Reputations in flux

Abstract

I examine how a firm’s multiple reputations influence managers’ and stakeholders’ reactions to a negative violation. Specifically, I investigate how a firm’s financial and social reputations, as well as its overall general reputation, serve potentially conflicting roles for two types of organizational violations: financial restatements and environmental malfeasance. In the context of financial restatements, I find that a firm’s social reputation encourages managers to provide a more accommodative response to the violation, while its general reputation discourages managers from being accommodative. I also find that being accommodative positively influences each of a firm’s three reputations as outcomes in a financial violation context. In the context of environmental malfeasance, I find that a firm’s social and financial reputations encourage managers to provide an accommodative response, while its general reputation discourages managers from being accommodative. I also find that being accommodative negatively influences a firm’s social and general reputations as outcomes in the social violation context. Ultimately, I show that reputation repair is a complex and dynamic process and that a firm’s multiple reputations often act as conflicting rather than complementary assets. In doing so, I advance organizational research in several related areas, including reputation management, stakeholder management, and social evaluations.