Corporate Reputation & Firm Performance: Empiricial Literature Evidence

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. This work 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.