How much does Corporate Responsibility influence a company’s reputation?

The terms Corporate Responsibility (CR) and reputation are often confused. They are not the same, but the former does have a significant impact on the latter. Quantifying to what extent this is so is both complex and important due to the so-called “reputation economy”: the perceptions that stakeholders have of a company have an impact on its income statement through the favourable behaviour they stimulate.

TheReputation Institutehas ventured to do so for Spain at the current time: it has calculated the weight of perceived CR – calling it the CSR Index – as 41.9%. This, according to the Reputation Institute, means that if we allocate 100 to those perceptions, then 41.9 depends on three things: feelings about citizenship (13.8%), i.e. if the company is concerned about society, invests in good causes and does not harm the environment; the workplace (13.4%), i.e. if the company is an attractive place to work as an employee and treats its professionals well; and its governance (14.7%), i.e. if the company is governed responsibly, behaves ethically and shows how it operates transparently.

The remaining 58.1% comes from people’s perception of the products and services (the most important of all, with 18.8%) of the firm, its leadership (13.7%), its innovation (13.4%) and its performance (12.1%).

Evidently, many of these aspects are interrelated. For example, an entity’s commercial offering (products and services) and its governance are clearly connected. The association of these two – which is natural in a responsible company – increases the weight of the latter and, as a result, that of the CSR index.

Ultimately, why is this important?

• Improving a company’s reputation by five points increases the intention to recommend its products by 5.6%.
• Improving a company’s reputation by five points increases the intention to purchase by 6.0%.
• Improving a company’s reputation by five points increases the intention to make a special effort to give the firm the benefit of the doubt in the event of a crisis by 4.7%.

This is the result of those perceptions that are formed from people’s direct experiences with the company (with its products, customer care, jobs, and so on), from what it does or says (e.g. its CR initiatives) and from what others say about it (e.g. social networks, the media, friends). Now that we know perceived Corporate Responsibility has a weight of 41.9%, it is the moment to foster it from these three perspectives.