CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Academic and practitioner interest in corporate reputation is at an all-time high. In practitioner circles, very seldom will a firm’s new strategy, significant investment, senior appointment, or a business scandal or crisis be discussed in isolation of the likely effects on its reputation. Within academic research, considerable energy has been devoted in the last 15 years in attempts to more precisely define (Barnett et al., 2006) and measure corporate reputation (Ponzi et al., 2011; Gardberg and Dowling, 2012), as well as to explorations of its antecedents and outcomes (Walker, 2010). In respect of the impacts of corporate reputations, research has suggested that a firm’s reputation shapes the attitudes and behaviours of a variety of its salient stakeholders including employees (Swider et al., 2011), customers (Graham and Bansal, 2007).
A significant strand of research on corporate reputation has seen reputations as critical organisational assets (Flanagan and O’Shaughnessy, 2005; Roberts and Dowling, 2002; Hall, 1992, 1993) and has explored the relationship between firms’ reputations and their financial performance (Deephouse, 1997; Sanchez and Sotorrio, 2007; Roberts and Dowling, 1997, 2002). Reputation research has argued that a good reputation can contribute to subsequent financial performance for a number of reasons including differentiating firms from competitors and encouraging customers to pay a price premium, raising buyer confidence, and substituting for expensive governance mechanisms (Rindova, Williamson, Petkova, and Sever, 2005; Weigelt & Camerer, 1988; Peteraf, 1993; Kogut, 1988). Existing empirical research has, for the most part, supported a positive reputation-performance relationship (e.g. Roberts and Dowling 2002; Sabate and Puente 2003).
Notwithstanding these achievements, existing reputation-performance research suffers from some theoretical and methodological problems that have restricted its intellectual and practical value. Conceptually, while most recent theoretical work has emphasised the need to bring specificity and multidimensionality to reputation research, all reputation-performance research of which we are aware treats a firms’ reputation monolithically. That is, rather than examining a firms’ reputation for something (e.g. innovative products, good employment opportunities, etc) in the eyes of a specific constituency (e.g. employees, customers etc), research has tended to see reputation in terms of a form of general favourableness (Rindova, Williamson, Petkova, and Sever, 2005). Empirically, studies have critiqued commonly used reputation metrics because of the presence of “halo effects” whereby reputational assessors rely on specific knowledge (typically knowledge of a firm’s financial performance) when making reputational judgements or whereby an assessors judgement of one facet of a firm’s reputation heavily shapes his or her assessment of other facets of a firm’s reputation (Brown and Perry, 1994; Flanagan, O'Shaughnessy and Palmer, 2011; Highhouse, Broadfoot, Yugo, and Devendorf, 2009). Together, these issues have limited the value of reputation-performance research to date because of an inability to isolate the possible financial impacts of investment in specific reputation-building activities.
Consistent with recent literature that emphasises the multi-dimensionality of firm reputations, in this paper, we provide the first empirical evidence regarding the relationships between distinct dimensions of firm reputation and financial performance. We develop an innovative method by which we “de-halo” measures of aspects of firms’ reputations and then examine how dimensions of reputation shape how firms perform financially. In so doing, we contribute significantly to our understanding both of how facets of firms’ reputations interact to shape subsequent financial performance, and to research concerned with understanding the circumstances in which investments in corporate social responsibility pay off financially. It is against this backdrop this study seeks to investigate corporate reputation and marketing performance of alcoholic beverage firm in Port Harcourt, Rivers State, Nigeria.
1.2 Statement of the Problem
Good corporate reputations have strategic value for the firms that possess them (Rumelt, 1987; Weigelt and Camerer, 1988). According to a resource-based view, firms with assets that are valuable and rare possess a competitive advantage and may expect to earn superior returns. Those whose assets are also difficult to imitate may achieve sustained superior financial performance (Barney, 1991; Grant, 1991). Within this line of reasoning, intangible assets such as good reputations are critical not only because of their potential for value creation, but also because their intangible character makes replication by competing firms considerably more difficult. Not surprisingly, several studies confirm the expected benefits associated with good reputations (Roberts and Dawling, 2002; Davis et al., 2010).
The Nigerian Brewery has continued to showcase their financial soundness as they have been profitable over the years. Various studies have been undertaken in Nigeria to establish the link between this sector’s reputation and their financial performance in Nigeria. A search for any empirical study on reputation in Nigeria also yielded no results. A study on Nigeria is necessary because the business environment in Nigeria is quite different from those of the developed nations where studies on reputation have been carried out before.
The reputations of companies certainly correlate with their financial performance in the eyes of business people but it is more likely that financial performance causes such views, rather than vice versa (Davis et al.. 2010). There is therefore need in alternative method to assess the linkages between corporate reputation and financial performance; one that focuses on interactions in the marketplace. This study seeks to explore these linkages using the companies listed on the Nigerian Stock Exchange by examining the interaction of customer and employee view s of reputation, and thus help to clarify how reputation may be used as a strategic tool. The study aims to build upon earlier thinking that the differences between these two perceptions explain how reputation influences performance, it is important to study reputation companies invest a lot to protect their reputations and it would be important to establish whether these investments pay off by way of having a positive impact on their bottom-line.
1.3 Objectives of the Study
The broad objective of this study is to investigate the influence of corporate reputation and marketing performance of alcoholic beverage firm in Port Harcourt, Rivers State, Nigeria. The specific objectives however include;
i) To assess out the extent to which quality of the management and marketing performance influence the sales of the alcoholic beverage.
ii) To investigate the extent to which customer orientation and marketing performance increase the consumption of alcoholic beverage in Port Harcourt.
iii) To study the relationship between corporate image and marketing performance of the alcoholic beverage industry in Port Harcourt.
1.4 Research Questions
The following are some of the questions which this study intends to answer:
i) To what extent is the quality of the management and marketing performance influence the sales of the alcoholic beverage?
ii) To what extent is the customer orientation and marketing performance increase the consumption of alcoholic beverage in Port Harcourt?
iii) What is the relationship between corporate image and marketing performance of the alcoholic beverage industry in Port Harcourt?
1.5 Research Hypotheses
The following null hypotheses are formulated from the above specific objectives:
i) There is no significant relationship between management and marketing performance and the sales of the alcoholic beverage.
ii) There is no significant correlation between customer orientation and marketing performance and increase in the consumption alcoholic beverage
iii) There is no significant relationship between corporate image and marketing performance of the alcoholic beverage industry.
1.6 Significance of the study
It is anticipated that the study will be of benefit to the alcoholic beverages companies, its managers will be able to articulate the retail marketing strategies aimed at winning and retaining retail customers. The study will help customers or alcoholic beverages understand the interventions companies should implement in addressing the challenges that affect them from both the internal and external environment. Other companies would benefit from the findings of the study especially when benchmarking themselves with other players in the same industry line or different industry dealing with alcoholic beverages in their distribution chain or in the area of strategic responses.
The study will also add value to the existing body of knowledge in the area of marketing, strategic responses companies should adopt in order to gain a competitive advantage. It will also set foundation for scholars and researchers who wish to further understand the strategies that have been adopted by the different companies in Port Harcourt.
1.7 Scope of the Study
The general scope of this study covers Corporate Reputation and Marketing Performance. The geographical scope is Rivers State of Nigeria. The units of analysis cover randomly Managers, Staff and customers of alcoholic beverage industry in Port Harcourt.
1.8 Limitation of the Study
The researcher was faced with the following constraints in carrying out this study:
Time: The time within the researcher is too short to carry on the detail study on this topic.
Resources: Another constraint of the researcher is financial resources to carry on the detail study of this topic.
Data: Another limitation to this study will be lack of data to make valid study on the research problem.
