The Notion of Reputation Risk: A Theoretical Survey

Abstract

Dictionaries define reputation as the quality or skills of a person or organization, as judged by the public at large, or recognition of character or ability. Corporate reputation as a technical term, on the other hand, has received remarkable attention both in the managerial and quite a few other academic disciplines. Within this scientific scope, the notion of reputation is conceptualized as an important asset or liability bestowed upon a corporation by its stakeholders or perceptual representation of a company's past actions and future prospects that describes the firm's overall appeal to all of its key constituents. In a world of global numerous forces in which trade, technology, and communications enhance competitive forcessubstantially, corporate reputation now stands as a pivotal strategic concern. Many researches on corporate reputation indicates that organizations with good reputations find more and better support from stakeholders and a desired and strong reputation brings in numerous benefits which include higher customer retention rates, increased sales, higher product selling prices, and reduced operating costs. However, it is also rather vulnerable to numerous risks and managers must review and guide strategies, major action plans, and a risk policy together as well as setting performance objectives. Moreover, legitimacy of organizations depend upon the extent to which they help stakeholders manage risks. In this paper, the notion and origin of reputation are theoretically discussed along with corporate reputation as an intangible risk in order to achieve a wholistic understanding.