Reputation Spillover Research Articles

On the tip of the brain: Understanding when negative reputational events can have positive reputation spillovers, and for how long

AbstractResearch SummaryThis study contributes to the reputation spillover literature by showing how a crisis caused by a firm's capability failure enhances the reputations of its rivals. We consider how the combination of rivals' characteristics that increase their associability with the focal firm and the extent to which the crisis is salient in the minds of stakeholders can lead to positive reputation spillovers, and we also explore how long the positive reputation spillover lasts. Using a natural experiment based on the Escherichia coli outbreak in Chipotle's Seattle restaurants, we find that the reputations of other restaurants in the Seattle region were enhanced when the E. coli breakout was more salient and thus cognitively available, but only for Mexican restaurants that were geographically proximal to a Chipotle. Managerial SummaryIn this study we conducted a natural experiment based on Chipotle's 2015 E. coli breakout to explore how a firm's capability failure affects the reputation of its competitors. We found that failures due to firm practices that differentiate the firm from others in its industry result in positive reputation spillovers, but only for the firms that are the most similar, and only for as long as the failure is salient to stakeholders. Thus, the benefit to firms from a competitor's failure is only temporary, and will not be experienced equally.

An "Image Theory" of RPM

We show how a brand manufactureris control over retail prices can lead to e¢ cien-cies when consumers rely on prices as a signal of quality. For this we first show how higher prices can be associated with both higher quality perception as well as higher actual quality. We next identify a conflict of interest between retailers and manufactures. Retailers do not internalize the ensuing reputation spill-over that higher prices have on demand at all outlets. And they have less incentives to support brand image through higher prices as this erodes their own position in negotiations while increasing that of the manufacturer. Our efficiency defence for RPM thus applies even when retailers need not be incentivized to undertake non-contractible activities, as in our model the key opportunism problem, with respect to quality provision, lies between the manufacturer and consumers.

Reputation spillover effects from grant‐providing institutions

There is a broad academic discussion about the impact of funding grants from a foundation or a government department on individual support intentions toward the nonprofit organization receiving the grant. However, the role of the grant provider's reputation has frequently been overlooked. In this study, we experimentally tested whether there is a reputation spillover effect of a grant‐providing organization. Based on a real‐life example, we asked citizens to rate their willingness to donate to a nonprofit organization, and we experimentally manipulated the available information on funding sources. We test this for both a government department and a foundation as a grant provider. Our results suggest that not the act of receiving a grant, but the citizens' awareness about the funding organization—at least in the case of a foundation—has an impact on support intentions. In contrast, for a prominent government department as a grant provider, we did not find support for a reputation spillover effect.

The Interdependence of Corporate Reputation and Ownership: A Network Approach to Quantify Reputation

We propose a novel way to measure the reputation of firms by using information about their ownership structure. Supported by the signaling theory, we argue that ownership relations channel reputation spillovers between shareholders and their invested companies. We model such reputation spillovers by means of a simple dynamics that runs on the ownership network, constructed from available data bases. We focus on the core of the global ownership network with 1'300 firms and 12'100 ownership links. Our method assigns a ownership-based reputation value to each firm, used to provide a quantitative reputation ranking. We compare our ranking with alternative rankings, to confirm that the top ranked firms are correctly identified. We also demonstrate that our reputation measure does not correlate substantially with operating revenue or control and thus provides additional information about firms.

Firms and Collective Reputation: A Study of the Volkswagen Emissions Scandal

This paper uses the 2015 Volkswagen (VW) emissions scandal as a natural experiment to provide evidence that collective reputation externalities are economically significant. Using a combination of difference-in-differences and demand estimation approaches, we document a spillover effect from the scandal to the non-VW German auto manufacturers. The spillover amounts to an average drop of $2,057 in consumer valuations of these manufacturers’ vehicles and to a 34.6% reduction in their annual sales. We substantiate our interpretation that the estimates reflect a reputation spillover using data on internet search behavior and direct measures of consumer sentiment from Twitter.

Corporate social responsibility and vertical integration

As firms slice their value chains into ever smaller pieces through outsourcing, their exposure to reputational spillovers associated with potential third-party misconduct increase. This may threate...

Asymmetric Negative Media Coverage and Strategic Alliance Formation

We study the role of asymmetric negative media coverage of pairs of potential alliance partners on the likelihood of alliance formation. The media in its role as information intermediary reduces information asymmetry between potential alliance partners, and thereby influences whether two firms ally with each other. Asymmetric negative media coverage raises potential transaction hazards in alliances and introduces the risk of negative reputation spillovers for the potential partner with less negative media coverage. We contrast the influence of media on alliance formation with the positive economic effects of business complementarity and partner-specific alliance experience on alliance formation. We find that the likelihood of alliance formation driven by business complementarity declines in the presence of increased potential one-sided transaction hazards. We show that private information obtained from partner- specific alliance experience fosters alliance formation, even in the presence of asymmetric negative media coverage of a pair of firms.

감사인의 명성효과와 타 감사인에 대한 전이효과

감사인의 명성효과와 타 감사인에 대한 전이효과

New Ways of Seeing: Theory Integration across Disciplines

Academy of Management JournalVol. 61, No. 1 From the EditorsNew Ways of Seeing: Theory Integration across DisciplinesJason D. Shaw, Subrahmaniam Tangirala, Balagopal Vissa and Jessica B. RodellJason D. ShawThe Hong Kong Polytechnic University, Subrahmaniam TangiralaUniversity of Maryland, Balagopal VissaINSEAD and Jessica B. RodellUniversity of GeorgiaPublished Online:10 Jan 2018https://doi.org/10.5465/amj.2018.4001AboutSectionsView articleView Full TextPDF/EPUB ToolsDownload CitationsAdd to favoritesTrack Citations ShareShare onFacebookTwitterLinkedInRedditEmail View articleREFERENCESAgarwal, R., & Hoetker, G. 2007. A Faustian bargain? The growth of management and its relationship with related disciplines. Academy of Management Journal, 50: 1304–1322.Link , Google ScholarAlbert, S., & Bell, G. G. 2002. Timing and music. Academy of Management Review, 27: 574–593.Link , Google ScholarHackman, J. R. 2003. Learning more by crossing levels: Evidence from airplanes, hospitals, and orchestras. Journal of Organizational Behavior, 24: 905–922. Google ScholarHitt, M. A., Beamish, P. W., Jackson, S. E., & Mathieu, J. E. 2007. Building theoretical and empirical bridges across levels: Multilevel research in management. Academy of Management Journal, 50: 1385–1399.Link , Google ScholarKelley, T. L. 1927. Interpretation of educational measurements. New York, NY: World Book Company. Google ScholarLarsen, K. R., & Bong, C. H. 2016. A tool for addressing construct identity in literature reviews and meta-analyses. Management Information Systems Quarterly, 40: 529–551. Google ScholarLee, S. Y., Pitesa, M., Thau, S., & Pillutla, M. M. 2015. Discrimination in selection decisions: Integrating stereotype fit and interdependence theories. Academy of Management Journal, 58: 789–812.Link , Google ScholarMaltarich, M. A., Nyberg, A. J., Reilly, G., Abdulsalam, D., & Martin, M. 2017. Pay-for-performance, sometimes: An interdisciplinary approach to integrating economic rationality with psychological emotion to predict individual performance. Academy of Management Journal, 60: 2155–2174.Link , Google ScholarMarkóczy, L., & Deeds, D. L. 2009. Theory building at the intersection: Recipe for impact or road to nowhere? Journal of Management Studies, 46: 1076–1088. Google ScholarMathieu, J. E., & Chen, G. 2011. The etiology of the multilevel paradigm in management research. Journal of Management, 37: 610–641. Google ScholarMayer, K. J. 2006. Spillovers and governance: An analysis of knowledge and reputational spillovers in information technology. Academy of Management Journal, 49: 69–84.Link , Google ScholarPfeffer, J. 1993. Barriers to the advance of organizational science: Paradigm development as a dependent variable. Academy of Management Review, 18: 599–620.Link , Google ScholarPlowman, D. A., Baker, L. T., Beck, T. E., Kulkarni, M., Solansky, S. T., & Travis, D. V. 2007. Radical change accidentally: The emergence and amplification of small change. Academy of Management Journal, 50: 515–543.Link , Google ScholarShaw, J. D., Bansal, P., & Gruber, M. 2017. New ways of seeing: Elaboration on a theme. Academy of Management Journal, 60: 397–401.Link , Google ScholarThorndike, E. L. 1904. An introduction to the theory of mental and social measurements. New York, NY: The Science Press. Google ScholarVissa, B. 2011. A matching theory of entrepreneurs’ tie formation intentions and initiation of economic exchange. Academy of Management Journal, 54: 137–158.Link , Google ScholarZahra, S. A., & Newey, L. R. 2009. Maximizing the impact of organization science: Theory-building at the intersection of disciplines and/or fields. Journal of Management Studies, 46: 1059–1075. Google ScholarFiguresReferencesRelatedDetailsCited byFrom the Editors: Publishing Practical and Responsible Research in AMJIvona Hideg, Katherine A. DeCelles and Laszlo Tihanyi9 December 2020 | Academy of Management Journal, Vol. 63, No. 6The Problems With Theory and New Challenges in TheorizingGeoffrey Wood, Phillip H. Phan and Mike Wright29 November 2018 | Academy of Management Perspectives, Vol. 32, No. 4New Ways of Seeing: Pitfalls and Opportunities in Multilevel ResearchSrikanth Paruchuri, Jill E. Perry-Smith, Prithviraj Chattopadhyay and Jason D. Shaw22 June 2018 | Academy of Management Journal, Vol. 61, No. 3 Vol. 61, No. 1 Permissions Metrics in the past 12 months History Published online 10 January 2018 Published in print 1 February 2018 Information© Academy of Management JournalAcknowledgmentsThanks to Wei Si, Xiang Zhou, Yuen Lam Bavik, and Shuisheng Shi for helpful comments and editing.Download PDF

Reputation spillover: corporate crises’ effects on country reputation

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.

Audit Office Reputation Shocks from Gains and Losses of Major Industry Clients

AbstractOur study reports evidence on the dynamic effects of client switches on auditor reputations and fee premia. Offices of large accounting firms that lose (gain) major industry clients experience a reputation shock leading to more same‐industry client losses (gains) over the next two years. There is also a shift in audit fees charged to other same‐industry clients when a major client loss (gain) results in an audit office losing (gaining) city‐level industry leadership. A major client loss or gain also creates a short‐term capacity shock to an audit office's ability to supply high‐quality audits. However, there is no evidence of reputation spillovers to other‐industry clients in the audit office, or to clients in other offices of the accounting firm.

Business-to-Consumer Platform Strategy

We build an economic model to study the problem of offering a new, high-certainty channel on an existing business-to-consumer platform such as Taobao and eBay. On this new channel, the platform owner exerts effort to reduce the uncertainty of service quality. Sellers can either sell through the existing low-certainty channel or go through additional screening to sell on this new channel. We model the problem as a Bertrand competition game where sellers compete on price and exert effort to provide better service to consumers. In this game, we consider a reputation spillover effect that refers to the impact of the high-certainty channel on the perceived service quality in the low-certainty channel. Counter-intuitively, we find that low-certainty channel demand will decrease as the reputation spillover effect increases, in the case of low inter-channel competition. Also, low-certainty channel demand increases as the quality uncertainty increases, in the case of intense inter-channel competition. Furthermore, the platform owner should offer a new high-certainty channel when (i) the perceived quality for this channel is sufficiently high, (ii) sellers in this channel are able to efficiently provide quality service, (iii) consumers in this channel are not so sensitive to the quality uncertainty, or (iv) the reputation spillover effect is high. In the one-channel case, the incentives of the platform owner and sellers are aligned for all model parameters. However, this is not the case for the two-channel solution, and our model reveals where tensions will arise between parties.

Where Do Students Go When For-Profit Colleges Lose Federal Aid?

We examine the effects of federal sanctions imposed on for-profit institutions in the 1990s. Using county-level variation in the timing and magnitude of sanctions linked to student loan default rates, we estimate that sanctioned for-profits experience a 68 percent decrease in annual enrollment following sanction receipt. Enrollment losses due to for-profit sanctions are 60–70 percent offset by increased enrollment within local community colleges, where students are less likely to default on federal student loans. Conversely, for-profit sanctions decrease enrollment in local unsanctioned for-profit competitors, likely due to improved information about local options and reputational spillovers. Overall, market enrollment declines by 2 percent. (JEL H52, I21, I22, I23, I28)

Do Opinions on Financial Misstatement Firms Affect Analysts’ Reputation with Investors? Evidence from Reputational Spillovers

ABSTRACTWe examine whether opinions on firms subsequently revealed to have misstated earnings affect analysts’ reputation with investors. We find that positive opinions by bullish analysts hurt their reputation, leading investors to react less to their research on non‐misstatement firms after the misstatement revelation (i.e., negative spillovers). We also find that bearish analysts issuing more negative opinions gain reputation and experience positive spillovers. Finally, for analysts who dropped coverage of the misstatement firm before the misstatement revelation, we find no spillovers, which suggests that analysts experience limited reputational gains when they did not issue a public negative opinion.

Do Opinions on Financial Misstatement Firms Affect Analystss Reputation with Investors? Evidence from Reputational Spillovers

We examine whether opinions on firms subsequently revealed to have misstated earnings affect analysts’ reputation with investors. We find that positive opinions by bullish analysts hurt their reputation, leading investors to react less to their research on non-misstatement firms after the misstatement revelation (i.e., negative spillovers). We also find that bearish analysts issuing more negative opinions gain reputation and experience positive spillovers. Finally, for analysts who dropped coverage of the misstatement firm before the misstatement revelation, we find no spillovers, which suggests that analysts experience limited reputational gains when they did not issue a public negative opinion.

CSR reputation spillover among business group affiliates: The asymmetric effects

This paper examines the reputation spillover among companies affiliated to the same business group, in which affiliates can share reputational gains or loss through spillovers. The experiments diff...

Country Of Origin Reputation And IPO Performance

We study how public firms’ stock price is influenced by reputational spillovers among firms that are categorized in the same country. First, we argue that a firm entering the financial market throu...

Board Interlocks and Reputation Spillover Effects:An Analysis of Financial Reporting Policies

Drawing on social network theory, I examine whether material adverse events such as financial fraud allegations at one firm effect the financial reporting policies of associated by a board interloc...

Monitoring global supply chains

Research summary: Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers' conduct. But little is known about what influences auditors' ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains. Managerial summary: Firms reliant on supply chains to manufacture their goods risk reputational harm if the working conditions in those factories are revealed to be dangerous, illegal, or otherwise problematic. While firms are increasingly relying on private-sector “social auditors” to assess factory conditions, little has been known about the accuracy of those assessments. We analyzed nearly 17,000 code-of-conduct audits conducted at nearly 6,000 suppliers around the world. We found that audits yield fewer violations when the audit team has been at that particular supplier before, when audit teams are less experienced or less trained, when audit teams are all male, and when the audits were paid for by the supplier instead of by the buyer. We describe implications for firms relying on social auditors and for auditing firms. Copyright © 2015 John Wiley & Sons, Ltd.

Reputational spillovers: Evidence from French architecture

While the notion of reputation has attracted much scholarly interest, few studies have addressed the strategic issue of reputational multiplicity and managing the interactions among different types of reputations. We suggest that an organization can have several stakeholder-specific reputations—peer, market, and expert—and that reputational spillover effects (the continued influence of one reputation on another) matter at the organizational level. We test reputational spillovers on 42 French architecture companies over a period of 30 years. Our results show that over time, the three reputations interact with each other, generating positive spillovers, with the exception of market and expert reputations. We contribute by explaining how interconnected organizational reputations among different stakeholders can interact over time, how companies can strategically manage reputational spillovers, and how such spillovers influence organizations in creative and professional industries.