Does Firm’s Size Speak of Its Reputation? Indian Evidence

Abstract

Good reputation carries a significant value for organization. Although firms make every effort to earn respect among stakeholders, it is difficult on the part of stakeholders to judge firm’s quality. Myriad signals confuse rather than assisting them in framing perceptions about a firm. Hence, market demands some conspicuous clues like firm size to assess its worthiness. Since little is known about how corporate reputation is affected by firm size, the study attempts to examine the role of firm size in building reputation of Indian companies. The dataset comprises of 403 Indian companies over 10 year time frame, that is, from 1 April 2002 to 31 March 2012. Results of panel regression reveal firm size as a crucial antecedent of corporate reputation. Significant differences are discovered in the firm size of highly reputed and low reputed firms. The study adds up to the research on determinants of corporate reputation that firm size can serve as a surrogate clue in times of information glut obscure in the market. The study offers significant repercussions for stakeholders who can make informed judgements by interpreting firm size as a signal of firm’s competencies.