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Reputation Risk and Globalisation

Terry O’Callaghan

Recently, multinational corporations have begun to reinvent themselves as socially responsible actors. This is largely in response to activist pressure. These activists have perceptively understood the link between corporate success and corporate behaviour. Corporate self-regulation has emerged as an important mechanism to counter this activist pressure. The author argues that corporations have a capacity for self-regulation because their reputation is critical to their success. As such, reputation is beginning to discipline corporate behaviour. The book first explores the link between corporate reputation, corporate behaviour and self-regulation. The author then compares and contrasts various studies of multinational corporations that have sought to self-regulate.
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Conclusion: beyond sustainability and long live the night parrot

Terry O’Callaghan

Extract

This book began in a critical conversation with anti-corporate activists. It praised their efforts to bring about change in the way that multinational corporations (MNCs) behaved in the social and environmental dimensions of their commercial activities. Anti-corporate activists understood early that there was a close link between corporate behaviour and the building of a strong corporate reputation. According to them, a failure to behave well impacted negatively on a company’s reputation. The main mechanism for achieving this is the collective capacity of activists to politicise the reputations of MNCs. They have done this through open protest at corporate headquarters, setting up anti-corporate websites, highlighting the plight of victims of corporate behaviour, and by reacting angrily to corporate disasters. I used the social amplification of risk framework (SARF) to explain how anti-corporate activists have become adept at communicating the potential risks posed by MNCs. The result of this campaign is that MNCs are now acutely aware of the damage a well-organised activist campaign can do to their reputations. Three consequences flow from this insight. First, MNCs have begun to rethink the ways in which they interact with society. Second, they have seen the necessity of redesigning their corporate messages to demonstrate that they are – and can be – good corporate citizens. Third, they are redesigning the practical aspects of their businesses. This includes signing up to corporate charters, issuing sustainability reports, and undertaking special initiatives to reinforce their credentials on social and environmental matters. They are also adopting such initiatives as triple...

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