Abstract
CEOs are responsible for the development of a strong corporate reputation, which is increasingly used by multinational corporations as an important differentiation criterion in foreign markets. Because the effects of an often centrally managed but locally perceived reputation are likely to vary between countries, this study analyzes the moderating role of institutional distance and firm-specific resources on reputation effects in the chemical and pharmaceutical industry, two important aspects that have not been considered in consumer-centered corporate reputation research so far. The authors refer to signaling theory—advanced by institutional and resource-based thinking—and use data from 29,987 consumer evaluations of a multinational corporation in 43 countries. The results of the multilevel models indicate that distance between home and host countries weakens reputation effects on both consumer loyalty and trust, whereas firm-specific resources reinforce these effects. In particular, country experience and cultural-cognitive distance are important when managing reputations across nations because they explain high amounts of country-level variance.
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Notes
Following Steenkamp and Geyskens (2006) and Walsh et al. (2014), we used the scores of the nearest neighboring country to replace missing data for the normative pillar for five countries (CR, EGY, GT, SAU, VNM). The same procedure was applied to replace missing cultural values (indulgence/restraint, long-term orientation) for three countries (CR, GT, UAE). A robustness check was conducted by estimating models with and without the missing countries. The results remained the same: b Normative distance = −0.080, p < 0.05 (−0.009, p < 0.05), b Cultural-cognitive distance = −0.006, p < 0.010 (−0.003, p < 0.05). Due to these results and for model identification reasons, we decided to include the countries with missing data in the survey.
We calculated additional models using single Hofstede dimensions and provided evidence for the effects of the distance of single dimensions (explained country-level variances range up to 27.2%). The results are effects on loyalty (trust) intercepts: b Uncertainty avoidance = 0.001, p < 0.001 (0.006, p < 0.001), explained variance = 6.1 (18.1); b Power distance = −0.019, p < 0.05 (−0.059, p < 0.05), explained variance = 26.5 (27.2); b Masculinity = −0.003, p < 0.05 (−0.005, p < 0.01), explained variance = 12.2 (18.1); b Collectivism = 0.000, p > 0.05 (0.000, p > 0.05), explained variance = 6.1 (8.8); b Long term orientation = 0.002, p < 0.05 (0.007, p < 0.01), explained variance = 6.1 (27.2); b Indulgence = 0.003, p < 0.05 (0.012, p < 0.01), explained variance = 18.3 (27.2).
In the case of the normative dimension, one might argue that the differences could be more relevant to consumer behavior than normative distance. MNCs’ CR signals gain relevance in a high normative environment because consumers may use them to overcome their insecurities raised by foreign MNCs but also through their actual environment and in turn might consequently influence CR effects on loyalty (trust). Thus, we also calculated additional models for normative differences (not distances) by using the identical sample. For this purpose, we relied on the same measures and created a factor score (using explorative factor analysis with Varimax rotation and Kaiser Normalization (following Ang et al. 2015; Stenholm et al. 2013)). The results for the slopes are significant for loyalty (trust): b = −0.057, p < 0.05, explained variance = 4.1% (b = −0.044, p < 0.001, explained variance = 18.2%). Because the explained variances are less strong for loyalty (and alike for trust) compared to our proposed model, we still suggest controlling for institutional country distances in future CR research.
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The authors would like to thank three anonymous referees for their constructive comments and Nadine Batton, University of Trier, for the helpful data search for the last revision of this manuscript.
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Measurement of CR (Walsh et al. 2009; Walsh and Beatty 2007): Customer orientation: [Company] has employees who are concerned about customer needs, has employees who are polite to their customers, and is concerned about its customers. Good employer: [Company] appears to be a good employer, seems to have an excellent leadership style, and seems to treat its employees well. Product range quality: [Company] is a strong/reliable company, offers high-quality products, and develops innovative products. Social/environmental responsibility: [Company] would reduce its profits to ensure a clean environment, seems to make an effort to create new jobs, and seems to be environmentally responsible. Reliable/financially strong company: [Company] looks like it has strong prospects for future growth, seems to recognize/take advantage of market opportunities, and tends to outperform competitors.
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Swoboda, B., Huber, C., Schuster, T. et al. Corporate Reputation Effects Across Nations: The Impact of Country Distances and Firm-Specific Resources. Manag Int Rev 57, 717–748 (2017). https://doi.org/10.1007/s11575-017-0313-3
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DOI: https://doi.org/10.1007/s11575-017-0313-3