Brand, Identity and Reputation: Exploring, Creating New Realities ...

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The Formation of Reputations in Business Markets Chunyan Xie, Stord/Haugesund University College, Norway Sven Haugland, Norwegian School of Ecnomics and Business Administration, Norway Introduction Corporate reputation is usually studied from a communication perspective. A firm‘s reputation as it is judged by external stakeholders is assumed to be formed on the basis of direct and indirect experiences and the information received (e.g., Fombrun & Shanly, 1990; Yoon, Guffey, & Kijewski, 1993). The focus in this perspective is on the information signals that a company sends to actors in the environment, and how this information is perceived and interpreted by external stakeholders. A limitation is that it does not take into account how a company organizes and manages its continuous interactions with core stakeholders such as suppliers and customers, and how such interactions impact reputation. We argue that in business-to-business contexts, a customer‘s judgment of a supplier‘s reputation cannot be properly explained from an information perspective, but rather we need to take into account certain characteristics of the relationship between the actors. This study therefore addresses reputation from a relationship perspective by arguing that how a company (e.g., customer) evaluates the reputation of another company (e.g., supplier) is influenced by the continuous interaction between the two companies. While reputation has been widely studied in consumer markets, this construct has received less attention in business markets. One reason may be that trustworthiness serves some of the same purposes in business-to-business relationships as reputation in business-toconsumer relationships. However, reputation and trustworthiness are different constructs, and the fact that we have limited knowledge about the formation of reputation in business markets underlines the importance of studying reputation in B2B contexts, and how reputation and trustworthiness are linked to each other. The purpose of this study is first to analyze how customers evaluate supplier reputations based on what kind of relationships they have with their suppliers. We test the impact of specific relationship characteristics on reputation. Second, we analyze how the same characteristics are related to trustworthiness to get a better understanding of the differences and similarities between reputation and trustworthiness, and third, we study how reputation and trustworthiness are related to each other. Theoretical Background and Hypotheses Concepts like identity, image and reputation are commonly used to describe what individuals or other actors know or believe about an organization. Fombrun, Gardberg, and Sever (2000, p. 243) defined corporate reputation as ―a collective representation of a firm‘s past behaviour and outcomes that depicts the firm‘s ability to render valued results to multiple stakeholders‖. We are in this study especially concerned about the formation of such collective representations by studying how customers evaluate the reputation of key suppliers. We take the view that reputations are formed not only on the basis of communication and information, but also on the basis of direct interactions between companies. In order to unpack possible relationship characteristics that may have an impact on reputation, we take a broad perspective and include dimensions both at the inter-firm level and at the inter-personal level. Particularly, we examine two firm-level dimensions; (1) dependence between the actors and (2) reliance on relational norms, and two inter-personal dimensions; (1) common knowledge and (2) inter-personal trust, and we study the impact of these dimensions on reputation. Furthermore, these dimensions will also be linked to trustworthiness to explore if the same or different factors impact reputation and trustworthiness. Inter-firm characteristics are related to the overall structuring and management of the relationship. Dependence between customer and supplier indicates how important the actors are for each other in terms of performing their operations. We include both customer‘s dependence on supplier and supplier‘s dependence on customer. Dependence causes the actors to be attached to each other, and it is reasonable to believe that the actors will develop positive evaluations of each other because of such attachments. Thus, we propose: H1a. Customer dependence on supplier will be positively related to reputation and trustworthiness. H1b. Supplier dependence on customer will be positively related to reputation and trustworthiness. Relational norms imply that the actors are expected to follow certain patterns of behaviour (Rousseau, 1995) developed in the relationship on the basis of shared norms and values (Dwyer, Schurr, & Oh, 1987). Relational norms represent an informal, selfenforcing way of governing inter-firm interactions. Relying on relational norms as a governance mechanism requires that the actors are able to develop well-functioning working relations for handling the day-to-day interaction between the actors, and we argue that relational norms will result in a favourable judgment of the partner‘s reputation and lead to a trust-based relationship. H2. Relational norms will be positively related to reputation and trustworthiness. With inter-personal characteristics we refer to the relationship between the contact persons in the customer and the supplier firm. In this study, we focus on common knowledge about mental models (Sande, 2007), which refers to the contact persons‘ knowledge about each other in relation to how they judge market conditions and company opportunities, perform internal coordination and make decisions in relation to their respective companies. If the customer contact person has good knowledge about the working conditions of the supplier contact person, and vice versa, this common knowledge is likely to result in favourable evaluations of reputation and trustworthiness. H3. Common knowledge will be positively related to reputation and trustworthiness. Inter-personal trust captures the customer representative‘s level of trust to the contact person in the supplier firm. Developing high levels of trust between the company representatives is usually considered to be important for developing well-functioning inter-firm 276
elations. If the contact persons trust each other, it is also more likely that they will judge the reputation of the companies in a more favourable way, and furthermore, trust at the personal level is likely to contribute to a trustworthy inter-firm relationship. H4. Inter-personal trust between the contact persons in the customer and supplier firm will be positively related to reputation and trustworthiness. Some reported B2B-studies have investigated the relationship between reputation and trustworthiness. Anderson and Weitz (1989) find in a study of independent manufacturer representatives that trust decreases if the principal (manufacturer) has a poor reputation in dealing with independent representatives. Ganesan (1994) find in a study of retailers and vendors that retailer‘s perception of vendor‘s reputation is positively related to vendor‘s credibility-trust, but not elated to benevolence-trust. Although these empirical findings are inconclusive, there is some indication that favourable reputations will increase trustworthiness. H5. Reputation will be positively related to trustworthiness. Method To test the hypotheses, we conducted a survey among firms in the Norwegian offshore oil industry. The sample consists of the member organizations of the Norwegian Ship Owners‘ Association and the member organizations of Maritime Forum in Western Norway. 410 firms were obtained from the member lists of both associations after screening for eligibility. By calling these 410 firms, we identified around 200 managers who were responsible for handling the relationships to the suppliers of their companies, and who also agreed to participate in the survey. They received an email with a link to a web-based questionnaire. Each respondent was instructed to answer the questions in relation to a supplier the company is currently buying from. In total, 83 completed questionnaires were returned. We used established measurement scales for all variables. Reputation was measured by the Reputation Quotient scale (Fombrun et al., 2000) and it measures five cognitive dimensions (i.e., products and services, vision and leadership, workplace environment, social and environmental responsibility, and financial performance) and one emotional dimension (i.e., emotional appeal). We use the five cognitive components in this study. Trustworthiness was measured by three dimensions – benevolence, integrity and ability – based on Becerra, Lunnan, and Huemer (2008) and Mayer and Davis (1999). Results We tested the hypotheses by structural equation modelling by applying PLS. The results yield mixed support for the hypotheses. Concerning reputation, customer dependence on supplier, relational norms and common knowledge have a significant and positive impact on reputation, while relational norms and inter-personal trust along with reputation impact trustworthiness positively and significantly. These findings indicate that the more dependent the customer is on the supplier, and the more common knowledge the contact persons share, the more favourable the customer evaluates the reputation of the supplier. The customer‘s evaluation of supplier trustworthiness, on the other hand, can primarily be explained by reliance on relational norms, inter-personal trust and reputation. An unexpected finding is the negative and significant relationship between supplier dependence on customer and reputation. This indicates that the more dependent the supplier is on the customer, the less favourable the customer evaluates the reputation of the supplier. The results show that characteristics at both the inter-firm and the inter-personal levels impact reputation, and furthermore, different factors seem to impact reputation and trustworthiness, indicating that reputation and trustworthiness play different roles in B2B relationships. The results provide support for the importance of incorporating relational characteristics when studying the formation of reputation in business markets. References 1. Anderson, E., & Weitz, B. (1989). Determinants of continuity in conventional industrial channel dyads. Marketing Science, 8, 310-323. Retrieved from http://mktsci.journal. informs.org/ 2. Becerra, M., Lunnan, R., & Huemer, L. ( 2008). Trustworthiness, risk, and the transfer of tacit and explicit knowledge between alliance partners. Journal of Management Studies, 45, 691-713. doi:10.1111/j.1467-6486.2008.00766.x 3. Dwyer, F.R., Schurr, P.H., & Oh, S. (1987). Developing buyer-seller relationships. Journal of Marketing, 51(2), 11-27. Retrieved from http://www.marketingpower.com/AboutAMA /Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Marketing/JournalofMarketing.aspx 4. Fombrun, C., & Shanley, M. (1990). What‘s in a name? Reputation building and corporate strategy. Academy of Management Journal, 33, 233-258. Retrieved from http://journals. aomonline.org/amj/ 5. Fombrun, C.J., Gardberg, N.A., & Sever, J.M. (2000). The reputation quotient: A multi-stakeholder measure of corporate reputation. Journal of Brand Management, 7, 241–255. Retrieved from http://www.palgrave-journals.com/bm/index.html 6. Ganesan, S. (1994). Determinants of long-term orientation in buyer-seller relationships. Journal of Marketing, 58(2), 1-19. Retrieved from http://www.marketingpower.com/ AboutAMA/Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Marketing/JournalofMarketing.aspx 7. Heide, J.B., & John, G. (1992). Do norms matter in marketing relationships? Journal of Marketing, 56(2), 32-44. Retrieved from http://www.marketingpower.com/AboutAMA/ Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Marketing/JournalofMarketing.aspx 8. Mayer, R.C., & Davis, J. H. (1999). The effect of the performance appraisal system on trust for management: A field quasi-experiment. Journal of Applied Psychology, 84, 123-136. Retrieved from http://www.apa.org/pubs/journals/apl/ 9. Rousseau, D.M. (1995). Promise in action: Psychological contracts in organizations. Newbury Park, CA: Sage. 10. Sande, J.B. (2007). The role of common knowledge in buyer-supplier relationships. Ph.D thesis, Norwegian University of Life Sciences, Ås, Norway. Retrieved from http://extranet.isnie.org/uploads/isnie2008/sande.pdf 11. Yoon, E., Guffey, H.J., & Kijewski, V. (1993). The effects of information and company reputation on intentions to buy a business service. Journal of Business Research, 27, 215-228. Retrieved from http://www.elsevier.com/wps/find/journaldescription.cws_home/ 505722/description 277
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Book of Proceedings Brand, Identity
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Session 1.1 Emotional Branding in T
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p.31) consumers tend to those sourc
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Tables and figures Brand perception
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Malaysia‘s Global Halal Hub - ―
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Birds of a Feather Consume Sports T
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Session 1.2 How is Social Media, li
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2. Interviews made with the adminis
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Table-5 Facebook Members of Homeles
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content (UGC) or even direct intera
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Fierman, (1991) found that 47% of c
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Multiple Dimensions of Brand Identi
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Session 1.3 Corporate Identity, Cor
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CSR are the ideals and ethics of co
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Corporate Brand Identity Management
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To study the influence of B2B relat
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Antecedents And Consequences Of Bra
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22. Gurviez, P., and Korchia, M. (2
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Non-monetary factors, such as effor
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23. Holbrook, M.B. (2006). Consumpt
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Brand Extensions and Culture: The I
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avoidance tend to prefer more infor
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Virtual Internal Brand Communities:
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References 1. Algesheimer, R., Dhol
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associations based on their percept
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shift in the psychological contract
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10. Berthon, P., Ewing, M., & Hah,
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Session 2.1 Global Brand Relationsh
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G. Brand Personality Excitement Hon
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The Impact of Relationship Marketin
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‗United 2010-one for all, all for
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Brand Equity Trends in Top Global B
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Uncovering ‗Meanings‘ through A
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45. Melewar, T.C. and Saunders, J.
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Thus, from a design perspective, we
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Keywords Brands, marketing, meaning
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How Important is the Brand Name Ele
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References 1. Aaker, D. (1991). Man
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Simon Cowell and Branding the X Fac
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Dead or Living: Which Celebrity To
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Reference 1. Bagozzi, R.P. & Yi, Y.
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has been adopted and within this an
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Organizational Factors Contributing
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examine and reconcile existing lite
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Effects of Corporate Social Respons
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15. Morsing M, & Schultz M. (2006).
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1989). But if the information avail
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An Inquiry into Corporate Heritage
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3. Balmer, J. M. T., & Greyser, S.
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Research questions and methodology
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Building Corporate Reputation: A Di
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Session 3.1 Financial vs. Consumer-
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For indicating brand equity, one of
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Financial Brand Valuation: an exper
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Figure 1 Religiously Motivated Cons
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I Don‘t Like It! - Understanding
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Session 3.2 Advertising Agency Empl
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applications of the Repertory Test
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The Life Cycle of Mavens Lynne Free
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Exploring the relationship between
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internal branding process. Internal
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proper branding strategy. With the
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Profiling the Image of Urban Busine
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Finally, the paper confirms the cau
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Table 3 Image differences according
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associated with the brand‖ (Aaker
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Figure 1 - Number of adjectives sel
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Figure 5 - Main attributes of a gol
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Empirical Studies For both studies,
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Figure 2: Perception of the City of
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Co-branding places? Andrea Lucarell
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12. Lucarelli, A., & Berg, P. O. (2
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the place brands, as has been showe
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Session 3.4 Innovation and Entrepre
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The interviews were conducted in th
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Country-of-Origin Effects on Brand
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7. Kaynak, E., Kucukemiroglu, O. &
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Results The demographic profile ind
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use games consoles (Childwise, 2001
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Plenary Session 2 Brand Performance
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Uncles, M.D. & Kwok, S. (2008). Gen
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Brand Management Framework Empirica
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Coneptualising Branding in Indian P
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characteristics could be zeroed upo
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Concentrating on the actual practic
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ooking attractive in greater detail
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Session 7.2 Brand Personification a
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Importance of Country Image to Mega
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Table 1: Evaluative Responses for t
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To be Similar or Unique? Implicatio
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Brown, T. J., Dacin, P. A., Pratt,
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A brand-driven strategy oriented to
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Rheingold, H. (1993). The Virtual C
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A Framework for Public Sector Brand
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Conclusion Public sector organisati
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A strategic investigation into the
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There are also some changes in term
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Brand Hypocrisy Sanne Frandsen, Cop
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Table 1: Empirical Findings Theory
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Brand Governance in Social Networki
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Determinants Brand Orientation Va
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When Individual Experience becomes
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Impact of Storytelling on Consumer
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The Role of Communication in Establ
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Culture‘s Influence on Consumer P
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+ Top-Down Dynamic between Luxury F
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Analysis and results We assessed th
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An Exploration of Own Brand Retaile
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11. ETI 2010. Ethical Trading Initi
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When investigating unique significa
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Session 8.2 Closing the Gaps - the
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accomplishing reality rather than d
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Page 263 and 264: Introduction Reputation and Financi
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Page 269 and 270: Introduction Factors Affecting Bran
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