Perceived Organizational Reputation and Organizational Performance: An Empirical Investigation of Industrial Enterprises
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Volume 8 Number 1
Academic Research Perceived Organizational Reputation and Organizational Performance: An Empirical Investigation of Industrial Enterprises Abraham Carmeli Bar-Ilan University, Israel Asher Tishler Tel Aviv University, Israel
ABSTRACT This study analyzes the complex set of relationships among perceived organizational reputation, firm’s quality of products/services, customers’ satisfaction and multiple performance measures. A path analysis shows that reputation is influenced by customers’ satisfaction, which is a mediator in the relationship between the firm’s quality of products/services and reputation. Reputation is associated with the firm’s growth and accumulation of customers’ orders, but is not directly associated with market share, profitability and financial strength. Market share influences a firm’s profitability and is a function of the firm’s growth and accumulation of customers’ orders, but it has no influence on the firm’s financial strength.
KEYWORDS: Perceived organizational reputation, organizational performance, customers’ satisfaction, quality of products/services INTRODUCTION Considerable research by scholars and practitioners has recently been devoted to identifying the predictors and understanding the consequences of organizational reputation. A prominent theoretical framework
for assessing the importance of organizational reputation is the resource-based view of the firm (RBV). According to the RBV framework, the heterogeneity of the resources of different firms leads to differences in their competitive advantage and performance variance (Prahalad and Hamel, 1990; Reed and DeFillippi, 1990; Wernerfelt, 1984). Gaining and preserving a sustainable competitive advantage (SCA) depends on the unique bundle of core resources that a firm has developed, acquired and deployed in the competition arena (Aaker, 1989; Amit and Schoemaker, 1993; Barney, 1991, 1995; Grant, 1991; Wernerfelt, 1984). According to Fombrun (1996: 57) ‘corporate reputations are held by people inside and outside a company’. Firms consistently compete to be better-regarded companies; a status that reflects a competitive advantage and, possibly, superior performance (Fombrun, 1996). A favorable organizational reputation is, by definition, a strategic resource, as it reflects the firm’s competitive position relative to its competitors. A firm with a favorable organizational reputation has a competitive edge over its rivals that, according to Fombrun
Corporate Reputation Review, Vol. 8, No. 1, 2005, pp. 13–30 # Henry Stewart Publications, 1363–3589
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Perceived Organizational Reputation and Organizational Performance
and Shanley (1990: 223), ‘may enable firms to charge premium prices, attract better applicants, enhance their access to capital markets and attract investors’. Considerable efforts have also been devoted to studying the relations between organizational reputation and the organization’s financial performance and stock market value (Antunovich et al., 2000; Hammond and Slocum Jr., 1996; McGuire et al., 1988; McMillan an
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