Corporate Reputations: Built in or Bolted on?

Abstract

While there is widespread support for the notion that organizations with better reputations outperform their rivals, there is uncertainty about how to create such a reputation, especially among the managers responsible for this task. For example, organizations often give money to worthy causes or create social responsibility programs in the hope that this will appeal to their stakeholders. When approaches such as these are only loosely coupled to the strategy of the organization they appear to be “bolted on” rather than “built in.” Thus, they are likely to foster a reputation that is less consistent with the principal actions of the organization and be less credible. They are also easy for competitors to imitate. Because of this, a reputation grounded in the strategy of the organization has a better chance of providing a sustainable competitive advantage. We present a normative framework that illustrates a strategy-led approach to reputation building. It is illustrated with numerous corporate examples.