Chapter 16: A Comparative Study of Corporate Reputation between China and Developed Western Countries
Yang Zhang and Manfred Schwaiger INTRODUCTION Corporate reputation has been enthralling academics as well as top executives for quite a while. Corporate reputation is one of the most valuable intangible assets, as it is extremely hard to imitate by competitors. As an effective management tool, corporate reputation helps firms to achieve sustainable competitive advantages. A fine reputation not only increases customer confidence in products, services and advertising claims but also lowers cognitive dissonance, as it acts as a surrogate for information (Eberl 2006; Fombrun and van Riel 1998; Goldberg and Hartwick 1990; Lafferty and Goldsmith 1999). Via better customer retention (Caminiti 1992; Preece et al. 1995; Rogerson 1983) firms can achieve price premiums and higher purchase rates (Klein and Leffler 1981; Milgrom and Roberts 1986). Companies showing a strong reputation have better access to capital markets, which decreases capital costs (Beatty and Ritter 1986; Wiedmann and Buxel 2005). Moreover, private investors’ stock buying and holding behavior is affected by a company’s reputation, whereby effects are intensified in stock market crises (Schütz and Schwaiger 2007). Several studies (e.g., Caminiti 1992; Dowling 1986; Eidson and Master 2000; Nakra 2000; Preece et al. 1995; Turban and Cable 2003) report higher recruiting and employee retention rates among companies with stronger reputations, thus helping a company to win the war for talents. Finally, a good reputation pays off in terms of general advantages in conducting negotiations with suppliers (Schwalbach 2000) and other stakeholder groups (Brown 1997; Cordeiro and Sambharya 1997; Deephouse 1997; Fombrun 1996;...
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