rebuilding a brand’s reputation: strategic decisions to ... · sims, (2009) in his paper...

Rebuilding a Brand’s Reputation: Strategic Decisions To Overcome Past Mistakes 1

Rebuilding a Brand’s Reputation:

Strategic Decisions to Overcome Past Mistakes

Research Proposal

Guillermo Fernández

European Master in Business Studies

October 2012


Content

Abstract ............................................................................................................................. 3

Introduction/Background .................................................................................................... 4

Problem statement ............................................................................................................. 5

Hypotheses .................................................................................................................... 5

Purpose .......................................................................................................................... 6

Relevance ...................................................................................................................... 6

Review of literature table.................................................................................................... 7

Methodology .................................................................................................................... 12

Desktop research ......................................................................................................... 12

Field research .............................................................................................................. 12

Other specifications ...................................................................................................... 14

Contribution .................................................................................................................. 15

Potential limitations ...................................................................................................... 15

Overview of chapters ....................................................................................................... 16

Plan of work ..................................................................................................................... 17

References ...................................................................................................................... 18

Already analyzed .......................................................................................................... 18

Considered interesting for further steps ........................................................................ 19


REBUILDING A BRAND’S REPUTATION: Strategic decisions to overcome past mistakes

Abstract

The thesis will explore the actions that companies carry out for recovering the trust of their

stakeholders after a mistake, failure, controversial or deceiving decision has been taken. In

the first part, I will go into the concept of reputation and its implications in depth,

understanding the value for the organization and whether its management is worthy or not.

Secondly, I will analyze the most significant literature on the rebuilding reputation process

in order to extract some conclusions. As a third step, I will compare theory and practice,

meaning by the latter, what some organizations have done in real life. For this, I will make

use of case studies that will lead to the identification of some patterns of strategies and

compare them with what scholars state. Fourthly, by means of a field research, I intent to

gather stakeholder’s perceptions, to get a feedback on what the interest groups of the

companies perceive of its recovery strategy. Finally, I will present conclusions and

recommendations of my investigation.

KEYWORDS: reputation; reputation rebuilding process; reputation strategy


Introduction/Background

Rather often nowadays we hear in the news about companies’ unethical or reproachable

actions, things that should not have been done according to good behavior standards. As

a result, their images are damaged and so is the trust that society in general and

consumers in particular had on them.

In other words, the company seems to be, or is perceived as, less reliable for future

actions, assuming that if something reproachable has been done once, it can be repeated

again.

The concept behind this idea is called reputation. Although many definitions have been

proposed, one that summarizes the core aspects of decades of study is: “Observers’

collective judgments of a corporation based on assessments of the financial, social, and

environmental impacts attributed to the corporation over time” (Barnett, Jermier, & Lafferty,

2006).

Reputations can be decent or wicked. In the second case, when the harm is done, first it is

important to consider whether it is worthy to fix it or not. Companies operate in markets

characterized by imperfect information, and given that consumers cannot know everything,

firms with a positive background have a competitive and differentiation advantage.

The fact is that according to several studies, reputation is a relevant strength for the

enterprise, as it can be seen in “Corporate Reputation: The Definitional Landscape”

(Barnett et al., 2006) there is even a cluster of meaning that comprises definitions of

reputation as an “intangible asset”. It needs to be preserved because of its fragility (Herbig,

Milewicz, & Golden, 1994); and signals stakeholders about quality, enabling firms to obtain

several benefits in its market (Fombrun & Shanley, 1990).

Considered the previous, what does the company do for fixing it and being back on the

track of trustworthiness? Is there a clear strategy or at least an identifiable path of actions

aimed at the restitution of the lost honor? Sims, (2009) in his paper “Toward a Better

Understanding of Organizational Efforts to Rebuild Reputation Following an Ethical

Scandal” proposes a very relevant model that I take as a base to build the core idea of my

thesis up.


Problem statement

What are the crucial strategic decisions that a company has to make for rebuilding its

reputation?

Hypotheses

H1: Proactive strategic actions have a positive impact on the reputation rebuilding process.

Considering the ones stated by Sims (2009) for evaluation:

Leaders' importance:

o Reaction to crises

o Leader’s attention

o Role modeling

o Allocation of rewards

o Criteria for selection and dismissal

Single-loop redressive actions (short-term)

o Denials

o Referential accounts

o Reactive decoupling

o causal account

o penitential account

Double-loop learning redressive actions (long-term)

o Fixing the outcome

o Rewarding positive behaviors

o Employee training

o Proactive decoupling

o Implement new policies

H2: Only the passage of time, without any proactive action from the company, has a

positive impact on the reputation rebuilding process.

H3: Proactive actions are perceived as faster reputation rebuilders than the passage of

time by stakeholders.


H4: Proactive actions are perceived as more successful reputation rebuilders than the

passage of time by stakeholders.

Purpose

During the research process I would like to answer the following derived questions

(partially based on the ones already formulated in the topics proposal)

1. Problem resolution

Are there different alternatives? Or does a clear path exist when it comes to

achieving the outcome of having a restored reputation?

What do companies do in practice?

2. Stakeholders perception

Which are the involved stakeholders?

Do people perceive the strategy?

How do they approach each of the groups?

3. Long-term consequences

Has the behavioral pattern of the company changed?

How to set up the methods for not failing again?

Do people perceive that something has changed?

Relevance

The identification and test of a pattern of strategic actions carried out by companies who

had failed in respecting social norms can result in a profitable set of tools for business that,

for whichever reason, have lost the trust of their stakeholders.


Review of literature table

AUTHOR TITLE KEYWORDS MAIN OUTCOMES RELEVANCE FOR THESIS CONCLUSIONS INTRODUCTORY ARTICLES

Aimed at giving a first background on the concept of Reputation, its definitions and theoretical implications Fombrun, C., & Shanley, M.

What’s in a name? Reputation building and corporate strategy

Reputation definition, Model Reputation Building, Reputation Identification

Sets the basis of: - "The concept of Reputation" - The consequences of

managing Reputation Establishes a Model for

Reputation Building. Sets and describes a list of

signals to identify reputation in a market with incomplete information: - Market - Accounting - Institutional - Strategy

Referred by many as one of the first Academic works on "Reputation".

How to find out about the reputation of a company?

Gives ideas for the practice part: ""How would you rate these companies on each of the following attributes..."

Importance of reputation management.

Fombrun, C., & Van Riel, C

The reputational landscape

Reputation perspectives

Gives several perspectives on the concept of Reputation (economic, strategic, marketing, organizational, sociological) and finally proposes an integrative view.

First article published in the "Corporate Reputation Review" and also a good starting point.

An integrative view about what reputation means.


AUTHOR TITLE KEYWORDS MAIN OUTCOMES RELEVANCE FOR THESIS CONCLUSIONS Barnett, M. L., Jermier, J. M., & Lafferty, B. A.

Corporate reputation: the definitional landscape

Corporate reputation ; identity ; image ; reputation capital

Differentiation between “Identity”, “Image” & “Reputation”.

Link between the three concepts. Very good inventory of previous

Academic definitions of reputation, clustered according to groups of meaning.

Summarizes previous definitions: Very easy to identify differences and similarities among them.

Proposes a new one. Clarifies connections

between key concepts.

Quantitative and qualitative summary of “Reputation” and concepts related.

ON THE FIELD ARTICLES A more specific set of articles, that provide insights on the core objective of the Thesis: “The Reputation Rebuilding Process”

Herbig, P., Milewicz, J., & Golden, J

A model of reputation building and destruction

Credibility; Reputation

Link between “Reputation”-“Credibility”.

Proposes the: “Competitive credibility model” to connect both of them.

Helps to continue the process of understanding “Reputation” and the related concepts.

A firm is reputed after its credible transactions.

For a company to be sustainable, credibility and Reputation should have both a positive sign.

A firm’s credibility is positively related to its reputation.

Mixed signals will have larger negative effects on reputation and credibility if spaced closer together than further apart.


AUTHOR TITLE KEYWORDS MAIN OUTCOMES RELEVANCE FOR THESIS CONCLUSIONS Sims, R. Toward a

Better Understanding of Organizational Efforts to Rebuild Reputation Following an Ethical Scandal

Reputation management; reputation rebuilding process

Increasing relevance of the study of Reputation.

Main structure of a reputation rebuilding process (Public breach, crisis, redressive action, reintegration).

Relevance of the leader’s role and actions to be implemented.

Differentiation between Single-loop (Short term) and Double-loop (long term) actions.

It merges two models: one on social drama and another on leadership mechanisms for building or changing culture.

Provides what seems to be a consistent model on the Reputation Rebuilding routines.

Reputation is more like a marathon than like a sprint.

the consequences of a damaged reputation run far and deep (Pellet, 2008).

it is harder to recover from reputation failure than it is to build and maintain reputation.


AUTHOR TITLE KEYWORDS MAIN OUTCOMES RELEVANCE FOR THESIS CONCLUSIONS METHODOLOGICAL RELEVANCE

Articles that clarify the methodological approach that can be taken in order to measure reputation The two articles from Sabrina Helm presented below are part of the same Research. In “Designing a Formative Measure for Corporate Reputation” she investigates about a suitable technique to measure reputation, and in “One reputation or many?: Comparing stakeholders’ perceptions of corporate reputation” the results of the implementation of this already contrasted scales are shown. Helm, S. Designing a

Formative Measure for Corporate Reputation.

formative indicators; reflective; reputation measurement; scales; structural equation modelling

Review of different methodologies for measuring reputation:

o Measurement approach o Corporate personality o Trust-based measures o Expectations-based

Display of her own methodology.

Useful for the methodological part of my study.

I could use a similar approach to measure how stakeholders perceive the reputation reconstruction after a failure.

Filtering questions. Consumers who:

o Knew the company name and were customers of the company’s products and

o Felt knowledgeable about its reputation.

Interesting and very comprehensive multi-step field research approach to:

1) Refine the terms to be used:

o 40 interviewees convenience sample

o Two focus groups o Scales refine

process (26 respondents)

o 20 consumers “Think aloud” answer mode”

2) Quantitative study once the scales are contrasted (762 usable questionnaires)

Helm, S. One reputation or many?: Comparing stakeholders’ perceptions of corporate reputation

stakeholder analysis

Different stakeholders consider similar criteria for evaluating a corporate’s reputation.


AUTHOR TITLE KEYWORDS MAIN OUTCOMES RELEVANCE FOR THESIS CONCLUSIONS METHODOLOGICAL RELEVANCE

Articles that clarify the methodological approach that can be taken in order to measure reputation Puncheva-Michelotti, P., & Michelotti, M

The role of the stakeholder perspective in measuring corporate reputation

Quantitative approach considering 500 respondents in different situations:

o purchasing products from a company

o seeking employment, o purchasing shares o supporting the operations

of a company in their community

Presentation of groups of factors to evaluate reputation.

Introductory questions like: “You have been offered a job that you like, how much would each of this statement influence your decision to take the job”

Six different versions of the questionnaire depending on the targeted interviewees in order not to make it boring.

Good complement to Sabrina Helm’s research in order to identify my methodological approach to the subject.


Methodology

The working process on the thesis will be divided in two major subprojects: Desktop and

Field Research. The two of them will be complementary and aimed at obtaining a global

perspective of the topic.

Desktop research

Objectives

1. Provide with a sustainable background of knowledge in:

a. The core concepts of reputation and the reputation rebuilding process

b. The field methodologies used by scholars specialized in this field.

2. Be an input for the field research

Implementation

Research on existing bibliography on the topic. Academic journals’ articles and

books:

- Theory

- Companies’ case studies

Some of the documents that I am already considering can be seen at the bibliography

section of this document.

Field research

Objectives

1. Obtain primary data to complement the findings obtained during the desktop stage

of the project.

2. Confirm or deny the theoretical assumptions

Implementation

Considering my experience taking part in various researches, and after reviewing relevant

literature on the methodological approach to study such an intangible concept as

reputation: (Helm, 2005, 2007 and Puncheva-Michelotti & Michelotti, 2010) I find well-

grounded the decision of opting for a Mixed Research Method; a combination of qualitative


and quantitative techniques in a sequential way; using qualitative data as an input for the

quantitative one.

Qualitative methods, like an in-depth interview, may provide me with detailed information to

justify my conclusions, whereas quantitative methods, like an online questionnaire, may

bring a pool of answers to establish the base ground.

Implementation:

In order to contrast the results from the theoretical part, and also to figure out if there is a

difference between individual and social perception of reputation; the implementation could

follow the next guidelines.

Ask about the stereotype of the company. What is your perception? before giving

any information about the company and putting it in the frame of reputation

repairing.

Storytelling:

o Propose a small text (between 100 and 150 words) explaining the situation

of a company that has failed.

o The firm could be:

Real (so the subjects recognize it and have a background on the

story)

Invented (in order to present critical issues that might be of interest

for the research)

o After the text, some questions regarding the content will be proposed. the

groups of questions might be:

Perception of the company's reaction to the crisis.

Personal response in terms of behavior (i.e. did you avoid taking

petrol from BP? for how much time? are you taking it again?

Group response in terms of behavior (i.e. what did your friends do?

how long do you think that they would keep it in mind?)

Suggestions proposal (i.e. what would have you done if you were in

the shoes of the company? (individual assessment), What do you

think that society would like the company to do? (social component)

what do you claim to be the best strategy to get back on track?


Participants

Individuals with enough knowledge about the companies analyzed and their past actions

and who consider having enough knowledge about the company's reputation (Helm,

2005).

At this moment I do not consider restricting the sample to a specific socio-demographic

group, given that the chances for people to know about the subject are not constrained by

these characteristics. Potentially, anyone with a sufficient level of awareness can take part

in the study.

Nevertheless, it would be very interesting to be able to achieve a multi-perspective view of

the rebuilding reputation process from different stakeholders. This would be a variant of

the strategy used in Helm’s article, where she wanted to evaluate the way of assessing

corporate reputation that different stakeholders had (Helm, 2007b). More information has

been provided in the review of literature section of this document.

Other specifications

Qualitative Quantitative Settings In person (Kassel/León) or

via Skype The Internet

Measurement Instruments Storytelling Means-end chain Word association Sentence completion Wall of Pictures Projective techniques:

fictitious situations: ““You have been offered a job that you like, how much would each of this statement influence your decision to take the job” (Puncheva-Michelotti & Michelotti, 2010)

Open-ended questions

Online questionnaire


Qualitative Quantitative Intervention materials

Video or voice recorder Online survey software

Procedures 5 to 10 in-depth interviews Between 200 and 300 responses

Contribution

1. Analyze the impact of the different strategies in the success of reputation

rebuilding.

2. Provide with a different implementation of Helm's reputation measurement scales

(Helm, 2005) in the field of reputation rebuilding.

3. Statistical evaluation of the different strategies proposed for each of case using the

concept of support from the association rule learning method (Wikipedia, 2012)

Potential limitations

The most interesting approach would be being able to gather primary data from both the

companies subject of the study and the stakeholders involved.

In this regard, I currently find two major issues:

1. Unfortunately, lacking a direct contact with CEOs or business men from those

companies would risk my chances of reaching them. I will consider contacting them

as an additional option, but not as a first solution.

2. When interviewing stakeholders, it may be difficult to find subjects who are familiar

with the insights of how the reputation of a company is built.


Overview of chapters

1. Introduction

1.1. Background on the topic

1.2. Purpose of the study

1.3. Methodology used

1.3.1. Desktop Research

1.3.2. Field Research

2. Theoretical framework

2.1. The concept of reputation

2.1.1. The definitional landscape

2.1.2. Linked concepts and its relationships with reputation

2.1.3. Relevance of reputation and validity of the term “The Reputation Economy”

2.2. The reputation rebuilding process

2.2.1. Concept

2.2.2. The successful strategy

2.2.2.1. Different authors’ proposals

2.2.2.2. The reputation rebuilding journey: Agreed steps

2.2.2.3. Short vs. Long term actions

2.2.3. Short vs. Long term consequences

3. Case studies: Reputation rebuilding implemented

3.1. Identification and analysis of main patterns of actions from companies trying to

rebuild their reputation

3.2. Comparison with theory

4. Stakeholders

4.1. Perceptions of the stakeholders about the process

5. Outcomes of the thesis and conclusions

6. Recommendations and limitations

7. References


Plan of work


References

Already analyzed

Especially the work of Charles Fombrun (Founder & Chairman of the Reputation Institute),

Ronald Sims and Sabrina Helm seems very interesting to me up to now. My Research

Proposal and knowledge about the subject is highly grounded on their publications.

Barnett, M. L., Jermier, J. M., & Lafferty, B. A. (2006). Corporate Reputation: The

Definitional Landscape. Corporate Reputation Review, 9(1), 26–38.

doi:10.1057/palgrave.crr.1550012

Fombrun, C., & Shanley, M. (1990). What’s in a name? Reputation building and corporate

strategy. The Academy of Management Journal, 33(2), 233–258.

doi:10.2307/256324

Helm, S. (2005). Designing a Formative Measure for Corporate Reputation. Corporate

Reputation Review, 8(2), 95–109. doi:10.1057/palgrave.crr.1540242

Helm, S. (2007a). The Role of Corporate Reputation in Determining Investor Satisfaction

and Loyalty. Corporate Reputation Review, 10(1), 22–37.

doi:10.1057/palgrave.crr.1550036

Helm, S. (2007b). One reputation or many?: Comparing stakeholders’ perceptions of

corporate reputation. Corporate Communications An International Journal, 12(3),

238–254. doi:10.1108/13563280710776842

Herbig, P., Milewicz, J., & Golden, J. (1994). A model of reputation building and

destruction. Journal of Business Research, 31(1), 23–31. doi:10.1016/0148-

2963(94)90042-6

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measuring corporate reputation. Marketing Intelligence & Planning, 28(3), 249–

274. doi:10.1108/02634501011041417


Sims, R. (2009). Toward a Better Understanding of Organizational Efforts to Rebuild

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472. doi:10.1007/s10551-009-0058-4

Wikipedia. (2012). Association Rule Learning. Retrieved November 15, 2012, from

http://en.wikipedia.org/wiki/Association_rule_learning

Considered interesting for further steps

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rebuilding a brand’s reputation: strategic decisions to ... · sims, (2009) in his paper...

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