Corporate Reputation Effects across Nations: The Impact of Country Distances and Firm-Specific Resources

By Swoboda, Bernhard; Huber, Cathrin et al. | Management International Review, September 2017 | Go to article overview

Corporate Reputation Effects across Nations: The Impact of Country Distances and Firm-Specific Resources


Swoboda, Bernhard, Huber, Cathrin, Schuster, Tassilo, Hirschmann, Johannes, Management International Review


Abstract CEOs are responsible for the development of a strong corporate reputation, which is increasingly used by multinational corporations as an important differentiation criterion in foreign markets. Because the effects of an often centrally managed but locally perceived reputation are likely to vary between countries, this study analyzes the moderating role of institutional distance and firm-specific resources on reputation effects in the chemical and pharmaceutical industry, two important aspects that have not been considered in consumer-centered corporate reputation research so far. The authors refer to signaling theory--advanced by institutional and resource-based thinking--and use data from 29,987 consumer evaluations of a multinational corporation in 43 countries. The results of the multilevel models indicate that distance between home and host countries weakens reputation effects on both consumer loyalty and trust, whereas firm-specific resources reinforce these effects. In particular, country experience and cultural-cognitive distance are important when managing reputations across nations because they explain high amounts of country-level variance.

Keywords Corporate reputation * Signaling theory * Country distances * Firm-specific resources * Multilevel structural equation analysis

1 Introduction

Multinational corporations (MNCs) increasingly seek to manage their corporate reputation (CR) internationally because a strong reputation is of paramount importance in local competition abroad (e.g., for attracting employees, customers, or non-governmental organizations, NGOs). For example, Procter and Gamble manages its CR across nations by evaluating consumers' responses (Lafley 2009), whereas the H. J. Heinz Company considers its CR strength when deciding to rely on its CR or making acquisitions in new countries (Johnson 2011). However, MNCs face challenges in managing their CR internationally, especially in distant countries (such as Pfizer Inc. in Latin America; Silbermann 2012), because CR--defined as consumers' overall evaluation of a firm's responsibility, strength, or quality of offers (Berens et al. 2005; Walsh and Beatty 2007)--is often centrally managed but locally perceived, and MNCs need firm-specific resources to successfully respond to dynamic local environments (such as Am way Corporation in China; DeVos 2013). This study analyses CR effects by linking them to moderators across nations. We utilize a consumer-centered perspective because the effects of CR on consumer behavior may vary as a function of country distance and firm-specific resources. In other words, many MNCs transfer their standardized CR approaches to foreign countries and assume that the transferred CR has similar effects on target groups independent of how distant a foreign country is from the home country (i.e., institutional environment) and what the resource base (e.g., country commitment or experience) in the foreign country looks like.

Scholars often study the effects of perceived CR on consumer behavior in a national setting (e.g., on trust, satisfaction, or loyalty; Andreassen 1998; Caruana and Ewing 2010; Johnson and Grayson 2005), but only a few empirical studies have addressed varying CR effects across nations so far (see the recent reviews by Ali et al. 2015; Swoboda et al. 2016; Walker 2010). The few exceptions link the varying effects to cultural differences (Bartikowski et al. 2011; Falkenreck and Wagner 2010; Jin et al. 2008; Walsh et al. 2009; Walsh and Bartikowski 2013), seldom to competitiveness, demographic, and economic differences (Deephouse et al. 2016; Swoboda et al. 2016). As the previous research merely focuses on the host country context (i.e., country differences), it remains unclear whether and how country distances (i.e., dissimilarities between MNCs' home and host countries) affect consumer responses to CR across nations. In this regard, it is important to note that there is one crucial distinction between country differences and distances. …

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