Maximizing the strategic value of corporate reputation: a business model perspective

Abstract

Purpose

The article emphasizes the importance of corporate reputation as a firm’s key intangible asset leading to tangible shareholder benefits, such as increased profit and market evaluation for established companies, or higher growth rate, lower risk and ease access to funding for new ventures. However, the benefits of corporate reputation do not follow automatically; rather, “the reputational rent” is created and appropriated through a proper, deliberately designed business model. We discuss the link of a firm’s corporate reputation and its business model, proposing a typology of approaches for reaping the rewards of corporate reputation.

Design/methodology/approach

The study is presented as a conceptual paper with illustrative case examples

Findings

For practical purposes, particularly important are two distinct perspectives on corporate reputation: the utilitarian dimension, and the social dimension. The future may turn out to be “either 5-stars or 1-star” world, with Yelp and similar platforms critically disadvantaging the middle-ground of many markets, keeping only top performers and the ones whose business model is insensitive to reputational erosion. This increases the likelihood that the distribution of possible reputation levels will become increasingly bimodal - either high or low, with almost nothing in between - and can be properly mapped on a 2x2 matrix forming the basis of the study.

Originality/value

We introduce the link between a firm’s corporate reputation and its business model, proposing a typology of approaches for reaping the rewards of corporate reputation.

Citation

Ma, Q.“. and Osiyevskyy, O. (2017), "Maximizing the strategic value of corporate reputation: a business model perspective", Strategy & Leadership, Vol. 45 No. 4, pp. 24-32. https://doi.org/10.1108/SL-05-2017-0043