2010 - Public Relations Society of America

Reputation Matters:
Impact of Organizational Reputation on Purchase and Investment Decisions
Alan R. Freitag
University of North Carolina at Charlotte
arfreita@email.uncc.edu
Abstract
The researcher placed two questions in an omnibus telephone survey of 850 respondents in a
major U.S. metropolitan area. The questions sought respondents’ expression of intention to
purchase goods and services or invest in the stock of a company based upon that company’s
reputation for socially responsible behavior. Reponses were analyzed based on demographic
categories including income level, education level, age, ethnic identity and gender. Results
indicate that consumers and investors do clearly factor organizational reputation into their
purchase and investment decisions, with no consequential variations across demographic strata.
The data suggest linkages between corporate reputation and profitability, bolstering the
economic value of public relations counsel in matters of corporate policy vis-à-vis responsible
business practices.
Introducing the topic of corporate social responsibility to a professional or academic
conversation is certain to generate lively, even animated discussion and debate among
interlocutors and certainly among scholars, business leaders and activists. Questions these
discussions might center on include: whether CSR is an appropriate role for profit-focused
businesses at all; if it is, whether justification for CSR efforts stems from economic or altruistic
motivations; what sorts of activities constitute CSR; whether a company’s promotion of its CSR
activities constitutes “greenwashing;” and who within the organization should exercise authority
over and administer CSR efforts. There are certainly additional central questions, and several
recent books have tried to address these broad issues in depth (Werther & Chandler, 2006; Kotler
& Lee, 2005). In addition, a growing literature is rapidly emerging, and this paper adds to that
literature with a small project aimed at benchmarking one aspect of the CSR issue: whether
consumers and investors are consciously making purchase and investment decisions based at
least in part on a company’s reputation for responsible behavior.
This paper is submitted in a public relations context; consequently, readers may argue
that public relations scholars should not be making a business case for CSR, but should rather
stress the ethical imperative of responsible community engagement on the part of corporations as
a reasonable exchange for implicit permission from the community to function profitably. That’s
a fair point, and, in fact, this author has argued that it is disturbing to find that the preponderance
of CSR literature is found in business-oriented texts and journals and that the public relations
community of scholars has a conspicuously limited profile in this arena (reference withheld to
protect anonymity during review). Realistically, however, we in public relations should
recognize the value in triangulating the argument – addressing both the rational/business and the
moral/ideological aspects favoring CSR-driven practices. The bridging premise of this project is
that corporations should consider the business/rational merits of CSR because consumers and
investors are including moral/ideological factors in their purchase and investment calculations.
That the question of the appropriateness and wisdom of CSR activities needs to be
increasingly and continually addressed is made clear by current events and circumstances. On
one hand, we have a string of episodes of corporate corruption and exploitation, especially over
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