The Centre for Corporate Reputation is developing a series of working papers:
WORKING PAPER 10:404
Just Talk? Strategic Plan Announcements and Market Reactions
Authors: Richard Whittington, Saïd Business School, University of Oxford
Basak Yakis-Douglas, Saïd Business School, University of Oxford
John Ahn, Saïd Business School, University of Oxford
ABSTRACT
This paper analyses market reactions to public strategic plan announcements by NYSE and NASDAQ companies. Contrary to the low expectations set by 'cheap talk' and 'soft talk' perspectives, we find that a substantial minority of such strategic plans elicit significant cumulative abnormal returns, either in a positive or a negative direction. We also find that new chief executives are likely to increase the effects of positively-evaluated strategic plans. We propose that research on strategic planning and performance should discriminate more between the quality of plans rather than whether companies have plans or not. We also suggest avenues for research on the discourse of these strategic plan announcements and on the adoption of strategic plan announcements, from institutionalist and strategy theory perspectives.
To download the paper click here
WORKING PAPER 10:101
The Role of Reputation in Reputation
Authors: Michael L Barnett, Saïd Business School, University of Oxford
Sunyoung Lee, Saïd Business School, University of Oxford
ABSTRACT
Aggregated reputation scores and rankings have been highly criticized for lacking a theorectical basis by which to weight the individual perceptions that form them. The resulting product can be a score or ranking that fails to represent the perceptions of many or even most stakeholders. Though researchers have striven to provide a more accurate rating of a firm to represent stakeholders' views of a firm, little attention has been paid to the influence of a ranking on perceptions. Rather than examining how individuals perceptions can be represented at an aggregate level, we focus here on how an aggregated reputation can influence individual perceptions, forming reputation. Drawing upon the literature on cognitive and social psychology, we propose a cognitively based theory of reputation. We delineate boundary conditions influenced by rankings and investigate the relative impact of information versus noise on perceptions. Through experiments, we find that ratings have a significant influence on stakeholder perceptions, but more importantly, their importance increases or diminishes according to noise. We find that exposure to reputation ratings provides stakeholders with an anchor point - information about what others think - and their perceptions of the firm are adjusted relative to this anchor. We suggest future work on reputation should look into the role of reputation as an influencing factor rather than as a reflection of individual stakeholders' perceptions.
To download the paper click here
WORKING PAPER
Regulatory Sanctions and Reputational Damage in Financial Markets
Authors: John Armour, University of Oxford - Faculty of Law; Oxford-Man Institute of Quantitative Finance; European Corporate Governance Institute (ECGI)
Colin Mayer, University of Oxford - Saïd Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Andrea Polo, University of Oxford - Saïd Business School
ABSTRACT
We study the impact of the announcement of enforcement of financial and securities regulation by the UK’s Financial Services Authority and London Stock Exchange on the market price of penalized firms. Prior literature on reputational penalties has suffered from the existence of a number of confounding factors that render it hard to disentangle reputational from other losses. In the UK, the FSA and LSE only make the investigation (and its result) public if and when the firm is found to have breached the rules and incurs a fine and/or an order to pay compensation. This means that the announcement of a breach is an exceptionally clean signal to the market about the extent to which the firm in question abides by its legal obligations. We find that reputational sanctions are very real: their stock price impact is on average almost 9 times larger than the financial penalties imposed. Furthermore, reputational losses are confined to misconduct that directly affects parties who trade with the firm (such as customers and investors). The announcement of a fine for wrongdoing that harms third parties has, if anything, a weakly positive effect on stock prices. Our results have significant implications for understanding both corporate reputation and regulatory policy.
To download the paper click here
WORKING PAPER 10:204
How are reputation and quality built within management consultancy firms?
Authors: Dr Will Harvey and Professor Tim Morris
Oxford Univeristy Centre for Corporate Reputation,
ABSTRACT
Reputation and quality are often used interchangeably within the literature with the underlying assumption that they are the same phenomenon. We examine this assumption by exploring how far reputation is synonymous with the quality of projects delivered within a management consultancy firm. Drawing on interviews with 117 employees, clients, non-clients, alumni and students in eight different countries, we analyse how reputation and quality inter-relate. We find that the reputation of the firm does not necessarily align with the quality of the projects it delivers and that the firm’s reputation actually varies across offices and practices. We also find that some firms and practices of the same firm are able to exploit their reputation when it is superior to the perceived quality of their work, while other firms or practices within the same firm have to compensate for inferior reputation in the quality they offer in their project work. We conclude by providing a model of how reputation and quality may be built and sustained in different ways within management consultancy firms.
For further information please contact ccr@sbs.ox.ac.uk
WORKING PAPER 10:403
Definitions, networks, signals and stakeholders. Linking organizational communication to corporate reputation
Authors:
Dr William S. Harvey and Professor Timothy Morris
ABSTRACT
Purpose. This paper summarizes and bridges the corporate reputation literature on definitions, social networks, signals and stakeholders.
Design/methodology/approach. A review of the theoretical literature on corporate reputation pertaining to definitions, social networks, signalling and stakeholders is provided. A working definition is given before outlining how organizational communication can shape corporate reputation.
Findings.The overall argument is that more focused definitions are needed on corporate reputation before trying to understand its antecedents and consequences. An important contribution of the paper is showing that different forms of communication through social networks, signalling and stakeholders need to be disaggregated in order to better comprehend how communication affects corporate reputation. The paper concludes by showing diagrammatically how organizational communication can lead to corporate reputation capital which in turn can affect how organizations communicate in the future.
Originality/value. Few attempts have been made to bridge the theoretical literature on different forms of communication and social relationships with corporate reputation. This is important because although we know that they are important in some sense for creating and managing corporate reputation, we know less about in what ways. This paper addresses exactly this by unpacking how organizational communication can lead through different social relationship channels to creating different corporate reputations.
For further information please contact ccr@sbs.ox.ac.uk
WORKING PAPER 10:203
Career choices. How University of Oxford students form reputations of companies.
Author:
Dr William Harvey
ABSTRACT
This research shows that the reputations of firms are key in determining whether University of Oxford students decide to apply to particular firms. The data derives from a joint survey run by the Careers Service and the Student Union at the University of Oxford in which 430 students (74% undergraduates, 26% postgraduates) participated. The students were asked about their impressions of particular industries and careers and what factors determined these impressions. Three important components emerged. First, that the stereotypically popular careers of investment banking, and law were less popular among students than academic research and publishing/media. The opposite was the case for students at the University of Oxford’s Saïd Business School where there was a strong preference towards careers in investment banking and management consultancy. Second, students analysed a range of factors such as pay, job security and flexibility of working hours when determining the respectability of particular careers and they would trade-off one factor from another when deciding what industries and firms would be best to work for. Third, the social networks of students and the influence of third party intermediaries, in addition to the strength of company brands, significantly affected what they thought about particular companies.
For further information please contact ccr@sbs.ox.ac.uk
WORKING PAPER 10:301
Computerization and the ABACUS: Reputation, Trust, and Fiduciary Responsibility in Investment Banking
Authors:
Patricia A. McCoy, School of Law, University of Connecticut
Alan D. Morrison, Saïd Business School, University of Oxford
William J. Wilhelm, Jr., McIntire School of Commerce, University of Virginia
ABSTRACT
We argue that technological change has altered the types of contract that investment bankers can write and, as a result, that it has changed the role of reputation and trust in some financial markets. Investment bankers traditionally operated in markets where information was hard to prove in court, and performance was difficult to measure. As a result, their business was founded upon reptuationally intermediated tacit contracts. While this type of contract remains important in advisory businesses, advances in information technology, financial engineering, and financial law have shifted the focus of investment banks towards arm's length transactions that are often performed in dealing rooms. This shift has profound consequences for the regulation and supervision of investment banks. We argue that light-touch regulation in most appropriate in traditional tacit businesses, where formal regulation can crowd out the reputational arrangements upon which trade rests. In codified markets formal and codified regulation is more appropriate. We apply these insights to the SEC's recent action against Goldman Sachs. We argue that the case hinged upon the extent to which the ABACUS transaction at the heart of the case was transactional, as opposed to tacit, and we draw some conclusions for the future structure of financial regulation.
To download the paper click here
Business journalism and corporate reputation
Author: Jonathan Silberstein-Loeb
ABSTRACT
The relationship between journalists and corporate decision-makers is the most important and influential factor affecting the media’s role in determining corporate reputation. Three primary factors influence this relationship: 1) Individual behaviour; which refers to the intention, perceptions, and reputation of different actors, whether they be journalists or corporate decision-makers. 2) Resource constraints; namely, the information available to different parties, as well as the time allowed, and means used, to obtain it. 3) Exogenous factors; i.e. public opinion (and the perception of it), state of the economy, market sector (which refers both to the state of the media and to the state of the business), and culture. Well-formed relationships between journalists and corporate decision-makers generate transparency, a consequence of which is that the amount of information available to the media increases. This helps market actors to know what a particular company is doing, but, having increased the quantity of information available to the media, and by extension to the public, corporations have more to manage. This outcome constitutes a compelling reason for companies to adhere to social norms and behave responsibly.
For further information please contact ccr@sbs.ox.ac.uk
Trade associations in the newspaper industry, 1830-1950
Author: Jonathan Silberstein-Loeb
ABSTRACT
This paper concerns the history of the Newspaper Society. The Society, which formed in England in the 1830s and still exists, is the oldest newspaper trade association in the world. From the time of its foundation, the Society’s membership has comprised the majority of newspapers published throughout Britain outside London. The Society undertook all those tasks trade associations typically conduct; namely, networking, regulation, market development, negotiation and procurement, and information services. Recently, historians have begun to think more extensively about these types of organizations and in particular what conditions make for ‘associative capacity’ as well as the policy implications and economic impact of these associations. This paper contributes to this burgeoning body of literature by exploring the effect of corporate reputation on cooperation and vice versa.
For further information please contact ccr@sbs.ox.ac.uk
Paralysis by Analysis? Four Decades of Strategic Planning
Authors:
Richard Whittington
Ludovic Cailluet
Basak Yakis-Douglas
ABSTRACT
This paper traces the evolution of strategic planning practice through a content analysis of advertisements for strategic planning jobs in the New York Times from 1960 to 2003. We address two issues. First, responding to prominent criticisms of analytical approaches to strategic planning, we consider the role of analysis in strategic planning jobs over time.
Second, following the association of the MBA degree with these analytical approaches, we examine the relationship of MBA qualifications to analysis in strategic planning jobs. We find no significant shift from analysis in advertised strategic planning jobs in recent years. The MBA appears strongly associated with analytical strategic planning, but not solely. We conclude that analysis has a robust role in strategic planning and discuss implications for strategy practice, research, and education.
For further information please contact basak.yakis-douglas@sbs.ox.ac.uk
The Evolving Practice of Strategic Planning
Authors:
Richard Whittington
Ludovic Cailluet
Basak Yakis-Douglas
ABSTRACT
In this paper we use discourse analysis to investigate the process of institutionalization and change of strategic planning practices over four decades. We propose a model that connects the production and consumption of text to the process of institutionalization and its subsequent expression in new practices. To do this, we use the empirical material of job advertisement for strategic planners and their content. To map and analyze the semantic network of concepts in strategic planner adverts, we used ReseauLu (RL) (Cambrosio et al, 2004; Mogoutov, 2008), a network analysis software designed specifically for the treatment and mapping of complex, heterogeneous relational data so that they can be visually inspected and interpreted.Given that discourse is an important element in the process of social change (Fairclough, 2005), we posit that the content of job advertisement participates in the process of institutionalization of strategic planning as an occupation. We find that vocabulary forms a discourse that participates in the institutionalization of strategic planning as an occupation and as a practice. “Long”, “range” and “planning” tends to disappear in favor of “strategy” between the 1960s and the 1990s. Only “planning” survives the test of time as it is combined with other terms such as “strategic” and has acquired a generic sense that is less connected to a specific period in time. We conclude that that the institution of strategy changed over the last forty years from a primarily corporate orientation, concerned with extending budget-disciplines over the long-term, to a more strategic one concerned with reactivity, integration of business-level initiatives and competition. However, the activity of strategizing remains centered on planning, an activity requiring analytical skills, synthesis and creativity.
For further information please contact basak.yakis-douglas@sbs.ox.ac.uk
From “Long Range Planner” to “Director of Strategic Planning”: Analysing Strategists Job Ads to Understand Evolving Practices
Authors:
Ludovic Cailluet
Andrei Mogoutov
Richard Whittington
Basak Yakis-Douglas
ABSTRACT
In this paper we use discourse analysis to investigate the process of institutionalisation and change of strategic planning practices over a long period. We propose a model that connects the production and consumption of text to the process of institutionalisation and its subsequent expression in new practices. For that we use the empirical material of job advertisement for strategic planners and their content. We posit that job advertisements participate in the process of institutionalization of strategic planning as an occupation. The evolution of the text of job ads reflects and influences changes in professional practices over a long period of time. In a recursive pattern, practices are reflected in discourse produced by practitioners of strategic planning and are gradually re-integrated in the text of job advertisement.
For further information please contact basak.yakis-douglas@sbs.ox.ac.uk
WORKING PAPER 10:402
The Communication Advantage: Investigating Impacts of Strategy Announcements
Authors:
Basak Yakis-Douglas
Richard Whittington
ABSTRACT
We focus on corporate communications related to firms' strategy using event-study methodology to analyse the impact of strategy communications on share-prices. We then construct an explanatory model which estimates cumulative abnormal returns using the variables shareprice shock new CEO, shareprice deviation, size, and regular announcements. Our findings illustrate that not only are strategy announcements sources of cumulative abnormal returns, but also as important as earnings announcements. We suggest that firms carrying out strategy announcements regularly have a higher chance of perfecting these communications and therefore have an increased chance of controlling the direction and scale of investors’ reactions. Investors, on the other hand, through these announcements, can form their own benchmarks for evaluating firms and ultimately become more immune to other factors that cause reactions.
For further information please contact basak.yakis-douglas@sbs.ox.ac.uk
To download the paper click here
WORKING PAPER 10:401
Structure as Signalling: the case of private equity practice areas in elite professional service firms
Authors:
Heidi K. Gardner, Harvard Business School, N. Anand, IMD,
Tim Morris, Oxford University Centre for Corporate Reputation
ABSTRACT
We recast the concept of structure as signaling by showing how organizations couple instrumental and expressive elements of architecture in order to compete effectively in an opaque market context. In the market for professional services potential and current clients seek high quality signals of focus and customization as underlying markers of reputation. Using a multiple-case, inductive study of 16 elite professional firms we find that certain organizational design options send strong signals of quality, but in order benefit from this, firms need to amplify these signals. Firms that do not have such designs can switch signals in order to appear higher quality, and thereby enhance their reputation. We find that in opaque market contexts reputation is associated not so much with the one best organization design option as it is with the appropriate architecting of expressive and instrumental elements of a range of designs.
WORKING PAPER 10:201
Does it pay to be really good?
Addressing the shape of the relationship between social and financial performance
Authors: Michael L Barnett, University of Oxford, Robert M Salomon,New York University, Stern School of Business
ABSTRACT
Decades of research has produced an inconsistent link between corporate social performance (CSP) and corporate financial performance (CFP). We argue that inconsistencies in the literature are attributable to misspecification of the CSP–CFP relationship. We hypothesize that firms’ capacity to influence stakeholders through CSP is non-monotic and the resulting CSP-CFP relationship is U-shaped, not linear. Our results support a U-shaped relationship. Firms with low CSP have higher CFP than do firms with moderate CSP, but firms with high CSP have the highest CFP. This supports the theory that stakeholder influence capacity underlies firms’ ability to transform social responsibility into profit.
For further information please contact michael.barnett@sbs.ox.ac.uk
WORKING PAPER 10:202
An exploration of reputation within major programme management
Author: Kasim Randeree, BT Centre for Major Programme Management & Oxford University Centre for Corporate Reputation
ABSTRACT
Many major programmes fail to achieve their intended outcome for reasons such as cost overrun, poor planning or inaccurate demand forecasting. Such failures are often in the public eye, due to their scale, the involvement of public facilities and infrastructure, or because of the heavy investment of public funds. Consequently, failure has a detrimental reputational impact on stakeholders involved in the major programme. The purpose of this paper is thus to examine the scope and potential of the topic of reputation in the context of major programme failure. This paper is exploratory in nature and is thus conducted through a multi-dimensional literature survey, with a view to evaluating key questions on the intersections between the three areas of stakeholder reputation, major programme management and major programme failure. The paper finds that programme managers must broaden their understanding of what represents failure in a major programme context and raise their level of awareness of the implications of reputational damage as a consequence of major programme failure.
The paper is unique in evaluating the impact of major programme failure on stakeholder reputation. The implications of this study prove that issues pertaining to reputation within a major programme context are significant and warrant further research through case-based and empirical methodologies.
For further information please contact ccr@sbs.ox.ac.uk
WORKING PAPER 10:300
See no evil? Limits on stakeholder attention and the social control of business
Author: Michael L Barnett, University of Oxford
ABSTRACT
I develop an attention-based view of stakeholder action that outlines the structural conditions that affect the likelihood that stakeholders notice firm misconduct. I also detail how a firm’s reputation before and response to an act of misconduct affect how stakeholders make sense of noticed acts. Finally, I identify conditions that affect stakeholders’ desire and ability to respond. In sum, I develop a framework that explains variance in stakeholder response to firm misconduct.
For further information please contact michael.barnett@sbs.ox.ac.uk