Hard times matter: The impact of stakeholder orientation on reputation and the role of market risk

Abstract

Intangibles, such as corporate reputation, are increasingly considered the major source for value creation and company success. Given the importance of having a strong corporate reputation, new strategic and operational approaches are emerging to manage it. In this context, stakeholder orientation is at the forefront of reputation management. Relying on extensive data over a period of six years, this study theoretically develops and empirically tests the relationship between stakeholder orientation through CSR disclosure and corporate reputation. The dataset includes 249 US firms belonging to the S&P 500 over the years 2004-2009. Results show that the sign of the relationship is positive and statistically significant, supporting the view that a stakeholder-oriented disclosure strategy can be associated with a series of bottom-line benefits such as an improvement in corporate reputation. Instead complexity, uncertainty and dynamism in the business environment make the positive relationship between stakeholder orientation and corporate reputation weaker.