Managing Responsibility: WHAT CAN BE LEARNED FROM THE QUALITY MOVEMENT? Sandra Waddock Charles Bodwell S ince the 1980s, competitive pressures and widespread consumer attention to quality have meant that companies cannot compete successfully without paying close attention to the quality of their products and services. Today, demands for enhanced corporate responsibility1 come from corporate critics, social investors, activists, and, in- creasingly, customers who claim to assess corporate responsibility when making purchasing decisions. These demands go beyond product/service quality to focus on areas such as labor standards, environmental sustainability, financial and accounting reporting, procurement, supplier relations, environmental practices, and supply chain management. Further, the recent corporate scandals have generated significant public concern about corporate responsibility, transparency, and accountability. Exter- nal critics raise the specter of reputational damage, as Nike, Levis, Gap, Adidas, and other global brands found in the 1990s when activists focused attention on abusive labor and human rights practices in developing nation suppliers.2 These global brands were forced to adopt new systems for managing supply chain com- panies, auditing them to ensure that they live up to Nike’s own code of conduct. Most large brand-name companies are adopting internal responsibility manage- ment systems to avert similar criticisms.3 Corporate responsibility is defined as the ways in which a company’s operating practices (policies, processes, and procedures) affect its stakeholders and the natural environment.4 External and internal demands for changes in company practices can provide an opportunity for organizational learning.5 25CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1 FALL 2004 The responsibility for opinions expressed in this article rests solely with the authors, and publication does not constitute an endorsement of these opinions by Boston College or the International Labour Office. Managing stakeholder relationships and natural resources is quickly becoming a more significant part of the modern corporate landscape, much as managing quality did in the early 1980s.6 While some progressive managers are paying attention to it, many still believe explicit responsibility management is not nec- essary.7 Despite similar reservations in the history of the quality movement, by the end of the 1980s, total quality management (TQM) had become a business imperative for most major corporations. From early skepticism, managers gradu- ally realized that quality was important to customers. The quality movement was boosted by major European Union companies requiring suppliers to meet ISO quality standards.8 There are significant signs that responsibility management is following a similar trajectory and could conceivably become the new business imperative9 of the early 2000s. The recent scandals in the U.S. further these pressures by cre ...

1. Managing Responsibility:
WHAT CAN BE LEARNED FROM
THE QUALITY MOVEMENT?
Sandra Waddock
Charles Bodwell
S
ince the 1980s, competitive pressures and widespread consumer
attention to quality have meant that companies cannot compete
successfully without paying close attention to the quality of
their
products and services. Today, demands for enhanced corporate
responsibility1 come from corporate critics, social investors,
activists, and, in-
creasingly, customers who claim to assess corporate
responsibility when making
purchasing decisions. These demands go beyond product/service
quality to focus
on areas such as labor standards, environmental sustainability,
financial and
accounting reporting, procurement, supplier relations,
environmental practices,
and supply chain management.
Further, the recent corporate scandals have generated
significant public
concern about corporate responsibility, transparency, and
accountability. Exter-
nal critics raise the specter of reputational damage, as Nike,
Levis, Gap, Adidas,

2. and other global brands found in the 1990s when activists
focused attention on
abusive labor and human rights practices in developing nation
suppliers.2 These
global brands were forced to adopt new systems for managing
supply chain com-
panies, auditing them to ensure that they live up to Nike’s own
code of conduct.
Most large brand-name companies are adopting internal
responsibility manage-
ment systems to avert similar criticisms.3
Corporate responsibility is defined as the ways in which a
company’s
operating practices (policies, processes, and procedures) affect
its stakeholders
and the natural environment.4 External and internal demands for
changes in
company practices can provide an opportunity for
organizational learning.5
25CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 2004
The responsibility for opinions expressed in this article rests
solely with the authors, and publication
does not constitute an endorsement of these opinions by Boston
College or the International Labour
Office.
Managing stakeholder relationships and natural resources is
quickly becoming
a more significant part of the modern corporate landscape, much
as managing

3. quality did in the early 1980s.6 While some progressive
managers are paying
attention to it, many still believe explicit responsibility
management is not nec-
essary.7 Despite similar reservations in the history of the
quality movement, by
the end of the 1980s, total quality management (TQM) had
become a business
imperative for most major corporations. From early skepticism,
managers gradu-
ally realized that quality was important to customers. The
quality movement
was boosted by major European Union companies requiring
suppliers to meet
ISO quality standards.8
There are significant signs that responsibility management is
following a
similar trajectory and could conceivably become the new
business imperative9 of
the early 2000s. The recent scandals in the U.S. further these
pressures by creat-
ing a public policy context in which there is specter of greater
regulation of cor-
porate responsibility. Clear differences exist in the extent to
which companies in
different parts of the world and different industries emphasize
their corporate
responsibilities. Many companies with brand names to protect
now recognize
that there are multiple stakeholders who can and will exert
pressures on them
for greater responsibility if they do not take voluntary action.
Managing responsibility, however, is more complex than
managing qual-

4. ity. First, the borders of responsibility can be extremely
difficult to define. Who is
responsible for the working conditions in a firm supplying only
one subcompo-
nent of a product, where the buyer represents only one of
dozens of customers?
Who is responsible for the working conditions of that supplier’s
suppliers? Man-
aging quality starts with customer demands, which is a simple
task compared to
determining responsibility objectives that must satisfy a range
of stakeholders
with incompatible goals.
Demands to manage responsibly are increasing.10 Much as
quality man-
agement once offered competitive advantage for early movers,
so today can
responsibility management provide a similar basis for
competitive advantage.
In comparing emerging total responsibility
management (TRM) approaches with exist-
ing total quality management (TQM)
approaches, we focus on initial responses
to managing quality, skepticism about
responsibility management approaches,
and common values underlying both
quality and responsibility management
systems.11 Research undertaken by the
International Labour Office illustrates that
companies that appear to be in the lead in
adopting integrated responsibility management approaches are
those managing
long supply chains. These companies have been subjected to

5. much anti-corpo-
rate activism, e.g., footwear, apparel, and sports equipment
companies whose
brand names are readily recognizable.
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 200426
Sandra Waddock is Professor of Management at
Boston College's Carroll School of Management
and Senior Research Fellow at the Center for
Corporate Citizenship at Boston College.
Charles Bodwell is the Chief Technical Advisor
(Project Manager) of the Factory Improvement
Programme, a project of the International Labour
Organization under Swiss and US funding that
links good management and good labor practices
in global supply chains. <[email protected]>
TRM approaches12 start with a vision that includes the
company’s respon-
sibilities to stakeholders and the natural environment. The
company must then
manage those responsibilities by articulating them explicitly
and developing a
code of conduct with specific standards. The responsibility
vision represents an
effort to achieve management commitment throughout the
corporation and to
create a set of benchmarks to which stakeholders can hold the

6. firm and its sup-
pliers accountable. Vision also involves determining which
values provide the
appropriate foundation for a company’s stakeholder-related
practices and perfor-
mance, frequently expressed in company-specific statements of
values, aspira-
tions, or codes of conduct or by adherence to international
standards (such as
the principles of the UN Global Compact).13 Companies inform
their visions and
obtain feedback about their operating practices through
interaction with relevant
stakeholders. They then incorporate this feedback into operating
practices and
performance improvement strategies. One company in the lead
on such activity
is Royal Dutch/Shell through its “Tell Shell” web site.14
Just as with TQM, TRM includes continuous innovation and
improvement
processes that are extended to all stakeholder and environmental
management
systems. These processes allow for remediation where necessary
and create a
feedback loop so that the company can learn from past mistakes.
Innovation and
improvement mean designing responsibility objectives for each
of the company’s
core stakeholders and establishing appropriate goals and
indicators to measure
performance. For example, audit systems could be created to
ensure external
supplier compliance with the company’s code. Audits in turn
can lead to correc-
tive action plans that provide suppliers with objectives for

7. improvement.
The Quality/Responsibility Analogy
Managing responsibility is not new. Managers already manage
responsi-
bility, just as they were already managing quality when the
quality revolution
began. Responsibility is already being managed when, for
example, employee
policies are developed, when customer relationship strategies
are implemented,
and when supply chains are managed.15 The more explicit
responsibility man-
agement approaches emerging in many multinational
companies16 help firms
manage those practices that affect stakeholder relationships and
the natural
environment openly and directly. Responsibility management
systems can be
compared to quality management systems along multiple
dimensions.
Multiple Meanings
Multiple definitions of quality management have evolved during
the past
quarter century. Juran’s definition of quality is “fitness for
use,” which has two
elements: product (or service) performance that results in
customer satisfaction;
and freedom from product/service deficiencies, which avoids
customer dissat-
isfaction.17 Other definitions focus on superiority or excellence
of the product/
service by some reasonably abstract criteria, specific,

8. measurable variables associ-
ated with the product/service, or on user-based criteria
associated with what the
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 2004 27
end user desires.18 Another definition emphasizes particular
values (e.g., a value
to usefulness criterion that compares one product or service to
another), while
other definitions emphasize adherence to product
specifications.19 Quality asso-
ciations and many companies have come to use a simple
criterion, according
to the leading textbook on quality: “Quality is meeting or
exceeding customer
expectations,”20 putting much of the rationale for quality
management into the
customer relationship.
Like quality, responsibility can have multiple meanings. In one
sense,
responsibility means taking blame or accepting accountability
for activities and
actions, which assumes that the impacts of those activities are
negative. How-
ever, accepting responsibility can also mean taking charge of
something. Respon-
sibility also implies having the capacity for making morally
acceptable decisions

9. and being accountable for actions and impacts. This latter
connotation provides a
rationale for creating positive visions and constructive values as
key ingredients
of responsibility management, much as meeting customer
expectations implies
creating products that provide value(s) and satisfy real customer
needs. Manag-
ing responsibility thus sets a fairly high standard of
performance with respect to
the relationships that a company develops with its stakeholders
through its
strategies and operating practices.21
Satisfying Stakeholders
Achieving customer satisfaction is a cornerstone of the quality
revolution.
In the words of the management guru Tom Peters, leading
companies put in
place “systems that focus unmistakably on building long-term
customer loy-
alty.”22 To achieve that objective, companies need to
understand what customers
want and provide it, using employees’ loyalty, productive
capabilities, and skills.
Similarly, responsibility management systems help companies
deal with the
demands and expectations of stakeholders, including customers
and employees.
Responsibility management approaches incorporate processes of
mutual
engagement and dialogue with relevant stakeholders on issues
of concern,
using processes termed “stakeholder engagement” or

10. “stakeholder dialogue.”23
Engagement can involve a trade union representing a factory’s
workers in a
process of collective bargaining on pay levels, or it can involve
meeting with
community leaders on access to local resources.
From a company’s perspective, managing responsibilities with
stakehold-
ers makes increasing sense. Given the rapidity of
communication across the
Internet, the likelihood is that certain (especially activist)
stakeholders will be
critical of the company unless (and sometime even if) they are
constructively
engaged with it. Without greater transparency24 (and
engagement) on the part
of the company, such critics can diminish the company’s
reputation.
Measuring the “Unmeasurable”
Measurement is a cornerstone of the quality movement. Quality
guru
W. Edwards Deming was famous for his efforts at reducing or
even eliminating
variation through a process of continuous improvement that
depended on
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 200428

11. statistical process control. As with quality, determination of
responsibility
requires a measurement and assessment system that provides a
basis of under-
standing, accountability, and information for stakeholders. With
effective
measurement of responsibility-related practices, a company can:
improve its
stakeholder-related performance; determine where opportunities
for innovations
lie and where remediation is needed; and account for its
stakeholder and envi-
ronmental impacts, practices, and outcomes.
In the early days of the quality movement, there were concerns
about
how to measure quality—and some even debated whether it
could be measured
at all. Similarly, many managers today believe that “you can’t
measure this
responsibility stuff,” and therefore it is unmanageable. Yet
recent advances in
social auditing25 (including the balanced scorecard,26 strategic
audits,27 holistic
performance assessment,28 and the Global Reporting Initiative
(GRI)29) contra-
dict this assessment. For example, social auditing processes can
help companies
identify where environmental resources are being wasted or
where discontented
employees are wasting time, absent, or leaving the firm and
taking their knowl-
edge and skills with them. Balanced scorecard tools can help
companies develop

12. a set of objectives that relate to specific stakeholders
(especially customers and
employees) to determine their satisfaction with the company’s
products and
services and ultimately to maintain their loyalty. The GRI
provides a structure
for companies reporting on stakeholder and environmental
issues that is more
holistic and standardized in its external reporting structure than
internally gen-
erated reports (which are often inconsistent). Some integral
responsibilities
(such as human rights, labor rights, and animal rights) require
qualitative rather
than quantitative assessment that are derived from the
perspectives of stake-
holders (such as activists and workers).
Measurement techniques help companies align their
responsibilities with
their practices. For example, techniques that some companies
are using include:
performing external audits on supply chain companies (e.g.,
companies in the
Fair Labor Association); monitoring customer reactions to
products and services;
engaging critical NGOs in dialogue to explore concerns (e.g.,
Shell with its stake-
holder engagement); and assessing resource usage through
environmental man-
agement systems.
Making a Business Case
In the early days of the quality movement, many managers
questioned

13. whether there was a business case for quality. It is now clear, of
course, that
quality products and services are demanded by customers if the
company is to
keep its franchise. Similar questions arise about the business
case for responsibil-
ity management. It is not always clear to managers what the
benefits of respon-
sible employee or labor practices are, whether savings can
accrue from more
environmentally sound approaches, or why deceptive practices
might hurt a
company’s long-term profitability. Yet improving the
responsibility of company
practices can sometimes generate positive effects on both
productivity and
quality. For example, improving worker management relations
through the
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 2004 29
strengthening of social dialogue, eliminating discriminatory
practices that block
promoting the most suitable employees, and improving health
and safety condi-
tions at the factory level can benefit productivity.30 One
company, where
responsibility management systems have been put in place,
illustrates the link-
age between improving working conditions at the factory level

14. and increasing
productivity:
For getting companies to realize the value of doing things the
right way, top man-
agement has to be made aware that eventually it will benefit the
company. Safe
workplaces are more productive. . . . We improved the
ventilation in [a produc-
tion area] and this resulted in defects falling to 2% from 7 or
8%, while produc-
tivity went up 20%. We improved airflows, which resulted in a
two-degree
temperature drop. This along with other changes resulted in,
according to our
estimate, an increase in productivity of 10 to 15 percent while
cutting defect rates
by 75%.31
Assurance Personnel
There are structural similarities between TRM and the quality
movement.
In the early days of quality control, companies created a
separate quality struc-
ture, incorporating a quality check by a quality assurance
person at the end of
the production process. Similarly, in their own early days,
responsibility man-
agement systems are implemented in supply chains when
companies appoint
corporate responsibility officers charged with “assurance” that
the code of con-
duct, principles, or values of the firm are being upheld in
practice.32 Some firms
appoint small compliance teams charged with enforcing

15. corporate codes of con-
duct, often operating under the responsibility of the legal
department, separate
from manufacturing or purchasing.
It was not until quality was considered an essential
responsibility of
everyone involved in production that it truly became part of the
production
processes. Very likely, only when responsibility is truly
considered integral to all
company practices will responsibility management be
considered a core element
of business practice, rather than just an add-on.33 An example
of a company’s
vision that incorporates its understanding of responsibility is
Johnson & John-
son’s famous Credo, which articulates its stakeholder
responsibilities explicitly.
TQM/TRM as Frameworks for
Systemic Management Processes
Certainly, no single approach represents the concept of quality
manage-
ment, just as there is no single responsibility management
approach, no “one-
size fits all” methodology. However, there are general
frameworks for managing
both quality and responsibility systemically, as shown in Table
1.
Table 1 compares the major processes involved in responsibility
manage-
ment with those used in quality management through three
widely accepted

16. frameworks of evaluation—the Baldrige Quality Award, the
Deming Prize
(Japan), and the European Quality Award. These frameworks
provide an
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 200430
overview of the critical elements of quality management at the
firm level to
guide firms in implementation. All include leadership, as does
the TRM frame-
work. Similarly, each of the systems links quality with strategy
or planning,
as does TRM. Stakeholder orientations are evident in all, with
the quality
approaches focusing predominantly on customers and
employees, while TRM
approaches also emphasize attention to (and engagement with)
additional exter-
nal and internal stakeholders.
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Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
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TABLE 1. Schematic Comparison Principles and Processes in
TRM, the Baldrige Award,
Deming Prize, and European Quality Award

17. Total
Responsibility
Management
Inspiration Processes
1. Responsibility Vision,
Values
2. Leadership Built on
Foundational Values
3. Stakeholder
Engagement
Integration Processes
4. Strategy
5. Human Resource
Responsibility
6. Integration into
Management Systems
7. Responsibility
Measurement Systems
Innovation and
Improvement Processes
8. Improvement:
Remediation,
Innovation, and
Learning

18. 9. Results: Performance,
Stakeholder, and
Ecological Outcomes
and Responsibility
10. Transparency and
Accountability
Baldrige
Quality Awarda
1. Leadership
2. Strategic Planning
3. Customer and Market
Focus
4. Information and
Analysis
5. Human Resource
Focus
6. Process Management
7. Business Results
Deming Prizeb
(Major Criteria
Only Listed)
1. Top Management
Leadership,Vision,

19. Strategies
2. TQM Frameworks
3. Quality Assurance
System
4. Management Systems
for Business Elements
5. Human Resources
Development
6. Effective Utilization of
Information
7. TQM Concepts and
Values
8. Scientific Methods
9. Organizational Powers
(Core Technology,
Speed,Vitality)
10. Contribution to
Realization of
Corporate Objectives
European
Quality Awardc
1. Leadership and
Constancy of
Purpose

20. 2. Customer Focus
3. People Development
and Involvement
4. Continuous Learning,
Innovation and
Improvement
5. Management by
Processes and Facts
6. Par tnership
Development
7. Public Responsibility
8. Results Orientation
a. Source: 2001 Criteria for Performance Excellence, Baldrige
National Quality Program.
b. Source: Deming Prize Criteria, Ichiro Kotsuka, 2000, JUSE.
c. Source: European Foundation for Quality Management .
These frameworks represent optimal approaches for quality
management.
Each approach relies on measurement and information to
develop a results ori-
entation. Similarly, TRM approaches add measurement and
indicators to the
multiple-stakeholder orientation. All approaches represent
holistic management
systems. Finally, all four build in feedback loops and
continuous improvement as

21. core elements.
Responsibility management practices can be extensively
observed in
the modern supply chain management practices of major global
brands and
retailers,34 partly as a response to notoriety that these
companies received for
such practices since the early 1990s. Thus, though the TRM
framework is not
new in its fundamental design, it does provide an explicit focus
on managing
responsibilities, values, and stakeholder (and environmental)
practices and
impacts, emphasizing the arenas of primary responsibility.35
Resistance to Managing Quality/Responsibility
Some managers strenuously resisted managing quality early on,
just as
some managers today resist managing responsibility. Indeed, it
took more than
30 years from the time that Deming sold his ideas to Japanese
managers before
the importance of quality to competitive success was finally
fully impressed on
U.S. companies,36 and even longer before the ISO quality
standards became
accepted practice in Europe. Among the reasons for initial
resistance to quality
management were incomplete information, the persistence of
misguided beliefs
despite evidence to the contrary, the need for managers to make
difficult cogni-
tive leaps,37 and perceptions that quality was unimportant and
the cost of qual-

22. ity would be high. Additionally, when quality was first
introduced, management
norms did not legitimate learning from the Japanese, solutions
were framed in
ways that inhibited learning, and poor judgment created
inadequate responses,
all of which was combined with what one observer terms “heavy
doses of arro-
gance.”38
Managing responsibility includes everything from doing nothing
(or,
worse, doing the wrong things) to the full integration of
responsibility into the
range of processes across the organization. At either extreme
company manage-
ment has made a decision, consciously or unconsciously, on
how to deal with
labor, the environment, integrity, and other issues that involve
impacts on
and relationships with key stakeholders. Of course, sometimes
added costs are
incurred to manage responsibility, as when a new auditing
system is put in place
or stakeholders are brought together in focus groups. One
perspective holds
that there is a necessary trade-off between “doing well and
doing good,” i.e.,
between responsible practice and strong financial performance.
However, a
growing body of evidence shows that this trade-off is mostly
mythical. Indeed,
more responsible practice may be synonymous with the good
management that
actually leads to positive financial performance. Evidence from
research on

23. social and financial performance39 and the social investment
movement40 sug-
gests that there is either no difference in the performance of
share prices of more
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 200432
responsible firms or that these firms may actually slightly
outperform those of
less responsible firms.
The perspective that managing responsibly costs more than not
doing so
contains an assumption similar to the one that underpinned
much of the initial
resistance to quality management: that higher quality would add
unrecoverable
costs.41 In part, the problem with TQM, as defined by Robert
Cole, was that as
long as quality was solely associated with outcomes (the
product and its attrib-
utes), managers had a difficult time conceiving of improving
quality while
actually lowering cost. The transition to understanding that low
cost and high
quality could co-exist took years to make. It required a mindset
shift towards a
process orientation and the dismantling of a second assumption
that continual
improvement could not be cost-effective.42 We can expect a

24. similar evolution
with respect to managing responsibility.
Responsibility management approaches can potentially provide
for a solid
basis of competitive advantage, especially for early movers.
They can more easily
recruit and retain talented employees, keep existing customers
(less costly than
gaining new customers),43 attract social/ethical investors,
improve community
relations by becoming neighbors of choice, and even improve
productivity.44
Benefits can come because employees and management are not
distracted by
external attention from day-to-day business operations. The
potential for com-
petitive advantages thus derives from the possibility that better
stakeholder rela-
tionships will have positive long-term performance
implications. For example,
improved employee relations have provided significant evidence
of better pro-
ductivity, despite that some costs might be incurred in
implemented relationship
management systems.45 Further, numerous studies now indicate
that companies
with better responsibility management outperform their
competitors.46
Consumers are becoming increasingly sophisticated about how,
where,
and under what conditions their goods are made.47 Yet since
the costs associated
with irresponsible corporate behaviors are often hidden or

25. unrecognized, the
apparent benefits of cutting corners may sometimes seem
obvious to managers,
at least until the reputational costs related to customers,
investors, and employ-
ees become obvious.
What Is Different about Responsibility Management?
There are several elements in responsibility management
approaches that
differ from quality management systems. Managing
responsibility makes implicit
responsibilities explicit.48 Responsibility management demands
open articulation
of the values that underpin corporate practices, demonstrated
integrity in living
up to those values, and reports on performance with respect to
implementation
of those values. Quality approaches provide explicit attention to
values associ-
ated primarily with employee participation and customer
satisfaction, while
responsibility management has the considerably more complex
task of negoti-
ating among the values and expectations of a wide array of
stakeholders.
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CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
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26. The measurement and assessment task for responsibility
management is
also more complex than for quality. Thus, some of the
approaches being devel-
oped for social auditing tend to involve stakeholder perceptions
and input, while
others encompass more readily measurable factors such as
safety violations,
resource usage, and measurable aspects of working conditions
and pay. Because
multiple stakeholders’ interests are involved in responsibility
management, cur-
rent measurement and reporting systems (such as the Global
Reporting Initia-
tive) are still being criticized for their complexity of
application. In addition,
stakeholders can differ on what constitutes responsible
performance as is often
reflected in the social screening undertaken by the social
investment commu-
nity. Some stakeholders question whether animal testing should
be allowed at
all, while others believe it is the only way to advance human
progress; some
believe that military contracting is inherently irresponsible,
while others believe
that self-defense is necessary to national security and should be
supported as a
responsible activity. Unfortunately, the reality of managing
responsibility for
multiple stakeholder impacts and relationships suggests that this
complexity is
unlikely to diminish.
The business case for responsibility management is also more
subtle than

27. the case for quality management. Poor customer relationships
resulting from
poor quality standards means lost revenue, a direct linkage.
When social
investors choose not to invest in a company, when customers
avoid purchasing
because a company has a reputation for using sweatshop labor,
or when talented
potential employees choose another company because of a poor
responsibility
reputation, the impacts are much less obvious or direct.
Further, companies using responsibility management approaches
need to
be open to input from stakeholders on some actions, decisions,
and impacts that
typically occur behind closed corporate doors. Unlike the
quality management
process, which is largely internally generated, the stakeholder
engagement
process involved in responsibility management opens the
company up to out-
siders. The engagement process means that company managers
need to be will-
ing to make internal changes to satisfy concerns of external
stakeholders. It
requires a willingness to be in a give-and-take power-sharing
relationship with
stakeholders that is atypical of many current management
strategies.
Finally, because external demands for greater transparency and
corporate
accountability have been growing rapidly and are likely to
continue to do so,
responsibility management means being transparent in reporting

28. out results to
stakeholders. Transparency signifies accountability. Initiatives
such as the Global
Reporting Initiative49 are providing new means for companies
to report out their
social, ecological, and economic results consistently.
Implementing explicit sys-
tems for managing responsibility can provide a basis for
improved stakeholder
relationships, better stakeholder-related corporate practices,
and—in the end—
more competitive advantage.
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 200434
Going Forward
Many managers and employees have been through hours of
TQM train-
ing, thus they can readily understand the systems approach that
TQM entails.
Responsibility management expands this systems approach to
all of a company’s
important stakeholders, moves values from theory into practice,
and emphasizes
the importance of stakeholder relationships. Both quality and
responsibility
management rely on linking the overall vision of the company
to implementa-
tion of that vision through specific standards. By now, quality

29. standards in most
industries have become obvious. Responsibility, transparency,
and accountability
standards are less clear.
There is as yet no global standard for responsibility, no global
code of con-
duct that is universally accepted, no standard reporting system
for social, ecolog-
ical, and economic (so-called triple bottom line) reporting, and
no generally
accepted monitoring mechanisms. There are still many
companies for whom
responsibility management and external accountability (other
than financial
accountability) remain a distant and even unidentified target.
Many brand name
companies have suffered significant reputational damage from
lack of attention
to important issues related to corporate responsibility and have
made changes.
For other companies, it is possible that it will take mandated
rather than vol-
untary action to move them forward. Just as European Union
companies
demanded that suppliers meet ISO quality standards, thereby
moving quality
to the center of corporate life, so might it take a similar action
to move respon-
sibility to the fore. Indeed, the ISO organization made just such
a move in 2004
when it announced that it would be developing (voluntary)
corporate responsi-
bility standards.
Notes

30. 1. Here we use the term corporate responsibility in lieu of the
older term corporate social
responsibility, which carries with it connotations of explicitly
doing good for society and can,
in that usage, tend to overlook the integral responsibilities
associated with day-to-day busi-
ness practices that are implied by the more generic term
corporate responsibility.
2. There is a great body of literature in the academic and
general press discussing labor prac-
tices and global production chains. For example, see Debora L.
Spar, "The Spotlight and the
Bottom Line" Foreign Affairs, 77/2 (March/April 1998): 7-12;
also, for contrasting views on
the corporate social responsibility/supply chain debate, see
Richard Wokutch, "Nike and its
Critics: Beginning a Dialogue" Organization & Environment,
14/2 (June 2001): 207-237.
3. For detailed analysis and insights, see Ivanka Mamic,
Implementing Codes of Conduct: How Firms
Use Management Systems for Social Performance (Sheffield,
UK: Greenleaf, forthcoming).
4. See Sandra Waddock, Leading Corporate Citizens: Vision,
Values, Value Added (New York, NY:
McGraw-Hill, 2002).
5. Peter Senge, The Fifth Discipline (New York, NY: Free
Press, 1990).
6. Sandra Waddock, Charles Bodwell, and Samuel B. Graves,
“Responsibility: The New Busi-
ness Imperative,” Academy of Management Executive, 16/2

31. (May 2002): 132-148.
7. For an instructive look at the mental models that prevented
managers from adopting quality
management in the early days, see Robert E. Cole, “Learning
from the Quality Movement:
What Did and Didn’t Happen and Why?” California
Management Review, 41/1 (Fall 1998):
43-62.
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 2004 35
8. A detailed analysis of the evolution of the quality movement,
on which this paragraph is
based, can be found in James R. Evans and William M. Lindsay,
The Management and Control
of Quality, 4th edition (New York, NY: West, 1999).
9. Waddock, Bodwell, and Graves, op. cit.
10. See Waddock, Bodwell, and Graves, op. cit.
11. The TRM framework is derived from research undertaken by
the International Labour
Office’s Management and Corporate Citizenship Programme,
and reported in Ivanka Mamic,
Implementing Codes of Conduct: How Firms Use Management
Systems for Social Performance
(Sheffield, UK: Greenleaf, forthcoming). For explicit
introduction of the TRM framework,
see Waddock, Bodwell and Graves, op. cit.; Sandra Waddock

32. and Charles Bodwell, “From
TQM to TRM: Emerging Responsibility Management
Approaches,” Journal of Corporate Citi-
zenship, 7 (Autumn 2002): 113-126.
12. Waddock, Bodwell and Graves, op. cit.; Waddock and
Bodwell, op. cit.
13. See <www.unglobalcompact.org> for further background.
14. See, for example, Philip H. Mirvis, “Transformation at
Shell: Commerce and Citizenship,”
Business and Society Review, 105/1 (2000): 63-84; Ann T.
Lawrence, “The Drivers of Stake-
holder Engagement: Reflections on the Case of Royal
Dutch/Shell,” in Jörg Andriof, Sandra
Waddock, Bryan Husted, and Sandra Rahman, eds., Unfolding
Stakeholder Thinking: Theory,
Responsibility and Engagement (Sheffield, UK: Greenleaf,
2002), pp. 185-200.
15. Recognizing that the natural environment is not a
stakeholder per se, we nonetheless use
the term stakeholder to reflect a company’s treatment of both its
human stakeholders and
the natural environment to simplify the language. As one
reviewer pointed out to us, this
definition of responsibility relates to consequences vs. more of
a duty-based standpoint.
Here, we take a relatively instrumental perspective on the
morality of managing responsibil-
ity, recognizing that sometimes it is simply important to do the
right thing for its own sake.
16. For a detailed analysis of these systems, see Mamic, op. cit.
17. Cited in Evans and Lindsay, op. cit.
18. Evans and Lindsay, op. cit., pp. 11-12.

33. 19. Evans and Lindsay, op. cit., pp. 12-13.
20. Evans and Lindsay, op. cit., p. 13.
21. Waddock, op. cit.
22. Thomas J. Peters, “The Simple Truth,” Office Systems, 12/4
(1995): 78.
23. See Mamic, op. cit.; also, Jerry M. Calton and Steven L.
Payne, “Coping With Paradox:
Multistakeholder Learning Dialogue as a Pluralist Sensemaking
Process for Addressing
Messy Problems,” Business and Society, 42/1 (March 2003): 7-
42; Stephen L. Payne and Jerry
M. Calton, “Towards a Managerial Practice of Stakeholder
Engagement: Developing Multi-
Stakeholder Learning Dialogues,” in Jörg Andriof, Sandra
Waddock, Bryan Husted, and
Sandra Rahman, eds., Unfolding Stakeholder Thinking: Theory,
Responsibility and Engagement
(Sheffield, UK: Greenleaf, 2002), pp. 121-136.
24. Of course, some things are likely to remain proprietary and
therefore undisclosed, but
demands for greater transparency with respect to operating
practices are clearly on the rise.
25. Kim Davenport, “Social Auditing: The Quest for Corporate
Social Responsibility,” in James
Weber and Kathleen Rehbein, eds., Proceedings of the
International Association of Business and
Society, 1997, pp. 197-207.
26. Robert S. Kaplan and David P. Norton, “The Balanced
Scorecard—Measures that Drive
Performance,” Harvard Business Review, 70/1
(January/February 1992): 71-79.

34. 27. Timothy Bell, Frank Marrs, Ira Solomon, and Howard
Thomas, Auditing Organizations
Through a Strategic-Systems Lens: The KPMG Business
Measurement Process, KMPG Peat Marwick,
1997.
28. Patsy Lewellyn and Maria Sillanpää, “Holistic Performance
Model,” presented at the Inter-
national Association of Business in Society Annual Meeting,
March 2001, Sedona, AZ, 2001.
29. Global Reporting Initiative, see
<www.globalreporting.org/>.
30. See Mamic, op. cit.
31. These quotes are from managers in the same study reported
by Mamic, op. cit., undertaken
by the International Labour Office.
32. Waddock and Bodwell, op. cit.
33. See also N. Craig Smith, “Corporate Social Responsibility:
Whether or How?” California
Management Review, 45/4 (Summer 2003): 52-76.
34. Mamic, op. cit.; Waddock and Bodwell, op. cit.; Waddock,
Bodwell, and Graves, op. cit.
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 200436
35. Lee E. Preston and James E. Post, Private Management and
Public Policy (New York, NY: Pren-

35. tice-Hall, 1975).
36. Cole, op. cit.
37. Ibid.
38. Ibid.
39. The definitive study, summarizing nearly 130 empirical
papers (many of which have signifi-
cant methodological problems), is by Joshua Margolis and
James P. Walsh, “Misery Loves
Companies: Rethinking Social Initiatives by Business,”
Administrative Science Quarterly, 48/2
(June 2003): 268. This meta-analysis is based on their book
People and Profits? The Search for a
Link between a Company’s Social and Financial Performance
(Mahwah, NJ: Lawrence Erlbaum
Associates, 2001). See also M. Orlitzky, F.S. Schmidt, and Sara
L. Rynes, “Corporate Social
and Financial Performance: A Meta-Analysis,” Organization
Studies, 24/3 (2003): 403-441.
40. David Diltz, “The Private Cost of Socially Responsible
Investing,” Applied Financial Economics,
5/2 (April 1995): 69-77.
41. Cole, op. cit.
42. Cole, op. cit., pp. 50-52.
43. One study shows that satisfied customers tell six people
while dissatisfied customers tell 22
of their experience with a company. See Armand V.
Feigenbaum, “Changing Concepts and
Management of Quality Worldwide,” Quality Progress, 30/12
(December 1997): 45-48.
44. See, for example, Jeffrey Pfeffer and John F. Veiga,

36. “Putting People First for Organizational
Success,” Academy of Management Executive, 13/2 (May
1999): 37-48. Also see Gary Dessler,
“How to Earn Your Employees’ Commitment,” Academy of
Management Executive, 13/2 (May
1999): 58-67.
45. See Pfeffer and Viega, op. cit.; Jeffrey Pfeffer. The Human
Equation: Building Profits by Putting
People First (Boston, MA: Harvard Business School Press,
1998).
46. See Margolis and Walsh, op. cit., who state: “A clear signal
emerges from these 95 studies.
There is a positive association, and certainly very little
evidence of a negative association
between a company’s social performance and its financial
performance. The question about
this empirical relationships seems to be answered.” (Margolis
and Walsh, 2003, op. cit.,
p. 10, on manuscript). These authors also note the sometimes
significant methodological
and measurement problems besetting many of these studies, and
they note that the causal
relationship remains uncertain, e.g., do more profitable
companies simply invest more in
corporate responsibility activities.
47. See, for example, R.T. Rust, V.A. Zeithaml, and K.N.
Lemon, Driving Customer Equity: How
Customer Lifetime Value is Reshaping Corporate Strategy (New
York, NY: Free Press, 1999);
Charles Fombrun, Reputation: Realizing Value from the
Corporate Image (Boston, MA: Harvard
Business School Press, 1996).

37. 48. Thanks to an anonymous reviewer for this wording
suggestion.
49. See <www.globalreporting.org>.
Managing Responsibility: What Can Be Learned from the
Quality Movement?
CALIFORNIA MANAGEMENT REVIEW VOL. 47, NO. 1
FALL 2004 37
Corporate Reputation Review,
Vol. 10, No. 4, pp. 261–277
© 2007 Palgrave Macmillan Ltd,
1363-3589 $30.00
Corporate Reputation Review Volume 10 Number 4
261www.palgrave-journals.com/crr
ABSTRACT
The need to investigate the link between rep-
utation and responsibility is well established.
This paper answers calls to conduct this com-
parison from a stakeholder perspective. In so
doing a literature review identified models of
reputation that engage with stakeholders from
their inception to measurement, while no such
models of corporate responsibility were found.
A qualitative study to conceptualize responsi-
bility from the perspective of stakeholders was
then conducted. Following this, a formal com-

38. parison between this conceptualization and
that of reputation models is undertaken. The
results suggest that there is considerable simi-
larity between the concepts of responsibility
and reputation. Implications may include the
use of reputation models as potential measures
for many of the aspects conceptualized as
responsibility. Questions about the causal
relationship between the two concepts are also
discussed.
Corporate Reputation Review (2007) 10, 261 – 277.
doi: 10.1057/palgrave.crr.1550057
KEYWORDS: corporate reputation ; corporate
responsibility ; stakeholders
INTRODUCTION
In recent years, practitioners and academics
have become increasingly interested in rep-
utation and how it relates to other concepts
such as responsibility (eg Brammer and
Pavelin, 2006 ; Fombrun, 2005 ; Andriof and
Waddock, 2002 ). In part, this is because ele-
ments of responsibility have been viewed as
key drivers of reputation. Antecedents of
a good reputation have been suggested
to include embracing CSR standards
( Fombrun, 2005 ), philanthropic giving
( Brammer and Millington, 2005 ) and the
development of trusting relationships with
stakeholders ( MacMillan et al ., 2004 ;
Waddock, 2002 ; Jones, 1995 ).
On the other hand, some theorists suggest
that rather than being an antecedent of rep-
utation, issues relating to the responsibilities

39. of a business are key attributes in terms of
which an organization ’ s reputation is judged.
Schnietz and Epstein (2005) , for example,
identify social responsibility as a key dimen-
sion of reputation; Tucker and Melewar
(2005) see social responsibility as a critical
element of reputation relevant to crisis man-
agement and Lindgreen and Swaen (2005)
Corporate Responsibility and Corporate
Reputation: Two Separate Concepts
or Two Sides of the Same Coin?
Carola Hillenbrand
The John Madejski Centre for Reputation, School of
Reputation and
Relationships, Henley Management College , Greenlands,
Henley-on-Thames, Oxon , UK
Kevin Money
The John Madejski Centre for Reputation, School of
Reputation and
Relationships, Henley Management College , Greenlands,
Henley-on-Thames, Oxon , UK
Corporate Responsibility and Corporate Reputation
Corporate Reputation Review Vol. 10, 4, 261–277 © 2007
Palgrave Macmillan Ltd. 1363-3589 $30.00262
argue that issues relating to responsibility are
embedded within the functional relation-
ships that underpin business activities. They
suggest, therefore, that there will be a sig-

40. nifi cant overlap between the reputation for
these activities and the reputation for issues
relating to responsibility.
It is thus not clear from the current lit-
erature how responsibility and reputation
interact. Does responsibility lead to a good
reputation? Or is reputation judged in terms
of issues relating to responsibility and other
characteristics? The key difference between
these two approaches is the following: The
fi rst approach sees responsibility as preceding
reputation, or in other words as bringing
about a good or bad reputation. The second
approach sees responsibility as an inherent
part of reputation, in other words as a key
element in terms of which reputation is des-
cribed. At this stage both, one or neither of
these propositions might be true. This paper,
therefore, sets out to compare these two con-
cepts. To achieve this, the paper follows fi ve
related steps:
1. First, literature relating to reputation is
reviewed.
2. Second, literature relating to responsibility
and its related constructs such as CSR is
reviewed.
3. Third, stakeholder literature is reviewed
with the aim of developing an approach
to bring together literature on reputation
and responsibility.
4. Fourth, the fi ndings of a qualitative

41. research study are presented.
5. Finally, the conceptualizations of respon-
sibility and reputation are compared and
contrasted with a view to reaching a
better understanding how these concepts
interact.
CORPORATE REPUTATION
Corporate Reputation is a multi-stakeholder
concept that is refl ected in the perceptions
that stakeholders have of an organization
( Smidts et al ., 2001 ). There is much evidence
that reputations with different stakeholder
groups interact. In particular, reputation with
employees is seen to have an impact on
reputation with customers and communities
( Carmeli, 2005 ). When managing their
Corporate Reputation, organizations should
therefore take account of not only their
relationships with stakeholders but also
monitor how stakeholders infl uence each
other ( Dutton et al ., 1994 ).
A review of existing models of Corporate
Reputation reveals a relatively small number
of widely used models, the most prominent
of which seem to be variations of Fortune ’ s
Most Admired Companies List (MAC) and
the Reputation Quotient (RQ) ( Fombrun
and Van Riel, 2004 ; Fombrun, 1996 ). Also
popular but to a lesser extent are models
such as the Corporate Personality Scale
( Davies et al ., 2003 ) and the Stakeholder
Performance Indicator and Relationship

42. Improvement Tool (SPIRIT) ( MacMillan
et al ., 2004 ). These models differ considerably
in terms of their underlying approach, the
stakeholder they survey and what they meas-
ure ( Mahon, 2002 ).
For example, the MAC List surveys CEOs
and fi nancial analysts about their view of
listed companies in terms of issues such as
innovation, fi nancial soundness, use of cor-
porate assets and social responsibility. The
list was developed by the Fortune ’ s edito-
rial panel in discussion with business leaders
and fi nancial analysts and sought to identify
characteristics that executives and fi nancial
experts admire in companies. Subsequent
analysis of the data revealed that all compo-
nents factored on one underlying dimension,
which can best be described as a fi nancial
dimension ( Fryxell and Wang, 1994 ).
The RQ, on the other hand, can be app-
lied to obtain data on a company ’ s reputation
from the point of view of the general pub-
lic, customers, employees, suppliers and
investors. Although, in practice, surveys with
the general public and customers have been
Hillenbrand and Money
© 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 263
the main focus of research. The model meas-

43. ures perceptions of an organization in terms
of social expectations of dimensions such as
products and services, vision and leadership,
work place environment and social respon-
sibility. The scale was developed through a
literature review of existing reputation
models followed by focus groups conducted
in ten different countries. The focus groups
asked members of the general public to ans-
wer questions such as ‘ What is Corporate
Reputation? And what aspects make it up? ’
The statistical analysis found evidence for
two distinct factors: those relating to emo-
tional appeal and those relating collectively
to all the other dimensions.
The Corporate Personality Scale surveys
customers and employees in terms of their
perceptions of organization ’ s personality,
focusing on dimensions such as agreeableness,
machismo, competence and enterprise. The
scale was developed by extending the Aaker
branding scale from the level of brands to
that of organizations. This was done by ana-
lyzing corporate websites for descriptions of
corporate character, conducting focus groups
in which customers and employees were
asked to describe the characteristics of orga-
nizations ‘ as if they had come to life ’ and
searching for terms used to describe person-
ality. Items were generated and tested on
thousands of customers and employees. A
factor analysis was used to confi rm and
refi ne the components in the scale.
The SPIRIT model can be applied to

44. survey Corporate Reputation from the per-
spective of many stakeholder groups of a
business including, for example, customers,
employees, suppliers, investors and commu-
nity groups. SPIRIT measures Corporate
Reputation in terms of three areas, namely,
the experience, feelings and intentions of
stakeholders towards a business. Experiences
of stakeholders include the way a business
informs and listens to stakeholders, the
material and non-material benefi ts a business
provides to stakeholders and outside
infl uences such as experience of what the
media has to say about a business or how a
business treats other stakeholder groups.
Feelings refer to the level of trust and posi-
tive emotions that stakeholders feel towards
a business. Intentions of stakeholders meas-
ure the likelihood that stakeholders will sup-
port the business in the future, for example
through stakeholder retention, advocacy and
cooperation. The scale was developed
through a literature review of reputation,
marketing and psychology literature and fol-
lowed by focus groups and interviews. The
concepts in the model were modifi ed and
refi ned and questionnaires were developed
to measure aspects in the model. These were
distributed to 8,000 stakeholders of different
kinds across three different continents. Sta-
tistical Techniques, such as factor analysis and
structural equation modeling, confi rmed the
independence of the measures and the pro-
posed links between reputation, its causes
and consequences.

45. These models are now summarized in
Table 1 with reference to their main features.
As described in Table 1 , models differ from
each other according to their underlying
approach, the stakeholders they survey and
what they measure. The way a model is
developed and the underlying assumptions
of theorists have an impact on when it is
most appropriate to use different models. For
example, it is important to consider when it
is appropriate to use a personality metaphor
or a relationship metaphor and to consider
what useful data could be obtained from dif-
ferent stakeholder groups. We have already
stated we will take a stakeholder perspective
and this means focussing on models that
ely up on stakeholder expectations in their
underlying approach. Since the RQ and
SPIRIT models are developed with stake-
holder perceptions and expectations as
their fundamental starting points, these
two models will be used as a basis for the
comparison with a conceptualization of
responsibility developed from a similar
Corporate Responsibility and Corporate Reputation
Corporate Reputation Review Vol. 10, 4, 261–277 © 2007
Palgrave Macmillan Ltd. 1363-3589 $30.00264
methodology. While others, such as Davies
et al . (2003) also incorporated customers and

46. employees in the refi nement of their scales,
their conceptualization does not begin with
stakeholder expectations, but rather with the
application of a personality metaphor.
CORPORATE RESPONSIBILITY
Corporate Responsibility (CR) is a concept
in business research with roots in Business and
Society literature ( Andriof and Waddock,
2002 ). In this arena it is used as a broad term
to describe the issues relating to the respon-
sibilities of business. CR is closely linked to
other concepts in the Business and Society
literature, most importantly the concept of
Corporate Social Responsibility (CSR) (eg
Lockett et al ., 2006 ; Windsor, 2006 ; Moir,
2001 ), but has been differentiated from
CSR as being broader and encompassing
Table 1 : Summary of Reputation Models
Measures of
reputation
Underlying approach Who is surveyed What is measured
MAC list
(Fortune
Magazine)
Reputation described in terms
of characteristics that are
admired by fi nancial analysts,
CEO and journalists

47. CEOs and
fi nancial analysts
Eight characteristics of reputation (innovation,
fi nancial soundness, employee talent, use of
corporate assets, long-term investment value,
social responsibility, quality of management,
quality of products and services)
Statistical analysis suggest that all eight
characteristics factor on one dimension
Reputation
quotient (RQ)
( Fombrun, 1996 )
Reputation described in
terms of stakeholder
expectations of organizations
Many stakeholder
groups of a business
including the general
public, customers,
employees, suppliers,
investors, etc
Six pillars of reputation (emotional appeal,
products and services, vision and leadership,
workplace environment, fi nancial
performance, social responsibility) Statistical
analysis suggests that the six pillars group
into two dimensions of reputation:
emotional appeal as one dimension and the
remaining pillars as second dimension

48. Corporate
Personality
Scale ( Davies
et al. , 2003 )
Reputation described
in terms of a
personality-metaphor
Customers and
employees
Seven dimensions of corporate personality
(agreeableness, enterprise, competence, chic,
ruthlessness, machismo, informality) Distinct
dimensions are supported by statistical
analysis
SPIRIT
( MacMillan
et al. , 2004 )
Reputation described in
terms of stakeholder
expectations in business
relationships
Many stakeholder
groups of a business
including customers,
employees, suppliers,

49. investors, etc
Three dimensions: experiences (including
for example sub-dimensions such as
communication, material benefi ts, experience
of outside infl uences), feelings (including
sub-dimensions trust and positive emotions)
and intentions (including sub-dimensions of
supportive behaviors such as advocacy and
retention of stakeholders towards a business)
Distinct dimensions and sub-dimensions are
supported by statistical analysis
Hillenbrand and Money
© 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 265
day-to-day operating practices and strategies
of business as well as impacts on society and
the environment ( Ahmad et al ., 2003 ; An-
driof and Waddock, 2002 ). The term CR
drops the word social from previous concep-
tualizations ‘ to signal an emerging sense that
responsibilities are fundamental to all actions,
decisions, behaviours and impacts of business ’
( Waddock, 2003: 15 ). CSR, on the other
hand, can thus usefully be seen as relating
to the specifi c social, philanthropic and
community focussed responsibilities of
business.
CR rather than any of its related concepts
is investigated in this paper for two reasons:

50. First, there is a growing use and acceptance
within both the practitioner (eg Eco
Conference, 2006 ; EABIS Conference, 2006 ;
Zadek, 2004 ) and academic (eg Andriof and
Waddock, 2002 ; Waddock, 2003 ) communi-
ties for the term CR. Second, CR being a
broad concept, allows for the investigation of
both the social and other aspects of respon-
sibility within the same study ( MacMillan
et al . 2004 ; Waddock, 2003 ). A discussion
about the link between reputation and the
different aspects of responsibility should
therefore ensue.
Despite this distinction, a fundamental
problem in Business and Society literature is
that there is no universally agreed defi nition
of CR or CSR ( Windsor, 2006 ; Garriga and
Mele, 2004 ; Waddock, 2003 ). The lack of
agreement in terms and defi nitions has not
stopped academics and practitioners from
conceptualizing and measuring CR and its
related constructs in many different ways.
Academic examples include categorizing
corporate social performance in terms of
people and products ( Johnson and Greening,
1999 ) and in terms of social issues, such as
employee relations, diversity issues, product
issues, community relations and environ-
mental issues ( Hillman and Keim, 2001 ).
Practitioner examples include the triple
bottom line of fi nancial, social and environ-
mental performance ( Elkington, 1997 ) and
the Global Reporting Initiative (GRI)

51. that includes reports on employees, custo-
mers, community, supply chain and business
partners among other aspects. While these
conceptualizations often survey stakeholder
opinion, few actually involve stakeholders
in a rigorous and systematic way from the
defi nition of the concept through to meas-
urement. This leaves an opportunity for
stakeholders to be involved in defi ning
responsibility and identifying issues that are
relevant to them. It is clear from our review
above that researchers in the Corporate
Reputation domain have already developed
conceptualizations and models of Corporate
Reputation by engaging stakeholders in
concept development and through the map-
ping of their perceptions (eg MacMillan
et al ., 2004 ; Fombrun, 1996 ). It is also now
clear that researchers in the area of Business
and Society have yet to carry out similar
conceptual development for CR and its
related constructs ( Windsor, 2006 ; Neville
et al ., 2005 ). Before we can understand how
responsibility and reputation interact, it
follows that we fi rst have to have conceptu-
alizations of both concepts that are derived
from a similar approach. This will allow us
to compare and contrast the concepts more
easily and rigorously.
A number of scholars have thus called for
a conceptualization of CR to be developed
from a stakeholder perspective ( Wood et al .,
2006 ; Waddock, 2002 ). Taking account of
how stakeholders make sense of CR would
also add to the legitimacy of any models and

52. measures developed. This is because the
opinions of key groups such as customers,
employees or suppliers would be acknowl-
edged in an explicit way ( Wood et al ., 2006 ).
For these reasons, this paper sets out to
develop a conceptualization of CR that is
built through an engagement with stake-
holders from the inception stage. Before
this is done, the next section reviews key
elements of stakeholder theory relevant to
this approach.
Corporate Responsibility and Corporate Reputation
Corporate Reputation Review Vol. 10, 4, 261–277 © 2007
Palgrave Macmillan Ltd. 1363-3589 $30.00266
STAKEHOLDER THEORY
Stakeholder theory is developed from stra-
tegic management literature ( Freeman, 1984 ).
Its core theme is that businesses have obliga-
tions to a broader group of stakeholders than
just shareholders. Freeman (1984) defi nes
stakeholders as ‘ ( … ) any group or individu-
al who can affect or is affected by the
achievement of the organization ’ s objective ’ .
Stakeholder theory has developed to view
the fi rm as a nexus of relationships ( Jones,
1995 ). This approach suggests that mutual
trust between organizations and stakeholders
are key drivers of long-term sustainable suc-
cess ( Jones, 1995 ).
Stakeholder theory also moved forward

53. signifi cantly with the contribution of
Donaldson and Preston (1995) . They suggest
that work conducted with stakeholders could
be viewed as descriptive, instrumental and
normative. Put simply, descriptive approach-
es seek to investigate and describe ‘ how ’
organizations and stakeholders relate to each
other. Instrumental approaches investigate
‘ what happens if ’ organizations relate to
stakeholders in certain ways. Normative
approaches suggest how a fi rm ‘ should ’ relate
to its stakeholders. When applied to a
research setting, it seems reasonable that the
Donaldson and Preston taxonomy could in
some ways be viewed as sequential. This is
because it follows that concepts fi rst need to
be described before their instrumental or
normative value can be established.
Another key tenant of stakeholder theory
is that concepts, such as responsibility, are
multifaceted and possess multiple criteria
that can change over time ( Harrison and
Freeman, 1999 ). This is because concepts
should refl ect the different views and needs
of stakeholders ( Mitchell et al ., 1997 ). It
is thus suggested that criteria should be
esta blished and measured in a process of
consultation and engagement between orga-
nizations and stakeholders ( Wood et al ., 2006 ;
Jones, 1995 ). This is supported by Neville
et al . (2005) , who state that the extent of an
organ ization ’ s responsibilities is framed with-
in the context of an organization ’ s relation-
ship with its stakeholders.

54. Much of the research examining stake-
holders in the business and society literature
is concerned with instrumental issues and
normative issues. In the realm of descriptive
research, little empirical work has looked
into what stakeholders think responsibility
is. This is, however, particularly important
if we are to accept the thesis of both
Connolly et al . (1980) and Jones (1995) , who
suggest that instrumental and normative
research should be built upon the foundation
of strong descriptive research. This paper
aims to provide such a foundation.
The Need for a Conceptualization of CR
from a Stakeholder Perspective
The conceptualizations of reputation
developed by MacMillan et al . (2004) and
Fombrun (1996) reviewed in the reputation
literature involved stakeholders in their
development. They drew upon the key
tenants of stakeholder theory outlined above.
As was outlined in the previous section,
current conceptualizations of responsibility
have been produced without systematically
and rigorously engaging stakeholders in their
development. Furthermore, current measures
often focus primarily on the social activities
of a business such as charitable donations,
community involvement and employee vol-
unteerism ( Maignan and Ferrell, 2004 ).
It is not clear however, whether these
issues are similar or different to stakeholder
conceptualizations of the social elements of

55. responsibility, let alone what the views of
stakeholders would be regarding a wider
notion of responsibility ( Dawkins and
Lewis, 2003 ). As a result, the indicators cur-
rently used by companies to demonstrate
CR are often said to be pragmatic or public
relations-based responses to pressure from
non-governmental organizations (NGOs)
( Esrock and Leichty, 1998 ; Sumner,
2004 ) and are seen to lack credibility with
Hillenbrand and Money
© 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 267
stakeholders ( Barone et al ., 2000 ; Mohr et al .,
2001 ). There is, however, a consensus among
practitioners and academics alike that it is
important to understand and address
stakeholder expectations of CR ( Wood et al .,
2006 ; MacMillan et al ., 2004 ; Waddock,
2002 ). It is our aim to import the appro aches
and rigor around which reputation measures
were developed to the fi eld of CR. In
particular to apply similar techniques used
by Fombrun and Van Riel (2004) and
MacMillan et al. (2004) .
This paper continues by describing a re-
search project that sets out to defi ne respon-
sibility from the perspective of stakeholders
and fi lls this gap. Customers and employees
of a fi nancial institution are the participants

56. and sources of data in this study. As such
the study provides a fi rst step to conceptua-
lize responsibility from a stakeholder per-
spective. A formal comparison with the
reputation models, as outlined in the intro-
duction, is then given.
METHODOLOGY AND RESEARCH DESIGN
The research was conducted with a fi nancial
service company in the UK and was part of
a larger project investigating responsibility
and its impact in the fi nancial service sector.
Data gathering for the research reported in
this paper included 15 in-depth interviews
with employees of three different branches.
Furthermore, data gathering included four
focus groups with 8 – 12 customers each in
three different areas of the UK. The views
of a total of 56 customers and employees
were used as data in the qualitative analysis.
The design of the interviews was informed
by Kvale (1996) . The design of the customer
focus groups was informed by Marshall and
Rossman (1995) .
The study was based upon an inductive
research design. Following key qualitative
research techniques, the discovery of emp-
loyee and customer construction of reality
as a basis for conceptual understanding builds
on elements of grounded theory ( Glaser and
Strauss, 1967 ; Easterby-Smith et al ., 2002 ). In
a similar way to Fombrun (1996) , who asked
general questions such as ‘ What is Corporate
Reputation ’ and ‘ What does it entail ’ , the

57. current research study also used general
questions, such as ‘ What is Corporate
Responsibility ’ and ‘ What does it entail ’ .
While Fombrun asked stakeholders to think
of business in general and good and bad
companies, this research study is carried out
in the context of a relationship between
stakeholders and a target business. This is
done to take account of stakeholder theorists
and social psychologists who suggest that
issues are more richly understood when
they are embedded into experience.
It should be noted that the aim of the
research is to investigate mental conceptu-
alizations of CR among customers and
employees. Therefore, the design did not
employ existing conceptualizations of CR,
or aspects thereof, as practical research
guidelines. In the same way, no organiza-
tional value propositions such as mission
and vision statements of the participating
research organization were employed as
guidelines.
DATA ANALYSIS AND RESULTS
The fi eld notes and transcripts were analyzed
in an inductive way based on Miles and
Huberman (1994) who suggest a systematic
process for making sense of and displaying
data, including the following stages that are
now outlined:
1. Preparation of written-up fi eld notes.
2. Qualitative clustering to identify trends

58. in the data.
3. Further analysis to identify high-level
themes and links between clusters.
Field Notes
The focus groups with customers were
audio- and videotaped and subsequently
transcribed. Interviews with employees
could not be taped due to reasons of
Corporate Responsibility and Corporate Reputation
Corporate Reputation Review Vol. 10, 4, 261–277 © 2007
Palgrave Macmillan Ltd. 1363-3589 $30.00268
confi dentiality. Therefore, a second research-
er who took notes during the interviews
accompanied the facilitator.
Qualitative Clustering to Identify Trends
in the Data
The written up fi eld-notes and transcripts
were then analyzed by identifying dominant
trends that were repeatedly mentioned by
customers and employees. The method of
identifying trends was based on a qualitative
clustering technique described by Miles and
Huberman (1994) . Qualitative clustering
helps to understand data by grouping and
then conceptualizing units that have similar
patterns or characteristics. Based on this
technique, eight distinct clusters of respon-
sibility were identifi ed from the data that

59. represent customer and employee thoughts
on what a business is responsible for. These
eight clusters are responsibility for: (1) com-
munication with them, (2) the kind of ben-
efi ts a business offers them, (3) behaving with
integrity, transparency and accountability
towards them, (4) how a business makes
them feel, (5) how a business relates to local
communities, (6) how a business relates to
the wider society, including the environ-
ment, (7) how business behaves towards
other exchange stakeholders and (8) being
a fi nancially stable and successful business
in the long term.
HIGH-LEVEL THEMES AND LINKS BET-
WEEN CLUSTERS OF RESPONSIBILITY
These eight clusters were then categorized
in three high-level themes that refl ect who
these responsibilities are addressed to in the
minds of stakeholders. So, in the minds of
stakeholders a business is responsible for how
it relates to (1) ‘ me ’ , (2) ‘ others ’ and (3) ‘ it-
self ’ . These three themes with corresponding
clusters are shown in Table 2 .
Table 3 gives some specifi c examples of
how these themes and clusters are expressed
in the customer and employee data from the
fi nancial service organization studied.
It should be noted that there is a high
degree of overlap between the themes and
the clusters that underpin customer and em-
ployee understanding of CR. Expression of

60. these clusters seems to be more similar when
referring to issues removed from their own
relationship, such as how business relates to
others and to itself. While this is the case,
Table 2 : Themes and Clusters of Responsibility from a
Stakeholder Perspective
Three themes of responsibility Eight clusters of
responsibility
A business is responsible for …
… how it relates through communication
to ME through the kind of benefi ts it offers to me
through the way it behaves with integrity, transparency
and accountability
and how that makes me feel
… how it relates to OTHERS
(that includes stakeholders and
society in large)
The local community
The wider society
Towards other direct exchange stakeholders (ie employees,
customers, suppliers and shareholders)
… how it relates to ITSELF Long-term business success
Hillenbrand and Money

61. © 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 269
Ta
b
le
3
:
M
o
re
D
e
ta
il
e
d
C
o
n
c
e
p
tu
a
li
za

62. ti
o
n
o
f
R
e
s
p
o
n
s
ib
il
it
y
f
ro
m
a
S
ta
k
e
h

63. o
ld
e
r
P
e
rs
p
e
c
ti
v
e
A
b
us
in
es
s
is
r
es
po
ns

64. ib
le
f
or
…
…
th
at
m
ea
ns
f
ro
m
a
c
us
to
m
er
p
er
sp

65. ec
tiv
e,
fo
r
ex
am
pl
e
…
th
at
m
ea
ns
f
ro
m
a
n
em
pl
oy
ee

66. p
er
sp
ec
tiv
e,
fo
r
ex
am
pl
e
…
h
ow
i
t
re
la
te
s
to
M

67. E
th
ro
u
gh
co
m
m
un
ic
at
io
n
•
P
ro
ac
ti
ve
c
o
m
m

68. u
n
ic
at
io
n
o
f
re
le
va
n
t
in
fo
rm
at
io
n
•
B
ei
n
g

69. lis
te
n
ed
t
o,
b
ei
n
g
ab
le
t
o
g
et
t
h
ro
u
gh
to
a
m

70. em
be
r
o
f
st
af
f
•
A
pp
ro
pr
ia
te
c
o
m
m
u
n
ic
at
io
n

71. b
et
w
ee
n
m
an
ag
em
en
t,
st
af
f
an
d
cu
st
o
m
er
s
•
C

72. o
m
m
u
n
ic
at
in
g
co
m
pa
ny
p
ro
ce
du
re
s
th
ro
u
gh

73. t
h
e
ki
nd
o
f b
en
efi
ts
it
of
fe
rs
t
o
m
e
P
ro
du
ct
s

74. an
d
se
rv
ic
es
:
•
O
ff
er
in
g
co
m
pe
ti
ti
ve
p
ri
ce
s
an
d

75. pr
o
du
ct
s
ov
er
ti
m
e
•
O
ff
er
in
g
fr
ie
n
dl
y
an
d

76. po
lit
e
se
rv
ic
e,
k
n
ow
in
g
cu
st
o
m
er
s
by
n
am
e
R
em

77. u
n
er
at
io
n
p
ac
ka
ge
, t
ra
in
in
g
an
d
de
ve
lo
pm
en
t
•

78. P
ro
vi
di
n
g
a
go
o
d
sa
la
ry
•
P
ro
vi
di
n
g
ca
re
er

79. o
pp
o
rt
u
n
it
ie
s
•
T
ra
in
in
g
an
d
de
ve
lo
pm
en
t

80. th
ro
u
gh
t
h
e
w
ay
i
t
be
h
av
es
w
it
h
i
nt
eg
ri
ty
, t

81. ra
ns
pa
re
nc
y
an
d
ac
co
un
ta
bi
lit
y
•
B
ei
n
g
h
o
n
es
t

82. •
A
ck
n
ow
le
dg
in
g
pr
o
bl
em
s
in
a
n
o
pe
n
w
ay
•

83. N
o
t
al
lo
w
in
g
bo
rr
ow
er
s
to
o
ve
r-
st
re
tc
h
t
h
em

84. se
lv
es
•
B
ei
n
g
h
o
n
es
t
•
H
av
in
g
cl
ea
r
in
te

85. rn
al
t
ar
ge
ts
•
T
ak
in
g
re
sp
o
n
si
bi
lit
y
fo
r
em
pl
oy

86. ee
b
eh
av
io
r
to
w
ar
ds
cu
st
o
m
er
s
an
d
h
ow
t

87. h
at
m
ak
es
m
e
fe
el
•
B
ei
n
g
pr
o
u
d
o
f
be
in
g
a
cu

88. st
o
m
er
•
B
ei
n
g
pa
rt
o
r
so
m
et
h
in
g
in
sp
ir
in
g

89. •
T
ru
st
in
g
th
e
bu
si
n
es
s
•
F
ee
lin
g
re
sp
ec
te
d

90. •
B
ei
n
g
en
th
u
si
as
ti
c
ab
o
u
t
th
e
co
m
pa
ny
•

91. T
ru
st
in
g
th
e
bu
si
n
es
s
…
h
ow
i
t
re
la
te
s
to

92. O
T
H
E
R
S
(
th
at
i
n
cl
u
de
s
st
ak
eh
o
ld
er
s
an
d

93. so
ci
et
y
in
l
ar
ge
)
T
h
e
lo
ca
l
co
m
m
un
ity
•
A
b

94. u
si
n
es
s
th
at
a
re
a
w
ar
e
o
f
pr
o
bl
em
s
in
l
o
ca
l
co

95. m
m
u
n
it
ie
s
an
d
pa
rt
ic
ip
at
es
i
n
p
ro
vi
di
n
g
so
lu

96. ti
o
n
s
•
K
ee
pi
n
g
lo
ca
l
br
an
ch
es
o
pe
n
•
G
et
ti

97. n
g
in
vo
lv
ed
i
n
l
o
ca
l
pr
o
je
ct
s
an
d
co
m
m
u
n
it
y

98. ac
ti
vi
ti
es
T
h
e
w
id
er
s
oc
ie
ty
•
Su
pp
o
rt
in

99. g
n
at
io
n
al
a
n
d
in
te
rn
at
io
n
al
c
h
ar
it
ie
s
an
d
vo

100. lu
n
ta
ry
o
rg
an
iz
at
io
n
s
•
C
o
n
si
de
ri
n
g
a
bu
si
n

101. es
s
im
pa
ct
o
n
t
h
e
en
vi
ro
n
m
en
t
•
Su
pp
o
rt
in
g
n

102. at
io
n
al
a
n
d
in
te
rn
at
io
n
al
c
h
ar
it
ie
s
an
d
vo
lu
n
ta

103. ry
o
rg
an
iz
at
io
n
s
•
C
o
n
si
de
ri
n
g
a
bu
si
n
es
s

104. im
pa
ct
o
n
t
h
e
en
vi
ro
n
m
en
t
T
ow
ar
ds
o
th
er
d
ir

105. ec
t
ex
ch
an
ge
s
ta
ke
ho
ld
er
s
(i
e
em
pl
oy
ee
s
,
cu
st
o

106. m
er
s
, s
u
pp
lie
rs
a
n
d
sh
ar
eh
o
ld
er
s
)
In
p
ar
ti
cu
la

107. r,
em
pl
oy
ee
s
w
er
e
id
en
ti
fi
ed
as
a
k
ey
g
ro
u
p,
t
h

108. at
t
h
e
bu
si
n
es
s
sh
o
u
ld
:
•
R
et
ai
n
l
o
ca
l
em
pl
oy

109. m
en
t
•
P
ro
vi
de
s
ta
bl
e
lo
n
g-
te
rm
e
m
pl
oy
m
en

110. t
•
T
re
at
s
ta
ff
f
ai
rl
y
In
p
ar
ti
cu
la
r,
cu
st
o
m

111. er
s
w
er
e
id
en
ti
fi
ed
a
s
a
ke
y
gr
o
u
p,
t
h
at
t
h
e

112. bu
si
n
es
s
sh
o
u
ld
p
ro
vi
de
w
it
h
•
G
o
o
d
se
rv
ic
e

113. (e
g
tr
ea
ti
n
g
cu
st
o
m
er
s
w
el
l,
an
d
a
fr
ie
n
dl
y

114. m
an
n
er
)
•
A
cc
es
si
bl
e
se
rv
ic
e(
eg
o
ff
er
in
g
fa
ce

115. -t
o
-f
ac
e
se
rv
ic
e
to
c
u
st
o
m
er
s
an
d
a
di
re
ct
p

116. h
o
n
e
lin
e)
•
G
o
o
d
pr
o
du
ct
s
(e
g
co
m
pe
ti
ti
ve
p
ro

117. du
ct
s,
pr
ic
es
a
n
d
qu
al
it
y)
…
h
ow
i
t
re
la
te
s

118. to
IT
S
E
L
F
L
on
g-
te
rm
b
us
in
es
s
su
cc
es
s
•
B

119. ei
n
g
fi
n
an
ci
al
ly
s
u
cc
es
sf
u
l
•
B
ei
ng
e
st
ab
lis

120. he
d
in
b
us
in
es
s
in
t
he
lo
ng
t
er
m
•
L
o
n
g-
te
rm

121. p
ro
fi
ta
bi
lit
y
•
H
av
in
g
ex
ce
lle
n
t
m
an
ag
em
en
t

122. Corporate Responsibility and Corporate Reputation
Corporate Reputation Review Vol. 10, 4, 261–277 © 2007
Palgrave Macmillan Ltd. 1363-3589 $30.00270
the specifi c expression of concepts is often
different, particularly when relating to how
a business relates to them as a focal stake-
holder group.
DISCUSSION OF THE RESULTS
The most noticeable fi nding from the re-
search is how comprehensive and extensive
customers ’ and employees ’ conceptualization
of CR is. The analysis reveals a wide spread
of business behaviors and characteristics as-
sociated with the notion of CR such as the
way a business behaves towards people in its
daily activities, the way a business makes
people feel, aspects of profi tability and com-
munication. This is particularly interesting
when one considers how the term CR is
sometimes used in a very narrow sense to
represent charitable donations, community
involvement and employee voluntarism,
which are all extra-curricular activities and
not core aspects of how a business makes its
profi ts. While customers and employees see
support of good causes and the environment
as part of the picture, it does not seem to
be their main priority. The results do
suggest however, that CR is a concept that
em braces both the social aspects normally
associated with CSR and wider elements as-

123. sociated with more mainstream business
practice.
The results also suggest that customers
and employees see CR as being refl ected in
similar issues. This has implications for the
management of multiple stakeholder rela-
tionships in that it suggests that organizations
can manage and demonstrate their responsi-
bility using a similar set of issues. Theorists
such as ( Carmeli, 2005 ; Dutton et al ., 1994 ;
Smidts et al ., 2001 ) could build on this in
their work linking internal and external
reputations.
The most important business responsi-
bilities in customer and employee under-
standing are core aspects of business
behavior and strategy such as the way a busi-
ness runs its operations and treats customers
and staff and whether it is profi table or not.
Indeed of the eight clusters identifi ed, only
two ( How a business relates to the local com-
munity and How it relates to wider society ) did
not relate to the core activities of business.
The other six clusters refer to how a business
relates to stakeholders in terms of their
daily business activities and whether or
not a business makes money.
The message to businesses here is clear.
If they want to be seen as responsible by
customers and employees, they need to
get the relationship right with these groups
as well as meeting wider social obligations.

124. The fi ndings should also come as a relief
to managers who often wrestle with the
‘ confl ict ’ between being responsible and
providing good service and profi tability.
The message is again clear: businesses
that deliver value and service to customers
and are honest and fair to employees
should be perceived as being responsible.
If we believe past research, these activities
should also bring profi t (eg MacMillan et al . ,
2004 ).
LINKING CR AND CORPORATE
REPUTATION
A comparison of the conceptualization of
responsibility provided by the data analyzed
in this paper and current measures and mod-
els of reputation provides the framework for
a discussion about links between responsibil-
ity and reputation. As a starting point,
similarities between elements of CR, as rep-
resented by the fi ndings of the current study,
and elements of Corporate Reputation, as
represented by the SPIRIT-Model of Repu-
tation ( MacMillan et al ., 2004 ) and the RQ
Model ( Fombrun and Van Riel, 2004 ) are
summarized in Table 4 .
For ease of reference similarities and dif-
ferences are now discussed in terms of the
three themes of CR developed from the
empirical research in this paper.
Hillenbrand and Money

125. © 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 271
Table 4 : Comparison between Findings of the Current
Study and Reputation Models
Themes and clusters of responsibilities
(Results of the current study)
Reputation models
Three themes of
responsibility
Eight clusters of
responsibility
SPIRIT
MacMillan et al. (2004) Data from
one or more stakeholder groups on
their perceptions of a business
RQ
Fombrun and Van Riel (2004)
Data from one or more
stakeholder groups on their
perceptions of a business
A business is responsible for:
… how it relates to ME Through
communication
Experience of Business Behavior

126. (Communication)
Through the kind of
benefi ts it offers to me
Experience of business behavior (Material
and non-material benefi ts)
Products and services
Through the way it behaves
with integrity, transparency
and accountability
Experience of business behavior (Keeping
commitments,
fairness and a lack of
coercion)
Vision and leadership
And how that makes me
feel
Stakeholder feelings towards a business
(eg trust and positive emotions)
Emotional appeal

127. … how it relates to
OTHERS (that includes
stakeholders and society
in large)
The local community Experience of outside infl uences , eg
the
local community or apply SPIRIT
to the local community
The wider society Experience of outside infl uences , eg
the
local community or apply SPIRIT
to the wider society to obtain their
experiences of the business
Social responsibility
Towards other direct
exchange stakeholders
(eg employees, customers,
suppliers and shareholders)
Apply SPIRIT to multiple
stakeholders to gain
experiences of employees, customers,
investors and
shareholders
Workplace environment

128. … how it relates to
ITSELF
Long-term business success Stakeholder Intentions towards a
business
including behavioral support such as
retention, extension, advocacy,
cooperation and a lack of subversion
Financial performance
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Palgrave Macmillan Ltd. 1363-3589 $30.00272
Theme 1: Stakeholder Expectation about
‘ How a Business Relates to Me ’
It seems that the theme of ‘ how an organi-
zation relates to me as a stakeholder ’ is par-
ticularly similar to the part of SPIRIT that
measures ‘ stakeholder experiences of an or-
ganization ’ . Both the above-mentioned
themes in the CR and SPIRIT models,
for example, include a measure of how
an organization communicates with stake-
holders, the benefi ts stakeholders receive
from organizations, the integrity with which
stakeholders are treated and how stakehold-
ers feel towards the business.

129. The RQ also seems to overlap with the
CR model in terms of this theme of ‘ how
an organization relates to me as a stakehold-
er ’ . In particular, the pillar of ‘ products
and services ’ seem to relate very strongly to
‘ benefi ts offered to me (as a customer) ’
and the pillar of ‘ emotional appeal ’ seem to
link very strongly to ‘ how an organization
makes me feel ’ . The other two clusters of
this theme of responsibility, in terms of
the communication and integrity seem to
be less closely linked to the RQ. However,
it could be argued that elements of vision
and leadership should correlate with notions
of integrity.
Theme 2: Stakeholder Expectations
about ‘ How a Business Relates to Others ’
In terms of the second theme of responsibil-
ity, ‘ how an organization is seen to relate to
others ’ , the themes and dimensions from
reputation models fi t well, but not with the
same degree of synergy as the previous
theme of CR. This is because reputation re-
search often provides data from the perspec-
tive of one stakeholder group only in terms
of how the organization relates to them. RQ
and SPIRIT surveys are, for example, often
conducted with customers or employees of
an organization, while it is less common for
surveys to be conducted simultaneously with
both these groups, let alone multiple stake-
holders. Ideally, data regarding this dimen-
sion of responsibility should be obtained by
conducting research directly with different

130. stakeholder groups regarding their individu-
al relationships with the organization.
Research with one stakeholder group
does, however, offer an opportunity to gath-
er information that is relevant to this theme
of responsibility because reputation models
often require stakeholders to give their opin-
ion about how organizations relate to stake-
holder groups other than their own. An RQ
with customers of an organization, for ex-
ample, will provide an indication of how
customers perceive an organization to be
performing in terms of ‘ social responsibility ’ .
This could, for example, relate to the dimen-
sion of responsibility relating to ‘ how an
organization is seen to impact the wider so-
ciety ’ . An RQ with customers would also,
for example, provide an indication of how
customers perceive the ‘ workplace environ-
ment ’ of an organization. This may provide
some indication of the dimension of respon-
sibility that relates to ‘ how an organization
relates to its employees ’ .
When SPIRIT is applied to one stake-
holder group, it provides much more infor-
mation about the details of the focal
relationship than the RQ, but less informa-
tion about how this focal group perceive an
organization to relate to others. It does,
however, provides an indication of how
other groups may infl uence the reputation
of an organization in the minds of one focal
stakeholder group. This could include, for
example, customer perceptions of how an

131. organization relates to the local community
and wider society and an indication of how
these perceptions infl uence the reputation of
the organization in their minds. It does not,
however, overtly ask stakeholders how other
groups are treated by the organization.
This example highlights the differences
between the SPIRIT model and the RQ
and also highlights the importance of
carrying out further multi-stakeholder
Hillenbrand and Money
© 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 273
research in both the reputation and respon-
sibility fi elds. It seems clear that organiza-
tions will obtain a more accurate picture of
their reputation and whether they are meet-
ing their responsibilities, if they survey dif-
ferent stakeholder groups directly and
simultaneously.
If simultaneously applied to various stake-
holders, the SPIRIT model seems to provide
the closest link to the responsibility model.
This is because it asks stakeholders directly
about issues that relate to their own relation-
ship and that they have direct experience of.
The RQ, on the other hand, may require a
focal stakeholder group to make judgments
about things that are beyond their experi-

132. ence and knowledge. A customer RQ, would,
for example, ask customers about their
perceptions of an organization ’ s ‘ workplace
environment ’ , while an employee RQ may
ask about an organization ’ s ‘ products and
services ’ and ‘ fi nancial performance ’ . Issues
that each group may not necessarily know
that much about and that more closely links
to the experience of another stakeholder
group. Doing an RQ with multiple stake-
holders, may therefore, provide more of an
overview of the reputation of an organiza-
tion in terms of macro issues, rather than an
analysis of how an organizations relates to
each stakeholder group in term of issues that
are important to them.
The discussion above highlights the most
crucial differences between the RQ and
SPIRIT and suggests that organizations have
important decisions to make when choosing
reputation and responsibility models. The
RQ may for example, provide a more ho-
listic picture of responsibility when applied
to just one group, while SPIRIT fi ts well
with a multi-stakeholder approach. It also
indicates that SPIRIT and the RQ could
be modifi ed to take account of the needs
of responsibility practitioners. Choices of
research approach will have to be balanced
in terms of organizational need, costs and
time constraints.
Theme 3: Stakeholder Expectations
about ‘ How a Business Relates to Itself ’
In terms of the fi nal dimension of responsibil-

133. ity, ‘ how an organization relates to itself in
terms of long-term business success ’ , both
reputation models provide strong indicators.
The SPIRIT model provides an indication of
stakeholder intentions to be supportive of an
organization in the future. Since this relates
to issues such as customers continuing to buy
products and employees being committed to
their work, it provides an indication of the
future fi nancial success and sustainability of
an organization. Therefore, it provides a strong
indication of the future sustainability of an
organization. The RQ, on the other hand,
provides an indication of the perception of
the past fi nancial performance of an organiza-
tion. While not providing an indication of
future performance, this is a key element of
past performance that will determine wheth-
er an organization is seen to be responsible
at any particular moment in time. Both meas-
ures seem complimentary.
SUMMARY OF THE COMPARISON
BETWEEN THE CR MODEL AND
REPUTATION MODELS
In summary, an analysis of Table 4 suggests
that stakeholder understanding of CR is, in
important aspects, similar to stakeholder un-
derstanding of Corporate Reputation, as
expressed by the two reputation models
analyzed. This poses serious questions for
theorists who suggest that CR is a key an-
tecedent of Corporate Reputation or even
suggest that CR and Corporate Reputation
are distinct concepts. Rather, the results sug-
gest that far from being distinct the two

134. concepts are largely overlapping. In other
words, when taking a stakeholder perspec-
tive, Corporate Reputation and CR are both
expressed through similar and overlapping
corporate behaviors and understood in terms
of similar and overlapping stakeholder per-
ceptions. In this way rather than viewing
reputation and responsibility as two separate
Corporate Responsibility and Corporate Reputation
Corporate Reputation Review Vol. 10, 4, 261–277 © 2007
Palgrave Macmillan Ltd. 1363-3589 $30.00274
concepts, they may more usefully be thought
of as two sides of the same coin.
This has a number of implications, but
critically it may mean that reputation models
could be used to provide a starting point for
the provision of proxy-measures of responsi-
bility. In addition, the conceptualization of
responsibility provided in this paper suggests
that organizations can use measures provided
by reputation models to communicate and
report on the responsibility of their busi-
nesses in terms of issues that are relevant to
stakeholders. In this way data could be col-
lected for a number of purposes. Also, these
measures could be incorporated into strategic
decision-making that is aimed at growing
the value of the business as well as ensuring
responsible behavior. It might also provide an
opportunity for reputation and responsibility

135. practitioners and academics to join forces and
move both concepts forward.
Another interesting fi nding is that despite
differences in the interpretation of aspects of
the clusters, on a conceptual level, employees
and customers construct CR in a very simi-
lar way. From a theoretical point it suggests
that a generic conceptualization of CR and
Corporate Reputation could be developed
that is applicable to different stakeholder
groups. This could then be operationalized in
different ways with different organizations
and stakeholders as our research suggests dif-
ferent stakeholders express the same underly-
ing themes in different ways. From a practical
point it suggests that a business can simultane-
ously enhance its reputation and demonstrate
its responsibility by meeting stakeholder ex-
pectations. However, the expression of spe-
cifi c relationship issues still highlights
importance of understanding the specifi cs in
the expectations of different stakeholder
groups before operationalizing responsibility
or reputation in organizations.
LIMITATIONS AND FUTURE RESEARCH
The research focuses on the concepts of CR
and Corporate Reputation. The results
should not be taken to be generalizable to
other concepts such as CSR. While the
results suggest that social elements are key
components of CR, richer and more
in-depth views of CSR may be obtained
by taking a similar inductive approach and

136. researching this concept in more detail.
Researchers are thus encouraged to conduct
this type of research with different type of
corporate entity and concepts that embrace
different elements of those identifi ed in this
study or in the literature.
The current study has been conducted
with customers and employees of a fi nancial
service company in the UK and it is not
clear in how far the fi ndings can be gener-
alized to other industries, stakeholders or
countries. Future research could extend
exploratory research into stakeholder expec-
tations of CR including other stakeholder
groups such as suppliers, investors, commu-
nities and NGOs. It would also be interest-
ing to conduct similar research with different
businesses and in different industries and
countries to compare how far expectations
of CR can be compared and separated into
specifi c business responsibilities, specifi c
industry responsibilities, cultural responsi-
bilities and general responsibilities. Since a
key tenant of stakeholder theory is that con-
ceptualizations are multifaceted and depend-
ent upon different stakeholder needs, the
overlap between reputation models and con-
ceptualizations of CR could be further in-
vestigated in different situations.
CONCLUSION
Implications for Academics
The study has a number of implications for
the academic world. First, the fi ndings of this

137. study suggest that customers and employees
conceptualize CR in three ways: as business
behavior towards them, as business behavior
towards other stakeholder groups and as
business behavior that ensures a business ’
Hillenbrand and Money
© 2007 Palgrave Macmillan Ltd. 1363-3589 $30.00 Vol. 10, 4,
261–277 Corporate Reputation Review 275
own success. When broken down into its
constituent parts these relate to, for example,
issues such as how an organization provides
benefi ts to stakeholders through its products
and services, how it communicates with
stakeholders as well as the emotional impact
that an organization has on stakeholders.
Second, in a comparison of these fi ndings
with prominent reputation models it was
found that there is a great overlap between
elements of reputation models and aspects
of CR. This was particularly the case in that
both investigate how a business relates to its
various stakeholders in terms of key business
activities. Measuring CR may therefore, not
be that different from measuring Corporate
Reputation, as both can be rooted in stake-
holder relationships. Third, this paper pro-
vides the opportunity to apply the advances
in the conceptual development of reputation
to the fi eld of CR.
Implications for the Practitioner

138. The study also has a number of implications
for practitioners. One implication is the way
Corporate Reputation and CR are managed
in organization. Since the fi ndings suggest
that the areas of reputation and responsibil-
ity are overlapping, it follows that the con-
cepts could be managed in an integrated way.
Perhaps organizations already have the meas-
ures and processes they need to manage both
concepts in separate business units. For this
reason, organizations are encouraged to ex-
plore how Corporate Reputation and CR
activities could positively impact each other.
A further implication is that involving stake-
holders in defi ning an organization ’ s respon-
sibilities can add to the legitimacy of how
the concept of responsibility can be defi ned,
implemented and measured. Finally, it is clear
that elements of CR have been closely linked
to Corporate Reputation. This should give
practitioners the ammunition they need to
justify the costs that are sometimes associ-
ated with the fi eld.
CONCLUDING REMARKS
Overall, the major conclusion is that practi-
tioners and researchers in Corporate Reputa-
tion and CR are encouraged to explore how
they could work together to raise the profi le
of both fi elds, conduct further research and
infl uence strategic decision making.
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