Return on Investment

Return on investment of corporate reputation refers to the profitability that companies obtain from their good reputation. This return is the main reason for making efforts to build corporate reputation. Literature suggests that this return derives from the positive effect of corporate reputation on the relations with different stakeholders. Corporate reputation acts as a signal and a guarantee in contractual relationships with stakeholders. Since it reduces uncertainties, stakeholders are more willing to cooperate with a well-reputed firm. This willingness to cooperate translates, via cost or revenue, into the firm’s profitability. This positive influence of corporate reputation on profitability increases, in turn, corporate reputation.

This entry first discusses corporate reputation as a signal and a guarantee within the relationship of the firm with its stakeholders, how corporate ...