How do firms' actions influence corporate reputation? The case of downsizing at large U.S. firms

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Scholars have been quite interested in antecedents of corporate reputation, particularly given increasing evidence of the consequentiality of such reputations. Researchers have argued that audiences bestow such reputation when they perceive that firms have delivered on their commitments, are trustworthy and credible, exhibit high performance, and have acted in normatively or culturally valued ways, among other things. One important question asks how specific corporate actions dynamically affect such reputation. While reputation scholars stress that actions are central in how audiences develop the above perceptions and thus why they bestow reputation, relatively few studies have directly examined this relationship and understandings of this relationship are limited. Thus, we examine how large American corporations' rankings in the annual Fortune Magazine Most Admired Companies survey were affected by their use of the controversial practice of downsizing across the period from 1985 to 1994. We develop and test theoretically-grounded hypotheses about this empirical relationship, drawing on reputational and institutional research. Findings show that engaging in downsizing strongly affected firms' rankings in the Fortune survey. They also provide strong support for most of our hypotheses, revealing a number of important complexities and contingencies in the relationship between firm actions and changes in corporate reputations. We discuss our study's implications for research on reputation as well as for institutional theory.

Original languageEnglish (US)
Title of host publicationAcademy of Management 2005 Annual Meeting
Subtitle of host publicationA New Vision of Management in the 21st Century, AOM 2005
StatePublished - 2005
Event65th Annual Meeting of the Academy of Management, AOM 2005 - Honolulu, HI, United States
Duration: Aug 5 2005Aug 10 2005

Other

Other65th Annual Meeting of the Academy of Management, AOM 2005
CountryUnited States
CityHonolulu, HI
Period8/5/058/10/05

Keywords

  • Downsizing
  • Legitimacy
  • Reputation

ASJC Scopus subject areas

  • Information Systems and Management

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  • Cite this

    Love, E. G., & Kraatz, M. S. (2005). How do firms' actions influence corporate reputation? The case of downsizing at large U.S. firms. In Academy of Management 2005 Annual Meeting: A New Vision of Management in the 21st Century, AOM 2005