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The Impact of Stakeholder Power on Corporate Reputation: A Cross-Country Corporate Governance Perspective

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  • Abrahim Soleimani

    (Department of Management, Eastern Washington University, Spokane, Washington 99202)

  • William D. Schneper

    (Department of Business, Organizations and Society, Franklin and Marshall College, Lancaster, Pennsylvania 17604)

  • William Newburry

    (Department of Management and International Business, Florida International University, Miami, Florida 33199)

Abstract

Corporate reputation has roots in national beliefs about the role of the business corporation in society; these beliefs are constructed in accordance with the preferences of powerful stakeholders. Building on a stakeholder-power approach to corporate governance, we investigate whether differences in the legal rights and protections of shareholders, creditors, and workers across countries affect the general public’s reputation assessments of business corporations. Using a sample of 593 of the largest publicly traded companies in the world from 32 countries during 2007 to 2011, we find that in societies where shareholders enjoy a high degree of legal rights, the impact of stock market returns on corporate reputation becomes more positive. Likewise, the negative relationship between earnings volatility and reputation becomes greater when creditor rights are stronger. Contrary to expectations, we found no evidence of an interaction effect between labor rights and corporate social performance on corporate reputation.

Suggested Citation

  • Abrahim Soleimani & William D. Schneper & William Newburry, 2014. "The Impact of Stakeholder Power on Corporate Reputation: A Cross-Country Corporate Governance Perspective," Organization Science, INFORMS, vol. 25(4), pages 991-1008, August.
    • Handle: RePEc:inm:ororsc:v:25:y:2014:i:4:p:991-1008
    DOI: 10.1287/orsc.2013.0889
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    4. Deephouse, David L. & Newburry, William & Soleimani, Abrahim, 2016. "The effects of institutional development and national culture on cross-national differences in corporate reputation," Journal of World Business, Elsevier, vol. 51(3), pages 463-473.
    5. Thams, Yannick & Alvarado-Vargas, Marcelo J. & Newburry, William, 2016. "Geographical diversification as a predictor of MNC reputations in their home nations," Journal of Business Research, Elsevier, vol. 69(8), pages 2882-2889.
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