Reputation is probably the most important asset owned by a company, and not only because it attracts and retains the best resources, but also because it leverages the value of the company’s unique character and identity by showing how well the company manages to align its external perception with the internal reality. This document was prepared by Corporate Excellence and among other sources contains references to Corporate Reputation and Competitiveness by Gary Davies and Rosa Chun, Professors at the University of Manchester (the UK) and the IMD Business School (Switzerland), respectively, and published by Routledge in 2003.

1. If there is an area whose role in large companies
increasedinthelastfewyears,itisreputation:every
day more attention is paid to how an organization
is perceived and recognized, due to the fact that
organizations become increasingly aware of the
role that this perception and recognition play in
the decisions related to purchases, investments,
work motivation or just support.
Customers, analysts, employees, institutions or
general public decide when a company deserves
their regard, respect and trust depending on its
actions and behaviour towards the market and the
society, and this behaviour is directly related to the
company’s character, its values and its nature.
The high value of brands is largely based on the
value of their company’s reputation. It is understood
that trust has two sources – rational and emotional.
These sources are inseparable and work together
towards the same goal: preference of this company by
stakeholders as the result of its clear differentiation
and prestige achieved over time.
Such is the starting point of the text titled Corporate
Reputation and Competitiveness authored by Gary
Davies and Rosa Chun, Professors at the University
of Manchester (United Kingdom) and the IMD
Business School (Switzerland) respectively, jointly
with Rui Vinhas da Silva and Stuart Roper,
Professors of the Manchester University.
How Reputation is Created
Reputation is a combination of different elements
that result in our overall idea of a company – our
perception of the company based on different
factors, impressions, experiences and references. One
shouldn’t forget that this perception is then compared
to the perception of the same company at a different
point in time or to the perception of its competitors.
Reputation is probably the most important asset owned by a company, and
not only because it attracts and retains the best resources, but also because it
leverages the value of the company’s unique character and identity by showing
how well the company manages to align its external perception with the
internal reality.
L05/2014
From Measurement to
Management: Managing
Reputation to Achieve
Competitive Advantage
Reputation
Book Summary
This document was prepared by Corporate Excellence and among other sources contains references to Corporate Reputation and
Competitiveness by Gary Davies and Rosa Chun, Professors at the University of Manchester (the UK) and the IMD Business School
(Switzerland), respectively, and published by Routledge in 2003.

2. Book Summary 2
Different dimensions and variables constitute the
elements, or sub-reputations, that then contribute
to the overall idea of corporate reputation.
These dimensions include opinions about labour
conditions, products and services, innovations,
economic results, business governance, corporate
citizenshiporethicsandCSR.Certainly,advertising,
other communication and public relations activities
as well as relations with the mass media and the
community play an important role in creating or
destroying a company’s reputation.
Apart from the company’s character, its actions
and its environment, important factors include the
sector of its operations and the country or region
of its origin. These factors act as reputation filters,
creating certain stereotypes or halos that predispose
the public to anticipate certain typical behaviour
based on the knowledge of culture and values
associated with different sectors and countries.
Coherence of these different elements and
factors to a large extent determines whether the
perception of the company will be positive or
negative, what prestige level it will achieve and
whether it will be able to align different aspects to
create generally positive impression in the minds
of all its stakeholders.
Different measurement tools
One of the problems that still has not been
resolved in the field of reputation studies is related
to measurement tools, standards and methods
needed for measuring reputation both as an overall
concept and as a set of specific aspects. Besides, it is
important to bear in mind the difference between
the concept of reputation proper and variables that
are based on this concept.
One of the first reputation monitoring tools was
developed by the American magazine Fortune,
when it published its rating of America’s 1,000
most admired companies. The rating was then
extended to include other large international
companies and develop a rating of 100 best
employers. The methodology of the former
two rankings attaches significant weight to the
opinion of the companies’ senior executives and,
as a result, their financial performance.
Another reputation measurement system that
has become popular is the one developed by
the Reputation Institute, originally known as
Reputation Quotient and later renamed RepTrak.
This system incorporates 20 attributes divided
into 7 dimensions. The target population of
this method is consumers, and the overall score
fuses rational aspects and the aspects that reflect
emotional appeal of companies.
Several years ago, the Rotterdam Organizational
Identification Test (ROIT) developed a system
for evaluating employees’ identification with their
organization, where cultural elements have the
same weight as the elements related to satisfaction
with labour conditions.
The Role of Corporate Personality
An important step forward in measuring reputation
is related to corporate personality, i.e. the idea
that corporate identity is personified by the public
opinion. Its dimensions include agreeableness,
competence, chic, enterprise and informality on
the positive side, and machismo and ruthlessness
on the negative side. In fact, the first dimension
(agreeableness), formed by such attributes as
kindness, empathy and integrity is typical for
socially responsible organizations.
Each of the seven dimensions is divided into several
characteristics:
1. Agreeableness:
a. Kindness.
b. Empathy.
c. Integrity.
2. Enterprise:
a. State-of-the-art.
b. Adventurous.
c. Brave.
3. Competence:
a. Awareness.
b. Determination.
c. Technocracy.
4. Chic:
a. Style.
b. Prestige.
c. Fashion.
5. Ruthlessness:
a. Egotism.
b. Control.
6. Informality
7. Machismo
From Measurement
to Management:
Managing Reputation
to Achieve
Competitive
Advantage
“Stakeholders
decide when
a company
deserves
their trust
depending on
its behaviour,
which is
directly
related to the
company’s
character and
its values”.
Graph 1: How reputation is created
Source: Corporate Reputation Competitiveness, 2003.
Company
Country
Of origin
Design
Advertising
Directmail
Priorexperience
Wordof
mouth
Price
points
Personalcontact
Mediacomment

3. Book Summary 3
Thus corporate personality is dissected into elements
which are analysed and measured in order to evaluate
the degree to which they are perceived by customers
and employees as well as the gaps that exist between
the perceptions by these two groups. This perspective
helps to measure a company’s reputation and outline
its profile and values by means of studying different
dimensions and different stakeholders.
The Chain of Reputation
Another concept developed by Davies and Chun in
their text is the reputational chain, defined as the
capacity to correlate identity (for the employees)
and image (for the customers) through satisfaction,
which in the case of employees results in retention
and in the case of customers – in loyalty.
Forbothgroups,satisfactionisthekeyforexcellence.
At the same time, satisfaction is an essential element
in the process of building reputation. And before
speaking about customer satisfaction, we should
examine employee satisfaction. Satisfaction is thus
understood not only in economic terms, but also in
terms of personal motivation and development.
The most important element of reputational chain is
that it highlights the result of employee satisfaction
(good service and innovations) and its implications
for customer satisfaction (increased sales): the first
is impossible without the second, while the second
does not exist without the first.
In fact, according to the study carried out by Gary
Davies and Rosa Chun, employee satisfaction and
a good internal reputation in most of the cases
translates into customer satisfaction and a good
externalreputationinthecourseofaroundthreeyears,
depending on the sector and the country. This means
that the two phenomena are highly correlated.
Conclusion: Reputation as the
Key Factor of Transformation
Today brands are not just symbols used by companies
in the consumer sectors to lure customers through
image and advertising. The logo, the symbol and the
name are the tip of the iceberg consisting of complex
elements – the company in its entirety as perceived not
only by customers, but also by all other stakeholders.
Reputation plays an important role in brand
management and measuring the value of brand.
In fact, today brands are managed and measured
by their reputation, by the result that they achieve
in terms of intangible value for their stakeholders.
Besides, reputation enables companies and brands
to have a long-term vision. This ethical and
transparent vision is the foundation of trust.
Paradoxically, reputation drives companies to
combine the external and internal focus. They are
encouraged to be involved with the outside world,
since companies realize that they need to hear,
understand and integrate social issues that are present
on the public agenda in their corporate strategy. And
at the same time reputation stresses the internal focus
too, by highlighting the importance of values and
aligning corporate identity with the reality.
Finally, reputation is currently one of the priority
issues for businesses and their managers, as well
as governments, professionals, countries, cities,
institutions and associations of all kinds, from
trade unions through social entities and NGOs to
political parties aware of the importance to improve
their reputation, protect it or build it from scratch.
From Measurement
to Management:
Managing Reputation
to Achieve
Competitive
Advantage
“A good
internal
reputation
in most of
the cases
translates
into a good
external
reputation
in the
course of
around
three years,
depending
on the
sector
and the
country”.
Graph 2: The Corporate Personality Scale
applied to a service organization
Source: Corporate Reputation Competitiveness, 2003.
Machismo
Informality
Ruthlessness
Staff
Customers
Agreeableness
Competence Chic

4. ©2014, Corporate Excellence - Centre for Reputation Leadership
A foundation established by major companies aiming to excel in the management of intangible assets and facilitate promotion of strong brands
with a good reputation and a capacity to compete on the global markets. Our objective is to become the driving force, which would lead and
consolidate professional reputation management as a strategic asset, fundamental for building value of companies around the world.
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