Abstract
The main purpose of this chapter is the study of the reputational transfer between the leader and the company he leads, analyzing whether the mentioned process is conditioned by the presence of a family in the ownership and/or management of the company. Using the information published by the Spanish Monitor of Corporate Reputation (MERCO) for the period between 2001 and 2017, different econometric models have been formulated with panel data that show that the reputation of the leader of the family firms is transferred to the corporate reputation faster than when the company does not have the condition of a family business. In addition, it has been researched if the reputation of the leader is nourished by the corporate reputation, and the results show a link in that sense, without being conditioned by the family nature of the company.
TopIntroduction
The resource-based view highlights the strategic interest of the different resources that each company has and, especially, the dominant role played by intangible resources (e.g., Barney, 2001). In this last category, corporate reputation is understood as the global estimate of the perceptions that main interest groups have of the company (i.e., stakeholders) as a result of the direct and indirect experiences they have with the organization (e.g., Deephouse & Jaskiewicz, 2013; Dowling, 2016) and in a framework of comparison between rivals (Chun, 2005; Gotsi & Wilson, 2001).
Although it is argued that reputation participates in the characteristic of causal ambiguity (e.g., Barney, 1991; Dierickx & Cool, 1989), different studies have tried to identify its dimensions (e.g., Cravens, Goad & Ramamooth, 2003; Dollinger, Golden & Saxton, 1997; Fombrun, 2006), all of them agreed on the influence of the manager1, through his leadership, for his role as a productive asset, as well as for his visibility in public opinion, especially among investors and employees (Helm, 2006). In this context, the term reputational transfer appears to denote the significant influence of the manager reputation on corporate reputation (Cravens et al., 2003; Gaines-Ross, 2003; Men, 2012; Treadway, Adams, Ranft, & Ferris, 2009; Wade, Porac, Pollock, & Graffin, 2008), considering the effect of CEO role in some aspects like corporate financial performance (Weng & Chen, 2017), stock-based performance measures (Karuna, 2006), corporate governance (Karuna, 2009) or corporate reputation crisis (Sohn, Lariscy, & Tinkham, 2009). Moreover, although it is argued that the manager is also benefited by the reputation of the firm he works for (Graffin, Pfarrer, & Hill, 2012), there is little empirical evidence in this regard (e.g., Safón, Mohedano, & Urra, 2011).
In the field of family firms (hereinafter, FF), the reliable identification of the family with the company has led to the study of the relationship between corporate reputation and the level of family participation (Berrone, Cruz, Gómez-Mejía, & Larraza-Quintana, 2010; Miller, Le Breton-Miller, & Scholnick, 2008; Zellweger, Nason, Nordqvist, & Brush, 2013). However, as far as our knowledge is concerned, the reputational transfer between manager and FF is still not analyzed. Therefore, this study seeks to fill the gap by studying the role of the family in the transfer of the leader reputation to the company. Also, it is intended to contrast whether the corporate reputation contributes to the leader reputation, investigating how this relationship is affected by the presence of a family in the management and control of the company. To this end, the rankings published by the Spanish Monitor of Corporate Reputation (MERCO) have been used concerning the most reputable companies and leaders in Spain in the period 2001-2017.
Key Terms in this Chapter
Socioemotional Wealth: Non-financial aspects of the firm that meet the family’s affective needs, such as identity, the ability to exercise family influence, and the perpetuation of the family dynasty.
Causality (in the Sense of Granger): Informative capacity of a variable in the prediction of the behavior of another variable of interest. That is, the variable X causes Y if the prediction of Y improves taking into account the information available in X that is not contained in any other variable.
Family Firm: Firm in which the founders or descendants of the founding family continue to hold positions in the top management, serve on the board, or are blockholders.
MERCO: Reputational evaluation instrument launched in 2000, based on a multi-stakeholder methodology regarding the following business aspects: economic-financial results, quality of the commercial offer, talent, ethics and corporate responsibility, international dimension, innovation, and management of corporate reputation.
Executive Reputation: Recognition that stakeholders have of the manager ability to generate value consistently over time in the company which he leads based on its historical behavior as a person, a professional, and as a part of the company.
Panel Data: Data set that combines a temporal dimension (time series) and a transversal dimension (individuals).
Reputational Transfer: Process through which the CEO reputation impacts positively or negatively on the reputation of the company for which he works.