Reputation Formation

Reputation formation involves establishing and managing a network of high-status, influential players that provide affiliated status to a new firm entering their field. It is an essential and strategic element required for any young firm’s emergence into the market since a positive reputation is a firm’s most valuable asset.

Forming a credible reputation as a young firm signals the potential for future success in the minds of consumers, stakeholders, and competitors. This entry first explains the use of positive signals; a major tenet of reputation formation is the implementation of signals as a method of indicating the[Page 640] potential growth of a young firm. It then discusses the importance of accumulating significant amounts of social and symbolic capital as a means to acquire reputation through affiliation ...