The theory of corporate reputation

‘Corporate reputation’ is a straightforward term for how a company is perceived by others. But since the 1980s, attempts have been made to more formally define it, distinguishing reputation from related constructs such as corporate image, identity, brand equity and status.

In 2005 an effort was made in the Corporate Reputation Review to analyse the varying definitions of corporate reputation and identify a more explicit, narrower statement. The resulting definition: Observers’ collective judgments of a corporation based on assessments of the financial, social, and environmental impacts attributed to the corporation over time.

Since then, it has come to be understood that the success of an entire sector can rest on the reputation of a single business, due to reputation risk contagion; while the ability to build out reputational capital can shore up a company enough to survive a series of potentially catastrophic events.

It is also clearer what real corporate reputation is not. It is not a brand image, and can’t be built from an advertising budget or clever marketing. Reputation is not spin.

No matter how accomplished a communications strategy, if there is no authentic action behind it, it will only serve to diminish reputation by promising then not delivering. Likewise, there is no quick fix to a damaged reputation, and online reputation management (ORM), where negative media is deliberately countered or buried, will not build a strong, long-lasting corporate image.