Developing Theory Article - “Managing Corporate Reputation in Times of Global Changes and Turbulence — A Strategy for Competitiveness”.

“ManagingCorporate Reputation in Times of Global Changes and Turbulence — A Strategy forCompetitiveness”.

By: Claudia Ogrean, Mihaela Herciu, Lucian Belascu, Journal of Modern Accounting and Auditing, ISSN 1548-6583 July 2011, Vol. 7, No. 7, 726-733.

This is an article about how a company can take advantage from any opportunities as well as minimize all of the threads thanks to managerial frameworks in such global business. And the main point or important component for this framework is corporate’s reputation. To authors, reputation of corporate is a tangible asset. It is one of the competitive advantages. It is not easy to build but easy to lose. Nowadays, doing business doesn’t mean producing and selling. It becomes suggesting the best products or services solutions for a selected market segment to take as much as market shares that company can. And, players now are facing more and more competitors from international. In this situation, invisible assets in which reputation is an important factor because it is hard to imitate have more interest. And, reputation have important role in improving company image, rising competitive advantage, getting more attention from customers about company products, may accessing cheaper capital, etc.

There are different theories how corporation reputation become a strategic factor. Now, it is related to signals that company gives to public and the congruence between signals and what company actually does. Or we can have the idea that it includes internal reputation (comes from company stakeholders such as managers, workers, customers, suppliers, etc.) and external reputation (comes from external or society stakeholders).

Because of the important of corporate reputation, Fortune magazine as well as Reputation Institute have different surveys that publish the most admired companies in the world based on reputation attributes such as human resources management, assets management, financial management, global competitiveness, social responsibility, innovation, etc. Next, customers from 24 countries rate companies’ reputation for 54 highest-rated companies based on seven dimensions of reputation. They are “performance, products/services, innovation, workplace, governance, citizenship and leadership” from four perceptions of emotions “esteem, admire, trust, feeling”. From the Reputation Institute result, in 2010 Google, Sony, The Walt Disney Company, BMW, and Daimler (Mercedes-Benz) are the top-five highest reputation companies. By global reputation industry, it is “consumer products, food manufacturing, retail food, industrial products, computer, electrical & electronics, retail general, beverage, automotive”, etc., respectively.

In conclusion, from different studies and their results authors say that corporate reputation is an essential element for company success. However, it is needed to have knowledge about its transformations. For example: time, space, points of view. And, in this “crisis time” business environment changes every day, each company is facing more risks and uncertainty situations that can affect to its reputation and its competitiveness as well, a flexible and more adaptable strategy with crisis is a good strategic management for company. I think this is a good article for managers who are looking for a general knowledge about the corporate reputation and its factors. From different points of view mentioned in the article, they may have their own opinions about the managerial frameworks for their corporation in this global recession. 

Current Event Post: U.S. Fossil Fuel Industry Rebounds

U.S. Fossil Fuels Industry Rebounds

In a stagnated economy hoping for any well spring of job development, the fossil fuels industry is offering a light to guide the way in the coming years.  In blog posted by Mark J. Perry, a University of Michigan economics professor, data from the U.S. Energy Information Administration indicated significant growth in U.S. energy production from oil, coal and natural gas since 2009.  It appears that much of this growth is directly attributable to technological advances including hydraulic fracturing and horizontal drilling.  Perry wrote that these advancements “…have allowed us to tap into previously inaccessible underground oceans of domestic oil and gas trapped inside shale rock far below the earth’s surface.” (Sebastian) 

The use of this technology is not cheap.  Initial investments can be as much as ten times more expensive than a similar traditional well.  However, the payoff continues for a longer term.   Because the supply chain for oil and gas drilling is very long, and mostly domestic, the trickledown effect on the economy is vast.  IHS, a global information company, published in a recent Global Insight Study that the increase in unconventional oil and gas drilling will bring more than $5 trillion in capital spending that will support more than 3.5 million jobs by within the next twenty years. (Dlouhy)

Aside from the boost to the domestic economy, oil production from shale has had another effect.  Oil production in the Gulf of Mexico continues to fall as a percentage of total U.S. output.  In the past, when a hurricane enters the Gulf, oil rigs shut down and prices soar.  Shale extraction is proving to stabilize the hurricane issue as proven at the end of August when hurricane Isaac shut down Gulf production for more than a week.  Compared to a few years ago when hurricane Katrina caused oil prices to jump to $130 a barrel, stemming 95% of Gulf production during Isaac caused no appreciable change in the price of crude. (Zhou)

Technological advancements in gas and oil drilling have lead to a dramatic increase in U.S. fossil fuel production.  Coupling this increase with diminished domestic fossil fuel usage in recent years positions the United States as a major player in the world reserve and decreases U.S. dependence on foreign oil.  Moreover, it increases domestic economic development and limits disruption in the market due to late summer tropical storm activity.  This allows managers to better plan for long term activities independent of massive fluctuation in crude oil prices. 

Sebastian, Simone. "U.S. on track to produce record fossil fuel energy." Houston Chronicle 25 10 2012, D3. Print.

Dlouhy, Jennifer. "A potent economic force: Study says energy from shale is a bonanza for future jobs." Houston Chronicle 23 10 2012, B6. Print.

Zhou, Moming. "Storm Effects on Oil Prices Waning As Shale Booms: Energy Markets." Bloomberg (2012): n.pag. Bloomberg.com. Web. 28 Oct 2012. <http://www.bloomberg.com/news/2012-09-14/storm-effect-on-oil-prices-waning-as-shale-booms-energy-markets.html>.

Internet corporate reporting by listed firms in Hong Kong

By Pak-Lok Poon and Yuen Tak Yu

Internet corporate reporting has rapidly increased since the last decade to provide newest company information to global customers and investors. This information can be financial or non-financial such as company overview, history, products and services, etc. Hong Kong is a one of the biggest financial centers in the Asia-Pacific region. As many companies went public, the demand for their financial information roars up. Since financial information plays a very important role in investor’s decisions, Internet financial reporting is an economical and fast way to reach potential investors.

Under high pressure of dynamic and competitive business environment, firms see Internet corporate reporting no longer an option, but rather a necessary way that any firm needs to implement. The purpose of this article is to illustrate the relationships between the degree of reported information on corporate websites and the characteristics of Hong Kong's listed firms.  This is measured in terms of the richness of the corporate information disclosed on their websites which reflects firm's commitment, resources and level of strategic significance attached to Internet corporate reporting.

This empirical study test the theories of innovation theory, the expectation-confirmation theory, corporate governance theories, and the learning/experience curve theories. This research can imply on many contexts related to the adoption of Internet corporate reporting. The authors implemented an empirical study by using the questions, measuring the variables in formulating hypotheses under the local context, and collecting lots of data during three years. The data set composed of the top 200 listed firms which collectively make up over 80% value of the total capitalization of the stocks in Hong Kong.

The authors found that the degree of a firm using Internet reporting has a positive relationship with some of its characteristics, such as the level of corporate governance and previous experience of adopting such a reporting practice. Furthermore, other factors including firm's size, revenue and stock trading activity also play an important role. Interestingly, it is found that system openness does not affect the degree a firm adopts Internet reporting.

The study has some implication in providing a clearer picture of Internet corporate reporting in Hong Kong. Larger firms with higher revenues and stock trading activities are typically more innovative, have more financial resources and greater access to technical knowledge and expertise to adopt Internet corporate reporting. But as the popularity of Internet corporate reporting grew, the size, revenue and stock trading activity of a firm were no longer key indicators of adopting such a reporting practice. Manager can utilize that knowledge to transform company website as an effective and cheap community tool with consumers and investors by providing useful information. This can help to build a strong understanding and relationship with more customers, especially when firms enter new market and consumers are lack of their products and company information.

References

Poon, P-L. & Yu, Y.T. (2012). Internet corporate by listed firms in Hong Kong. Information Research, 17(1) paper 510. [Available at http://InformationR.net/ir/17-1/paper510.html]