Reputation Management - LMU

Ludwig-Maximilians-Universität München – Institute for Market-based Management 

Reputation Management 

Brief description (April 2011) 

Prof. Dr. Manfred Schwaiger 

Institute for Market-based Management (IMM) 

Kaulbachstraße 45/I 

D-80539 München 

phone +49 89 2180-5640 

Fax +49 89 2180-5651 

e-mail schwaiger@lmu.de 

www http://www.imm.bwl.lmu.de 

1 Corporate Reputation Management 

Prof. Dr. Manfred Schwaiger


1. Reputation as 

a Management Objecti Objective e 



A company‘s market value can hardly be derived from 

tangible assets… assets 

S&P 500 (1980-2010) HDax (1980-2010) ** 

* 

Sources: 

Ballow/Burgman/Roos/Molnar: “A New Paradigm for Managing Shareholder Value, July 2004, p. 7 

Lev: Intangibles: Management, Measurement, and Reporting,” Brookings Institution Press, 2001 

Lev: Remarks on the Measurement Measurement, Valuation Valuation, and Reporting of Intangible Assets. Assets Economic Policy Review Review, Sept Sept. 2003 

Thomson Reuters Datastream 

* 2000-2007 

** HDAX contains stocks of 110 largest, publicly listed corporations in Germany (DAX, MDAX, TecDAX) 



*

… the central intangible asset is a company‘s 

corporate t reputation t ti 

Reputation: general evaluation of a company by its various stakeholders 

stakeholders. 

Incorporates both, cognitive and emotional components. 

An assessment of reputation is based on factual experiences as well 

as on perceptions relying on communicated messages. 

Products & Services 

Strategy & Innovation 

Manager & Employees 

Performance & Market pos. 

CSR & Fairness 

… 

Corporate 

Communications 

Reputation 

Sources: Schwaiger/Cannon 2004, Sobol et al. 1992 ; Fombrun 1996; Gray/Ballmer 1998; Hall 1992; De Quevedo 2001 ; Tucker/Melewar 2005 



Companies build competitive advantages and increase their 

market k t value l by b fostering f t i reputation t ti 


Media Media 

Customers Employees Investors Politicians Suppliers 

Trust in products Win war for talents Better access to Advantages in Lower 

and advertising 

Retention 

Higher purchase 

rates 

Willingness to 

apply 

Salary premium 

Better retention 

capital markets 

Lower credit 

costs 

Increased 

Price premium Higher productivity willingness to buy 

and hold shares 

and stocks 

negotiations 

Favorableness 

and support 

Reduced risk of 

litigation 

procurement 

costs 

Higher 

commitment 

Sources: Fombrun/van Riel 1998; Goldberg/Hartwick 1990; Lafferty/Goldsmith 1999; Caminiti 1992; Preece et al. 1995; Klein/Leffler 1981; Milgrom/Roberts 

1986; Dowling 1986; Eidson/Master 2000; Nakra 2000, Brown 1997; Cordeiro/Sambharya 1997; Deephouse 1997; Fombrun 1996; McMillan/Joshi 

1997; Roberts/Dowling 1997; Srivastava et al. 1997 



Reputation p drives financial performance 

p 

Regression analysis using reputation and stock data show: 

Investments in reputation-building activities over a longer period show a 

positive impact on the shareholder value (market value) 

(“I (“Investment t t Effect“). Eff t“) 

The overall reputation depends on innovative and communicative capabilities 

as well as on finance based influence 

(“Performance Effect“). 

Sources: Eberl/Schwaiger 2005; Roberts/Dowling 2002; Schwalbach 2000; Hildebrandt/Schwalbach 2000 

Investments Reputation Market value Reputation 

Investment 

Performance 

Effect Effect 



Reputation p champions p outperform p the DAX-30 index 

Price index (basis = 100) 

200 

Risk: DAX =101 = 1.01 

(daily basis) 

Top 25% Reputation DAX 

175 156 

150 

125 

100 

75 

114 

Difference in index points 

50 0 

Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 

Corporate reputation data: 

Source: IMM Corporate Reputation Monitor© 

9 waves analyzed: 2005-12, 2006-06, 2006-12, 2007-06, 2007-12, 2008-06, 2008-12, 2009-06, 2009-12 

Sample size ranges between 26 to 28 DAX firms 

During each wave a representative sample of the German general public was surveyed 

Stock market data: 

Source: Datastream 

Period: 30/12/2005 – 31/3/2010 

Dividends included 

Weighting schemes: DAX stocks are weighted by market value; reputation portfolio stocks are weighted equally 

(Note: similar results for market value weighting) 



60 

30

A lack of reputation p can be fatal … 

June 28 28, 2007: Fire in the transformer building in a 

nuclear power plant in Germany, malfunction of the 

power grid → shutdown of both reactors 

July 16, 2007: Head of the nuclear energy division 

and Head of Corporate Communications have to 

resign 

July 27, 2007: commission of independent experts 

is installed by Vattenfall (among them the former 

BMW‘ BMW‘s Head H d of f Corporate C t Communications 

C i ti 

(budget: 7,5 Mio. $) 

„The The shutdown of the plants has burdened the 

profit by $ 85 Mio.“ 

(Vattenfall Europe, interim report Nov. 2007). Source: Spiegel 



The other end of the scale: Nestlé 




2. Our Approach of Corporate 

Reputation Management 



Our reputation model is based on a multinational study and 

hhas been b adopted d t d by b several l blue bl chip hi companies i 

Source: Schwaiger, M. (2004): 

Components and Parameters of 

CCorporate t RReputation t ti – an EEmpirical i i l 

Study, in: Schmalenbach Business 

Review, Vol. 56, S. 46-71 



Reputation is not a goal in itself. It has to be linked to 

iimportant t t outcomes t and d enable bl their th i management! t! 

Check implementation. 

implementation 

Media response o.k.? 

Effectiveness and efficiency 

as expected? 

Feed drivers! Improve TQM, 

Performance, set up CSR 

strategy. 

Create facts and drive 

perception (Corp. Comm.) 

 

 

Controlling 

Acting 

 

Outcome 

(e.g. Loyalty, 

Engagement, 

Willingness to invest 

etc.) 

Measuring 

Explaining 

 

: : Tool Setup (Measuring, Integration of Studies) ca. 4 Month 

Driver analyses per stakeholder group 

then steady state 

ca. 2 Month 

MMeasure reputation t ti and d 

outcomes within your 

strategic group. Locate your 

position compared to 

benchmarks 

Calculate impact of quality, 

performance, CSR, 

attractiveness etc. via 

Reputation on outcome 

(driver analysis) 

Rule of thumb: 12-14 Month 



First Step: p Measuring g reputation p 

Design of the study 

General public: CATI 

OOpinion i i lleader: d CAPI 

Recruiment Market: Online 

Data collection: 

TNS Infratest 

About 2.000 / 300 / 2000 

interviews, 50-60 companies 

Companies selected for 

evaluation have to be known 

at least by name 


Likeability 

Competence 

Identify 

more with 

Likeable company 

Miss more than 

other companies 

Recognized 

world-wide 

Top competitor in 

its market 

Performs at a 

premium level 



Likeability 

65% 

60% 

55% 

50% 

45% 

40% 

35% 

30% 

25% 

20% 

15% 

Measurement results: Reputation Portfolio and 

TTarget t Group G Monitor M it 

Deutsche Lufthansa 

Audi 

Beiersdorf 

VW 

Linde 

Adidas-Salomon 

Deutsche Post 

Henkel 

Deutsche Bahn 

Siemens 

Bayer 

Microsoft 

DaimlerChrysler 

Schering 

Schenker 

BMW Group 

Deutsche Börse 

IBM 

TUI MAN 

HUK Coburg 

L'Oreal 

Deutsche Telekom Commerzbank Fresenius 

Metro Aral 

Hewlett-Packard 

Allianz 

Boeing 

Porsche 

BASF 

AXA 

Germanwings Mü Rück 

Continental 

Shell 

Dresdner Bank 

Infineon 

Deutsche Bank ThyssenKrupp 

Kühne und Nagel 

RWE E.ON 

EADS 

Toyota 

SAP 

HypoVereinsbank 

Altana 

Uil Unilever 

BP 

Accenture 

Burger King 

Mc Donalds 

10% 

50% 55% 60% 65% 70% 75% 80% 85% 90% 

Competence 

Reputation Monitor: 

Perception of Likeability and Competence of one 

selected stakeholder group 

(currently: ~60 companies) 

NGOs/NPOs 

Academics 

Target Group Monitor: 

Reputation of a company in all 

surveyed stakeholder groups 

64,39% 

CEOs etc. 

General Public 



59,38% 

73,20% 

69,28% 

69,53% 

Journalists 

75,39% 

71,29% Politicians 

Analysts

Second Step: Analyzing reputation drivers 

4di 4 dimensions i cover th the main i stakeholder t k h ld groups 

Quality of Products & Services 

(customer perspective) 

Competence 

Likeability 

Attractiveness 

(employee perspective) 

Corporate Performance 

(capital market perspective) 

Recognized 

world-wide 

TOP competitor 

Performance at 

a premium level 

Identify 

more with 

Likeable 

company 



Corporate Social 

Responsibility 

(opinion ( p leader pperspective) p ) 



Second Step: Explaining reputation 

FFor every dimension di i ddrivers i are ddeposited it d 

High quality of products/services 

Good value for money 

Good services 

Customer concerns are held in 

high regard 

Reliable partner 

Rather innovator than imitator 

… 

Quality of Products & Services 

(customer perspective) 

Highly qualified employees 

CCould ld see myself lf working ki for f this thi 

company 

Likeable physical appearance 

… 

Competence 

Likeability 

Att Attractiveness ti 

(employee perspective) 

Corporate Performance 

(capital market perspective) 

Recognized 

world-wide 

TOP competitor 

Performance at 

a premium level 

Identify 

more with 

Likeable 

company 



Well managed 

Economically stable 

Manageable risks 

Growth potential 

Clear vision about the future 

… 

Corporate Social Responsibility 

(opinion leader perspective) 

Forthright information 

Fair attitude towards 

competitors tit 

Social responsibility 

Environmental engagement 

Is not only concerned about 

the profit p 

Corporate Citizenship 

… 



Linking reputation to customer retention proofs a significant 

effect ff t of f likeability lik bilit (ex.: ( power suppliers’ li ’ market) k t) 


Quality 


,31 

,40 

,50 

Performance 

,22 

,68 

79% 

Likeability 

Competence 

91% 

,80 

,87 

,80 

,73 

,13 (n.s.) 

,68 

,80 

Identify more with 




69% 

Commitment 

Recognized 

world-wide 

Top competitor in 

its market 

Performs at a 

premium level 

Source: Schwaiger/Zinnbauer (2003): „Unternehmensreputation: Treiber der Kundenbindung auch bei mittelständischen EVUs, „ 

in: Zeitschrift für Energiewirtschaft, 27. Jahrgang (2003), No. 4, S. 275-280 



,88 

,83 

,88 

,85 

Long term 

committed 

Choose again 

Recommendation

… and in the bank market 

Quality & 

Honesty 


++ 

++ 

++ 

PPerformance f 

+ 

Likeability 

Competence 

,86 

,09 (n.s.) 

Identify more with 




79% 

Commitment 

Recognized 

world-wide 

Top competitor in its market 

Performs at a premium level 

Source: Zinnbauer/Bakay/Schwaiger (2004): „Hohe Reputation stärkt bei Banken und Sparkassen die Kundenbindung,“ 

in: Betriebswirtschaftliche Blätter, Heft 06/2004, S. 271-274 



Long term 

committed 

Choose again 

Recommendation

PLS analysis y allows calculating g a “driver ranking” g 

Rank Position 

(Impact on comp. to 

loyalty) benchmark 

1 (20.12%) 

2 (16.74%) 

3 (12.70%) 

4 (6.68%) 

5 (6.22%) ( ) 

6 … 

++ 

- 

o 

+ 

-- 

Driver 

Rather innovator than imitator 

Well managed 

Customer centricity 

Physical appearance 

Sincere information 

Factor 

Quality 

Performance 

Quality 



… 


CSR 

…

xyz 

reelative 

poosition 

of 

Third Step: Derive recommended actions from driver 

rankings ki and d competitive titi positions… iti 

0,1 

0,1 

2 4 

18 21 

19 

14 

6 

-0,010 

0,0 

0,000 0,010 0,020 0,030 0,040 0,050 0,060 0,070 

-0,1 

-0,1 

-0,2 

-0,2 

-0,3 

15 

16 

17 

12 

3 

5 

11 

9 

20 

10 

8 

1 

13 

influence on customer loyalty 

Dimension 1 = impact on outcome 

Dimension 2 = position in the strategic benchmark group 

7 

For example: 

indicator 7: „well managed“ 

IIndicator di hhas hi high h iinfluence fl on 

customer loyalty (via reputation) 

and is less developed than for the 

other benchmarks. This driver has 

tto be b worked k d on. 

2006 Strategist of the year 



… analyze risks, develop strategic communication guidelines 

and d implement i l t them th creatively ti l 

identify risks 

bad performance 

legal issues 

board member deviance 

product flops 

environmental scandal 

communication disaster 

… 

t 

Unfortunately: That does not always work… 



Fourth Step: Controlling Measures 

pretest – media resonance analysis - posttest 

Likeablility 

TSV 1860 

Airport Lounge 

5% 

4% 

3% 

2% 

1% 

0% 

-2% 

-3% 

Stiftungs Stiftungs-Lst. Lst 

Formel 1 

-5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 

-1% 



-4% 

Competence 

Oper


33. RReputation t ti MManagement t 

as a Stee Steering g Tool oo 



The Concept p 

1. Consolidating: g 

Getting a common linchpin for all 

studies, capturing all relevant aspects 

of corporate reputation 

2. Measuring & Managing 

Determine Goals and potential 

drivers, identify levers of reputation in 

each h relevant l t stakeholder t k h ld group 

3. Operations & Communications 

derive suitable operative programs 

and communication measures 

4. (Control) Tool 

for measuring the effectiveness of 

single activities regarding corporate 

reputation 

6 endogenous indicators for reputation 

3 for likeability 

3 for competence 

Communication in 

the financial 

sector 

Communication to 

consumers 

Corporate 



employees/ 

recruitment market 


opinion leaders 



Summarizing: 

Wh What t are the th benefits b fit of f reputation t ti management t ffor a fi firm? ? 

Beneficial aspects 

+ Transparent management and 

steering concept with proven impact 

on corporate performance 

+ Compatible tool allows linking 

communications measures and using g 

existing market research studies 

+ Instrument to control actions in every 

section available with respect to 

effectiveness and (long-term) 

efficiency 

+ The resulting impacts of the drivers 

allow the identification of a hierarchy of 

the messages prioritization of 

goals 

Increased 

market 

value 

and 

crisis i i 

prevention 




4. CVs + Project Examples 



IMM Team 


University Professor of Management 

Ludwig-Maximilians-Universität Munich 

Responsibilities: 

Chair of the IMM, Dean (2003-2005), Dean of Studies (1999-2003 and since 

2005), Head of the working group for the international study programme 

“European European Master in Management” Management , Member of the executive committee of the 

German Academic Association for Business Research (VHB), member of the 

board of the Munich Experimental Laboratory for Economic and Social 

Sciences (MELESSA) 

CCurriculum i l vitae: it 

Academic studies of Business Administration/Economics at Universität Augsburg with majors in Marketing 

and Operations Research, Ph.D. (Dr. rer. pol.) in 1992, post-doctoral thesis (Habilitation) in 1997 

Fields of Research: 

Market-based Management, Market and Trends Research, Communications Management, Corporate 

Reputation, Competitive Advantage 

Consulting Experience: 

Numerous projects p j with German Blue-Chip-Companies p p ( (concerning g topics p such as Customer Satisfaction 

and Customer Loyalty, Employee Motivation, Corporate Communications and Marketing Strategy) 



IMM Team 

Prof. Dr. Marko Sarstedt, , MBR 

Assistant Professor for Quantitative Methods in Marketing and Management 

Academic studies of Business Administration at Universität Passau, Helsinki 

School of Economics and Business Administration and Ludwig-Maximilians- 

Universität München; Majors: Empirical Research and Corporate Planning Planning, 

Information, Organization and Management, Statistics 

Ph.D. (Dr. oec. publ.) from the Institute for Marked-based Management 

(IMM) / Ludwig-Maximilians-Universität München 

Junior Professor at the Ludwig-Maximilians-Universität München 

Fields of Research: Heterogeneity in Structural Equation Modeling (mainly 

PLS Path Modeling), Effects of Cultural Sponsorship, Reputation, Success 

Factors in Marketing, g, Data Quality y and Scale Development p 

Consulting Experience: Telco, Engineering 



IMM Team 

Dipl Dipl.-Kfm. -Kfm Felix Kessel 

Research and Teaching Assistant 

Academic studies of Business Administration at Ludwig-Maximilians- 

Universität München; Majors: Market-based Management, Human 

Ressource Management, Computer Sciences 

Field of Research: Green Marketing, Sustainability, Corporate Social 


Consulting g Experience: p Engineering g g 

Dipl Dipl.-Hdl. -Hdl Markus Kick 


Academic studies of Human Resource Education & Management at Ludwig- 

Maximilians-Universität München; Mayors: Market-based Management, 

Statistics 

Field of Research: Reputation, Brand Impact on Health Insurance Choice 

Decisions 



IMM Team 

Dipl.-Kffr. Dipl. Kffr. Martina Littich, M.A. 


Academic studies of Communication Science and Business Administration at 

Ludwig-Maximilians-Universität München and Universidad San Pablo CEU in 

MMadrid; d id Majors: M j Applied A li d Communication C i ti RResearch, h Ad Advertising ti i PPsychology; h l 

Market-based Management, Marketing 

Field of Research: Effects of Communication on Reputation/Stock Returns, 

Health Marketing 

Consulting Experience: Engineering 

Dipl.-Kffr. p Elena Michel 



Universität München and Università di Bologna; Majors: Market-based 

Management Management, Marketing, Marketing Advertising Psychology 

Field of Research: Return on Marketing, Corporate Reputation and Stock 

Returns Risk, Corporate Reputation and Analyst Stock Recommendation 

Consulting Experience: Automotive 



IMM Team 

Dipl Dipl. -Kfm Kfm. Sascha Raithel Raithel, MBR 


Academic studies of Business Administration at Universität Augburg; Majors: 

Data Analysis and Statistics, Information Management and Market Research, 

BBusiness i IInformatics f i 

Fields of Research: Marketing Performance Measurement, Marketing- 

Finance-Interface, Corporate Reputation 

Consulting g Experience: p Insurance, , IT 

Dipl.-Kfm. p Matthias Schloderer, , MBR 


Academic studies of Business Research at Ludwig-Maximilians-Universität 

München and Technische Universität München; Majors: Marketing, Empirical 

Research and Planning Planning, Market/Advertising Psychology 

Fields of Research: Corporate Reputation (Corporate Reputation Monitor © in 

the Opinion Leader Market, NPO Reputation, War for Talent), PLS Path 

Modeling, Effects of Cultural Sponsorship, Customer and Student Satisfaction 

Consulting Experience: Insurance, Telco, Aviation, Defense, Engineering 



IMM Team 

Dipl.-Hdl. p Kathrin Stingl, g , MBR 


Academic studies of Human Resource Education & Management at Ludwig- 

Maximilians-Universität München 

Fi Fields ld of f RResearch: h MMarketing k ti iin Hi Higher h Ed Education, ti St Student d t Expectations 

E t ti 

and Satisfaction 

Consulting Experience: Insurance 

Dipl.-Kffr. p Petra Wilczynski, y , MBR 



Universität München; Majors: Market-based Management, International 

Markets Markets, Advertising Psychology 

Fields of Research: Corporate Reputation, Measurment Theory and 

Quantitative Methods 

Consulting Experience: Insurance 



IMM Team 

Dipl. p oec. Lorenz Zimmermann 


Academic studies of Business Administration/Economics at Universität 

Hohenheim and University of Connecticut; Majors: Marketing, 

Managerial Accounting, Accounting Applied Social Research, Research Statistics 

Consulting Experience: Insurance, Automotive, Telco 



Project j example p 1: 

Client is market leader in Germany, suffers from severe 

Sit Situation ti 

customer t churn, h CEO under d pressure iin media di 

Media response mostly negative 

Problem 

Support provided 

Exemplary results 

Comprehensive analysis of customers, employees, 

financial community and opinion leader markets in 

Germany (driver analysis) 

additional studies not desired, integration in existing ones 

Identification of claims that show positive impact on 

reputation in all stakeholder groups 

Feed drivers that distinguish client from competitors 

As opposed to competitors, competitors innovation is not a main 

driver, but good management is. 

Draw benefits from physical appearance (better 

evaluated than competitors‘ appearance), refrain from 

specific sponsoring activities 

Understanding customer needs far more important than 

friendliness in service fields 




Oligopoly market, client is one out of two global players 


and dttechnology h l lleader d 

Media response mostly negative, CSR activities on trial 

Problem 



Effective reputation management in Germany and France 

Check whether global or regional (communications-)strategy 

seems more effective 

Custom-made Study (GER/F): CAP-interviews (TNS) with 

journalists, analysts, top managers and politicians 

Derive implications for operations and corporate 

communications 

Advantages in perceived innovativeness and market 

leadership claims should be exploited by means of 

communications (skimming; no additional investments) 

Increase reliability, which is perceived below benchmarks 

(investment program) 

CSR activities show minor impact (savings possible!) 




Client is regional energy supplier 


CCommitment it t and d ttrust t are important i t t in i all ll stakeholder t k h ld 

groups, but difficult to manage 

Problem 



Identify drivers of reputation as antecedent of trust 

focusing on customer loyalty and derive suitable 

measures 

Development of a loyalty model (SEM) 

Identification of loyalty drivers based on a regional CATI 

sample 

Reputation model explains 70% of loyalty variance 

Only likeability component has significant impact 

CSR activities are effective and are perceived better than 

those of the benchmarks 

Lack of competence (compared to benchmarks) should be 

eliminated with respect to other stakeholder groups

Reputation Management - LMU

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