Güven Kurumları ve İtibar Yönetimi Oturumu Doç. Dr. Turhan ERKMEN, Arş. Gör. Dr. Emel ESEN

The Role of Leader Reputation on Determining Corporate

Reputation Assoc. Prof. Dr. Turhan Erkmen

PhD. Emel EsenYıldız Technical University

Business Administration Department

Corporate ReputationNew changes and challenges in the market

call upon organizations to focus on their reputation in order to create better product and services; enhance their credibility and image (Srivoravilai, 2011, p. 243).

In the past two decades, there has been considerable interest and research on corporate reputation and it has become a business issue since the 20th century

Corporate ReputationReputation is so one of the intangible assets

that is extremely hard to imitate, turning it into a valuable source of competitive advantage (Alsop, 2004, p. 1).

Corporate reputation is described in the academic literature as organizational standing, goodwill, esteem, organizational identity, organizational image, brand and prestige (Shenkar and Yuchtman Yaar, 1997; Wartick, 2002).

Corporate ReputationBalmer’s (1998) review of the evolution of the

theory of corporate reputation identified three stages of development. The first phase (in the 1950s) focused on corporate image, giving way in the 1970s and 1980s to an emphasis on corporate identity and corporate communications, and then in the 1990s to a mounting interest in corporate brand management and thence reputation (Bennett and Kottasz, 2000, 225).

Corporate ReputationCorporate reputation is an emotional capital

that reflects the various stakeholders’ perceptions about organization’s past and future actions and inimitable, intangible assets (Kotha, Radgopal and Rindova, 2001; Fombrun and Van Riel, 2004; Gable, 2008; Walsh and diğ., 2009; Firestein, 2006; Worcester, 2009; Schürmann, 2006).

Personal ReputationPersonal reputation represents an

individual’s collection of perceptions about others and results from the combination of salient personal characteristics, behaviors, and images that are observed directly over time (Foste and Botero, 2011, 3).

At work, reputations most likely focus on issues related to individuals’ capacity to perform their jobs effectively, and to be cooperative and helpful towards others (Zinko et.al, 2011, 1).

Antecedents of ReputationTime: Reputations take time to develop, in

that observers need to perceive consistency of behavioural demonstration across occasions (Zinko et al., 2011, 4).

Human Capital: Human capital is the knowledge, skills and experience of individuals and also their willingness to share these attributes with the organization to create value (Baron, 2011, 30).

Antecedents of ReputationExperience: Most intentional, positive

reputations are based on being known for excelling in a specific task.

Social control and competency: In order for individuals to influence their personal reputations, they must be able to communicate effectively to those around them in a manner consistent with the reputations they wish to develop, and to do so in influential ways (Zinko et al., 2011, 5).

Antecedents of ReputationSelf-efficacy: Self-efficacy is defined as people’s belief in

their capabilities to mobilize motivation, cognitive resources and courses of action needed to exercise control over events in their lives (Tams, 2008, 165).

Political behavior, political skill: Politically skilled individuals possess greater adaptive capacity, which results in positive and strong leader reputation (Blass and Ferris, 2007, 6).

Social capital: Social capital is the features of social organizations such as trust, norms and networks that can improve the efficiency of society by facilitating co-ordinated actions (Ferri, Deakins and Whittam, 2009, 144).

Consequences of ReputationAutonomy: Autonomy is defined as the

amount of freedom and discretion an individual has in carrying out assigned tasks (Langfred, 2004, 385).

Power: As individuals gain personal reputations, they gain power, which may derive from not only formal but also informal authority.

Promotions and Career Success: Reputations can have considerable influence early on, due to lack of information that is available regarding the individual.

Consequences of ReputationAccountability: Accountability involves an

expectation or assumption that an individual will behave in a certain manner (Hall et al., 2004, 525).

Trust: Trust as “one party’s level of confidence in and willingness to open oneself to the other party”.

Personal Reputation

Autonomy

Power

Career success

Accountability

Trust

Time

Human capital

Experience

Competency

Self-efficac

yPoliticalbehavio

r

Socialcapital

Leader ReputationThe leader is a significant symbol of any

organization and the leader’s actions and words can be more important symbolically than operationally (Davies and Mian, 2010, 331-332).

The actions of the CEO and the Board of Directors provide a role model and, thus, help foster and entrench the ethical belief system for all the employees (Stanwick and Stanwick, 2003, 1050).

Leader ReputationThe importance of reputation in the business

arena is widely documented in the literature. In the practitioner arena, recent studies by Gaines-Ross (2000) and a leading consulting firm, Burson-Marstellar (2003), show that CEO reputation accounts for up to 50% of corporate reputation

Leader ReputationA Burson-Marsteller study revealing that

CEO image continues to be a significant determinant of share-holder value.

Burson-Marsteller surveyed approximately 1,400 influential business people from five key stakeholder categories, including CEOs, other senior executives, financial analysts, government officials, and journalists. Findings the survey revealed include: (Gaines-Ross, 2000, 366-367).

Leader ReputationCEO reputation can represent a staggering

45 per cent of a company's reputation.

Companies whose CEOs were rated `most admired' by respondents achieved a 13 per cent annual shareholder return, while companies whose CEOs were rated less favorably delivered a negative 28 percent annual shareholder return.

Leader Reputation81 percent of respondents said the CEO's

reputation would influence their opinion of a company under media scrutiny.

80 per cent of respondents said the CEO's reputation would influence whether or not they would recommend a company as a good place to work.

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