To test for a relationship between corporate reputation and financial performance, using Australian data.
Econometric modelling.
No causal relationship between corporate reputation and financial performance (in either direction) was found. This is contrary to some findings in other countries. Reputation may not have a significant impact on performance in Australia. There may be weaknesses in the existing measure of reputation, or the finding may be due to unobserved variability in the intervening variable of managerial exploitation of the reputation.
The findings may be specific to Australia. In Australia, the linkage between reputation and performance may be too small to be significant in the available sample. It is argued that in corporate practice the link between reputation and performance proceeds via strategy and competitive advantage. Having a reputation resource is not enough; it needs to be managed well and exploited if it is to yield financial results. More work is needed to establish reliable measures of reputation.
It is the first known study to investigate the link on Australian data. The discussion of the findings raises issues for the measurement and management of reputation.
