The Term Reputation Management : Users, Uses and the Trademark Tradeoff

Transcription

1 Corporate Reputation Review Volume 5 Number 1 The Term Reputation Management : Users, Uses and the Trademark Tradeoff David Deephouse University of Alberta, Canada ABSTRACT Reputation management is a relatively new professional service provided to corporations. The use of the term was investigated on websites during October 1999 March Among US firms in the Reputation Institute and the Council of Public Relations Firms, the term was common but not universal in either group. This sample was supplemented by searching the web using the term reputation management. A variety of firms offered reputation management services, including software companies, accountancies, and law firms, but only nine were from outside the USA. Reputation management appeared to integrate many other services, such as investor relations, public relations, and so on. Many firms offered trademarked services. The competitive benefit of trademarking such a complex professional service is debated. A global association could expand this investigation to non-us and non-english language contexts where similar services are offered under other names. INTRODUCTION Interest in reputation management in the USA grew rapidly in the 1990s. Following the lead of Fortune magazine s Most Admired Corporations survey, magazines and public interest groups began evaluating corporations and publishing their findings to the public. Executives began to pay attention to their reputations. Academic research examined how corporate reputation could be a strategic resource that improved a firm s financial performance (Deephouse, 2000; Fombrun, 1996; Hall, 1992). Many groups began conferences to address the topic, such as The Conference Board, an association of large US corporations, and the Reputation Institute, a research center sponsored in part by corporations and professional service firms. One of the initial advocacy programs of the newly-formed Council of Public Relations Firms (CPRF) was the Corporate Reputation Initiative (Council of Public Relations Firms, 1999b). Specialized corporate reputation officers and reputation management consulting practices evolved out of other positions and practices (Bennett & Kottasz, 2000). It would seem that reputation management should be common, especially in the USA. This paper investigates this assumption, specifically asking, What professional service firms (PSFs) are using the term reputation management (RM)? and How are they using it? The websites of PSFs were examined during November 1999 March It was surprising to find that not all PSFs in the CPRF or the Reputation Institute were using the term. For those that were, the service appeared to integrate many established stakeholder communication services, such as public affairs and investor relations. Some RM users were attempting to use trademarks to differentiate their services. There appeared to be little underlying difference between these services, however, which could have negative implications for RM providers as a whole. Corporate Reputation Review, Vol. 5, No. 1, 2002, pp # Henry Stewart Publications, Page 9

2 The Term Reputation Management : Users, Uses and the Trademark Tradeoff THE CORE GROUP OF REPUTATION MANAGEMENT FIRMS IN THE USA Survey Methods The sample of firms and data were collected between October 1999 and March 2000 by searching the World Wide Web a sampling strategy that has both advantages and disadvantages. A disadvantage is that all firms lacking a website are excluded. Moreover, we may omit firms that provide services which overlap RM but do not label them as such, including corporate branding and corporate identity management. Further, the search was done using the English language and so did not find any non-english websites. One advantage is that a web search is an inclusive procedure; it allows firms to identify themselves as being providers of RM services, and their web content represents deliberate strategic projections to the world. Another advantage is cost; it does not impinge on practitioners and only requires the effort of researchers (Sudman, 1976). Given the name Reputation Institute and the CPRF s Corporate Reputation Initiative, we first examined the US firms in these associations. One sample included all companies listed in October 1999 on the Reputation Institute s website ( A second used the firms listed as members of the CPRF on its Council Members web page in November 1999 (Council of Public Relations Firms, 1999a). These two groups could be considered core members of the US-based reputation industry, defined narrowly as those firms offering services incorporating the term reputation management. Given the nature of the inquiry into an emerging professional practice, the data collection contained both purposive and opportunistic elements (Yin, 1989). The first set of variables consists of basic firm characteristics: name, location of headquarters, web address, and number of offices. A variable was created called International Dummy to indicate whether a firm had offices outside the USA. For CPRF members, data were obtained for 1998 about World Fee Income (ie, revenue), World Number of Employees, US Fee Income, and US Number of Employees from the detailed CPRF s industry rankings website To assess financial performance, fee income per employee ratios were calculated for both world and US data. Also developed were indicators of each firm s service mix. There were five Service Specialties: Crisis/Issues Management, Corporate Image, Reputation Management, Marketing/Brand Management, and Other. Next, each firm s website was searched to see if the phrase reputation management was used and a dichotomous variable was created called RM in Website Dummy. Finally, it was found that many firms had trade and service marks, which are important indicators of product differentiation (Scherer & Ross, 1990). The number of marks that appeared on the website was recorded and the name of each mark. The Reputation Institute Core The Reputation Institute divided its 31 members into four types of firms. There were 24 public relations firms (18 of which were also members of CPRF), two corporate advertising agencies, one brand consulting service, and four market research firms. Of these, 26 had offices outside the USA, four did not, and one did not report on this variable. Indicators of each firm s service mix are presented in Table 1. It was found that 20 firms offered crisis/issues management and ten offered RM. Of these, four specialized in both; six offered brand management; and two, image management. It was not possible to identify specialties for Pinnacle Worldwide, perhaps because it was a Page 10

3 Deephouse Table 1: Services Offered by Professional Service Firms in the Reputation Institute and the Council of Public Relations Firms Service Specialties 1 Trademarks Type RM in Crisis/Issues Image Branding or Total of Firm Total Website Management RM Management Marketing Other Users Number Reputation PR Institute Non-PR Council of Public Relations PR Firms Notes: 1 Firms may have more than one specialty. For the Reputation Institute, two PR firms and one non-pr firm had missing data. 2 Corporate Advertising Agencies (2), Brand Consulting Service (1), and Market Research Firms (4). Page 11

4 The Term Reputation Management : Users, Uses and the Trademark Tradeoff Table 2: Correlations of Income per Employee and Services Offered Among Professional Service Firms in Council of Public Relations Firms US Income per Employee (Efficiency) 2. US Number of Employees (Size) RM in Website Dummy Number of Trademarks Crisis/Issues Mgt Service RM Service Corporate Image Service Corporate Branding Marketing Service 9. Other Service N=75. All correlations greater than 0.23 are significant at alpha=.05 worldwide federation of independentlyowned public relations firms. It was found that 11 of the 31 firms had trade and service marks. Firms that were not public relations firms tended to have more marks, according to correlation analysis (r=.48; N= 31; p<.01). The CPRF Core The CPRF had 110 members, 89 of which had data for both US and worldwide fee income. It was possible to access the websites of 77 of these firms. As noted before, 18 were members of the Reputation Institute. Initially the links within the CPRF website were followed to specific information for each firm, particularly Business Services Expertize. In the context of the CPRF s Corporate Reputation Initiative, it was surprising to find that reputation management was not included as a Business Services Expertize. It was determined that CPRF had yet to include it, perhaps indicating that it was not yet established as a distinct service. 1 The following information was found about each firm s RM activities from its web page (see Table 1). For two of the 77 firms, there was insufficient information to identify service specialties. Reputation management was mentioned on 41 of the 77 websites (53 per cent), but it was a service specialty on only six (out of 75). Crisis/issues management was a specialty of 53 firms. Image Management was the specialty of 29 CPRF firms, but none of the 18 PR firms who were members of the Reputation Institute had this specialty. Of those with image management as a specialty, 20 also offered crisis management services. Of the reputation management firms, three also listed crisis management as a specialty. It was found that seven out of the 77 firms (9 per cent) were using trademarks, four of whom were members of the Reputation Institute. A correlation analysis was done to see if there were any underlying patterns relating to firm size or efficiency. Binary variables were assigned for each service specialty and for whether a firm had RM in its website. For size, number of US employees was used, which was correlated in excess of 0.77 with number of offices and US fee income. As can be seen in Table 2, there was no significant correlation between US Page 12

5 Deephouse fee income per employee and any of the service indicators. Larger firms tended to be using RM more than smaller firms and tended not to offer image management. RM Service Descriptions Next are presented verbal descriptions that some core firms gave of their reputation management services. For example, Shandwick offered global reputation management. Global Reputation Management is our business focus. We are proud to represent some of the world s mostrecognized and highly visible companies, products and services. Our proposition to clients is clear. We provide public relations representation and counsel in leading and developing business markets worldwide. (Shandwick International, 1999) Burson-Marsteller attempted to differentiate itself from reputation management with the term Perception Management, as described in the following: Burson-Marsteller is in the Perception Management business. We are focused on adding value to our clients through the use of Perception Management. Our goal is to ensure that the perceptions which surround our clients and influence their stakeholders are consistent with reality and our clients desired business objectives. (Burson-Marsteller, 1999a) At Burson-Marsteller we believe that communications is far more critical in business than simply generating awareness, disseminating information or enhancing reputation [emphasis added]. The role of communications is to manage perception in order to motivate behaviors that create positive business results. We are totally focused on this idea as our mission, and we believe it assures our disciplines create value for our clients. (Burson-Marsteller, 1999b) Differences among reputation management services were assessed from several prominent firms who broke their reputation management service into multiple components. For instance, Edelman and Shandwick both called their service reputation management. Edelman had a multi-step model with two phases. Phase I consisted of the following: reputation research gap analysis/assessment planning process positioning messaging (Edelman Worldwide, 1998a). Phase II consisted of the following: strategic concepts strategic recommendations measurement and evaluation why Edelman reputation management? (Edelman Worldwide, 1998b). If the last step is interpreted as a sales pitch to contact Edelman, there were eight steps in Edelman s model. Shandwick had a sixstep model called The Shandwick Wheel (Semons, 1998). Its components are as follows: Assess, Develop, Align, Leverage, Protect, Measure. Under these labels, however, were similar descriptions of the actual consulting activities, such as surveying stakeholders and designing communication strategies. Even Burson-Marsteller, which was trying to differentiate itself with Perception Management, outlined similar activities in its Constituency Relations, Corporate, and Organizational Performance practices. In sum, the review of RM service descriptions indicated similarity in the actual activities underlying each Page 13

6 The Term Reputation Management : Users, Uses and the Trademark Tradeoff company s approach. These RM services appeared to integrate many of the preexisting communication specialties, such as public affairs, public relations, advertising, corporate identity, design, and so forth. REPUTATION MANAGEMENT OUTSIDE THE US CORE Also of interest was uncovering the global variety of PSFs using the RM term because successful innovations sometimes come from the periphery of an industry (Leblebici, Salancik, Copay, & King, 1991; Reger & Huff, 1993). Between January and March 2000, the web was searched with the term reputation management using three search engines (AltaVista, 3,259 hits; HotBot, 400 hits; and AOL, 1,726 hits). We also searched the US Trademark database ( and found 31 additional firms. There were four interesting developments in the periphery: limited globalization the productization of RM services using computers the incursion of other large consulting firms numerous attempts to trademark the term reputation. We do not discuss each firm but highlight those that exemplify these developments. Only nine firms from outside the USA had RM in their website. Eight were identified from the developed world and one from the developing world. The latter was imagequity+ TM from Chennai, India. This firm had a lofty strategic intent: We aim to be the world s #1 reputation management company by making people realize the value of their reputation. We may even take the next 50 years to achieve our goal, our bee-hag, but we believe we have what it takes to get there (imagequity+ TM, 1999). Like some of the core US firms, imagequity+ TM had several trademarks, including TrM TM and imagequity+ TM. They outlined a six-step process for total reputation management (TrM TM ), and their process was similar to those used by core firms described above (imagequity+ TM, 1999). Overall, however, the use of the term RM had not yet spread widely to PSFs in other English-speaking countries. A second development was the attempt to create reputation management products using computer technology. SeNet claimed to be the first mover in this area: First in its product category, SeNet s Ki4 Reputation Management Software is the only enterprise-wide knowledge management solution for the essential business task and executive responsibility of reputation management. Executive management receives mountains of data on a daily basis from many sources and departments in varying forms. Ki4 provides one consistent, easy-to-use, and effective solution to reputation management, allowing executives to plan ahead to prevent problems and protect the company s stakeholders, critical strategic assets, reputation, and goodwill. (SeNet Corporation, 1999b) Their Ki/4 product has a proprietary Reputation Management Index (RMI) that is calculated daily to help executive management stay abreast of progress and to measure the impact of enterprise-wide issues that could adversely affect the corporate reputation. This company listed 13 trademarks for its products on its About SeNet web page (SeNet Corporation, 1999a), 2 but none of them were found in the US Trademark database. PriceWaterhouseCoopers (PWC) illustrated both productization and the incursion of other types of professional service firms into reputation management. The effort of this Big 5 accounting firm to Page 14

7 Deephouse enter the industry was evident from its sole sponsorship and fold-out advertizement in the 2000 edition of Fortune s America s Most Admired Corporations. In December 1998, PWC applied for a trademark for Reputation Assurance related to consulting and training services in reputation management. It also developed a software product, called RA5, that would be linked to its Reputation Assurance Service. The trademark application for RA5 described the product as computer software used to assist companies in assessing corporate responsibility and accountability processes, including reputation management relative to corporate, ethical and environmental governance of companies. After these data were collected, PWC became a network partner of the Reputation Institute, illustrating the move of a peripheral firm into the core. As noted above, the use of marks was also well established among non-core firms in the sample. Perhaps more interesting was that many firms applied for or received protection for marks that specifically use the word reputation. In 1993, Reputation Laboratory, Inc., of New York successfully completed the US registration of the word reputation as a service mark for conducting marketing research for clients. In 1998, Alan Hilburg & Associates applied to the US Trademark Office for Managing The World s Reputations. Richard Anton Lethin applied for Reputation as a trademark for a computer software product in September He also applied for Reputation Server and Reputation.com on the same day. Moreover, differences between countries trademark laws allows for a trademark to be registered in one country but not in another. A critical example is the phrase reputation management. David A. Potts, a lawyer, filed for this mark in Canada in October 1993, and it was registered September This mark was neither registered nor applied for in the USA. The term may have been deemed too generic in the USA to receive protection, whereas in Canada it may be easier for a mark to remain distinctive; aspirin, for instance, remains a trademark of Bayer in Canada but has not been in the USA since 1921 (Wilkins, 1992). THE TRADEMARK TRADEOFF IN REPUTATION MANAGEMENT The use of trademarks in the sample was intriguing. Economic and marketing research suggests that trademarks help differentiate products and improve competitive advantage (Cohen, 1991; Scherer & Ross, 1990). These benefits were not demonstrated in the sample, as no significant correlation was found between the number of marks used by a firm and income per employee. The following insights are offered concerning the source of the trademark approach and its competitive consequences. The author suspects that the background of firms partly affected their choice of using trademarks in RM. There was significantly greater use of trademarks by non- PR firms in the Reputation Institute. This may have resulted from a migration of the norms of marketing and advertising, as applied to clients, to RM practice itself (Abrahamson & Fombrun, 1994; Bourdieu, 1990). A few PR firms used trademarks, too. As some of these firms were part of corporations that included advertising agencies, a dominant logic of trademarked product differentiation may have been applied across the corporation (Prahalad & Bettis, 1986). Finally, firms may have adopted the trademark strategy because they believed it would be successful, given its use by others. Turning to competitive implications, at least two factors may account for the lack of significant correlation between the use of trademarks and performance. First, RM Page 15

8 The Term Reputation Management : Users, Uses and the Trademark Tradeoff is new, and so are the trademarks; it is simply too early to tell whether these trademarks are successful. If they do succeed, then trademarks held by others may become more valuable properties. In Canada, lawyer David Potts held rights to the term reputation management itself. Even trademarks not associated with RM related services might be useful. For example, Fibrebond Corporation had the registered rights to the phrase Securing Your Reputation, but it was applied to the manufacture and installation of pre-cast detention cells for the corrections industry. A second factor is that RM, as a professional service, is fundamentally different from the kinds of products and services for which trademarks have been beneficial. In the USA, the use and legal protection of trademarks was tightly linked to the 19th century development of large corporations that relied on repeat business from distant customers (Wilkins, 1992). By distinguishing goods and services, trademarks reduced customer search costs and prevented confusion among customers. However, RM buyers (ie CEOs, top management teams, and their staffs) are not naı ve consumers making repetitive purchases of relatively simple products. Instead, they are making important contracting decisions for complex services that may affect the competitive advantage of their corporations. They may discover that underlying the different names are similar service components, much as occurred in this analysis. Research has found that consumers attitude towards a product or company declines when they realize that an attempt at persuasion fails to differentiate substantially the product (Wright, 1985). Moreover, Rindova and Fombrun (1999) have suggested that a firm which misrepresents itself may hurt its credibility and trustworthiness. RM buyers may therefore have a negative reaction to RM practitioners using trademarks and may instead seek out other RM providers. Given the uncertainty about professional service quality in advance of purchase, RM buyers may rely on the reputation of the RM provider or their social and business connections (Kipping, 1999; Podolny, 1994). They may even ask their accountants or management consultants about RM. These professionals may refer the corporations to a current RM provider, but in the long run, customers may choose to acquire or form a strategic alliance with an RM practitioner. They may also develop their own RM practice, as PWC has done. And given that RM is concerned with strategy (Fombrun & Van Riel, 1997), strategic management consultants like McKinsey could also begin to offer RM services. DISCUSSION This section presents limitations and suggestions for further investigation into the evolution of RM and associated professional services. There are several limitations to the present study. The first was using web pages as a data source. Some firms may believe in the usefulness of the web more than others and therefore project more and more accurate information. Moreover, it was assumed that web content indicated actual business practices, which might not be true. Nevertheless, since the Internet is a growing medium for communication and its use signals that a consultancy is on the leading edge of technology, the use of web pages seemed reasonable. Another limitation was the sample. It focused on members of the Reputation Institute and the Council of Public Relations Firms, all of whom were based in the USA. This source was supplemented by searching the web using the term reputation management. Future research could expand the dataset to include firms offering services that are close substitutes to reputation management, such as design, corporate Page 16

9 Deephouse branding, and corporate identity. In addition, the search process was limited by the use of the English language. Although English is to some extent the lingua franca of international business, other interesting variations in RM will exist among non- English-speaking firms. Furthermore, the study was conducted in Companies change their websites regularly, and some may have added RM content. It should also be noted that trade associations like the Reputation Institute and the CPRF have added new members. To address these concerns and to develop a more thorough understanding of RM, the author proposes a global, multi-lingual trade association to evaluate systematically these and other issues. 3 For instance, what makes RM a distinct, holistic service and not just a combination of existing services? What are the substantive differences among RM, design, image management, and so forth (Barnett, Boyle, & Gardberg, 2000; Corley & Gioia, 1998)? Will the use of RM spread from large US firms to smaller and non-us firms? If so, will this occur by international acquisitions, by evidence of its usefulness presented by practitioners and academics, or by other means? Is RM an emerging industry, or is it just a service provided by PSFs from a variety of industries? Answers to these and other questions could help the reputation community to understand better not just RM, but competitive dynamics among professional service firms in general. To conclude, it was surprising that not all the firms in the US sample actually used the term reputation management, given the growing popularity of reputation in the USA. Even though the CPRF had a Corporate Reputation Initiative, it was found that barely half of the membership mentioned RM on their websites, and only six of 75 specialized in RM. In contrast, image management, an older term, was a specialty for 29 firms. Larger firms tended to use RM, but there was no significant relationship between RM and efficiency. Among RM users, RM appeared to integrate many previously used services. Moreover, many terms were found that are used to describe RM, and some firms were seeking trademark protection for these terms. This may result from the connections of RM firms to advertising and marketing. The author suggests that trademarks may not be beneficial because RM is not a simple multi-purchase product, but a complex professional service. The author recommends a global trade association evaluate trends among professional service firms offering reputation management and related services. ENDNOTES 1. And on June 7, 2001, reputation management was still not a practice area expertize Council of Public Relations Firms (2001). Find a PR firm. Accessed 2001 June 7. findafirm/find-a-firm.asp. 2. Since these data were collected, SeNet has changed its name to Entegra Corporation I appreciate the suggestions of editor Cees van Riel. REFERENCES Abrahamson, E. and Fombrun, C.J. (1994) Macrocultures: Determinants and consequences, Academy of Management Review, 19(4): Barnett, M.L., Boyle, E. and Gardberg, N.A. (2000) Towards one vision, one voice: A review essay of the 3rd International Conference on Corporate Reputation, Image and Competitiveness, Corporate Reputation Review, 3(2): Bennett, R. and Kottasz, R. (2000) Practitioner perceptions of corporate reputation: An empirical investigation, Paper presented at the 4th International Conference on Corporate Reputation, Identity, and Competitiveness, Copenhagen, DK. Bourdieu, P. (1990) The logic of practice, Stanford University Press, Stanford, CA. Burson-Marsteller (1999a) Our Mission, accessed May 13, Burson-Marsteller (1999b) Perception Management, accessed May 13, perception/per-r01.html. Page 17

10 The Term Reputation Management : Users, Uses and the Trademark Tradeoff Cohen, D. (1991) Trademark strategy revisited, Journal of Marketing, 55(3): Corley, K.G. and Gioia, D. (1998) Reconciling scattered images: Consequences of reputation management for insider audiences, paper presented at the 3rd International Conference on Corporate Reputation, Image and Competitiveness, San Juan PR. Council of Public Relations Firms (1999a) Council members, accessed October 29, Council of Public Relations Firms (1999b) Council- At-A-Glance, accessed October 29, Council of Public Relations Firms (2001) Find a PR firm, accessed June 7, Deephouse, D.L. (2000) Media reputation as a strategic resource: An integration of mass communication and resource-based theories, Journal of Management, 26(6): Edelman Worldwide (1998a) Reputation management: Our approach: Phase I, accessed May 13, Edelman Worldwide (1998b) Reputation management: Phase II, accessed May 13, Fombrun, C. and Van Riel, C. (1997) The reputational landscape, Corporate Reputation Review, 1(1&2): Fombrun, C.J. (1996) Reputation: Realizing value from the corporate image, Harvard Business School Press, Boston, MA. Hall, R. (1992) The strategic analysis of intangible resources, Strategic Management Journal, 13(2): imagequity+ TM (1999) Team imagequity+ TM, accessed September 29, Kipping, M. (1999) American management consulting companies in western Europe, 1920 to 1990: Products, reputation, and relationships, Business History Review, 73(2): 190. Leblebici, H., Salancik, G.R., Copay, A. and King, T. (1991) Institutional change and the transformation of interorganizational fields: An organizational history of the US radio broadcasting industry, Administrative Science Quarterly, 35: Podolny, J. (1994) Market uncertainty and the social character of economic exchange, Administrative Science Quarterly, 39: Prahalad, C.K. and Bettis, R.A. (1986) The dominant logic: A new linkage between diversity and performance, Strategic Management Journal, 7: Reger, R.K. and Huff, A.S. (1993) Strategic groups: A cognitive perspective, Strategic Management Journal, 14(2): Rindova, V.P. and Fombrun, C.J. (1999) Constructing competitive advantage: The role of firm-constituent interactions, Strategic Management Journal, 20: Scherer, F.M. and Ross, D. (1990) Industrial market structure and economic performance, (3rd ed.). Houghton Mifflin, Boston. Semons, A. (1998) Reputation management: The Shandwick way, Corporate Reputation Review, 1(4): SeNet Corporation. (1999a) About SeNet, accessed October 29, senet.htm. SeNet Corporation (1999b) Ki4 Reputation Management Software, accessed September 29, Shandwick International (1999) Shandwick International: Overview, accessed May 13, Sudman, S. (1976) Applied sampling, Academic Press, New York. Wilkins, M. (1992) The neglected intangible asset: The influence of the trademark on the rise of the modern corporation, Business History, 34(1): Wright, P.L. (1985) Schemer schema: Consumers intuitive theories about marketers influence tactics, in R. J. Lutz (Ed.), Advances in Consumer Research, Vol. 13: 1-3. Association for Consumer Research, Provo, UT. Yin, R.K. (1989) Case study research (2nd ed.). Sage, Newbury Park, CA. Page 18