Capability Reputation, Character Reputation, and Exchange Partners’ Reactions to Adverse Events

Park, Brian; Rogan, Michelle

doi:10.5465/amj.2016.0445

Cited by 59 publications

(48 citation statements)

References 127 publications

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“…While debate persists regarding the exact nature and meaning of firm reputation (Barnett & Pollock, 2012), it has been traditionally understood as a collective social judgment focused on a firm's qualities or capabilities (Rindova et al, 2005). Building on this foundation, scholars have begun to recognize that a firm may have multiple reputations depending on the specific qualities or capabilities being assessed (Lange, Lee, & Dai, 2011;Love & Kraatz, 2009;Mishina et al, 2012;Park & Rogan, 2019;Rindova & Martins, 2012). For example, a firm may have a reputation for capably delivering value to stakeholders (Haleblian, Pfarrer, & Kiley, 2017), for producing quality products (Milgrom & Roberts, 1982), for its competitive tenacity and aggressiveness (Carter & Deephouse, 1999), for being innovative (Henard & Dacin, 2010), or for its character, integrity, and trustworthiness (Bertels & Peloza, 2008).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Thus, a firm's multiple reputations are often characterized as reputations for something, varying based on observers' idiosyncratic perceptions and expectations of the firm (Lange et al, 2011). 1 While a firm can have many specific reputations, we focus on two primary types: capability reputation-based on a firm's ability to consistently deliver value over time-and character reputation-based on a firm's consistent demonstration of integrity and trustworthiness in its interactions with stakeholders (Mishina et al, 2012;Park & Rogan, 2019). Our focus on capability and character reputations is consistent with past theoretical and empirical research that has highlighted the importance of these two reputations, particularly in a violation context (Mishina et al, 2012;Park & Rogan, 2019;Parker et al, 2019).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…However, while interest in reputation defense is growing, research in this domain has only begun to recognize that a firm may have multiple reputations (Chandler, Polidoro, & Yang, 2020; Love & Kraatz, 2009; Mishina et al, 2012; Park & Rogan, 2019; Parker, Krause, & Devers, 2019; Raithel & Schwaiger, 2015). For instance, a firm may have a reputation for capably delivering value to stakeholders while also having a reputation for exceptional character and trustworthiness (Mishina et al, 2012; Park & Rogan, 2019).…”

Section: Introductionmentioning

confidence: 99%

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Reputations in flux: How a firm defends its multiple reputations in response to different violations

Bundy

Iqbal

Pfarrer

2021

Strategic Management Journal

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Research Summary We examine how a firm defends its capability and character reputations in response to different violations. We develop our core theoretical mechanism—stakeholders' situational expectations—to theorize that the effectiveness of a firm's response strategy following a violation depends on the nature of the violation and the reputational judgment being made. We test our hypotheses using two longitudinal violation samples and novel media‐based measures of reputation. Generally, we find that a more accommodative strategy is an effective defense following a capability violation, but it is less effective following a character violation. In supplemental analyses, we also discover that a more accommodative strategy is less effective at managing general reputation. Ultimately, our theory and findings suggest that reputation defense is more complex than previously considered. Managerial Summary We shed light on the challenges managers face in defending their multiple reputations following a violation. We suggest that the type of violation affects stakeholders' expectations of the firm, and that these expectations differentially threaten a firm's multiple reputations as well as the efficacy of its response strategy. Using a sample of capability‐based (unintentional financial restatements) and character‐based (environmental malfeasance) violations, we find that a more accommodative response strategy can defend certain reputations following a capability‐based violation but can be detrimental to other reputations. We also find accommodativeness to be generally harmful following a character‐based violation. Ultimately, our results suggest that managers should consider both the type of reputation they are defending and the nature of the violation when implementing a response strategy.

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Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Reputations in flux: How a firm defends its multiple reputations in response to different violations

Bundy

Iqbal

Pfarrer

2021

Strategic Management Journal

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“…Key to negative reputation spillovers are that the negative action is perceived as self-serving, within an actor's control, and that others are also likely to be doing the same thing (Barnett & King, 2008;Gomulya & Mishina, 2017;Park & Rogen, 2019). However, what if the negative action is the outcome of capability failings that result from taking different actions than those taken by others in the industry?…”

Section: Theory and Hypothesesmentioning

confidence: 99%

On the tip of the brain: Understanding when negative reputational events can have positive reputation spillovers, and for how long

Paruchuri

Pollock

Kumar

2019

Strategic Management Journal

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Research Summary This study contributes to the reputation spillover literature by showing how a crisis caused by a firm's capability failure enhances the reputations of its rivals. We consider how the combination of rivals' characteristics that increase their associability with the focal firm and the extent to which the crisis is salient in the minds of stakeholders can lead to positive reputation spillovers, and we also explore how long the positive reputation spillover lasts. Using a natural experiment based on the Escherichia coli outbreak in Chipotle's Seattle restaurants, we find that the reputations of other restaurants in the Seattle region were enhanced when the E. coli breakout was more salient and thus cognitively available, but only for Mexican restaurants that were geographically proximal to a Chipotle. Managerial Summary In this study we conducted a natural experiment based on Chipotle's 2015 E. coli breakout to explore how a firm's capability failure affects the reputation of its competitors. We found that failures due to firm practices that differentiate the firm from others in its industry result in positive reputation spillovers, but only for the firms that are the most similar, and only for as long as the failure is salient to stakeholders. Thus, the benefit to firms from a competitor's failure is only temporary, and will not be experienced equally.

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“…Brammer and Pavelin (2006) add that specific forms of reputation matter more depending on the type of industry and stakeholder relationships. Park and Rogan (forthcoming) differentiate character and capability reputation. Although reputation can rely on some observable and visible characteristics of the service provider, some characteristics that can matter in the choice of customers are non-directly observable (Von Nordenflycht, 2010), and, as a result, potential clients tend to focus on what they can interpret as a signal of quality (Sanders and Boivie, 2004).…”

Section: The Signalling Effect Of Media Coverage Of Professional Miscmentioning

confidence: 99%

Sins for some, virtues for others: Media coverage of investment banks’ misconduct and adherence to professional norms during the financial crisis

Roulet

2018

Human Relations

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Why does professional misconduct persist in the face of media scrutiny? In this study, we explain how professional norms can be at odds with societal norms and how the behaviours they trigger can be perceived as misconduct. Most audiences tend to disapprove of wrongdoings, but specific stakeholders may interpret this disapproval as an indication of the focal organization’s level of adherence to professional norms. Building on mixed methods, we explore the case of the investment banking industry during the financial crisis and suggest that corporate customers were favourably biased by the reporting of banks’ misconduct in the print media as they linked it to the banks’ quality of service. We capture the extent to which banks are associated with misconduct, signalling their adherence to negatively perceived professional norms. We then look at how such signalling affects the likelihood for banks to be invited into initial public offerings syndicates. Our findings show that the more banks are disapproved of for their wrongdoings, the more likely they are to be selected to join a syndicate. This study suggests that the coverage of misconduct can actually act as a positive signal providing banks with incentives to engage in what is broadly perceived as professional misconduct.

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Capability Reputation, Character Reputation, and Exchange Partners’ Reactions to Adverse Events

Cited by 59 publications

References 127 publications

Reputations in flux: How a firm defends its multiple reputations in response to different violations

Reputations in flux: How a firm defends its multiple reputations in response to different violations

On the tip of the brain: Understanding when negative reputational events can have positive reputation spillovers, and for how long

Sins for some, virtues for others: Media coverage of investment banks’ misconduct and adherence to professional norms during the financial crisis

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