Academic journal article Economics & Sociology

Corporate Reputation and Economic Performance: The Evidence from Poland

Academic journal article Economics & Sociology

Corporate Reputation and Economic Performance: The Evidence from Poland

Article excerpt

Introduction

In stock exchanges there is a noticeable increase in investors' interest in responsible companies. As a result, funds investing into corporate social responsibility portfolios are becoming more and more popular. The positive result of these changes is that companies are under pressure and if they want to attract investors and to gain an advantage over their rivals, they have to be aware of the importance of environmental protection (environmental management, recycling), corporate social responsibility (CSR) activities, appropriate investor relations, compliance with codes of best practices for listed companies, codes of ethics, protection of the health and safety of their employees. Nowadays it is not only profitability or liquidity that counts. Shareholders want to make sure that they invested their money into a responsible company. Corporate reputation grew into one of the crucial intangible resources influencing economical and financial results.

There is a wide array of definitions of corporate reputation. From a sociological point of view it is rather the outcome of shared socially impressions of a firm (Fombrun and Van Riel, 1997; Scott and Walsham, 2005). It can be described as a function or a set of collective judgements of a firm "based on assessments of the financial, social, and environmental impacts attributed to the corporation over time' (Barnett, Jermier and Lafferty, 2006). It is based on corporate relations with all stakeholders: suppliers, customers, employees, investors, banks, etc. As a result, it considers various aspects of corporate activities (Gotsi and Wilson, 2001).

In some definitions the importance of relations with stakeholders is emphasized, and then the reputation is defined as stakeholders' overall evaluation of a company (Gotsi and Wilson, 2001). The impact of reputation is expressed in improved loyalty from employees, goodwill creation, greater latitude in decision making, etc. (Bebbington, Larrinaga, Moneva, 2008). Thus, by generating reputational capital, a corporate can achieve a distinct advantage (Fombrun, 1996, Wolska, 2013).

Moreover, good reputation, as collective beliefs about a company's ability and willingness to satisfy the interests of stakeholders, creates wealth. As a result, from a strategic management point of view, reputation is a resource - a strategic asset (Fombrun, 1996). This intangible asset has meaningful power in the process of value creation (Roberts and Dowling, 2002). As an asset or even a set of assets, good reputation can "produce" certain tangible benefits such as lower capital and labour costs, premium prices for products, etc. (Little and Little, 2000).

Corporate reputation is based on factors such as corporate social responsibility and it became a signal to investors. They not only tend to assume that by investing in responsible companies they behave socially responsible, and they protect the environment, but they are also convinced that it will secure sure profits in the future. However, in some countries profits are the most important issues for managers. Consequently, managers as well as investors do not pay much attention to CSR.

In relation to that, the aim of this research was set to identify the relationship between corporate reputation and economic performance in one of such countries: Poland. The hypothesis put states that relations between indicators of corporate reputation and economic performance in Poland are weak.

The article proceeds as follows. The next section provides a brief overview of literature on relationship between reputational factors and corporate economic performance. In the following section stages of data selection are outlined and applied methodology is presented. In the next section findings of the research in relationship between reputational factors and corporate economic performance are presented and discussed. A final section provides summary and conclusions.

1. Literature Overview

An increase in the demand for products of companies of high reputation as well as an increase in the demand for their shares caused a rise in interest in those companies among economists. …

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