Reputation spillover: corporate crises’ effects on country reputation

Abstract

PurposeThe purpose of this paper is to examine how varying degrees of media-constructed associations between organizations and their home countries affect audience perceptions of such associations and, subsequently, how recipients attribute crisis responsibility and reputational damage to the home country. Additionally, the paper investigates if pre-crisis country image can buffer negative effects of the crisis for the country.Design/methodology/approachThe authors hypothesize that the strength of actor associations in media reports about crises affects recipients’ cognitive processes of crisis responsibility attribution and, thus, the “direction” of reputational damage (corporation vs country). Empirically, the authors analyze the effects of different levels of actor association in crisis reports (strong actor association vs weak actor association) regarding a Chinese corporation in a one-factorial (between-subjects) experimental design; and the intervening effect of China’s country image prior to the crisis. Participants for the study lived in Switzerland and the USA.FindingsThe effect of different actor associations presented in the media on perceived association between a corporation and its home country is confirmed. Furthermore, these varying perceptions lead to significantly different tendencies in people’s ascriptions of crisis responsibility (corporation vs country), and different degrees of reputational fallout for the home countries. Finally, the data did not confirm a moderating effect of pre-crisis country image on the reputational damage caused by the crisis.Research limitations/implicationsThe study contributes to the understanding of key factors in the formation of crisis attributions as well as insights for the study of country image and public diplomacy.Practical implicationsIt provides a new approach for corporate communication and public diplomacy to analyze the complex interdependencies between countries and internationally visible and globally known corporations, which potentially affect the country’s perception abroad.Social implicationsParticularly for smaller countries that cannot rely on political and economic power to defend national interests in a global context, their “soft power” in terms of reputation and country image can play a central role in their political, economic, and cultural success.Originality/valueThe paper applies a new conceptual framework and methodology to analyze how both mediated and cognitive associations between different actors influence attribution of responsibility in crises, and how these associations ultimately bear on reputation spillover for the different actors.