Reputation

[rep-yuh-tey-shuhn]

Reputation is the opinion (more technically, a social evaluation) of the public toward a person, a group of people, or an organization. It is an important factor in many fields, such as education, business, online communities or social status.

Reputation is known to be a ubiquitous, spontaneous and highly efficient mechanism of social control in natural societies. It is a subject of study in social, management and technological sciences. Its influence ranges from competitive settings, like markets, to cooperative ones, like firms, organisations, institutions and communities. Furthermore, reputation acts on different levels of agency, individual and supra-individual. At the supra-individual level, it concerns groups, communities, collectives and abstract social entities (such as firms, corporations, organizations, countries, cultures and even civilizations). It affects phenomena of different scale, from everyday life to relationships between nations. Reputation is a fundamental instrument of social order, based upon distributed, spontaneous social control.

A cognitive view of reputation

Until very recently, the cognitive nature of reputation was substantially ignored. This has caused a misunderstanding of the effective role of reputation in a number of real-life domains and the related scientific fields. In the study of cooperation and social dilemmas, the role of reputation as a partner selection mechanism started to be appreciated in the early eighties.

An interdisciplinary integrated approach to reputation, accounting for both evolutionary grounds and cognitimechanisms and processes, is still missing. Only such an integrated approach can point to guidelines for managing reputation and for designing technologies of reputation.

Working toward such a definition, reputation as a [socially transmitted (meta-) belief (i.e., belief about belief) concerns properties of agents, namely their attitudes toward some socially desirable behaviour, be it cooperation, reciprocity, or norm-compliance. Reputation plays a crucial role in the evolution of these behaviours: reputation transmission allows socially desirable behaviour to Rather than concentrating on the property only, the cognitive model of reputation accounts also for the transmissibility and therefore for the propagation of reputation.

In order to model this aspect it is necessary to specify and understand a more refined classification of the multi-faceted cognitive object commonly addressed as reputation.

A recommendation can be extremely precise (think for example of the stock market, where your advisor, when discussing the reputation of a bond, can supplement his informed opinion with both historical series and current events. On the contrary, in informal settings, gossip, although vague, may contain precious hints both to actual facts ["I've been told this physician has shown questionable behaviour"]) and to conflicts taking place at the information level (if a candidate for a role spread bar doubtful reputation about another candidate, who should you trust?).

Moreover, the expression "it is said that (John Smith is a cheater)" is intrinsically a reputation spreading act, because on the one hand it refers to a (possibly fake) common opinion, and on the other the very act of saying "it is said" is self-assessing, since it provides at least one factual occasion when that something is said, exactly for the fact the person who says so (the gossiper), while appearing to spread the saying a bit further, may actually be in the phase of initiating it.

Gossip can also be used as a tag only - as when gossipping about unreachable icons, like royalty or showbiz celebrities - useful only to show the gossiper belongs to the group of the informed ones. While most cases seem to share the characteristic of being primarily used to predict future behaviour, they can have, for example, manipulative subgoals, even more important than the forecast.

Considering, for example, the case of a communication between two parts, one (the advisee) that is requesting advice about the potential for danger in an economical transaction with another part (the potential partner, target), and the other (the advisor, evaluator) that is giving advice.

Roughly speaking, the advice could fall under one of the following three categories:

the adviser declares it believes the potential partner is (is not) good for the transaction in object;
the adviser declares it believes another (named or otherwise defined) agent or set of agents believes the potential partner is (is not) good for the transaction in object;
the adviser declares it believes in an undefined set of agents, there is a belief the potential partner is (is not) good for the transaction in object;

Note the care to maintain the possible levels of truth (the adviser declares - but could be lying - it believes - but could be wrong - etc..). The cases are listed, as it is evident, in decreasing order of responsibility. While one could feel most actual examples fall under the first case, the other two are not unnecessarily complicated neither actually infrequent. Indeed, most of the common gossip falls under the third category, and, except for electronic interaction, this is the most frequent form of referral. All examples concern the evaluation of a given object (target), a social agent (which may be either individual or supraindividual, and in the latter case, either a group or a collective), held by another social agent, the evaluator.

The examples above can be turned in more precise definitions using the concept of social evaluation defined above. At this point, we can propose to coin a new lexical item, image, whose character should be immediately evident from the following:

Image

Image is a global or averaged evaluation of a given target on the part of an agent. It consists of a (set of) social evaluations about the characteristics of the target. Image as an object of communication is what is exchanged in examples 1 and 2, above. In the second case, we call it third-party image. It may concern a subset of the target's characteristics, i.e., its willingness to comply with socially accepted norms and customs, or its skills. ways), nor its definition as pertaining to a precise agent. Indeed, we can define special cases of image, including third-party image, the evaluation that an agent believes a third party has of the target, or even shared image, that is, an evaluation shared by a group. Not even this last is reputation, since it tries to define in a too precisely the mental status of the group.

Reputation

Reputation, as distinct from image, is the process and the effect of transmission of a target image. To be more precise, we call reputation transmission a communication of an evaluation without the specification of the evaluator, if not for a group attribution, and only in the default sense discussed before. This covers the case of example 3 above. More precisely, reputation is a believed, social, meta-evaluation; it is built upon three distinct but interrelated objects: (1) a cognitive representation, or more precisely a believed evaluation - this could be somebody's image, but is enough that this consist of a communicated evaluation; 2) a population object, i.e., a propagating believed evaluation; and (3) an objective emergent property at the agent level, i.e., what the agent is believed to be. In fact, reputation is a highly dynamic phenomenon in two distinct senses: it is subject to change, especially as an effect of corruption, errors, deception, etc.; and it emerges as an effect of a multi-level bidirectional process.

While image only moves (when transmitted and accepted) from an individual cognition to another, the anonymous character of reputation makes it a more complex phenomenon. Reputation proceeds from the level of individual cognition (when is born, possible as an image, but not always) to the level of social propagation (at this level, it not necessarily believed from any agent) and from this level back to individual cognition again (when it is accepted).

Moreover, once it gets to the population level, reputation gives rise to a further property at the agent level. It is both what people think about targets and what targets are in the eyes of others.

From the very moment an agent is targeted by the community, his or her life will change whether he or she wants it or not or believes it or not. Reputation has become the immaterial, more powerful equivalent of a scarlet letter sewed to one's clothes. It is more powerful because it may not even be perceived by the individual to whom it sticks, and consequently it is out of the individual's power to control and manipulate.

More simply speaking for those who want a working definition of reputation, reputation is the sum of impressions held by a company's stakeholders. In other words, reputation is in the "eyes of the beholder". It need not be just a company's reputation but could be the reputation of an individual, country, brand, political party, industry. But the key point is reputation is not what the leadership insists but what others perceive it to be. For a company, its reputation is how esteemed it is in the eyes of its employees, customers, investors, talent, prospective candidates, competitors, analysts, alumni, regulators and the list goes on.

Reputation-based decisions

Image and reputation are distinct objects. Both are social in two senses: they concern properties of another agent (the target's presumed attitude toward socially desirable behaviour), and they may be shared by a multitude of agents. However, the two notions operate at different levels. Image is a belief, namely, an evaluation. Reputation is a meta-belief, i.e., a belief about others' evaluations of the target with regard to a socially desirable behaviour. To better understand the difference between image and reputation, the mental decisions based upon them must be analysed at the following three levels:Epistemic: accept the beliefs that form either a given image or acknowledge a given reputation. This implies a believed evaluation gives rise to one's direct evaluation. Suppose I know the friend I mostly admire has a good opinion of Mr. Berlusconi. However puzzled I may be by this dissonance-inducing news, I may be convinced due to my friendship to accept this evaluation and share it. Pragmatic-strategic : use image in order to decide whether and how to interact with the target. Once I have my own opinion (perhaps resulting from acceptance of others' evaluations) about a target, I will use it to make decisions about my future actions concerning that target. Perhaps, I may abstain from participating in political activity against Mr. Berlusconi. Memetic : transmit my (or others') evaluative beliefs about a given target to others. Whether or not I act in conformity with a propagating evaluation, I may decide to spread the news to others.

Firm reputation

Many businesses have public relations departments dedicated to managing their reputation. In addition, many public relations firms describe their expertise in terms of reputation management. The public relations industry is growing due to the demand for companies to build corporate credibility and hence reputation. Incidents which damage a company's reputation for honesty or safety may cause serious damage to finances. For example, in 1999 Coca Cola lost $60 million (by its own estimate) after schoolchildren reported suffering from symptoms like headaches, nausea and shivering after drinking its products.

Building reputation through stakeholder management

The stakeholder theory says corporations should be run for the benefit of all “stakeholders,” not just the shareholders. Stakeholders of a company include any individual or group that can influence or is influenced from a companies practices. The stakeholders of a company can be suppliers, consumers, employees, shareholders, financial community, government, and media. Companies must properly manage the relationships between stakeholder groups and they must consider interest of each stakeholder group carefully. Therefore, it becomes essential to integrate public relations into corporate governance to manage the relationships between these stakeholders which will enhance the organization’s reputation. Corporations or institutions which behave ethically and governed in a good manner builds a reputational capital which is a competitive advantage. According to Fombrun, a good reputation enhances profitability because it attracts customers to products, investors to securities and employees to its jobs. Company’s reputation is an asset and wealth that gives that company a competitive advantage because this kind of a company will be regarded as a reliable, credible, trustwothhy and responsible for employees, customers, shareholders and financial markets. In addition, according to MORI’s survey of about 200 managers in the private sector, 99% responded the management of corporate reputation is very (83%) or fairly (16%) important. Reputation is a reflection of companies’ culture and identity. Also, it is the outcome of managers' efforts to prove their success and excellence. It is sustained through acting reliable, credible, trustworthy and responsible in the market. It can be sustained through consistent communication activities both internally and externally with key stakeholder groups. This directly influences a public company's stock prices in the financial market. Therefore, this reputation makes a reputational capital as a strategic asset and advantage for that company. As a consequence, public relations must be used in order to establish long lasting relationships with the stakeholders, which will enhance the reputation of the company.

CEO reputation

Research has shown the reputation of the CEO is inextricably linked to the reputation of the company. CEOs set the tone, define company direction, attract talent, and are the human face of the organization. Increasingly, CEOs are building their brands on credibility, not celebrity. In times of uncertainty, the CEO is called upon to speak on behalf of the organization. Books on building CEO reputation and company reputation include Reputation by Charles Fombrun, The 18 Immutable Laws of Corporate Reputation by Ron Alsop, and CEO Capital: A Guide to Building CEO Reputation and Company Success by Leslie Gaines-Ross.

Online reputation

Reputation is a factor in any online community where trust is important. Examples include eBay, an auction service which uses a system of customer feedback to publicly rate each member's reputation. Amazon.com has a similar reputation mechanism in place and merchants develop their reputations across different dimensions. One study found that a good reputation added 7.6% to the price received. In addition, building and maintaining a good reputation can be a significant motivation for contributing to online communities. See Motivations for contributing to online communities for more information.

Reputation as extension of ego

Concern over reputation is sometimes considered a human fault, exaggerated in importance due to the fragile nature of the human ego. Shakespeare provides the following insight from Othello:

Cassio: Reputation, reputation, reputation! O! I have lost my reputation. I have lost the immortal part of myself, and what remains is bestial. My reputation, Iago, my reputation!
Iago: As I am an honest man, I thought you had received some bodily wound; there is more offence in that than in reputation. Reputation is an idle and most false imposition; oft got without merit, and lost without deserving: you have lost no reputation at all, unless you repute yourself such a loser.

-Shakespeare, Othello, the Moor of Venice Act II. Scene III, 225-226.

Reputation Officers

Despite the rising interest in reputation, few companies have reputation officers. Although many companies will say company reputation is the job of the CEO, managing reputation is a daily function and can best be given to an individual in the organization. There are only a handful of people in the business world with the word "reputation" in their titles -- Dow Chemical, SABMiller, Coca-Cola, Allstate, Repsol YPF, Weber Shandwick, and GlaxoSmithKline (although no longer). Hoovers has a list of officers with the term "reputation" in their titles. Despite the great interest in reputation, there only remains 25 or fewer people as reputation officers. Some would argue reputation-building and protection is the job of the CEO and not any direct report. Others would say that the CEO has too many responsibilities to focus on reputation.

Reputation Recovery

The convergence of globalization, instantaneous news and online citizen journalism magnifies any corporate wrongdoing or misstep. Barely a day goes by without some company facing new assaults on its reputation. Reputation recovery is the long and arduous path to rebuilding equity in a company's good name. Research has found it takes approximately 3.5 years to fully recover reputation ([Safeguarding Reputation ). Jim Collins of Good to Great fame says it takes a company seven years to go from good to great. The path is clearly long. The reason reputation recovery has risen in importance is that the "[stumble rate " among companies has risen exponentially over the past five years. In fact, 79% of the world's most admired companies have lost their number one positions in industries in that time period. Companies which were once heralded as invincible, no longer are.