with the organization, they experience the organization’s quality of products or service, its behaviors and its applied values. To maintain positive perceptions with the stakeholder at this point, the organization needs to ensure that brand values are indeed fulfilled. The fourth part of the model is reputation. From the image a stakeholder has of an organization and reassessment on the basis of experiences with that organization, the stakeholder develops a new attitude toward the company - the collective attitudes of all 36
  37. 37. stakeholders at this stage form an organization’s full reputation. Given that it is rooted in the substance of an organization, the reputation is relatively more stable than the image, which is abstract and transient. II.3. What Influences Corporate Reputation? Reputations take years, even decades, to build, and yet they can be lost rapidly. And when reputations are ruined, there can be considerable collateral damage as well. But what makes the corporate reputation? What influences it, what are the factors that affect and drive corporate reputation? On the following pages I will give an overview of different forces (internal and external) that are considered to have impact on corporate reputation. II.3.1. Reputation drivers (internal forces) So, what drives corporate reputation? Key components include factors such as product quality, management abilities, financial and social performance, and market leadership, as well as softer issues such as emotional appeal, openness, integrity, and environmental awareness. “Good reputations go a long way,” says Rossides (2008). It has been proven that they provide specific advantages like: • Customers being prepared to pay more for products and services and recommending an organization to others; • Employees being more committed to their company’s success; • Facilitating the attraction and retention of top talent; • More favorable treatment by business partners; • Investors feeling more secure – with a corresponding benefit to the share price; • Capital markets viewing organizations as less risky – supporting higher credit ratings; • Communities supporting companies in business endeavors; 37
  38. 38. • Fair treatment by the media; and • Most importantly, all stakeholders allowing organizations more latitude to make decisions and take actions in both good and bad times (Rossides, 2008). The international public relations firm Hill & Knowlton and executive search firm Korn/Ferry International, conducted by research firm ORC International, in 2003 surveyed worldwide CEOs in order to secure their perceptions about the importance of corporate reputation, what factors influence it, who is responsible for it, and its impact on the achievement of business objectives.14 Among other questions, CEOs were asked about the impact of several types of influences on corporate reputation, including internal aspects of their company, external forces, and actual threats. In that respect, CEOs overall identified the ability to communicate by a wide margin as the top internal aspect of their company most influential on its corporate reputation (other than financial performance). Transparency, human values and treatment of employees were also frequently cited as being among the top three internal factors. Asian CEOs expressed a different view, placing the greatest weight on transparency, ability to innovate and adaptability to change. Overall, despite CEOs’ view that they are responsible for their company’s reputation, only 33% cited CEO reputation as being among the most influential factors. Figure 17: What internal factors affect corporate reputation (according to CEOs worldwide)? Corporate Reputation Watch 2003 14 Corporate Reputation Watch survey 2003: http://www.corporatereputationwatch.com/ or http://www2.hillandknowlton.com/crw/download.asp?filename=2003%20CRW%20Survey%20Summary.pdf 38
  39. 39. Although CEOs did not identify one monumental threat to reputation, they suggested that there are many of equal concern. They ranked unethical corporate behavior and product and service problems as the top two threats (other than financial performance) to corporate reputation, with criticism from customers and the media not far behind. Criticism from NGOs, government, and the Internet were seen as representing relatively negligible threats. Figure 18: What are the main threats to corporate reputation (according to CEOs worldwide)? Corporate Reputation Watch 2003 Charles Fombrun, Chairman and Co-Founder of the Reputation Institute, who has written extensively on this topic (1990, 1996, 2003, 2004), has developed a set of six criteria that a company can use to gauge its reputation and benchmark its competition: • Emotional appeal: You simply like, admire and respect, or trust the company; • Products and Services: You think the company sells products or services that are high quality, innovative, reliable or good value for money; • Social Responsibility: You think the company is a good citizen – it supports good causes, doesn’t damage the environment, and does right by local communities; • Workplace Environment: You believe the company is well managed, has topnotch employees, and would be great to work for; • Vision and Leadership: You feel the company has a clear vision for the future and strong leadership; • Financial Performance: You’ve been happy with the company’s profitability, believe it has strong future prospects, and isn’t too risky to invest in. 39
  40. 40. Figure 19: Fombrun’s six key reputational drivers. Photo by TrendsSpoting: http://www.flickr.com/photos/15168231@N00/2616209161/ Based on Fombrun’s six reputational drivers, in Reputation Institute a new proprietary tool was later developed to measure reputation across stakeholders, countries and industries. The RepTrak™ model tracks 23 key performance indicators (attributes) grouped around 7 core dimensions: Products & Services, Innovation, Workplace, Governance, Citizenship, Leadership and Performance.15 15 More details on RepTrak™ model available on the Reputation Institute web site: http://www.reputationinstitute.com/advisory-services/reptrak 40
  41. 41. Figure 20: The RepTrak™ model tracks 23 key performance indicators (attributes) grouped around 7 core dimensions. Reputation Institute: www.reputationinstitute.com The selection of these dimensions as defined by Fombrun and the Reputation Institute is the first such systematic approach to a structured corporate reputation measurement methodology, and a basis for many measurements practiced across the world. II.3.2. Factors influencing the perception of reputation (external forces) As a part of Corporate Reputation Watch survey, among external forces, the CEOs surveyed overwhelmingly pointed to customers as having the greatest impact on reputation. Print media and financial analysts rounded out the top three external forces cited, though European CEOs surveyed placed a slightly higher weight on print media than on customers. Broadcast media were generally viewed by the CEOs as having less impact on reputation 41
  42. 42. than print media, and the Internet, legislators, and labor unions were viewed as having negligible impact. Figure 21: What external factors have most influence on corporate reputation (according to CEOs worldwide)? Corporate Reputation Watch 2003 Media in general have a very strong impact on corporate reputation. Mainstream media, for example, have much to do with forming perceptions of a company “because people who don't know much about the corporation rely on media reports to form their opinions”, thinks Wilcox (2009). He explains: “If the corporation is in the news because of a plant disaster, or being forced to do a product recall, people usually perceive that the corporation is not very good -- thus lowering the reputation of the company. The extensive media coverage of corporate CEOs making large salaries (in some cases, $l00 million) while, at the same time, laying off thousands of workers and asking for government bail-outs caused a severe erosion of reputation for such companies as AIG, Citigroup, and the Bank of America. On the other hand, Walmart -- the world's largest retailer -- has improved its reputation in recent years by a series of actions and initiatives that have put it in the forefront of the ‘green’ movement and sustainability. Favorable media coverage of these initiatives have done much to improve its reputation among the general public” (Wilcox, 2009). In my view, corporate reputation is generally driven by four main external forces. In other words, the perception of an individual or a group of individuals about a company’s reputation is influenced by ‘realities’ created by different sources. For instance, corporate sources, such as the company’s web site, advertisements, brochures, and so on, present one reality of the company, as it wants to be seen. The mainstream media (TV, newspapers, magazines, radio, etc.) through their news, articles, interviews, TV shows etc., present another reality 42
  43. 43. which is not necessarily same as that presented by the corporate sources. Word of mouth about a company is often spread among friends and networks (using for the purpose social media more and more every day), stimulating a discussion about it and thus actively building another reality about the company. And last but not least, the individual’s personal experience with the company (such as using its products or services, talking to sales staff or customer care, etc) again creates another reality. Good or bad, this experience will most likely be shared among his or her friends, or spread by word of mouth within his or her social network. Figure 22: Sources or external factors influencing public perception about a company’s corporate reputation (Bugariska, 2009) In some cases these four sources can present four different realities and they will all influence the individual to create his or her own perception about the company’s reputation. Companies’ task is to take care that these sources project synchronized and positive realities about them. Later on in this research paper, I will - using this approach - focus on exploring and measuring how the mainstream media (as one of the four external forces) influence corporate reputation. 43
  44. 44. II.4. Drawing the lines Before I move on to the reputation measurement methodologies, I will shortly conclude by summarizing the discussions above and drawing the lines between the concepts discussed above. These conclusions will be the foundations on which I continue with further research for this paper. Plenty of definitions exist for corporate reputation. It has been the focus of much academic and business research lately, and as a result more models of reputation measurement have emerged. In this variety of definitions, the focus is most often put on the company or on the individual. Among the definitions where the company is put in the focus, reputation is understood as closer to company activities or strategy, company values, and images it projects about itself, and is rather seen as the key intangible asset of the company. On the other hand, in the approaches where the individual is put in the focus, reputation is defined as collective representations, a perception of the individual/stakeholder about the company. Putting the most important concepts into one framework, a synthesized definition can be drawn: Corporate reputation is a perception about a company, hold in the mind of its stakeholders. It is a perception of who and what the company is, where does it come from, who it does business with, how it runs the business, how it treats its employees, how it builds credibility and trust. This perception, or knowledge, is formed on a basis of all experiences an individual (stakeholder) has with the company. Regarding its stakeholders, they are different for each company or industry; they represent organization’s internal (employees, members) and external public (customers, shareholders, opinion leaders, specific target audiences, broader community). Multiplicity of definitions also brings to lack of consensus amongst academics as to what is corporate reputation and how it defers from concepts such as corporate image and brand. There is considerable overlap and the terms are not mutually exclusive. However, we must at least try to draw lines between these terms. 44
  45. 45. First, for the purposes of this research paper, I will once again emphasize that under the term “reputation” I mean “corporate reputation”, and not “brand reputation” or “product reputation”. That means that I will explore the reputation of a company, i.e. the perception about the company (held in the mind of its stakeholders) only. Second, brand (both corporate or product brand) and corporate image are strongly related to the identity of the company or product (for eg. visual identity: logo, colors, etc), which is not necessarily the case with the corporate reputation. According to the American Marketing Association (AMA), a brand is “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of seller and to differentiate them from those of competition”.16 Thus, a company may have at the same time a strong brand and a lousy reputation (for eg. McDonald’s has extremely strong corporate brand, but negative corporate reputation for many people), or vice versa (mid-sized or local company may have a weak brand because of its inconsistent visual identity, but has a good reputation, cause it offers good quality products, it treats employees well, it is socially responsible, etc.). Corporate image, seen as a ‘mental picture that springs up at the mention of a firm’s name’ (as defined in the Business Dictionary)17, is also very close to firm’s reputation. Similar to a firm's reputation, it is the public perception of the firm rather than a reflection of its actual state or position. However, corporate image is not as comprehensive as the reputation, and it is rather an impression than knowledge about a company. All in all, the terms ‘corporate image’, ‘corporate brand’ and ‘corporate reputation’ have lots of in common. Although they have overlaps, they also differ in some aspects, and the ‘corporate identity’ is an intersection of all. 16 See, for instance: http://marketing.about.com/cs/brandmktg/a/whatisbranding.htm 17 Online Business Dictionary: http://www.businessdictionary.com/definition/corporate-image.html 45
  46. 46. Figure 23: Drawing the lines between image, brand, reputation and identity Regarding the factors that influence reputation, I will explore the internal forces that drive reputation according to Fombrun’s suggestion of the six reputation drivers. He has developed a set of six criteria (consisting of 20 attributes) that a company can use to gauge its reputation and benchmark its competition. These criteria are: emotional appeal, products and services, social responsibility, workplace environment, vision and leadership, and financial performance. The selection of these dimensions as defined by Fombrun and the Reputation Institute is the first such systematic approach to a structured corporate reputation measurement methodology, and a basis for many measurements practiced across the world. Thus it will also be a basis for this research as well. Using the approach of the four external forces as previously described (corporate sources, mainstream media, word-of-moth and individual’s personal experience, as sources of factors that influence public perception of a company’s reputation), I will focus on exploring and measuring how the mainstream media (as one of the four external forces) through their news, articles, interviews, TV shows etc., influence corporate reputation, specifically on the reputation of local telecommunication companies. 46
  47. 47. III. Overview of existing measurement methodologies Exploring and analyzing the influence that media has on corporate reputation takes place in a variety of measuring models, regarding to both reputation and media measures. Before I move on to the proposed integrated model, on the following pages I break down the characteristics of each of the existing corporate reputation measurement tools, as well as the most popular and used media measurement and PR evaluation methods. III.1. Methods of measuring corporate reputation Probably the most famous measure of reputation is the Fortune magazine “Most Admired American Companies” survey conducted yearly. The survey is conducted on the ten companies with the largest revenues within each industry group (SIC code). Questionnaires are sent to executives, directors and financial analysts within the industry segment so that there is a level of familiarity with the companies in question. Eight attributes are analyzed: financial soundness, wise use of corporate assets, value as a long term investment, social and environmental responsibility, people management, quality of management, product and service quality, and innovation. These attributes are scored by respondents on a 1-10 scale with 10 being the highest. However, doubts about the validity of the Fortune rankings in particular have been raised (Fryxell and Wang, 1994), for several reasons. First, since the early development of the Fortune study, the index was not intended for scientific research. Second, the survey is limited to certain constituencies without taking into consideration other stakeholders’ opinions. Finally, evidence of financial bias of the valuations published in Fortune has shed shadows over the results of previous studies, suggesting the possibility of artificial relationships between corporate reputation or corporate social responsibility measures and financial performance. Davies et.al. have developed the Corporate Personality Scale which companies can use to determine how their organization is perceived on certain personality traits such as “warmth”, “emotion”, and others. This scale is used to determine how the organization is perceived by stakeholders and then to help it make changes to better match stakeholder needs. 47
  48. 48. The Reputation Institute uses a measure called RepTrak™, which has been developed through factor analysis with respondents among the general public in about 25 countries. RepTrak™ is the proprietary tool used by Reputation Institute to measure reputation across stakeholders, countries and industries. The instrument has found seven drivers of reputation (products and services, innovation, workplace, citizenship, governance, leadership, and financial performance). There also are 23 attributes of reputation within these drivers.18 These attributes and dimensions can both be measured and prioritized in the context of their influence on reputation (what drives reputation?) as well as on key stakeholder supportive behavior (what can be done to influence behavior?). In addition to the overall RepTrak, the Reputation Institute uses a more frequent “Pulse” that examines emotion, feelings and trust toward companies. The Reputation Institute survey is published yearly in Forbes.com. Doubts about the RepTrak survey have focused on the fact that it was developed with a focus on the general public. There are two problems with this development: 1) the public may not have familiarity with an organization but still may rate the organization; and 2) for many industrial companies, there are many other stakeholders far more important than the general public.19 Harris Interactive uses a ‘Reputation Quotient’ (RQ), “an assessment tool that captures perceptions of corporate reputations across industries, among multiple audiences, and is adaptable to countries outside the United States”. It is a comprehensive measuring method of corporate reputation that was created specifically to capture the perceptions of any corporate stakeholder group such as consumers, investors, employees, or key influentials. The instrument enables research on the drivers of a company's reputation as well as comparisons of reputation both within and across industries. This business reputation model uses 6 drivers of corporate reputation (products and services, financial performance, workplace environment, social responsibility, vision and leadership, and emotional appeal) with subsequent 20 attributes. By making random checks (most often quarterly) these criteria taken together result in lists of most reputable and visible companies.20 The Harris Interactive survey is published yearly in the Wall Street Journal. Questions about the validity of the RQ 18 More on the RepTrack methodology explained on the Reputation Institute corporate website: http://www.reputationinstitute.com/advisory-services/reptrak 19 Overview of RepTrak methodology can be found at: http://www.slideshare.net/cfoglini/reputation-institute- free-report-global-rep-trak-pulse-2007 20 The methodological overview of the Annual RQ 2008 can be found at: http://www.harrisinteractive.com/services/pubs/HI_BSC_REPORT_AnnualRQ2008_Methodology.pdf 48

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