Strategically manipulating social reputation by scheduling corporate social responsibility events

• DOI: http://doi.org/10.1002/pa.1516
• Author: Jiuchang Wei,Yuxia Wang,Weiwei Zhu
• Published date: 01 May 2014
• Date: 01 May 2014

■Special Issue Paper

Strategically manipulating social

reputation by scheduling corporate social

responsibility events

Jiuchang Wei*, Yuxia Wang and Weiwei Zhu

School of Management, University of Science and Technology of China, Hefei, Anhui Province, China

This study intends to develop an effect assessment model to better understand how firms build social reputation

by leveraging sequential corporate social responsibility (CSR) events. It incorporates the rehearsal, association,

and recency effects to construct a model of social reputation that is derived from sequential CSR events with

fixed and random corporate audiences. The results show that the evolution model of social reputation over time

is a monotonically increasing function that has an upper limit. In the situation of fixed audiences, there is a

definable CSR reputatio n saturation point. The values o f social reputation increase sha rply in the first stage of

the profiles, which indicates that the CSR events significantly affect the soc ial reputation in the short time

subsequent to the firs t CSR event, and then the social re putation grows slowly. In the situation of ran dom

audiences, social reputation will only continue to increase when both the memorabilityrateandtheassociation

rate are much higher. Copyright © 2 014 John Wiley & Sons, Ltd.

INTRODUCTION

Strategic management has focused more and more

on corporate reputation, which is seen as an

intangible resource leading to sustained competi-

tive advantage (Becchetti et al., 2012; Wang, 2013;

Barney, 1991; Chun, 2005). The concept of reputa-

tion is used to make value judgments concerning

an object or a person (Farmer & Glass, 2010).

Corporate social reputation is a collective and cumula-

tive representation of a firm’sactionsandreflects the

firm’s ability to deliver valued outcomes to multiple

stakeholders (Fombrun & Van Riel, 1997). Social repu-

tation is routinely relied upon by corporate audiences

when making investment, product, and career deci-

sions (Dowling, 1986). Corporate audiences, which

have an overlap with corporate stakeholders, can be

defined as those groups that have a stake in the

actions of the organization (Ulmer & Sellnow, 2000).

However, many people may be concerned about a

firm’s actions although they are not or not yet its direct

stakeholders. For example, some potential consumers,

potential employees, potential suppliers, and local

authorities may seek or receive the information but

do not have direct benefitfromthefirm. Hence, to

establish a good reputation among them is also very

important for the firm. This study evaluates the impact

of corporate social responsibility (CSR) activities on

direct and indirect stakeholders.

Godfrey et al. (2008) reconceptualized CSR into

several discrete responsibilities, each having either

a positive or negative social effect. CSR is the action

taken by the company for further social benefit

beyond the firm’s direct interests and beyond what

is required by law (McWilliams & Siegel, 2001).

Present studies have addressed the impact of CSR-

related events on the stock market and found that

the market clearly responds to CSR events in differ-

ent ways. Becchetti et al. (2012) argued that the an-

nouncement of corporate exit from the Domini 400

Social Index would have a significant negative effect

*Correspondence to: Jiuchang Wei, School of Management,

University of Science and Technology of China, 96 JinzhaiRoad,

Hefei, Anhui Province, 230026, China.

E-mail: Weijc@ustc.edu.cn

Journal of Public Affairs

Volume 14 Number 2 pp 116–129 (2014)

Published online 8 April 2014 in Wiley Online Library

(www.wileyonlinelibrary.com) DOI: 10.1002/pa.1516

Copyright © 2014 John Wiley & Sons, Ltd.