Reputation is an important issue for business in the 21st century. Reputation is considered much more important nowadays, compared to any given point in time in human business history.
In today’s highly-competitive environment, corporate success depends more on intangible assets of a company than on the conventional physical and financial indicators.
Among the intangible assets, corporate reputation is the most remarkable one that contributes to a superior business performance.
The concept of corporate reputation has gained a great deal of popularity among business practitioners and academicians in recent decades because it is an important asset that may affect the perceptions held by various stakeholders about the company.
Corporate audiences routinely rely on the reputation of firms in making investment decisions, career decisions and product choices (Dowling, 1986).
A favourable reputation may attract affluent consumers, talented workers, and generous investors to the company.
In addition, a strong reputation is a strategic resource that is valuable, scarce, and very difficult to imitate, though providing a sustainable positional advantage for the company (Hall, 1993).
First, we have to understand the nature of business reputation. This will help us to evaluate further on why it is important.
There is mainly the concept of the “Multiple Prospective” of the reputation and “Multidimensional Conceptualisation of Reputation” characteristic suggested by Rindova and Martins (2012).
The scholars suggested that business reputation is formed by many impressions of different stakeholders to that company’s “signals, prominence, and standing”, (Rindova & Martins 2012).
These impressions about the company can be further examined with four dimensions.
They are, respectively, “specificity, accumulation, breadth of appeal and codification”, (Rindova & Martins 2012). Once the reputation is formed, it becomes the strategic intangible asset of the company.
Secondly, reputation is important because it provides alternative regulations to the business other than the governmental or formal authority.
A business can either be rewarded or punished according to its reputation by their relevant stakeholders. It depends on whether the business is behaving according to the stakeholders’ expectations.
If a business invested in maintaining a good reputation, then, many stakeholders of the business, such as the owner, managers, employees, shareholders, suppliers, and customers will benefit.
These benefits extend to many aspects, for example, economic, social, and psychological (Barnett & Pollock, 2012). Nowadays, it is common that many corporate companies heavily invest in a department for marketing and public relations to safeguard their reputation.
However, with the intangible nature of the business reputation, it is not so straight forward to maintain a positive reputation, especially in the complicated business environment of the 21st century.
Thirdly, the current business environment is different from the old era in many ways. Even the most sophisticated businessperson from the past would be surprised by the high complexity, large scale, and fast-paced nature of the modern world.
Businesses must pay attention to not only their product and service quality, but also consider the effects of political and ethical issues due to the effects of globalisation, internationalisation, and a long list of environmental issues in this century (Morey & Morey1992).
There are many other modern characteristics worth mentioning here, which have either direct or indirect impacts on a business’s reputation, for example, advanced telecommunication, the popularity of the Internet, rise of online key opinion leaders, and the popularity of hand-held devices.
As a result, organisations must carefully interact with their stakeholders to keep up with their expectations.
In a nutshell, reputation is very important to a business in the 21st century. A bad reputation will punish the business.
Reputation can be measured in multiple aspects and dimensions.
Therefore, businesses need to carefully manage their reputation. Organisations that provide product or services must maintain a positive reputation not only on basic attributes of quality and price, but also considering political, ethical, and environmental issues.
Murambinda is an active member (senior executive and former board member) of the Marketers Association of Zimbabwe. She is the general manager – corporate affairs for Delta Corporation.