Corporate Reputation & Firm Performance: Empirical Literature Evidence

Ronald Chibuike Iwu-Egwuonwu

Abstract


For ages, the view that corporate reputation positively impacts on firm performance has been documented; even
accounting literature backs the notion that corporate reputation causes an enormous amount of wealth
encapsulated in what is called goodwill, while some conventional wisdom assert that the reputation which
organizations orchestrate for themselves do cause sustainable profits. These views have attracted quite a lot of
scholars to structure research in so many areas of corporate reputation, and the body of knowledge on this
subject is indeed not only increasing but deepening also. Reputation is an intangible asset and intangible assets
are now increasingly seen as drivers of sustainable competitive business and corporate advantages. Thus,
intangible assets like reputation are increasingly researched as sources of sustainable advantages. Research
reveals that today what is usually called brand equity or corporate equity is actually determined by corporate
reputation.
Although reputation may be seen to arise as an output of different activities in the professions, the reputation an
organization enjoys is actually constructed by the publics of that organization on the basis of information about
the organization’s relative position to other organizations in the industry. It can arise out of consumers’
satisfying experience with the company’s products hence it can be inherited from an organization’s past actions.
This work is a review of empirical studies on corporate reputation with emphasis on how it can help
organizations achieve strong competitive advantage, enhance stock market performance as well as performance
values on other measures. It reveals that cultivating a strong reputation is a necessary foundation for today’s
firms that intend to beat the competition, enhance their market outlook and financial performance as well as
sustained existence. Corporate reputation is however also revealed to be a logical outcome of the quality of
corporate governance operated in an organization. It is a critical resource, and indeed a pillar, upon which the
quality of an organization’s future can be predicated. The paper concludes that the best material wisdom in
today’s corporate and political spheres is the wisdom to have a good reputation because it pays to have a very
good positive image.

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International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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