CORPORATE IMAGE AND REPUTATION
Corporate image and reputation are discrete but related concepts. As noted earlier, corporate image is the effigy that people have of a company. Corporate reputation, on the other hand, represents a value judgment that people make about the firm as a whole or one or more of its attributes. Corporate images typically can be fashioned fairly quickly through specific actions and well-conceived communication programs, whereas reputations evolve over time as a result of consistent performance (and they can be reinforced through corporate communication).
Clearly, a corporation must be concerned about its image and reputation amongst its important constituent groups. In academic parlance, these significant constituent groups are called stakeholders. They are groups that have a stake in the company. Stakeholders are affected by the actions of the company and, perhaps more importantly, their actions can affect the company. Consequently, its image and reputation in the eyes of its stakeholders is critical to the company. The principal stakeholders with which most large firms must be concerned are:
• Customers
• Distributors and retailers
• Financial institutions and analysts
• Shareholders
• Government regulatory agencies
• Social action organizations
• The general public
• Employees
The company's image and reputation vis-a-vis its various stakeholders will influence their willingness to provide or withhold support. Thus, if its customers develop a negative perception of the company or its products, its sales and profits assuredly will decline. Consider the recent travails of the Nissan Motor Company. In the 1980s it enjoyed the image of a customer-oriented, trendsetting automobile manufacturer with an excellent reputation for automotive engineering. By the mid-1990s, however, as a result of a series of poor decisions, its image as a cutting-edge producer, along with sales and profits, had declined precipitously. It is now perceived by customers as well as other stakeholders as a conservative maker of stodgy, boxy cars with its engineering reputation compromised.
The impact of corporate identity in the financial community can be seen through the history of the British packaging, printing, and coating company that recently changed its name from Bowater to Rexham in response to confusion in the financial community as well as among its customers as to its identity. In North America the company traded under the name Rexham, whereas in the rest of its markets it operated under the Bowater banner. The name change was initiated by its chief executive officer to create the image of a global competitor in the eyes of financial institutions and investors, as well as its customers.
The company's shareholders are another critical stakeholder group because they ultimately give or withhold their approval of management's decisions through their proxies. Moreover, their "buy" and "sell" decisions influence the corporation's stock price.
Government regulatory agencies, another important set of stakeholders, are required by law to monitor and regulate firms for specific, publicly defined purposes. Nevertheless, these agencies have considerable discretion in how they interpret and apply the law. Where they have a positive perception of the firm, they are likely to be much less censorious.
Social action organizations represent still another set of stakeholders. To the extent a corporation has a negative reputation in the particular area of concern of a social action group, it likely will be targeted for criticism and harassment by that group. For example, the Labor/Community Strategy Center has organized a boycott of Texaco stations and products in an effort to influence the company to reduce the air pollution emanating from its refinery in Wilmington, California. Although there are many refineries in the Wilmington area, the environmental group targeted Texaco for its boycott because of a recent much publicized explosion at the company's refinery.
A strong positive image with the general public can be beneficial to the firm. Research suggests that a prominent corporate image and an outstanding reputation are a consequential factors in attracting a high quality workforce. Merck, Microsoft, and Hewlett-Packard, for instance, have traditionally attracted topnotch job applicants because of their sterling reputations.
Current employees represent the internal constituency that a firm must consider when communicating corporate identity. It is widely believed that a positive reputation in the eyes of employees is a prime causal factor of high morale and productivity. This condition is frequently cited as a fundamental reason for the success of Japanese firms. Additionally, it should be emphasized that employees play a large role in representing the company to its external stakeholders.
Obviously, each of the various stakeholder groups is likely to have a somewhat different perception of the corporation because each is concerned primarily with a different facet of its operation. Thus, customers are principally interested in the price, quality, and reliability of the company's products and services. Financial institutions are concerned with financial structure and performance. Employees are mainly concerned with wages, working conditions, and personnel policies. Logically, then, a company should tailor its communication to each stakeholder group individually to engage the special concerns of that group.
A consistent image among the various stakeholder groups, however, is also essential. Although it is prudent to stress different facets of the firm's identity to its various publics, the firm should avoid projecting an inconsistent image for two key reasons. First, some of the concerns of the stakeholders overlap. For example, the financial community and the shareholders would have many of the same financial and strategic concerns about the company. In fact, many shareholders rely heavily on the advice of experts from financial institutions. Both employees and the general public have an interest in the overall prestige of the firm and the reputation of its products. A social action group's criticism, as in the case of the Texaco boycott, whether economically effective or not, is bound to influence some customers and affect the company's public reputation. Of course, a regulatory agency such as the Occupational Safety and Health Administration would focus narrowly on the firm's safety record and policies but the company's employees and their labor unions also have a stake in these matters.
The second and related reason for avoiding an inconsistent image is that the sundry stakeholders are not separate, discrete entities. Membership overlaps. Consider the example of a typical public utility where almost all of its employees are also customers and a significant number may also be shareholders. Furthermore, it is not unlikely that some of its employees will be active in environmental or consumer rights groups that challenge the company on specific issues. It is also likely that some of the company's bankers and regulators will be among its customers