Abstract
Corporate reputation is one of the main assets to compete successfully in the markets today, which requires its proper management. One of the main factors that determine the level of reputation of a company is transparency, due to its effects on the acquisition of the necessary information in order to maximize the effectiveness of stakeholders´ decisions. In order to know the current situation of information transparency provided by the family businesses of Castile and León, a study has been carried out, analyzing the degree of compliance with the requirements established by Royal Decree Law of 18/2017 of 24 November in 35 family businesses in the region. This law establishes the social and environmental information that companies with over 500 employees are legally obliged to provide.
TopIntroduction
One of the main challenges undoubtedly facing companies today is reputation management. Although the importance of having a good reputation has long been known, it has only been recently and especially since the middle of the last decade, that the business world has become aware of the importance of the proper management of this intangible asset.
The emergence of cutting-edge new technology such as Internet 2.0 has been a critical factor in understanding the growing importance of reputation management for companies. The impact of rapid changes in technology on business communication and the power of online opinions expressed by users and customers about their own experiences with companies has given rise to the so-called “online reputation,” which is quite simply the transfer of reputation into the ever-changing digital world.
Even though there is a range of different factors which determine the level of online reputation a company can achieve, it is widely accepted that information transparency is one of the main ones. The positive effects of a suitable level of transparency go far beyond a mere improvement in reputation. It becomes a significant factor for both social equity and economic efficiency, due to its effects on the acquisition of the necessary information these various social agents need in order to maximize the effectiveness of their decisions fully. Not only that, it is indeed one of the basic principles of Corporate Social Responsibility.
On the other hand, in today's dynamic business world, the family business is still of paramount importance, and it is typically the most common form of business contributing to job creation and wealth generation. This is especially true in Spain and particularly so in Castile and León, where this type of organization accounts for over 90% of all companies and generates a staggering 80% of all jobs and production.
In light of this fact, it is essential to find out what level of information transparency is currently being provided by leading Castilian-Leonese family businesses to their target audience and whether their efforts can be considered suitable. Hence, the differentiating aspects of the information transparency provided by these organizations can be known, and possible deficiencies in the quantity and quality of same can be detected, in order to offer possible solutions that family businesses in Castile and León can adopt to improve their overall business strategy.
To this end, an exploratory study has been carried out, and its primary purpose was to analyze the websites of 35 family businesses in Castile and León, to identify the presence of the non-financial information which companies are required to give under Royal Decree-Law 18/2017, of November 24. This new standard transposes European Directive 2014/95 and establishes the social and environmental information that companies with over 500 employees are legally obliged to provide.
Although big companies are the only ones subject to this law, we have read dozens of articles published since the law was first introduced, and we infer that these information requirements will soon be similarly extended to other types of smaller organizations shortly. Furthermore, information transparency implies the provision of information that goes beyond even what is established by law. This document has been chosen for these two reasons, as an instrument to measure the level of information transparency of the companies analyzed.
The work is divided into five sections. The first one presents the conceptual framework of information transparency. It sets out the primary definitions of the term, develops its relationship with reputation and explains its content and why it needs to be appropriately managed. The following sections outline the conclusions reached in the few investigations that were carried out regarding transparency in family businesses. The aforementioned Royal Decree-Law is presented below, and its background, content, and reasons for appearing are dealt with. After the presentation and commentary of the research results, the final sections are devoted to the conclusions and future lines of research.
The research objectives are:
Key Terms in this Chapter
Stakeholders: Person or group, with interest in a company, which may affect or be affected by the activities developed by the organization.
Index of Transparency: Index developed to measure the level of transparency provided by a company or government institution, through evaluation of a set of variables.
Information Transparency: Ability of an organization to make its stakeholders accessible the information needed to make decisions.
Directive 2014/95/EU of the European Parliament and of the Council of October 22nd, 2014: Directive that lays down the rules on disclosure of non-financial and diversity information by large companies (more than 500 employees) in E.U.
Corporate Social Responsibility: Set of social, environmental, and ethical initiatives, developed by companies to meet the needs of their stakeholders.
Royal Decree-law 18/2017, of November 24, on Non–Financial–Information and Diversity: New law that establishes the social and environmental information that companies with over 500 employees are legally obliged to provide in Spain.
Castile and León: An autonomous community of Spain, located in the northwest of the country.
Gross Value Added: Value for the amount of goods and services that have been produced in an area, industry, or sector of an economy, less the cost of all inputs and raw materials that are directly attributable to that production.