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Barack Obama staked his reputation on delivering against a wide range of different concerns – climate change, universal healthcare, reform of the financial markets. The risk was great – but so was the return: he now sits in the Oval Office as one of the world’s most powerful men. The management anthology Reputation Capital: Building and Maintaining Trust in the 21st Century provides some context for President Obama’s success. The main idea set out in the publication, which brings together perspectives from some 30 international authors, is that – as with investment strategies – when it comes to building reputation, there is a relationship between return and risk.

 

The international economic crisis has put a great deal of strain on the trust between companies and their customers. This precarious economic situation has taken a toll on company accounts, but has had a strong impact upon their reputations. Reputation is among the five most important intangible corporate assets, together with customer and employee satisfaction, brand and corporate culture – according to the results of a recent study by Harvard Business Manager.

 

In light of this, certain questions have become more relevant than ever: Which strategies can a company use to re-establish its reputation? And how can a good name be safeguarded in the long-term? The authors of the new management anthology Reputation Capital: Building and Maintaining Trust in the 21st Century provides some initial responses to these questions and critically evaluates conventional approaches to reputation. 
 

In their analysis, entitled "The CSR myth: true beauty comes from within", Matthias Vonwil and Robert Wreschniok reach a surprising conclusion: it is not CSR activities that give a company a good name, but, more importantly, reliable and reputable corporate communications. These findings are backed up by recent studies by the European Centre for Reputation Studies (ECRS). They show that 80 to 90 percent of stakeholder evaluations of a company are determined by economic, and not social, factors.

 

Performance Decisive for a Good Reputation
The extent to which a solid reputation affects the financial performance of DAX 30 companies has been investigated by Manfred Schwaiger and his team at the Ludwig-Maximilians-University Munich. Since 2005, he and his team of specialists have carried out comprehensive stakeholder surveys. The model they developed for their analysis is much more precise than previous reputational metrics and also takes account of emotional components. The conclusion the 25 companies with the best reputation outperform other companies by a long way.
 
"Companies can invest in machines – but also in reputation", says Joachim Klewes, communications specialist and, together with Robert Wreschniok, co-editor of the management compendium. When developing a strategy, Klewes and Wreschniok find it helpful to draw an analogy with the financial market. "As with investment strategies, when it comes to building up reputation, there is a certain relationship between return and risk."