Reputation & NGOs Workshop: How do organizations build robust reputations?

by Amanda Moss Cowan

Mae McDonnell: 'Bad Company: The Reputational Implications of Cross-Sector Interactions with a Stigmatized Firm' (McDonnell and Pontikes)

“Bad Company: The Reputational Implications of Cross-Sector Interactions with a Stigmatized Firm” (McDonnell and Pontikes) is very much an early work in progress, explained Mae McDonnell. It focusses on negative spillover effects of reputation, asking the question: how do prior cross-sector interactions with a scandalised company affect an NGO’s performance and reputation? Specifically, the study looks at cross-sector interactions between NGOs and British Petroleum in the aftermath of the 2010 explosion and sinking of BP’s Deepwater Horizon oil rig, the largest accidental oil spill in the history of the petroleum industry.

To examine these effects, Mae and her co-author have constructed a database tracing interactions between BP and a sample of 80 activist environmental NGOs occurring between 1999 and 2012. They hypothesise that NGOs engaged in collaborations with a firm prior to a scandal will suffer negative reputational and financial consequences in the scandal’s aftermath, whereas NGOs engaged in contentious interactions will see reputational and financial improvements post-scandal.

Witold Henisz: 'When Does a Stakeholder Attack Become a Reputational Crisis?: Stakeholder Capital and the Micro-Foundations of Corporate Reputation' (Henisz, Dorobantu, Nartey)

Fifty thousand points of media analysis, and sentiment analysis, underpin “When Does a Stakeholder Attack Become a Reputational Crisis?: Stakeholder Capital and the Micro-Foundations of Corporate Reputation” (Henisz, Dorobantu, Nartey). Witold Henisz introduced  micro-analysis of the reputational and financial effect on gold mines of negative events through a challengingly broad lens – seeking to link stakeholder reactions and reactions of their peers with various levels of status across sectors and geographies,  and to show  how established reputations can ensure  a  firm is resilient to negative events.

By identifying existing sentiment, reactions, relative status between stakeholders and financial outcomes, the paper offers support for the   proposition that reputational crises can be avoided or better defused when the right actions  have been taken months or even years before a crisis occurs. The unequivocal conclusion is that “stakeholder capital protects financial value by reducing the likelihood that an attack leads to a  reputational crisis and substantial loss of financial value”.