Summary of Corporate Crisis Communication and Reputation Management
Corporate Crisis Communication & Reputation Management Guide
Introduction
Reputation is a central concept for understanding how organizations are perceived by their stakeholders. It summarizes past actions and future prospects and influences how audiences respond to an organization in both routine and adverse situations. This guide breaks reputation into clear components, contrasts it with legitimacy, and provides practical examples to help you remember key distinctions.
Definition: "A perceptual representation of a company’s past actions and future prospects that describe the firm’s overall appeal to all its key constituents when compared to other leading rivals." — Charles Fombrun (1996)
What reputation is made of
Reputation can be decomposed into three main dimensions (Lange et al., 2011):
- Being known: General familiarity or awareness about an organization.
- Being known for something: Recognition for a specific quality or trait (e.g., quality products).
- Generalized favorability: Overall attractiveness or positive judgment of the organization.
Definition: "Being known" means stakeholders can recognize the organization; "being known for something" means stakeholders associate the organization with a trait; "generalized favorability" means stakeholders evaluate the organization positively overall.
Two core evaluative axes: Capability and Character
When people form or update reputation judgments, they typically assess two dimensions:
- Capability (Competence): Beliefs about what the organization can do — product quality, innovation, reliability.
- Character: Beliefs about the organization’s motives, ethics, and intent — honesty, fairness, social responsibility.
Definition: "Capability reputation" refers to perceived competence; "Character reputation" refers to perceived integrity and intentions. (Mishina et al., 2012)
Practical examples (quick classification):
- Toyota recall due to design flaws — primarily a capability issue.
- Volkswagen diesel cheating — primarily a character issue.
- BP oil spill from equipment failure and cost-cutting — mixed but leans toward character because of decisions that increased risk.
- Facebook sharing user data without informed consent — character.
- Johnson & Johnson recalls Tylenol after tampering kills consumers — capability (product safety) and response speaks to character.
- Boeing crashes tied to flawed software and limited disclosure — capability and character.
- Uber harassment and toxic culture — character.
Reputation risk and reputation damage
- Reputation damage (reputation loss): Any decline in stakeholders’ favorable evaluations of a firm following an event.
- Reputational risk: Anything that can harm how a company is perceived by any stakeholder (shareholders, employees, customers, regulators, communities).
Key features:
- Reputational risk is a “second-order” or collateral risk — it often arises from other operational, financial, or legal failures.
- It has been called the “risk of risks.” (Economist Intelligence Unit, 2005)
Table: Sources and pathways of reputational risk
| Source | How it affects reputation |
|---|---|
| Organizational activities & communications | Stakeholders infer motives and competence from what the firm does and says |
| Stakeholder expectations | Mismatch between promises/expectations and outcomes erodes trust |
| Performance issues | Repeated poor performance lowers perceived competence |
| Time | Reputation accumulates slowly but can change rapidly after salient events |
Definition: Reputational risk is the probability that an event or action will cause stakeholders to downgrade their perception of the organization.
Reputation as a safety net: buffer vs. burden
Two main views on how existing reputation affects reactions to negative events:
- **Reputation as a
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Reputation Overview
Klíčové pojmy: Reputation comprises being known, being known for something, and generalized favorability., Capability (competence) and character are the two core reputation dimensions., Reputational risk is a second-order risk arising from many types of failures., A strong reputation can act as a buffer or a burden depending on context., Legitimacy asks if an organization is appropriate to exist; reputation compares relative quality., Legitimacy has cognitive, pragmatic, and moral dimensions., Reputation accumulates slowly but can decline rapidly after salient events., Assess and monitor capability and character separately for targeted reputation management., Stakeholder groups evaluate reputation with different priorities (customers vs. investors vs. regulators)., Reputational damage is any decline in stakeholder favorability after an event.