An examination of firm, industry, and time effects on performance using random coefficients modeling
- J. C. Short, D. J. Ketchen, N. Bennett, M. du Toit
- Organizational Research Methods,
Firm reputation is an intangible asset that within a resource-based view can provide a sustainable competitive advantage (Barney, 1991; Carter & Ruefli, 2006; Fombrun, 1996; Roberts & Dowling, 2002). While reputation is built over time, it is highly vulnerable to being tarnished and risks being lost in no time at all (Carter & Ruefli, 2006; Davies, Chun, Vinhas da Silva & Roper, 2003; Hall, 1992 & 1993). One only has to think of the fall and subsequent demise of Arthur Andersen & Co. to see how rapidly a stellar reputation may be reversed. When considering how firm reputation may benefit the firm over time, the various advantages of a good reputation include cost savings as suppliers and employees seek to be associated with the firm, favourable access to capital given the perception of lower risk, as well as being able to charge premium prices to generate superior margins, (Carter & Ruefli, 2006; Fombrun, 1996 & 2001; Fombrun & Shanley, 1990; Roberts & Dowling, 2002). Attributed as key to firm success (Hall, 1992 & 1993), but only durable to the few (Carter & Ruefli, 2006) and rarely over a long time-frame (Wiggins & Ruefli, 2002), understanding the evolution of reputation might be considered as integral to firm strategy.