Corporate Communication, RQ - May 2016

1. Table of ContentsAbstract................................................................................................................31. Business is war - Alpha, Omega and Zeta firm.........................................3

1.1 Introduction.......................................................................................................................31.2 Alpha Firm........................................................................................................................4

1.2.1 CC – Loan Sharks......................................................................................................51.3 Omega Firm......................................................................................................................5

1.3.1 Corporate Communication.........................................................................................61.4 Zeta Firm...........................................................................................................................8

1.4.1 CC – The case of AirAsia..........................................................................................91.5 Conclusion......................................................................................................................10

2. RQ – Reputation Quotient, the case of SMEs in Malaysia.....................112.1 Introduction.....................................................................................................................112.2 Six dimensions................................................................................................................12

2.2.1 Emotional Appeal....................................................................................................122.2.2 Product and Services................................................................................................132.2.3 Vision and Leadership.............................................................................................142.2.4 Workplace Environment..........................................................................................152.2.5 Social and Environmental Responsibility................................................................152.2.6 Financial Performance.............................................................................................16

2.3 Conclusion......................................................................................................................17References..........................................................................................................19

CMCC5103 – Alpha, Omega and Zeta firm, and RQ Nor Helmee Bin Abd Halim

Abstract

This paper discusses three types of Alpha, Omega and Zeta firm. The primary objective of all

three firms is about the same – profit maximization. In a real world, all three types of the firm

conduct their business based on these three concepts, one-dimensional (commerce), two-

dimensional (commerce and law) and three-dimensional (commerce, law and reputation)

concept. The second part of this paper discusses the six-dimensions of Reputation Quotient

(RQ). Reputation is an intangible asset that has a powerful influence of overall performance of a

company. The focal discussion and examples will be based on SMEs companies competing for

market share in the emerging markets of Malaysia.

1. Business is war - Alpha, Omega and Zeta firm.

1.1 Introduction

Why “business is war”? What is the connection between business and warfare or military?

Business and military share many similarities which both are concerned with competition and

how to succeed in the face of determined adversaries. Military prepares forces to fight and win

on the battlefield, and in the business world, strategies are developed for organizations to operate

successfully in the competitive marketplace (battlefield). A great Chinese General and the author

of the oldest military book, the Art of War, indicates that when the militaries prepare for war,

they must consider the weapons, armies, terrain and so on. In the business world, organizations

must consider many factors such as culture, technologies, shareholders, resources as well as

corporate communication (CC). In a nutshell, this briefly answer the above questions.

Today, in the 21st century business world is more challenging and very competitive. The

advent of the Internet and communication play an important role for organizations and business

leaders to compete with their rivals. Author of Building Reputational Capital book, Jackson

(2004) describes three notions of how business leaders will view today’s world of business.

There are three types of firm, 1) Alpha firm 2) Omega firm and, 3) Zeta firm. These three types

of firms basically having the same vision and objective of maximizing profits and at the same

time applying the same approach of corporate communication (CC) in their business operations.

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As discussed in many literatures, CC has been summarized as a set of activities involved

in managing and orchestrating internal and external communication which aimed at creating

favorable relations with stakeholders. The common goal of the activities around CC is to build

competitive advantage as well as to improve the firm’s bottom line (van Riel and Fombrum

2007; Lah, M., Sušjan, A., and Redek, T, 2016). The subsequent sections will discuss all three

types of firms and the function of CC activities in improving and sustaining the firm’s overall

performance.

1.2 Alpha Firm

According to Jackson (2004), Alpha firm exists simply for profit maximization. The mentality of

the people or firm in this world of business is only about making money. Every move they do is

to maximize the bottom line of the business or the firm regardless of what or how they do it even

if they have to break the law. Jackson puts a stronger notion in his book by saying “ If you can

make more money for yourself or your firm by breaking the law, and think you can get away

with it, go for it”. He added that the only reason for the firm to obey the law is to avoid the

monetary cost of being noncompliance. Simply put, the firm will do whatever it takes from being

caught.

Loan sharks, money laundering business, get-rich-quick scheme, black-market lottery,

gambling, prostitution or any vice activities businesses are examples in this category. All these

kind of businesses are considered unethical and immoral, but as highlighted by Jackson (2004),

“the business of business is business, period”. It’s a one-dimensional as the business exists is

mainly because of demand in the marketplace. The operators are taking full advantage by

making as much profit as they could.

In a recent news reported by a local newspaper, “So long, Ah Long syndicate”, The Star.

(2016), local authorities busted one of the biggest “Ah Long” or loan sharks (illegal money

lender) firm in the country. The authority seized RM1.6 million worth of assets, including nine

cars and RM82, 800 in cash. It was reported that the firm had a turnover of RM8 million per

month. The firm had been in the business for two years before they were taken in. From a

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business perspective, it tells us how lucrative to endeavor in such business, but from a different

point view, it’s a risky business.

1.2.1 CC – Loan Sharks

Using loan sharks firms as an example, as reported by The Star (2016), the firm operates its

business behind the name of a shell company. In the business management dictionary, shell

company is defined as an entity that has no active business and usually exists only in name as a

vehicle for another company’s business operations. It is usually associated with any form of

illegal businesses including money laundering activity by illegal financial experts. The Alpha

firm is basically operates their business behind the shell name as cover up to their illegal

business activity.

In a typical business situation for an Alpha firm, loan sharks firm does not have a

physical building to operate their business. They work from home or virtually through the

Internet. They usually have a strong connection with gangsters, mobsters and other business

alliances. There is minimal open interaction or communication about the firm to the public as

public exposure is a risk to the business. The firm, however, often targets low income, close

friends and desperate families by approach them personally and lure them to indulge in the

business. While Griffith & McLean (2015) suggested that with the advent of the Internet

marketing, firms today utilize this technology to advertise and promote their business via social

media, blogs, forums, email spamming and send text messaging randomly to the people. In the

context of an Alpha firm, due to limited access to formal advertisement slot like newspapers and

magazines, they maximize the Internet platform as an alternative to build its business reputation

and ultimately improving its bottom line. In essence, Alpha firm also relies on many kinds of CC

activities to keep their business alive.

1.3 Omega Firm

Omega firms as explained by Jackson (2004), operate based on two-dimensional world. They

rely on the law and economics. Nevertheless, a high profile Omega firm, for example MAB

which is used in the following example, also consider firm reputation as their key source of

sustainable competitive advantage to compete with its rivals. The disappearance of MH370 and

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the downing of MH17 crisis communication illustrates how the firm view firm reputation is

utmost important to regain customer’s confidence on the national flag carrier.

Typically, profit maximization activities by these firms are constrained by legal

restrictions and the business is monitored by regulatory bodies. Like any other organizations, the

Omega firm is free to compete with others, however, they operate under certain limitations or

restrictions which is imposed by the local authorities. A state-owned company or Government-

Linked Company (GLC) is an example of organization operates under Omega firm. GLCs in

Malaysia are defined by Khazanah Nasional Berhad (the investment arm of the country), as

companies that have primary commercial objective and in which the Malaysian government has

a direct controlling stake or owned, controlled by the government. (Minhat & Abdullah, 2014).

1.3.1 Corporate Communication

According to Argenti (1996, 2006), an organization’s corporate communication function is

responsible for communication with both internal and external constituencies. The CC activities

include media relations, identity and image, investor relations, internal or employee

communications, government relation or public affairs, community relations, corporate

philanthropy, corporate reputation, marketing communication, event, publication, crisis

communications, website as well as social media. The activities become so important when

internal and external stakeholders begin demanding more information from organizations

(Cornelissen, 2008). These activities are usually handled by a dedicated unit, department or

division. Some examples of how firm indulges in such activities are discussed in the following

sections.

1.3.1.1 Employee Relations – Engagement, Motivation

Many empirical studies and motivational theories suggest that highly motivated employees lead

to high organization effectiveness, which then improve the overall performance of an

organization (Bass, 1960; Goleman, 1998; Preston et al, 2015). Motivation comes from many

forms, employee engagement, internal development, training, restructuring and many other

strategies increase employee motivation. MAB communicated its internal development plan and

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strategies with stakeholders via an annual report, employee engagement as well as e-media as

part of its internal communication.

“A great place to work, play and perform” is one of the mission statements that inspire

the employees of MAB. The firm regularly communicates its initiatives about organizational

development, employee development program, learning, recognition and award, employee’s

welfare and benefits as well as remuneration package (MAS “Annual Report”, 2014). As a

result, it improves employee’s performance as well as employee’s loyalty. In a recent

achievement of the airline where they recorded the first monthly profit (February 2016), the

CEO, Christoph Mueller dedicated the achievement to his team by mentioning the contributory

factors is due to increased employee engagement that leads to increased overall performance of

the airline (Business Insider “MAB turned its first monthly profit”, 2016).

1.3.1.2 Crisis Communication and Reputation Management

The disappearance of MH370 and the downing of MH17 have put the national carrier and the

country in the highlights of the world. The twin tragedies have put the entire organization as well

as the entire nation to unite to face the challenge. Flight cancellations, fear of flying, brand

damage, employees demoralize and financial impact are the immediate consequences of the twin

tragedies. The MH370 is still a mystery until today and the MH17 has been dubbed as unlucky

but innocent.

According to Coombs (2015), crisis communication seeks to prevent or lessen the

negative outcomes of a crisis by protecting the organization, its stakeholders, and the industry

from harm. The relentless support from the Prime Minister of Malaysia and the Government

have helped the firm to go through the turmoil and rebuild the brand reputation. The airline has

taken all necessary steps to rebuild its reputation such as setting up periodically press conference,

constantly communicate through social media platform, as well as providing moral support to the

family members of the victims and the crew. An interview with the former Head of Marketing,

Dean Dacko mentioned that the firm took seven weeks and seven days from blackout to recover

from MH370 and MH17 tragedies respectively (Mumbrella, “Dean Dacko Interview”, 2015).

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Today, with all the hard work, Malaysia Airlines are back flying high with better and improved

financial performance.

1.4 Zeta Firm

Jackson (2004) states that Zeta firm lives and operates via three-dimensional concept –

economics, law and reputation. The rule of thumb requires Zeta firm finding the right balance

among the dimensions of commerce (economics), compliance (law) and credibility (reputation).

Jackson (2004) highlights that Zeta firm lives in a “Realland” as a living organism and

competing in a dynamic environment. Apart from focusing on profit maximization and

protecting the public interest (law), the third important element is managing stakeholder relations

through reputation management. (Fombrun and Van Riel, 1997, 2004; Freeman et al, 2010) state

that stakeholder decisions towards an organization are affected by the level of reputation which

the organization possessed. According to Freeman et al (2010), stakeholders refer to 1) suppliers,

2) shareholders, 3) environment, 4) employees, 5) community and, 6) customers. In a study

conducted by Ma (2012) suggests that managing stakeholder relationships have become an

important objective in every organization today.

With the advent of technology, Internet, social media, globalization, and empirical studies

and findings on CC management, it is imperative for organizations to embrace the knowledge

and rapidly build their corporate reputation. Fombrun and Van Riel, (1997, 2004) highlight that

strong positive reputation is one of the important sources for an organization to be different from

its rivals, an important asset that rivals can’t easily imitate (Dierickx and Cool 1989; Rumelt

1987).

As described, private sectors are best to illustrate the Zeta firm characteristics. The main

goal of a private sector firm is a long-term business and profit. There are many reputable firms

from different business segment out there can exemplify Zeta firm but the most outstanding

popular brand today in Malaysia is AirAsia, the low-cost carrier. There are so much to mention

about the firm in particular. In the following section, will highlight and discuss how the firm

perform, manage its stakeholder relationship, build, and sustain its corporate reputation.

Technology is the turning point for AirAsia in generating revenue. Next, will discuss some

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evidence of “giving-back” to the society and lastly a brief discussion on how the firm reacts to

reputation restoration post #QZ8501 incident.

1.4.1 CC – The case of AirAsia

While other airliners were struggling to compete with each other in a competitive airline

industry, a new-entrant enter the market to make a difference in 2001. A new local firm, Tune

Air took over an existing domestic airline called AirAsia for RM1 together with millions of

Ringgit debts. After about 11 months, the airline made full payment of the debt (Poon & Waring,

2010). Since then, AirAsia never looked back and continue to make remarkable impact. Besides

the founder and the management team that contribute the success, the other significant

contributory factor is its strategic corporate communication and stakeholder relationship

management.

1.4.1.1 Technology influenced CC (Commerce)

AirAsia heavily relies on technology for its business, as well as disseminating and

communicating with its customers. The approach of B2C (Business to Customer) model and the

Internet allow the firm to pioneer the online ticketing system which reducing the use of the

conventional physical distribution channel. As a result, the airline generated higher revenue from

online sales through its corporate website (Poon & Waring, 2010). The firm also extended the

use of the Internet to provide online customer support via email, online chat and social media.

Apart from front-end system, the firm also deployed powerful backend system to facilitate the

internal operations. The heavy investment has increased efficiency of the overall process,

increase “Allstars” (employee) satisfaction, customer experience and ultimately increase the

overall performance of the firm.

1.4.1.2 Give back – CSR (Law)

Awareness and implementation of CSR are relatively new in Malaysia. CSR starts to take place

after implementation of policies and initiatives by the federal government and its agencies

(Sharma, 2013). It is now becoming mandatory for GLCs, and public listed companies to report

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their CSR initiatives in the annual financial report. Firms consider CSR today as important to not

only for organization's reputation, but also for financial results (Lu & Castka, 2009).

In this spectrum, AirAsia participated in many CSR activities like #GREEN24, relief

efforts, football coaching clinic for young development and much more. The #GREEN24

campaign is about environmental sustainability and consciousness. In 2015, AirAsia launched

the campaign for all “Allstar” and to the general public. Over the years, AirAsia has provided use

of its aircraft to facilitate humanitarian aid and natural disaster relief efforts. The firm

commitment is also extended globally, for instance the Nepal devastating earthquake on April

2015. In terms of youth development in sports, especially, football, AirAsia also conducted

football coaching clinics together with English football club, QPR over three countries,

Malaysia, Singapore and Thailand (AirAsia “Annual Report”, 2015).

1.4.1.3 #QZ8501 Disaster - Crisis Management

They say lightning never strikes twice, but three aviation disasters in 2014 involving Malaysia.

After the disappearance of MH370, the downing of MH17 and in December 2014, Indonesia

AirAsia, QZ8501 crashed into the Java Sea killing all passengers. The incident puts AirAsia in a

major crisis. If they fail to manage the situation well, it will further damage the image and

reputation of the firm. How AirAsia and the Group CEO, Tony Fernandes handles the crisis were

with full of respect (Newshub “Lessons from the infamous QZ8501”, 2014).

Tony Fernandes and his team use media strategy, particularly social media – Twitter to

frequently communicate with the public. The victim’s families are given continuous updates

through Tony Fernandes’s Twitter account. He assures the passengers and crew are his priority

and promised them to do his best to provide any form of support. Comparing the crisis

management between MAB and AirAsia, the latter handles it much better and well organized

(Masduki, 2015).

The strategies and action taken by AirAsia in handling post-crash public communication

have successfully restored its strong brand reputation within a short period. The airline quickly

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puts the incident behind them and continue pursuing its vision “to be the largest low-cost airline

in Asia”.

1.5 Conclusion

In sum, although Alpha, Omega and Zeta firms are differentiated by certain characteristics as

discussed above, they have one thing in common which is the stakeholder communication

activity. They rely on all three dimensional concepts to build their sources of sustainable

competitive advantage. These sources will become their strengths that enable them to compete

with other competitors in the marketplace. Subsequently, a sustained competitive advantage will

improve the overall performance of the company in a long run.

2. RQ – Reputation Quotient, the case of SMEs in Malaysia

2.1 Introduction

Small and medium-sized Enterprise (SMEs) have been regarded as one of the major contributors

to economic growth in all countries. In Malaysia, 90% of the business enterprises are SMEs from

various industries. As reported on the SME annual report, the contribution of SMEs to overall

Gross Domestic Product (GDP) increased significantly to 35.9% in 2014 and the total number of

establishments as reported is more than 600,000 SMEs in Malaysia today (SME Annual Report,

2014/2015). The numbers may increase or decrease depending on how these SMEs survive in the

challenging and competitive market. Among others, establishing a corporate reputation is one of

the important key areas for these companies to outperform their rivals.

Fombrun (1996) provides the most cited corporate reputation definition as “a perceptual

representation of a company’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”. Charles Fombrun

also suggested that corporate reputation can be measured and therefore he developed a structured

assessment instrument concept called Reputation Quotient (RQ) (Fombrun &Van Riel, 2004).

The instrument asks respondents to rate an organization on twenty attributes, which are then

formed into six dimensions as shown on Figure 2.1. The total score will determine the overall

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reputation of an organization which can be used as a source of competitive advantage, something

which is difficult for rivals to imitate. In the following sections will discuss how SMEs in

Malaysia use reputation to shape up their business based on these dimensions.

Figure 2.1 – The six dimensions of RQ (Fombrun &Van Riel, 2004).

2.2 Six dimensions

The six RQ dimensions are as follows;

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2.2.1 Emotional Appeal

Emotional appeal means stakeholders have good feelings about the company, trust the company,

admire and respect the company. Fombrun & Van Riel (2004) suggested that emotional appeal

has direct relation to the other five dimensions - products and services, workplace environment,

social responsibility, vision and leadership, and financial performance. Ratings for each

dimension contribute to the emotional appeal ratings, which then creates the overall reputation of

the organization. Matter of fact, emotion is known to be the primary driver of reputation.

Apart from the five dimensions that influence emotional appeal, corporate logo and

corporate identity create an emotional bond to the stakeholders too. According to Hilton (2009)

logos are becoming much simpler and more conversational. “They are not yelling; they’re

inviting. They convey more emotion”. Using Secret Recipe as an example, the logo is just a text

represents the business and the brand name as shown on Figure 2.2. The theme color used by the

business is red. From corporate website to its outlet interior design, the color is based on red.

There is no significant reason for the choice of color, but in Chinese culture, red represents lucky

color. These elements create the underlying identity, image and brand of the firm. Since 1997,

the firm has won the heart of the Malaysian. Customers trust the brand to the extent that they will

associate Secret Recipe brand with any event especially birthday celebration.

Figure 2.2 – Secret Recipe corporate logo

2.2.2 Product and Services

Highest and finest product quality is utmost important to the business owner and stakeholders.

For business owners, they can charge better price when the product is superior (Jackson, 2004)

and for customers, they will repeat transactions, or to recommend to family members and friends

through positive feedback via word of mouth, blog and social media (Yu et al, 2006). Besides

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quality, stakeholders generally seek for innovativeness, reliability, consistency and value for

money. Using Secret Recipe as an example, there is no doubt on the consistency of taste and

quality of its cakes. From own personal experiences, the taste of Secret Recipe’s cakes is

consistent regardless of where or which outlet the cake is bought.

Secret Recipe is one of the successful franchise business as reported in SME annual

report (2014/2015). The comprehensive training program is known to be the important factors

for its superior and excellent service. Training is provided by the franchisor to the chef, pastry

chef and the waiter/waitress. The objective of the training is to ensure uniformity of skills and

service quality across all franchises. In summary, highest, superior and finest product and service

quality satisfy stakeholder’s expectations of product and service delivery on a consistent basis.

Being consistent is what the business needs for a real reputation.

2.2.3 Vision and Leadership

Creating a vision, mission statement is one of the important steps in formulating strategic

planning. It looks like a simple task, but to create a clear, meaningful and simple yet inspiring

vision statement is not easy. Vision is generally seen as a picture of the future. Vision guides and

perpetuates corporate existence (Papulova, 2014). Some business leaders invest thousands of

dollars hiring experts to ensure they have a powerful vision statement.

Once vision is developed, the leaders must first champion the vision before others. A

transformational leader will then communicate the vision to all employees, get them to believe,

inspired, and transform them towards the corporate vision. Secret Recipe’s aspiration is “to

become the leader in fine quality cakes, fusion food and distinctive service”. Today, the

reputation they portray has made the business as the leading and largest café chain in Malaysia.

With more than 400 cafes throughout Asia region, it is expected that more franchisee to

sign up and expand the business not only in Malaysia but also in Asia. As reported by Maldives

Government website (2016), in April, the President launched the first restaurant in the country

located at Male. The café can also be found in prime urban locations and shopping malls in

major cities including Singapore, Indonesia, Thailand, China, Brunei, Cambodia and Myanmar.

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Ambitious, authentic and inspiring vision, and supported by good leadership team have created a

solid reputation of Secret Recipe which is hard for its rivals to replicate (Dierickx and Cool

1989; Rumelt 1987).

2.2.4 Workplace Environment

A unique corporate culture with conducive workplace environment have become relatively

important for prospect employee assessing their future employer as well as an important factor

for an employer as part as their employee retention program. Through social media, people are

exposed to international companies like Google, Apple and Microsoft where the working culture

is seen to be more enjoyable with many facilities, gadgets, free food and drinks. Every employee

wishes or dream to have a same environment or culture like what they have seen on the internet.

As many researchers link reputation to image, and the image is derived from the internal

of the company and based on the organization’s culture. It consists of current practices, history,

values and behavior (Melewar, Karaosmanoglu & Paterson, 2005). Earlier on, Alsop (2004)

suggested that company that creates a conducive environment for all their employees contribute

greatly to corporate reputation. This notion was well supported by Fombrun (1996) where he

suggested that employees would like to work in an environment where trust is promoted,

employees are empowered and the company inspires pride. Today, in some industries in

Malaysia like ICT, the culture is more or less the same like western IT companies in the Silicon

Valley.

From training and development perspective, SMECorp Malaysia organizes many training

programs for SMEs to take part. The training includes soft skills training for SMEs employees,

which is scaled up to more technical training for them to stay current with technology and to stay

competitive in the marketplace (SME “Annual Report”, 2014/2015). Through support from the

Government, many SMEs are now able to upgrade their skill sets which then improve

effectiveness and productivity of the firm. Efficiency and organizational effectiveness, improve

corporate image which then increase corporate reputation in total.

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2.2.5 Social and Environmental Responsibility

Although CSR is considered new in Malaysia but most organizations, including SMEs have

indirectly engaged in CSR practices long time ago. A research conducted by Hasnah Haron et al

(2015) states that SMEs in Malaysia start socially responsible with their own employees before

with other stakeholders 1) suppliers, 2) shareholders, 3) environment, 4) community 5)

customers (Freeman et al 2010). Today, CSR has become one of the most important agenda in

every business with respect to reputation building. The objectives of CSR include safeguard, and

ensure the company’s reputation is increasing among its stakeholders (Witte and Reinicke,

2005).

In Malaysia context, publicity of social responsibility among SMEs is relatively low.

Thanks to government agencies, NGOs and local newspapers for organizing campaigns and

recognition award for SMEs companies that have made an impact in CSR development. Among

others, awards like STAR Business Award (SOBA) organized by Star Publication (M) Berhad

(CSR Award) (Figure 2.3), SME Recognition Award from SMI Association of Malaysia (The

SME Social Responsibility Excellence Award) and many more (The Star, “SOBA” 2014). Such

campaigns and awards have indeed promoted CSR development in Malaysia and at the same

time recognize the contribution of participants to the society and the environment.

According to Murray (2003), through CSR practices, it increases corporate image and

brand awareness of the firm for long term success. Ultimately, this will increase corporate

reputation among stakeholders. Although most SMEs in Malaysia practice small-scaled CSR

activities like visiting Old Folks Homes, Orphanages and organizing blood donation campaign,

the efforts are still counted as “Doing Good to Do Well” (Vogel, 2005). Robert & Dowling

(2002) also suggested that an organization with a good reputation is also good at sustaining huge

profits in a long run.

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Figure 2.3 The Star SOBA (http://www.soba.com.my)

2.2.6 Financial Performance

Corporate reputation and company’s financial performance are directly correlated. Many

researchers including Robert & Dowling (2002), suggested that firms with a strong reputation

encourages shareholders to invest in the firm, it attracts good staff, improves sales, retains

customers, which in turns improve the overall financial performance of the firm. In 2014, Fosun

International Limited of Shanghai invested RMB210.5 million or approximately USD30 million

in Secret Recipe Malaysia and become the second largest shareholder in the company (Fosun,

2014).

For the past decade, the company has demonstrated good financial performance record and

the new investment deal will be used for business expansion and growth in China. Together with

a reputation of largest café chain in Malaysia and presence in ten countries in Asia region, the

investor is optimistic the firm will do well in China as well. For the firm, the investment deal is

seen as a big opportunity for the firm to penetrate large market like China as well as it

strengthens the financial status of the company.

In terms of human capital resources, organizations with strong financial performance

attracts good staff. Secret Recipe from a different angle, attracts new franchisee to venture the

franchise business. Public or potential franchisee sees good prospect of the business and they are

eager to be the next successful business owner. In a different perspective as reported in the SME

annual report (2014/2015), baby business particularly cloth diaper business is booming.

Conventional diapers are very expensive, with the introduction of cloth diapers for RM50 a piece

which can last for six years has attracted more people to join and support the company which

now has nice retail outlets. The firm may not be at par with Secret Recipe yet, but stakeholders

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http://www.soba.com.my/


believe and perceive this business has very strong potential. Under financial performance

dimension, it covers many factors and also can be viewed from different angles as briefly

discussed above.

2.3 Conclusion

The RQ concept as developed by Fombrun & Van Riel (2004), is an important baseline for

managing reputation and identifying new market risks, measures companies’ reputation strengths

based on stakeholder perceptions across attributes that classified into six corporate reputation

dimensions. Among the six dimensions, emotional appeal is known to be the primary driver

for corporate reputation in many industries. Apart from corporate image and identity discussed in

Secret Recipe’s logo that create emotional bond, studies reveal some other emotional appeal

factors like “trust” and “respect” increase the overall corporate reputation.

Although many researchers agree that CSR is good for corporate reputation building,

some researchers argue and against the idea of taking part in CSR activities. Milton Friedman

(1970) argues that the ultimate goal of an organization is to maximize profit and leave social

responsibilities to local authorities like government agencies, NGOs and so forth. However, how

business leaders perceive the rationale of contributing in CSR nowadays have changed the

landscape. Corporations have joined the efforts by the government to be socially responsible as

well.

In summary, every corporation regardless of size must continuously build their own

reputation. Reputation building starts from the inside of the company - employees, corporate

culture, internal processes, communication, leaders, behavior and so on. From the discussion, we

may conclude that reputation is an intangible asset that affects the overall company’s situation. It

has powerful influence that can help or hinder a company competing with its rivals.

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