Business Models, Innovation and Competitive Advantage
Edited by Giorgia M. D’Allura, Andrea Colli and Sanjay Goel
Chapter 8: Financial performance and corporate reputation in family firms: is it about being good or being known?
Family businesses are more likely than non-family businesses to respond to pressures from the institutional context, such as rules, norms and public or regulatory pressures, by being particularly careful about maintaining their corporate reputation and preserving the family name. Furthermore, corporate reputation is an important intangible asset for family firms, giving them competitive advantage in their industries. However, the family business literature has considered the corporate reputation construct as being unidimensional. By drawing on corporate reputation literature, the aim of this exploratory study is to investigate the relationship between a key antecedent of corporate reputation, firm financial performance, and the two dimensions of corporate reputation: favourability and prominence. By distinguishing between the two dimensions, this study of large public family firms indicates that financial performance is positively associated with both dimensions, whilst also finding a negative relationship between favourability and prominence. Overall the findings point towards a contractual perspective of corporate reputation in family firms, with reputation accounting for firms’ past behaviour and performance, allowing these businesses to continue accumulating and managing resources to sustain their competitive advantage.
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