Managing Corporate Reputation through Social Media

Managing Corporate Reputation through Social Media

Asha Kaul (Indian Institute of Management, India) and Avani Desai (GLS University, India)
Copyright: © 2016 |Pages: 17
DOI: 10.4018/978-1-5225-0332-3.ch003


The primary objective of this chapter is to highlight how social media can be used to strengthen stakeholders' relationships and build social capital for the organization, thereby enabling the organization to build, manage and sustain CR. The chapter begins with a brief overview of existing thought, approaches and terminology related to CR and proceeds to identify the interactions of each stakeholder with the organization through social media. The tenability of various forms of social media as viral videos, blogs, forums and micro blogging websites in furthering CR and the extent of their effectiveness are examined using cases derived from secondary data. Further, the chapter discusses methods of measuring the success of an organization's social media initiatives using different techniques and strategies for restoring reputation post a crisis by using social media. Finally, the chapter demonstrates a systematic process of strategizing and planning CR using social media and creating organizational infrastructure to achieve this end.
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The emergence of social media has changed the manner of information exchange. Data reveals that the number of Facebook users is more than 1 billion (Facebook Statistics Directory, 2015) and active Twitter users comprise over 115 billion (Statistic Brain, 2013) suggesting a significant drop in traditional newspaper readership with readers switching allegiance to a new and emerging form of technology. Some of the reasons for this shift can be attributed to environmental changes, globalization, speed at which messages need to be transmitted across the globe, the emerging tech-savvy Gen Y and Z, and evolution of communication technologies.

Overall, favorable disposition towards social media has also changed the interaction pattern between companies and consumers. One-way communication has given way to dialogue where consumers are at liberty to express their concerns or grievances through multiple platforms as YouTube, Twitter, Facebook, Pinterest, Instagram, blogs etc. Further, increase in reach and decrease in time for messages to traverse has alerted companies to the need for using a social media platform mix to manage stakeholder concerns and their own reputation. Undoubtedly, companies are finding it difficult, though not impossible, to monitor and control online conversations as stakeholders are being influenced more by cyber groups and fan following through this medium than advertising and marketing campaigns. Arguably then, if companies wish to connect with stakeholders, a paradigm shift is required. They need to adopt newer technologies that will shape offline and online public perception and opinion and build corporate reputation (CR).

CR, defined as “a perceptual representation of a firm’s past actions and future prospects that describes the firm’s overall appeal to all of its key constituents when compared with other leading rivals” (Fombrun, 1996, p. 72),has over the last four decades attracted the attention of academia and practitioners, alike. Researchers have posited that a reputation is “arguably the single most valued formal asset” (Gibson, Gonzales, & Castanon, 2006, p. 15), leading to a sustained competitive advantage (Fombrun, 1996). A favorable reputation “may [thus] enable firms to charge premium prices, attract better applicants, enhance their access to capital markets and attract investors” (Fombrun & Shanley, 1990, p. 223) and impact firm sustainability and performance.

With the advent of social media, building CR has undergone a change because “online reputation is your [organizational] reputation” (Fertik &Thompson, 2010, p. 16). It has thus, become essential to manage CR through social media across all stakeholders, be they shareholders, consumers, employees, business partners, governments, media, or local communities. The criticality of social media management can be comprehended when we consider CR as the net assessment of the company’s reputation (Fombrun, 1996), the “overall, affective impression” (Hutton, Goodman, Alexander & Genest, 2001, p. 257) and a sum of sub-reputations for different aspects of its activities (e.g., profitability, or quality of products or services). The challenge for companies is to manage these sub-reputations and generate loyalty by securing eyeballs, building awareness, developing consideration and preference, and stimulating action (Li & Bernoff, 2009).

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