AMJ-2005- Summary and Resp

8/8/2019 AMJ-2005- Summary and Resp

1/18

BEING GOOD OR BEING KNOWN:AN EMPIRICAL EXAMINATION OF THE DIMENSIONS,

ANTECEDENTS, AND CONSEQUENCES OF ORGANIZATIONALREPUTATION

VIOLINA P. RINDOVAIAN O. WILLIAMSON

ANTOANETA P. PETKOVAUniversity of Maryland

JOY MARIE SEVERHarris Interactive

We examined the extent to which organizations reputations encompass differenttypes of stakeholders perceptions, which may have differential effects on economicoutcomes. Specifically, we propose that reputation consists of two dimensions: (1)stakeholders perceptions of an organization as able to produce quality goods and(2) organizations prominence in the minds of stakeholders. We empirically exam-

ined the distinct antecedents and consequences of these two dimensions of repu-tation in the context of U.S. business schools. Results suggest that prominence,which derives from the choices of influential third parties vis-a-vis an organization,contributes significantly to the price premium associated with having a favorablereputation.

The concept of reputation, defined as stake-holders perceptions about an organizations abil-ity to create value relative to competitors, hasreceived considerable attention from organiza-tional scholars (Deephouse, 2000; Elsbach &Kramer, 1996; Fombrun & Shanley, 1990; Fom-

brun, 1996; Hall, 1992, 1993; Martins, 1998).Reputation is viewed as a valuable intangibleasset that provides a firm with sustainable com-petitive advantages (Barney, 1991; Hall, 1992)

because it influences stakeholders economicchoices vis-a-vis the organization (Benjamin &Podolny, 1999; Dollinger, Golden, & Saxton,1997; Deephouse, 2000) and contributes to differ-ences in organizational performance. Indeed, nu-merous studies have documented a positive rela-tionship between a firms reputation and itsfinancial performance (Fombrun & Shanley,

1990; Podolny, 1993; Roberts & Dowling, 2002).

Whereas this research has demonstrated unam-biguously that a favorable organizational reputa-tion is associated with economic benefits, it of-fers a less clear picture of what reputationactually is and how it is formed. A review ofextant research on organizational reputation inmanagement, economics, sociology, and market-ing reveals that two schools of thought inform theconstructs definition. Scholars studying reputa-tion from an economics perspective tend to de-fine it as the observers expectations or estima-tions of a particular attribute of an organization(Milgrom & Roberts, 1986; Weigelt & Camerer,1988), especially the organizations ability to pro-duce quality products (Milgrom & Roberts, 1986;Shapiro, 1983). According to this perspective,reputation forms on the basis of past actions,through which firms signal to stakeholders theirtrue attributes (Clark & Montgomery, 1998;Weigelt & Camerer, 1988).

A different perspective is presented by scholarswho draw on institutional theory to understandreputation (Rao, 1994). These scholars tend to char-acterize it as a global impression, which representshow a collectivea stakeholder group or multiplestakeholder groupsperceive a firm (Fombrun,1996; Hall, 1992; Rao, 1994). According to thisperspective, reputation forms as a result of infor-mation exchanges and social influence among var-

We would like to thank Associate Editor MarshallSchminke and three anonymous reviewers for their help-ful comments. This paper has also benefited from thecomments of Dax Basdeo, Daniel Cable, Anil Gupta,Sophia Marinova, Luis Martins, Tim Pollock, Ken Smith,Cynthia Stevens, Marvin Washington, and the partici-pants in the Guest Speaker Series at the R. H. SmithSchool of Business. Special thanks to Oliver Friedmanfor help with the empirical analysis.

Academy of Management Journal

2005, Vol. 48, No. 6, 10331049.

1033


2/18

ious actors interacting in an organizational field(Rao, 1994; Rindova & Fombrun, 1999).1

The different ways in which scholars workingfrom economics or institutional perspectives viewreputation suggest that research on this topic can beadvanced by greater integration of the conceptual-ization of the construct. In this article, we integrate

these two perspectives by proposing that they rep-resent two distinct dimensions of reputation. Theeconomics perspective addresses how stakeholdersevaluate a particular organizational attribute; there-fore, it emphasizes the perceived qualitydimensionof organizational reputation. In contrast, the insti-tutional perspective is concerned with the collec-tive awareness and recognition that an organizationhas accumulated in its organizational field; there-fore, it emphasizes the prominence dimension oforganizational reputation. Conceptualizing organi-zational reputation as consisting of two interrelated

but distinct dimensions advances reputation re-search by providing greater conceptual clarityabout what reputation is, how it is built, and how itinfluences organizational economic outcomes.

Drawing on work conducted from both the eco-nomics and institutional perspectives, we developand test a model of the antecedents and conse-quences of these two dimensions of organizationalreputation. We propose that perceived quality isinfluenced by the signals that organizations sendwhen they make strategic choices about the re-sources deployed in producing products and ser-vices. Conversely, prominence is influenced by the

choices that influential third parties, such as insti-tutional intermediaries and high-status actors,make vis-a-vis organizations (Deephouse, 2000;Pollock & Rindova, 2003; Rao, 1994; Stuart, 2000).

In addition, our study advances reputation re-search by examining several alternative modelsthat specify different sets of relationships amongthe antecedents and consequences of reputation.The development and testing of such alternativemodels is important because scholars have arguedthat the creation of reputation is causally ambigu-ous (Barney, 1991). By comparing the alternative

models to the hypothesized model, we providegreater theoretical clarity about how reputation isbuilt.

We empirically investigated these relationshipsin the context of U.S. business schools with full-

time MBA programs. We focused on the effect ofbusiness schools reputations on corporate recruit-ers, who seek to reduce uncertainty about the qual-ity of business school graduates as potential em-ployees. Because the quality of MBA graduates isdifficult to evaluate a priori, business schools rep-utations are likely to strongly influence recruiters

demand for MBA graduates. Therefore, the contextof our study is particularly appropriate for examin-ing the dimensions, antecedents, and consequencesof reputation.

THEORY AND HYPOTHESES

Perspectives on Organizational Reputation

Organizational scholars studying reputation rec-ognize that reputation is valuable because it re-duces the uncertainty stakeholders face in evaluat-ing firms as potential suppliers of needed productsand services (Benjamin & Podolny, 1999; Weigelt &Camerer, 1988). Scholars working from differenttheoretical perspectives, however, differ in theirexplanations of how reputation reduces stake-holder uncertainty. Those studying reputation froman economics perspective view uncertainty as afunction of the information asymmetries betweencompeting firms and their stakeholders. Firms re-duce information asymmetries, and thus marketuncertainty, when they make choices that revealtheir true attributes. Such choices serve as sig-nals that enable buyers to assess relevant firm at-

tributes, such as whether a firm is a producer ofhigh- or low-quality goods (Fombrun & Shanley,1990; Shapiro, 1983). Therefore, from an econom-ics perspective, reputation reduces stakeholdersconcerns about the quality of firms products, thus,inducing them to pay price premiums for firmsproducts, which in turn positively influences or-ganizations economic outcomes (Shapiro, 1982,1983).

Scholars that embrace an institutional perspec-tive on reputation maintain that the uncertaintyabout the true attributes of firms is reduced

through the exchange of information among diverseactors in an organizational field. In an organization-al field, they argue, certain actors, such as institu-tional intermediaries and high-status actors, havesuperior ability to access or disseminate informa-tion by virtue of their institutional roles or struc-tural positions (Rao, 1998; Rao, Greve, & Davis,2001). Stakeholders closely watch the choices ofsuch actors because of their perceived superiorityin evaluating firms (Rao, 1998; Stuart, 2000). As aresult, the actions of these actors introduce system-atic disparities in the availability of information

1 Organizational field is defined as a set of actors that,in the aggregate, constitute a recognized domain of or-ganizational life, such as suppliers, consumers, regula-tory agencies, and other organizations that produce sim-ilar services or products (DiMaggio & Powell, 1983).

1034 DecemberAcademy of Management Journal


3/18

about different organizations, thereby making somemore salient and central in the public mind (Rao etal., 2001; Zuckerman, 1999). For example, Pollockand Rindova (2003) showed that the volume ofmedia coverage a firm receives is positively relatedto the performance of its initial public offering(IPO). Similarly, Zuckerman (1999) showed that

whether or not a particular analyst covers a firmaffects how investors value it. Overall, the informa-tion conveyed through the choices of influentialthird parties vis-a-vis organizations decouples thereputation-building process from the strategic sig-nals of competing firms (Rao, 1994) and makessome firms more prominent in their organizationalfields (Rindova & Fombrun, 1999; Stuart, Hoang, &Hybels, 1999). The institutional perspective, there-fore, suggests that the extent to which an organiza-tion is widely recognized among stakeholders in itsorganizational field, and the extent to which itstands out relative to competitors, may be an im-portant dimension of organizational reputation.

These two perspectives on organizational repu-tation have shaped the definitions of the constructin the fields of management, economics, sociology,and marketing. Reviewing over 60 studies using theconstruct of organizational reputation in thesefields, we observed that scholars tend to definereputation either as specific assessments of a rele-vant attribute (e.g. ability to produce quality), as theeconomics perspective suggests, or as collectiveknowledge about and recognition of a firm, as theinstitutional perspective suggests. Table 1 summa-

rizes the definitions of reputation across these stud-ies, highlighting which perspective on reputationthey espouse in column 3.

Comparing the similarities and differences in thedefinitions of reputation in extant research, we pro-pose that organizational reputation can be concep-tualized as comprising two dimensions: (1) a per-ceived quality dimension, which captures thedegree to which stakeholders evaluate an organiza-tion positively on a specific attribute, such as abil-ity to produce quality products, and (2) a promi-nence dimension, which captures the degree to

which an organization receives large-scale collec-tive recognition in its organizational field.These two dimensions of reputation are likely to

have different antecedents. Organizations strategicchoices regarding the resources used to producegoods and services are likely to influence percep-tions of quality because organizational strategicchoices convey information about organizationsunderlying capabilities to produce quality products(Barney, 1991; Moran & Ghoshal, 1999). In contrast,the choices of influential third partiessuch asinstitutional intermediaries and high-status actors,

whose attention to or affiliation with organizationsmay be seen as a form of endorsementare likely toinfluence prominence (Pollock & Rindova, 2003;Rao, 1998; Stuart, 2000). Figure 1 depicts the rela-tionships between (1) the resource signals emitted

by an organization and its perceived quality and (2)certifications from institutional intermediaries and

affiliation with high-status actors, and prominence.The model further suggests that perceived qualityimpacts prominence and that each dimension ofreputation directly influences an organizationseconomic payoffs.

Antecedents of Perceived Quality

To evaluate the quality they can expect from aprovider of goods, stakeholders rely on signals thatreveal the unobservable attributes that affect theability of a firm to produce quality products (Sha-piro, 1982, 1983). Although economists stress thatuncertainty about quality is a widespread and im-portant feature of markets for most firms goods andservices (Shapiro, 1982: 20), products and servicesdiffer in the amount of uncertainty about qualitythey present buyers with. The more difficult it is forcustomers to assess product quality prior to pur-chase, the more they are likely to rely on strategicsignals to form expectations about quality. In par-ticular, customers are likely to rely on signals ofquality when the products they are purchasing canonly be evaluated with use and over time, or re-quire high levels of specialized expertise to evalu-

ate. Examples of such products and services in-clude new production technologies, custom-builtinformation systems, and legal or management con-sulting. When customers find product quality dif-ficult to evaluate prior to purchase, they may usethe quality of inputs and/or the quality of the pro-ductive assets a firm uses to convert inputs intooutputs to form expectations about the quality ofthe final product.

The inputs an organization uses in its productionprocess can signal quality because they affect thequality of products (Barney, 1991; Moran &

Ghoshal, 1999). To provide stakeholders with reli-able signals of quality, the strategic choices of firmsmust be costly and unavailable to all competitors(Ippolito, 1990). The acquisition and use of high-quality inputs is costly and not common to allcompetitors (Barney, 1986; Ippolito, 1990; Shapiro,1983) and therefore can provide stakeholders withsignals that influence perceived quality. Intel In-side and Nutrasweetare examples of input brandsused by PC and soft-drink manufacturers, respec-tively, to signal the quality of their own products.Drawing on this logic, we hypothesize:

2005 1035Rindova, Williamson, Petkova, and Sever


4/18

Hypothesis 1. The higher the quality of the

inputs that an organization uses in its produc-tion or service delivery processes, the higher itsperceived product quality.

The quality of the productive assets of a firm, andespecially the quality of its knowledge assets, canalso be used as a signal of quality. For example,Rindova and Kotha (2001: 1269) reported that Ex-cite attempted to signal the quality of its Web sitecontent by introducing personality-driven re-views offered by a team of journalists who werenationally renowned experts in their areas. Simi-

larly, Audretsch and Stephan (1996) suggested that

top-notch scientists in biotechnology firms signalthe quality of the firms research capability to stake-holders. These arguments suggest that the qualityof the productive assets an organization uses willinfluence the perceived quality dimension of itsreputation. Therefore, we hypothesize:

Hypothesis 2. The higher the quality of theproductive assets that an organization uses inits production or service delivery processes, thehigher its perceived product quality.

TABLE 1Definitions of Reputation

Research Area Definition of ReputationType of Perceptions Equated

with Construct Examples of Studies

ManagementEconomics/game-theory

perspectiveAn attribute or a set of attributes

ascribed to a firm, inferredfrom the firms past actions

Assessments of a relevantattribute(s)

Weigelt & Camerer (1988)Hayward & Boeker (1998)Stuart (2000)

An observers impression of anactors disposition to behave ina certain manner


Clark & Montgomery (1998)

Institutionalperspective

Publics cumulative judgments offirms over time; a globalperception

Collective knowledge andrecognition

Fombrun & Shanley (1990)Roberts & Dowling (2002)

Stakeholders knowledge andemotional reactionsaffect,esteemtoward a firm


Hall (1992)Fombrun (1996)Deephouse (2000)

Marketing perspective Level of awareness that a firmhas been able to develop foritself and for its brands; fame


Hall (1992)Shamsie (2003)

Economics Consumers expectations and

beliefs about a firms productsquality

Assessments of a relevant

attribute(s)

Shapiro (1982, 1983)

Allen (1984)

A rivals perceptions about thelikelihood an incumbent willbehave in certain way


Kreps & Wilson (1982)Milgrom & Roberts (1982)

Sociology A prevailing collective agreementabout an actors attributes orachievement based on whatthe relevant public knowsabout the actor


Lang & Lang (1988)Camic (1992)

A characteristic or an attributeascribed to an actor on thebasis of its past actions


Raub & Weesie (1990)Kollock (1994)

Marketing Estimation of the consistencyover time of an attribute of an

entity


Herbig & Milewicz (1995)

Consumers impressions of acompany that is producing andselling a given product orbrand


Goldberg & Hartwick (1990)

Perceptions and beliefs about afirm based on previousinteractions


Campbell (1999)Prabhu & Stewart (2001)

Public esteem or high regard Collective knowledge andrecognition

Weiss, Anderson, & MacInnis(1999)



5/18

Antecedents of Prominence

Whereas the resource choices of organizationsconvey information that stakeholders can use tomake inferences about their abilities to producequality, the choices and opinions of third parties

vis-a-vis these organizations may influence theirprominence. This is because under conditions ofuncertainty individuals look to the opinions andchoices of others to make up their own minds (Rao,Davis, & Ward, 2000; Rao et al., 2001). As a result,the formation of public opinion tends to follow asocial influence logic, leading some organiza-tions to gain disproportionate amounts of publicattention and support on the basis of rather generaland nonspecific impressions and beliefs (Kuran &Sunstein, 1999). Such organizations become prom-inent within their organizational field and may be

preferred as suppliers of goods, even in the absenceof stakeholders specific judgments about their abil-ity to produce quality goods.

Two types of actorsinstitutional intermediariesand high-status actors (Kuran & Sunstein, 1999;Rao et al., 2001)are likely to have a particularlystrong influence on an organizations prominence.Institutional intermediaries are entities that spe-cialize in disseminating information about organi-zations or in evaluating their outputs (Fombrun,1996; Rao, 1998). By virtue of their specializationin collecting and disseminating information, insti-

tutional intermediaries are likely to be viewed ashaving superior access to information and/or ex-pertise in evaluating organizations (Rao, 1998).Further, the information and evaluations provided

by institutional intermediaries about an organiza-

tion tend to be distributed more broadly than theopinions of the average stakeholder. As a result,they are likely to have a high degree of influence onwhich organizations become prominent in theminds of stakeholders. Both general and expert in-termediaries may influence prominence. Generalintermediaries (e.g., the media) are those that pro-vide general information on a broad set of issues,while expert intermediaries (e.g., Moodys InvestorServices debt ratings) are those providing technicalevaluations and certifications that often requirespecialized expertise (Fombrun, 1996).

The media are a type of general intermediarywhose impact on stakeholders perceptions derivesprimarily from their ability to focus public atten-tion on the issues and entities that they select toreport on (Deephouse, 2000; Pollock & Rindova,2003). In recent years media organizations havealso begun to offer stakeholders direct evaluationsof organizations in the form of various rankings andratings. For example, Fortunes list AmericasMost Admired Corporations has become a widelymonitored measure of organizational reputation(Roberts & Dowling, 2002). Media rankings have

FIGURE 1Antecedents and Consequences of Organizational Reputation



6/18

also become an important factor in determining thereputations of business schools (Gioia & Corley,2002; Martins, 1998). Although the media oftenseek to position their rankings as evaluations ofquality, empirical tests of such rankings show thatthey tend to be rather noisy and inconsistent indi-cators of quality (Dichev, 1999). This finding is not

surprising given that ratings and rankings collapsethe diverse and complex information necessary toevaluate organizational quality into a single num-

ber. However, it is precisely this synoptic nature ofrankings that may cause them to have a strongimpact on an organizations prominence. By offer-ing ready-made evaluations of organizations rela-tive standings, media rankings reduce stakehold-ers need to evaluate the attributes and quality of anorganization directly (Rindova & Fombrun, 1999).As a result, stakeholders can use media rankings asan overall indicator of whether an organization isamong the top in its industry. Therefore, we hy-pothesize:

Hypothesis 3. The higher an organizations po-sition in media rankings, the greater its prom-inence in the minds of stakeholders.

Expert intermediaries are also likely to impactthe prominence of organizations. Although someexpert intermediaries do offer direct evaluations ofproduct quality (e.g., Consumer Reports), manymore are likely to impact the prominence of organ-izations by certifying their level of achievementrelative to explicit or implicit standards of excel-

lence in a given field. Since expert intermediariessubject organizations to rigorous scrutiny using thespecialized knowledge that is necessary to evaluatethe more complex aspects of organizational opera-tions and outputs, few organizations receive suchcertifications from expert intermediaries, and thosethat do tend to stand out among their industrycompetitors. For example, the Baldrige award andISO 9000 status certify a level of quality achieve-ment in business as determined by third-party pan-els of experts. In the field of science, publicationsin premier scholarly journals certify the degree to

which scientists produce knowledge that is novel,objective, and cumulative and therefore, satisfiesthe institutional norms associated with modernscience (Clemens, Powell, McIlwaine, & Oka-moto, 1995; Merton, 1972). Because of the rigor-ous scrutiny to which expert intermediaries sub-ject scientific research, very few scientistsreceive such certification. Receiving certificationof achievement from expert intermediaries in-creases the visibility of the few organizations thatmeet the standards of expert intermediaries,causing stakeholders to view these organizations

as being among the top in their industry. There-fore, we hypothesize:

Hypothesis 4. The greater the extent to whichexpert intermediaries provide an organizationwith certifications of achievement, the greaterits prominence in the minds of stakeholders.

Affiliation with high-status actors may also in-crease organizational prominence. Affiliation withhigh-status actors increases prominence becausesuch affiliation enables stakeholders to assume thatthe high-status actors, who are believed to be wellinformed, have evaluated the organization posi-tively (Stuart, 2000). High-status actors themselvestend to garner a disproportionate amount of atten-tion within their organizational fields (Rao et al.,2000). As a result, affiliation with them may gener-ate positive spillover effects (Stuart et al., 1999),such as basking in reflected glory, which refers

to the transfer of a positive evaluation from onesocial object to another (Cialdini, Borden, Thorne,Walker, Freeman, & Sloan, 1976). Thus, ties tohigh-status actors are likely to enhance the promi-nence of an organization, leading us to hypothesize:

Hypothesis 5. The greater the extent of an or-ganizations affiliation with high-status actors,the greater its prominence in the minds ofstakeholders.

The Relationship between Perceived Quality andProminence

In the preceding sections we have argued thatperceived quality and prominence are two distinctdimensions of organizational reputation that alsohave different antecedents. These two dimensions,however, are likely to be related because they re-flect a common stakeholder concern with identify-ing providers of high-quality goods. The promi-nence dimension of reputation reflects the degreeto which opinions about an organizations ability toproduce quality and create value are disseminatedamong its stakeholders. Opinions about an organi-

zation disseminate throughout its organizationalfield not only through the actions and choices ofintermediaries, but also through the purchasing be-haviors and opinion statements of various stake-holders themselves (Nayyar, 1990; Rogerson, 1983).As a result, organizations that customers perceiveas having high quality are likely to be mentioned orpatronized more frequently, leading more custom-ers to choose them in the future. The aggregate ofthese choices makes such organizations morewidely recognized within their organizational field(Kuran & Sunstein, 1999). Therefore, customer per-



7/18

ceptions of quality can contribute to an increase inan organizations prominence, leading us to hy-pothesize:

Hypothesis 6. The higher the perceived prod-uct quality of an organization, the greater itsprominence in the minds of stakeholders.

Reputation and Price Premium

Because reputation reduces stakeholder uncer-tainty about the value of future exchanges, favor-able reputation can induce buyers to pay a pricepremium (Rao & Monroe, 1996; Shapiro, 1983). Aswe argued earlier, both prominence and perceivedquality reduce buyers uncertainty, but they do sothrough different mechanisms. Perceived quality islikely to have a positive effect on the prices thatcustomers are willing to pay because it increasestheir confidence in the quality of an organizations

goods. Higher prices serve as an assurance that aproducer organization has no incentives to increaseits profits by reducing investments that lead toquality products (Shapiro, 1983). According to Sha-piro, the price premium that producers with repu-tations for quality can charge can be viewed eitheras a return on reputation or as an incentive pay-ment to induce quality maintenance (1983: 661).Thus, on the basis of extant theory, we predict thatperceived quality is associated with higher pricepremiums.

Hypothesis 7. The higher the perceived prod-

uct quality of an organization, the higher theprice premiums associated with its products.

Prominence reduces stakeholder uncertaintythrough social proof (Rao et al., 2000, 2001), be-cause it reflects the collective recognition of anorganization in its organizational field. When mak-ing economic choices, stakeholders are likely tofavor prominent organizations because prominencereflects the majority vote, which can providesome assurance to both buyers and others evaluat-ing the buyers choices (Kuran & Sunstein, 1999;Rindova & Fombrun, 1999). For example, buyers

may be willing to pay premium prices for the prod-ucts of prominent organizations because acquiringsuch products can enhance their image with theirown customers (Podolny, 1994). In addition, prom-inence may lead to a higher price premium bysimply increasing the number of people bidding forthe goods an organization produces. Therefore, wehypothesize:

Hypothesis 8. The greater the prominence ofan organization, the higher the price premiumsassociated with its products.

METHODS

Sample and Data Collection

The sample used for this study included 107 U.S.business schools rated by 1,600 corporate recruiterswho completed an online survey about businessschool reputations administered by Harris Interac-

tive in 2000. The sample was generated from the344 schools accredited as of March 2000 by theInternational Association for Management Educa-tion. Small schools (those with fewer than 50 full-time MBA graduates in their class of 2000) wereeliminated because such organizations have beenshown to have goals and resource constraints thatdiffer from those of larger organizations (Aldrich,2000). This criterion produced an initial sample of188 schools that were asked to provide names andcontact information for corporate recruiters thathad recruited from them. Recruiters were contacted

by e-mail and regular mail and invited to partici-pate in the online survey. On the survey recruiterswere asked to rate up to three MBA programs and toselect schools that they had either recruited from,had some interaction with, or had some degree offamiliarity with. Of the recruiters who completedthe survey, more than 80 percent had hired stu-dents from and/or had contacts with the schoolsthey rated in the previous two years, suggestingthere had been sufficient opportunity for them todevelop perceptions about these schools (Clark &Montgomery, 1998). Although business schoolsprovided the contact information and/or contacted

the recruiters directly, they had no control overwhich schools a recruiter nominated. The nomina-tion procedure produced recruiter ratings for 107

business schools, which constituted the final sam-ple for this study.

Dependent Variables

Measures of reputation. One shortcoming of ex-tant reputation research is that organizational rep-utation is seldom measured directly. It is common

for researchers to infer the unobservable effects ofreputation by examining direct relationships be-tween observable organizational attributes or third-party actions and organizational performance out-comes (e.g., Rao, 1994; Shamsie, 2003; Stuart,2000). In order to understand how reputation cre-ates value, however, one needs to examine the spe-cific effects of the different aspects of stakeholderperceptions that make up reputation. In this study,we overcame limitations of previous research bydeveloping direct measures of the two dimensionsof organizational reputation.



8/18

Prominence. Prominence was measured by thenumber of recruiters that nominated a given school.Recall that recruiters were invited to select threeschools they would like to rate. We reasoned thatsince corporate recruiters are bounded by both cog-nitive and time constraints (Fiske & Taylor, 1991),they were likely to choose to rate those schools that

were most prominent in their minds. Regardless ofthe individual reasons that led each recruiter toselect a particular school, across the 1,600 recruit-ers who completed the survey, this nominationprocedure captured the relative prominence of

business schools among corporate recruiters as astakeholder group. The prominence measure de-rived through this nomination procedure is theonly measure of reputation that we are aware ofthat captures the collective-level properties of rep-utation (Rao, 1994) and allows for the distinction

between prominence and quality evaluations astwo distinct dimensions.

Perceived quality. Perceived quality was mea-sured, on a scale of 1 to 10, as the average ofrecruiters ratings of a school on 13 attributes re-lated to student quality (see Appendix A for a list ofthe attributes). The Cronbachs alpha for the mea-sure of perceived quality was .98. Because the unitof analysis for this study was the organization, theperceived quality score for each school was calcu-lated as the average of the individual scores of allrecruiters who rated that school. Ninety-twoschools were ranked by more than one recruiter.Across the schools with multiple raters (two or

more), the mean interrater agreement (rwg) for the13 attribute items was .95, suggesting a high level ofsimilarity in recruiters perceptions of eachschools quality.

Price premium. Price premium was measured bythe mean starting base salary, not including bo-nuses or other benefits, received by each schoolsMBA graduates in 2000, as reported in U.S. News &World Report (2001).2 This is an objective measureof recruiters economic choices vis-a-vis differentschools. This measure was adjusted for cost-of-liv-ing differences among geographic regions by mul-

tiplying each schools mean starting base salary bythe U.S. Department of Commerce Census Bureaus(2000) cost-of-living index score for that schoolsgeographic region.

Independent Variables

Quality of inputs. In the educational process ofan MBA program, incoming students constitute themajor resource input (DAveni, 1996). Schools ap-plication of different admission criteria leads todifferences in the quality of inputs for their educa-tional processes (DAveni, 1996). One of the main

admission criteria is applicants scores on stan-dardized scholastic aptitude tests, such as theGMAT. Therefore, we measured quality of inputsas the average GMAT scores of students enteringMBA programs in 1998 and 1999, as reported inU.S. News & World Report.

Quality of productive assets. The main produc-tive asset employed in the educational process of a

business school is its faculty (Trieschmann, Den-nis, Northcraft, & Niemi, 2000). Faculty embody theknowledge that is transferred to students in theeducational process (Feldman, 1987). Therefore,

the more knowledgeable faculty are, the greatertheir value as a productive asset. Job experience has

been identified as an important source of knowl-edge acquisition and development of the embeddedrelationships and routines that enable individualsto better perform job tasks such as teaching (Qui-nones, Ford, & Teachout, 1995; Tierney & Farmer,2002). Thus, although faculty quality has many dif-ferent facets, it is logical to expect that academicexperience will be positively related to the abilityof faculty to convey the knowledge they have ac-quired to students. Based on this logic, we mea-

sured the quality of productive assets as the averagenumber of years of academic experience possessed

by a business schools faculty. To compute thismeasure for each school, we generated a data set ofover 9,000 full-time faculty employed in the 107

business schools in our sample. The average levelof academic experience for each school was calcu-lated as the average number of years prior to 2000that had elapsed since the members of the full-timefaculty employed by a business school had re-ceived their Ph.D. degrees.

Media rankings. A business schools rank in

BusinessWeeks 1998 rankings was used to measuremedia rankings. We used the BusinessWeek rank-ing because it is the oldest and best-establishedranking of U.S. business schools and has been used

by multiple prior studies (DAveni, 1996; Elsbach &Kramer, 1996; Martins, 1998; Segev, Raveh, & Far-joun, 1999). In addition, the BusinessWeek rank-ings were more appropriate for our study thenthose published in other media sources, such asthe Financial Times or U.S. News & World Report,

because the latter include observable organization-al attributes and economic outcomes (such as

2 Prior research has considered U.S. News & WorldReport a reliable source of data about U.S. businessschools, since the Association to Advance CollegiateSchools of Business (AACSB) approves the data theperiodical reports (Trieschmann, Dennis, Northcraft, &Niemi, 2000).



9/18

starting salary).3 We used the 1998 BusinessWeekrankings because this was the most recent BusinessWeek listing at the time the recruiters completedthe survey. For the ranked schools, we used theiractual position (e.g., first, second, third), and weassigned a constant to the unranked schools.

Expert intermediary certifications. Publications

in premier scholarly journals certify that a facultysresearch satisfies the institutional norms of modernscience (Clemens et al., 1995; Merton, 1972). Wemeasured faculty publications in premier journalsas the sum of the total number of publications ofthe faculty of a business school over the five years(19962000) prior to the survey. We captured fac-ulty publications in two forms: (1) research publi-cations in premier research journals and (2) publi-cations in well-established practitioner journals(see Appendix B for a full list of journals). The listused by Financial Times and agreed upon byAACSB member schools was used in selecting rel-evant journals.4 We calculated the number of fac-ulty publications in research and practitioner jour-nals for each school by adding all the publicationsauthored by the faculty members at a particularschool.

Affiliation with high-status actors. Facultiesdoctorates from prestigious universities providethe business schools that employ them with anindirect affiliation with these universities. Obtain-ing a degree from a prestigious academic institutionenables faculty to accumulate scholastic, social,and symbolic capital and to gain access to profes-

sional opportunities not available to others (Keith &Babchuk, 1998; Long, Bowers, Barnett, & White,1998). The symbolic capital associated with degreeprestige can also transfer to the business schoolemploying the degree holder (Zuckerman, 1988).To compute this measure for each school, we usedthe Gourman Report (Gourman, 1997) to assign aPh.D. degree-prestige score to each professor em-ployed by a given school and then creating a schoolscore by averaging the individual faculty scores.This procedure produced a single continuous scoreranging from 0 to 5 for each school. The Gourman

Report has been well established as a measure of

the prestige of academic institutions in past re-search (Cable & Murray, 1999; Williamson & Cable,2003), and it is considered the only numerical rat-ing of the prestige of virtually every university inthe United States.

ANALYSIS AND RESULTS

Analysis

To simultaneously test the proposed relation-ships in our model, we used measured variablepath analysis in LISREL 8.53 (Joreskog & Sorbom,2001), which allows researchers to simultaneouslyexamine a series of dependence relationships, suchas those hypothesized in our model, while alsoanalyzing multiple dependent variables (Shook,Ketchen, Hult, & Kacmar, 2004). LISREL provides

both an overall assessment of the fit of a hypothe-sized path model to data and tests of individual

hypotheses. This statistical technique also allowedus to compare the fit of alternative models to that ofthe hypothesized model.

The hypothesized model, which is depicted inFigure 1, consisted of five exogenous variables andthree endogenous variables. Each variable wasmodeled as a single indicator and assumed to con-tain no measurement error with the exception ofthe perceived quality variable, which was mea-sured using a Likert-type survey instrument, thusallowing for the calculation of a reliability coeffi-cient. Following the procedures recommended by

James, Mulaik, and Brett (1982), we controlled formeasurement error in perceived quality by settingthe variables error term equal to its variance mul-tiplied by one minus its Cronbach alpha score (.98)and setting the variables lambda matrix valueequal to the square root of its Cronbach alpha score.Prior research suggested that faculty degree pres-tige, publications in premier journals, media rank-ings, and GMAT scores were likely to be intercor-related (DAveni, 1996; Trieschmann et al., 2000).Thus, these exogenous variables were allowed tocovary in the estimation of the model.

Results

The means, standard deviations, and correlationsamong all variables are presented in Table 2. Wecomputed these correlations via a fully saturatedLISREL model. We assessed overall fit of the modelto the data using chi-square and the goodness-of-fit,normed fit, comparative fit, and incremental fit in-dexes (the GFI, NFI, CFI, and IFI). The chi-squarestatistic is well known to be oversensitive to sam-ple size; it will be significant in large samples (sug-

3 In 2000 BusinessWeekintroduced as a component oftheir rankings a measure of intellectual capital basedon faculty publications (BusinessWeek, 2000: 89). How-ever, this component was not a part of the criteria duringthe time of our study.

4 Feedback from colleagues with expertise in humanresources led to our adding Personnel Psychology to theoriginal list of journals developed by Financial Timesand removing Human Resource Management and theInternational Journal of Human Resource Development.



10/18

gesting inadequate model fit) even when the differ-ences between observed and model-impliedcovariances are slight (Kline, 1998). Researchersrecommend evaluating model fit by using a rule of

thumb whereby the model chi-square value di-vided by degrees of freedom is lower than 3 (Kline,1998). Fit indexes at or above .90 further indicateacceptable fit (Medsker, Williams, & Holahan,1994). Our results with all these tests supported theconclusion that the hypothesized model had ade-quate fit to the data (2[14, n 107] 30.36, p .05; 2/df 2.17; GFI .93, NFI .95, CFI .98,IFI .98).

Figure 2 contains the maximum-likelihood pa-rameter estimates for the main predictors, signifi-cance levels, and proportions of explained variance

(R2s) for the hypothesized model.5 First, we discussthe results for the hypothesized predictors of busi-ness schools reputations. In terms of the effects ofresource signals on perceived quality, supporting

Hypothesis 1, student GMAT scores were statisti-cally significant, positive predictors of perceivedquality ( .33). Hypothesis 2 predicts that theaverage years of academic experience of a businessschools faculty has a positive relationship withperceived quality. However, faculty experiencewas not significantly related to perceived quality.

5 The R2s presented in the model are equivalent to oneminus the disturbance for each endogenous variable andreflect the proportion of explained variance (Kline,1998).

TABLE 2Correlations and Descriptive Statisticsa

Variable Mean s.d. 1 2 3 4 5 6 7

1. Price premium 61,449.29 15,827.662. Perceived quality 7.70 1.13 .22*3. Prominence 21.35 24.97 .60* .32*4. GMAT scores 614.76 46.16 .50* .33* .70*5. Faculty experience 16.34 2.35 .17 .07 .17 .20*6. Media rankings 49.02 20.29 .38* .21* .79* .67* .047. Publications in premier journals 62.81 62.50 .39* .17 .71* .71* .03 .76*8. Faculty degree prestige 4.34 0.29 .49* .31* .68* .73* .04 .66* .69*

a n 107.* p .05

FIGURE 2Path Coefficients for the Hypothesized Model



11/18

In terms of the effects of institutional intermediar-ies on prominence, supporting Hypothesis 3, mediarankings significantly predicted prominence (.51). Because we used the actual ranks in our dataset (e.g., first, second, third), the negative coeffi-cient should be interpreted to mean that businessschools that had higher ranks were more prominent

than business schools that had lower ranks. Aspredicted by Hypothesis 4, faculty publications inpremier journals were significant, positive predic-tors of prominence ( .17). Finally, as predicted

by Hypothesis 5, faculty degree prestige was signif-icantly, positively related to prominence ( .18).

Next, we present the results for the hypothesizedeffects of perceived quality on prominence and ofthe two reputation dimensions on price premium.The path from perceived quality to prominencewas positive and significant ( .13), supportingHypothesis 6. Perceived quality was not signifi-

cantly related to price premium; thus, Hypothesis 7was not supported. Last, as predicted by Hypothe-sis 8, prominence had a significant, positive rela-tionship with price premium ( .59).

Given that the goal of our study was to examinethe system of relationships between the anteced-ents, dimensions, and consequences of businessschools reputations, it is informative to examinethe total (direct plus indirect) effects of the hypoth-esized predictors on perceived quality, promi-nence, and price premium. Prominence had thelargest significant effect on price premium (.59).

Media rankings had the largest significant effect onprominence (.51), as well as a significant totaleffect on price premium (.30). Publications inpremier journals had a significant total effect onprominence (.17), but no significant total effect onprice premium. Faculty degree prestige had a sta-tistically significant total effect on prominence(.18) and a statistically significant total effect onprice premium (.11). Perceived quality did not havea significant total effect on price premium, al-though it did have a significant direct effect onprominence. These findings suggest that in terms of

MBA salaries, business schools may benefit morefrom overall stakeholder recognition than from re-cruiters direct perceptions of student quality; oneshould keep in mind, however, that perceived qual-ity and recognition are positively related. Neitherof the resource signals we examined (GMAT orfaculty experience) had significant total effects onprice premium; however, GMAT scores had a sig-nificant effect on perceived quality (.33), suggestingthat the quality of the students schools admit influ-ences recruiters perceptions of quality.

Alternative Model Evaluation

Both Medsker and colleagues (1994) and Hayduk(1987) recommended evaluating a hypothesizedmodel relative to plausible alternative models. Inthe present study, four alternative models appearedto present logical alternatives to the hypothesizedsystem of relationships. First, we predicted that

organizational resource signals would influenceperceived quality and that third-party certificationsand affiliation with high-status actors would influ-ence prominence. However, it is conceivable thatorganizational signals and third-party factors influ-ence both perceived quality and prominence (Ben-jamin & Podolny, 1999). We tested this alternativemodel 1 by adding links from GMAT and facultyexperience to prominence and adding links frommedia rankings, faculty publications, and facultydegree prestige to perceived quality. Second, in thehypothesized model, organizational and third-

party effects are predicted to influence price pre-mium only indirectly, through their effects on thetwo dimensions of reputation. However, reputationmay only partially mediate these relationships, inthat a firms resource signals and institutional fac-tors may influence price premium directly. Wetested this alternative model 2 by adding directlinks from all five exogenous variables to pricepremium.

Third, in the hypothesized model, we predictthat perceived quality influences prominence.However, the sociological view of reputation sug-

gests that it is also possible that high-status actorsand institutional intermediaries set the tone of theevaluations that other stakeholders make (Rindova& Fombrun, 1999). Once these collective processesare set in motion, more prominent organizationsmay be perceived as having higher quality (Kuran &Sunstein, 1999). We tested this alternative model 3

by reversing the link between perceived qualityand prominence so that prominence predicted per-ceived quality.

Fourth, one can argue that access to high-qualityresources and influential third parties, such as the

media and the premier journals, is influenced bythe prestige of the university with which a businessschool is affiliated (Keith & Babchuk, 1998). There-fore, the prestige of a business schools universitymay affect both organizational and third-partychoices and indirectly influence the reputation andprice premiums the business school enjoys(DAveni, 1996). To test this alternative model 4,we added university prestige (as measured by theuniversity-level Gourman score) as a variable di-rectly influencing business school MBA studentGMAT scores, faculty academic experience, media



12/18

rankings, publications in premier journals, and fac-ulty degree prestige. All other aspects of the hy-pothesized model remained unchanged.

We used the criteria suggested by James et al.(1982) to compare alternative models 1 and 2 to thehypothesized model because they are nested mod-els. In this procedure, a significant reduction in

chi-square suggests an improvement in the fit to thedata. For alternative model 1, the decrease in chi-square from the hypothesized model to alternativemodel 1 was not significant (2[5] 10.91, p .05). Thus, alternative model 1 is less parsimonious

because it adds more parameters to be estimatedand does not fit the data significantly better. Chi-square difference tests contrasting the second alter-native model and the hypothesized model also re-vealed an insignificant decrease (2[5] 10.93,p .05), suggesting that the fit of alternative model2 to the data was not better than the fit of thehypothesized model.

Alternative models 3 and 4 were not nested inour hypothesized model. Thus, following Klines(1998) recommendations, to determine whetherthese alternative models fitted the data better thanthe hypothesized model, we compared the Akaikeinformation criterion (AIC) scores of each alterna-tive model to the AIC score of the hypothesizedmodel. Kline (1998) suggested that given two non-nested models, the one with the lower AIC scorerepresents the better fit. The AIC scores for alterna-tive models 3 and 4 (78.83 and 260.76, respec-tively) were both higher than the AIC of the hypoth-

esized model (75.69). Thus, we concluded that thehypothesized model was superior to the alternativemodels we examined.

DISCUSSION AND CONCLUSIONS

In this article, we examine two questions that areseldom addressed by reputation researchers but areat the heart of the reputation construct: What fac-tors shape stakeholder perceptions of organiza-tions, and how do different aspects of stakeholderperceptions influence the economic payoffs to or-

ganizations? We have addressed these questions byproposing that organizational reputations consist oftwo dimensionsperceived quality and promi-nenceand by examining their distinct anteced-ents and consequences.

Our study makes several important contributionsto reputation research. By positing that organiza-tional reputation can be viewed as a two-dimen-sional construct, we integrate previously disparate

branches of research rooted in the economics andinstitutional perspectives and contribute to reputa-tion research and management practice a model

that identifies the antecedents of these two distinctdimensions. Our model also significantly advancescurrent understanding of the relationship betweenorganizational reputation and economic payoffs,which has been the most central concern of repu-tation research. Because past research has seldommeasured reputation itself, and has instead studied

the direct relationships between the observablecharacteristics of firms and price premiums (e.g.,Rao, 1994; Shamsie, 2003; Stuart, 2000), it cannotreveal whether observable organizational and insti-tutional factors affect price premium directly, or doso through reputation, or both (e.g., Podolny & Stu-art, 1995; Stuart, 2000). By measuring reputationdirectly and by distinguishing between its two di-mensions, in this study we were able to assess thecontributions that each dimensionperceivedquality, and prominencemakes to the economicpayoffs an organization reaps. In the context of ourstudy, although perceived quality had no signifi-cant relationship with price premium, prominencehad the largest total effect on price premium. Theseresults suggest that, viewed as an asset stock, theextent to which an organization is widely recog-nized in its organizational field strongly influencesthe economic value of its reputation. Our resultsalso provide empirical support for the theoreticalargument that the prominence dimension of repu-tation depends on support and endorsement byinfluential third parties, such as institutional inter-mediaries and high-status actors. We have ex-tended previous research by showing the mecha-

nism through which the media shape the economicoutcomes of firms. More specifically, we found thatthe media indirectly affect price premium by en-hancing organizational prominence. In addition,we expand current understanding of the role ofexpert intermediaries in markets by showing thatcertifications of a business school facultys aca-demic merit, reflected in their publications in pre-mier scholarly journals, have a significant effect ona business schools prominence. These findingssuggest that receiving recognition from experts inan organizational field may be an important con-

tributor to organizational prominence. In addition,our finding that the prestige of facultys academicdegrees had both a significant direct effect onprominence and a significant total effect on pricepremium suggests that hiring individuals with highlevels of symbolic capital, including but not lim-ited to educational degree prestige, may enable anorganization to increase both its prominence andeconomic payoffs.

In our study, the quality of inputs (studentGMAT scores) predicted perceived quality, but thequality of productive assets (faculty average aca-



13/18

demic experience) did not do so. This difference ineffects may occur because different types of re-sources may have different signaling value to cus-tomers, with the quality of inputs having greatersignaling value because in the production processinputs transfer their entire value to the final prod-uct, while productive assets do not. The difference

may also be due to the fact that the quality ofproductive assets, especially knowledge assets, iscomplex and hard to observe, therefore reducingtheir value as a signal that stakeholders can readilyuse to form expectations about quality. Future re-search should examine more specifically how theattributes of organizational resources affect theirvalue as signals of quality.

Overall, our findings provide compelling evi-dence that perceived quality and prominence arepredicted by different information signals. This ob-servation suggests the need for future research toexamine in greater detail the cognitive processesthat underlie the two dimensions of organizationalreputation. It is conceivable that judgments of qual-ity are based on specific, relatively detailed obser-vations of signals about firm attributes, whileprominence is based on general impressions aboutan organization that develop largely through socialinfluence (Rao et al., 2000). Our results also pro-vide evidence that positive evaluations of qualityincrease prominence and, therefore, may serve asinputs in the collective processes through whichprominence develops. Therefore, future researchshould pursue a finer-grained examination of the

different processes of impression formation amongstakeholders and how they shape the two dimen-sions of organizational reputation.

Several limitations of our study also provide ex-cellent opportunities for future research. First, thisstudy focused on a single type of reputation: anorganizations reputation with its customers. Sinceorganizations may have multiple reputations withdifferent stakeholder groups (Dollinger et al., 1997),future research should examine how the two di-mensions of reputation we propose affect the eco-nomic payoffs associated with different types of

reputation, such as reputation with employees orreputation with suppliers. Further, the question ofthe extent to which an organizations reputationindeed varies along the two dimensions over stake-holder groups is of significant theoretical and prac-tical interest. It is possible that prominence is rel-atively consistent across different stakeholdergroups, whereas perceived quality varies with thevarying performance expectations of differentstakeholders. Making progress in addressing thisquestion may help reputation research resolve oneof its long-standing debates about whether a firm

has one reputation or many (DAveni, 1996; Fom-brun, 1996).

Second, future research should examine the ex-tent to which the economic consequences of thetwo dimensions depend on the institutional con-text that surrounds an industry. The organizationalfield of business schools, which provided the em-

pirical context for the test of our model, may haveparticularly strong institutional forces, since pre-mier scholarly journals are strongly institutional-ized forms for certifying scholarly contribution(Zuckerman, 1988) and media rankings of businessschools have a high degree of legitimacy with var-ious stakeholders. In such a context, the effects ofprominence on economic payoffs may be strongerthan in contexts where institutional intermediariesare less well established or credible. Further, it will

be important to examine the extent to which ourfindings hold in other settings, where rankings arecommon and pervasive, but product quality is notso difficult for stakeholders to evaluate. In doing so,researchers will be better able to understand theextent to which certification by institutional inter-mediaries and affiliations with high-status actorssubstitute for direct evaluations of quality by en-abling stakeholders to rely on ready-made interpre-tations. Progress in that direction has significantimplications for understanding how firms shouldinvest in building their reputations and the extentto which they benefit from investing in qualityversus investing in media hype and prestigious af-filiations.

Third, our study focused on business schoolswith full-time MBA programs with more than 50students. The choice of this cut-off was based onarguments in organizational research stating thatsmall and large organizations represent differentorganizational forms that differ in the problemsthey deal with and the resource constraints theyface (Aldrich, 2000). In markets with numerouscompetitors, some small and midsize firms mayremain unnoticed by large groups of stakeholders

because their lack of prominence places them out-side the consideration set (Nedungadi, 1990)

from which stakeholders ultimately chose to buy.Thus, future research can extend this study by ex-amining the extent to which our model applies tosmall and midsize firms and how such firms canactually bolster their reputations.

Finally, the uniqueness of our data set limits thestudys ability to address how the relationshipsamong the antecedents, dimensions, and conse-quences of reputation evolve over time. Since ourstudy was based on the first large-scale survey ofcorporate recruiters with regard to their percep-tions of business schools (Wall Street Journal,



14/18

2001), we could not examine how the reputationsof business schools with this group changed overtime. However, in future research scholars can en-deavor to compare the impacts of organizationaland institutional factors on the sustainability of thetwo dimensions of reputation and, in turn, the twodimensions impacts on economic outcomes.

REFERENCES

Aldrich, H. 2000. Organizations evolving. London:Sage.

Allen, F. 1984. Reputation and product quality. RandJournal of Economics, 15: 311327.

Audretsch, D. B., & Stephan, P. E. 1996. Company-scien-tist locational links: The case of biotechnology.

American Economic Review, 86: 641652.

Barney, J. B. 1986. Strategic factor markets: Expectations,

luck, and business strategy. Management Science,32: 12311241.

Barney, J. B. 1991. Firm resources and sustained compet-itive advantage. Journal of Management, 17: 99120.

Benjamin, B. A., & Podolny, J. M. 1999. Status, quality,and social order in the California wine industry.

Administrative Science Quarterly, 44: 563589.

BusinessWeek. 1998. The best B-schools. October 19:8694.

BusinessWeek. 2000. The best B-schools. October 2: 75100.

Cable, D. M., & Murray, B. 1999. Universalism and thenorms of career mobility in science. Academy of

Management Journal, 42: 439449.

Camic, C. 1992. Reputation and predecessor selection:Parsons and the institutionalists. American Socio-

logical Review, 57: 421445.

Campbell, M. C. 1999. Perceptions of price unfairness:Antecedents and consequences. Journal of Market-

ing Research, 36: 187199.

Cialdini, R. B., Borden, R. J., Thorne, A., Walker, M. R.,Freeman, S., & Sloan, L. R. 1976. Basking in reflectedglory: Three (football) field studies. Journal of Per-

sonality and Social Psychology, 34: 366375.Clark, B. H., & Montgomery, D. B. 1998. Deterrence, rep-

utations, and competitive cognition. ManagementScience, 44: 6282.

Clemens, E. S., Powell, W. W., McIlwaine, K., & Oka-moto, D. 1995. Careers in print: Books, journals, andscholarly reputations. American Journal of Sociol-ogy, 101: 433494.

DAveni, R. 1996. A multiple-constituency, status-basedapproach to interorganizational mobility of facultyand input-output competition among top businessschools. Organization Science, 7: 166189.

DiMaggio, P. J., & Powell, W. W. 1983. The iron cagerevisited: Institutional isomorphism and collectiverationality in organizational fields. American Socio-

logical Review, 48, 147160.

Deephouse, D. 2000. Media reputation as a strategic re-source: An integration of mass communication andresource-based theories. Journal of Management,26: 10911112.

Dichev, I. D. 1999. How good are business school rank-ings? Journal of Business, 72: 201213.

Dollinger, M. J., Golden, P. A., & Saxton, T. 1997. Theeffect of reputation on the decision to joint venture.Strategic Management Journal, 18: 127140.

Elsbach, K. D., & Kramer, R. M. 1996. Members re-sponses to organizational identity threats: Encoun-tering and countering the BusinessWeek rankings.


Feldman, K. A. 1987. Research productivity and schol-arly accomplishment of college teachers as related totheir instructional effectiveness: A review and ex-ploration. Research in Higher Education, 26: 227298.

Fiske, S. T., & Taylor, S. E. 1991. Social cognition. NewYork: McGraw-Hill.

Fombrun, C. J. 1996. Reputation: Realizing value fromthe corporate image. Boston: Harvard BusinessSchool Press.

Fombrun, C. J., & Shanley, M. 1990. Whats in a name?Reputation building and corporate strategy. Acad-emy of Management Journal, 33: 233258.

Gioia, D., & Corley, K. G. 2002. Being good versus lookinggood: Business school rankings and the Circeantransformation from substance to image. Academyof Management Learning and Education, 1: 107120.

Goldberg, M. E., & Hartwick, J. 1990. The effects of ad-vertiser reputation and extremity of advertisingclaim on advertising effectiveness. Journal of Con-sumer Research, 17: 172179.

Gourman, J. 1997. The Gourman Report: Graduate pro-grams. New York: Princeton Review Publishing.

Hall, R. 1992. The strategic analysis of intangible re-sources. Strategic Management Journal, 13: 153144.

Hall, R. 1993. A framework linking intangible resourcesand capabilities to sustainable competitive advan-tage. Strategic Management Journal, 14: 607618.

Hayduk, L. A. 1987. Structural equation modeling withLISREL: Essentials and advances. Baltimore: JohnsHopkins.

Hayward, M. L. A., & Boeker, W. 1998. Power and con-flicts of interests in professional firms: Evidencefrom investment banking. Administrative ScienceQuarterly, 43: 122.

Herbig, P., & Milewicz, J. 1995. The relationship of rep-



15/18

utation and credibility to brand success. Journal ofConsumer Marketing, 12(4): 510.

Ippolito, P. M. 1990. Bonding and nonbonding signals ofproduct quality. Journal of Business, 63: 4160.

James, L. R., Mulaik, S. A., & Brett, J. M. 1982. Causalanalysis: Assumptions, models, and data. BeverlyHills, CA: Sage.

Joreskog, K. G., & Sorbom, D. 2001. LISREL 8 usersreference guide. Chicago: Scientific Software.

Keith, B., & Babchuk, N. 1998. The quest for institutionalrecognition: A longitudinal analysis of scholarly pro-ductivity and academic prestige among sociologydepartments. Social Forces, 76: 14951533.

Kline, P. B. 1998. Principles and practices of structuralequation modeling. New York: Guilford.

Kollock, P. 1994. The emergence of exchange structure:An experimental study of uncertainty, commitment,and trust.American Journal of Sociology, 100: 313345.

Kreps, D., & Wilson, R. 1982. Reputation and imperfectinformation. Journal of Economic Theory, 27: 253279.

Kuran, T., & Sunstein, C. 1999. Availability cascades andrisk regulation. Stanford Law Review, 51: 683768.

Lang, G. E., & Lang, K. 1988. Recognition and renown:The survival of artistic reputation. American Jour-

nal of Sociology, 94: 79109.

Long, R. G., Bowers, W. P., Barnett, T., & White, M. C.1998. Research productivity of graduates in manage-ment: Effects of academic origin and academic affil-

iation. Academy of Management Journal, 41: 704714.

Martins, L. 1998. The very visible hand of reputationalrankings in US business schools. Corporate Repu-tation Review, 1: 293298.

Medsker, G. J., Williams, L. J., & Holahan, P. J. 1994. Areview of current practices for evaluating causalmodels in organizational behavior and human re-source management research. Journal of Manage-

ment, 20: 439464.

Merton, R. K. 1972. Insiders and outsiders: A chapter inthe sociology of knowledge. American Journal of

Sociology, 78: 947.Milgrom, P., & Roberts, J. 1982. Predation, reputation,

and entry deterrence. Journal of Economic Theory,27: 280312.

Milgrom, P., & Roberts, J. 1986. Price and advertisingsignals of product quality. Journal of Political Econ-omy, 94: 796821.

Moran, P., & Ghoshal, S. 1999. Markets, firms, and theprocess of economic development. Academy of

Management Review, 24: 390412.

Nayyar, P. R. 1990. Information asymmetries: A source of

competitive advantage for diversified service firms.Strategic Management Journal, 11: 513519.

Nedungadi, P. 1990. Recall and consumer considerationsets: Influencing choice without altering brand eval-uations. Journal of Consumer Research, 17: 263276.

Podolny, J. M. 1993. A status-based model of market

competition. American Journal of Sociology, 98:829872.

Podolny, J. M. 1994. Market uncertainty and the socialcharacter of economic exchange. AdministrativeScience Quarterly, 39: 458483.

Podolny, J. M., & Stuart, T. 1995. A role-based ecology oftechnological change. American Journal of Sociol-ogy, 100: 12241260.

Pollock, T., & Rindova, V. 2003. Media legitimation ef-fects in the market for initial public offerings. Acad-emy of Management Journal, 46: 631642.

Prabhu, J., & Stewart, D. W. 2001. Signaling strategies in

competitive interaction: Building reputations andhiding the truth. Journal of Marketing Research,38: 6272.

Quinones, M. A, Ford, J. K, & Teachout, M. S. 1995. Therelationship between work experience and job per-formance: A conceptual and meta-analytic review.

Personnel Psychology, 48: 887910.

Rao, A. R., & Monroe, K. B. 1996. Causes and conse-quences of price premiums. Journal of Business, 69:511535.

Rao, H. 1994. The social construction of reputation: Cer-tification contests, legitimation, and the survival of

organizations in the American automobile industry:18951912. Strategic Management Journal, 15: 2944.

Rao, H. 1998. Caveat emptor: The construction of non-profit consumer watchdog organizations. American

Journal of Sociology, 103: 912961.

Rao, H., Davis, G. F., & Ward, A. 2000. Embeddedness,social identity and mobility: Why firms leave theNASDAQ and join the New York Stock Exchange.


Rao, H., Greve, H. & Davis, G. 2001. Fools gold: Socialproof in the initiation and abandonment of coverage

by Wall Street analysts. Administrative ScienceQuarterly, 46: 502526.

Raub, W., & Weesie, J. 1990. Reputation and efficiency insocial interactions: An example of network effects.

American Journal of Sociology, 96: 626654.

Rindova, V. P., & Fombrun, C. J. 1999. Constructing com-petitive advantage: The role of firm-constituent in-teractions. Strategic Management Journal, 20: 691710.

Rindova, V. P., & Kotha, S. 2001. Continuous mor-phing: Competing through dynamic capabilities,



16/18

form, and function. Academy of Management Jour-nal, 44: 12631280.

Roberts, P. W., & Dowling, G. R. 2002. Corporate reputa-tion and sustained superior financial performance.Strategic Management Journal, 23: 10771093.

Rogerson, W. P. 1983. Reputation and product quality.Bell Journal of Economics, 14: 508516.

Segev, E., Raveh, A., & Farjoun, M. 1999. Conceptualmaps of the leading MBA programs in the UnitedStates: Core courses, concentration areas, and theranking of the school. Strategic Management Jour-

nal, 20: 549565.

Shamsie, J. 2003. The context of dominance: An indus-try-driven framework for exploiting reputation.Strategic Management Journal, 24: 199215.

Shapiro, C. 1982. Consumer information, product qualityand seller reputation. Bell Journal of Economics, 13:2035.

Shapiro, C. 1983. Premiums for high quality products as

returns to reputations. Quarterly Journal of Eco-nomics, 98: 659680.

Shook, C. L., Ketchen, D. J., Hult, G. T. M., & Kacmar,K. M. 2004. An assessment of the use of structuralequation modeling in strategic management re-search. Strategic Management Journal, 25: 397404.

Stuart, T. 2000. Interorganizational alliances and the per-formance of firms: A study of growth and innovationrates in a high-technology industry. Strategic Man-agement Journal, 21: 791811.

Stuart, T. E., Hoang, H., & Hybels, R. C. 1999. Interorgan-izational endorsements and the performance of en-trepreneurial ventures. Administrative ScienceQuarterly, 44: 315349.

Tierney, P., & Farmer, S. M. 2002. Creative self-efficacy:Its potential antecedents and relationship to creativeperformance. Academy of Management Journal,45: 11371148.

Trieschmann, J. S., Dennis, A. R., Northcraft, G. B., Ni-emi, A. W. 2000. Serving multiple constituencies in

business schools: M.B.A. program versus researchperformance. Academy of Management Journal,43: 11301141.

U.S. Census Bureau. 2000. County and city data book:

2000 (a statistical abstract supplement) (13th ed.).Washington, DC: U.S. Department of Commerce.

U.S. News & World Report. 2001. Americas best grad-uate schools. Washington, DC: U.S. News & WorldReport.

Wall Street Journal. 2001. The top business schools.April 30: R4R5.

Weigelt, K., & Camerer, C. 1988. Reputation and corpo-rate strategy: A review of recent theory and applica-tions. Strategic Management Journal, 9: 443454.

Weiss, A. M., Anderson, E., & MacInnis, D. J. 1999. Rep-

utation management as a motivation for sales struc-ture decisions. Journal of Marketing, 63(4): 74 89.

Williamson, I. O., & Cable, D. M. 2003. Predicting earlycareer research productivity: The case of manage-ment faculty. Journal of Organizational Behavior,24: 2544.

Zuckerman, E. W. 1999. The categorical imperative: Se-

curities analysts and the illegitimacy discount.American Journal of Sociology, 104: 13981438.

Zuckerman, H. 1988. The sociology of science. In N. J.Smelser (Ed.), Handbook of sociology: 511574.Newbury Park, CA: Sage.

APPENDIX A

Attributes Used in the Measure of Perceived Quality

Recruiters rated business schools on the following at-tributes of their graduates on a scale ranging from 1,poor performance, does not meet your needs, to 10,

excellent performance, meets your needs very well.1. Communication and interpersonal skills2. Original and visionary thinking3. Leadership potential4. Ability to work well within a team5. Analytical and problem-solving skills6. Strong international perspective7. Strategic thinking8. Ability to drive results9. Specific functional expertise10. Adaptability, including the ability to deal with

ambiguity11. Fit with the corporate culture

12. Entrepreneurial skills13. General management point of view

APPENDIX B

Journals Used in the Measure ofFaculty Publications, by Area

Accounting Journal of Accounting and Economics Journal of Accounting ResearchAccounting Review

Economics

Econometrica Journal of Political EconomyAmerican Economic Review

Entrepreneurship

Entrepreneurship Theory and Practice Journal of Business VenturingJournal of Small Business Management



17/18

Finance

Journal of Finance Journal of Financial EconomicsReview of Financial Studies

Management

Academy of Management JournalAcademy of Management ReviewAdministrative Science QuarterlyManagement ScienceStrategic Management Journal

Organizational Behavior and Human Resources

Journal of Applied PsychologyOrganizational Behavior and Human Decision

ProcessesPersonnel Psychology

International Business

Journal of International Business StudiesManagement International Review

Marketing

Journal of Consumer Research Journal of Marketing Journal of Marketing Research

Operations and Information Systems

Information Systems Research Journal of Operations ManagementMIS QuarterlyOperations Research

Insurance and Real Estate

Journal of Risk and InsuranceReal Estate Economics

Practice

Academy of Management ExecutiveCalifornia Management ReviewHarvard Business ReviewLong Range PlanningSloan Management Review

Violina P. Rindova ([email protected]) is anassociate professor in strategy at the R. H. Smith Schoolof Business at the University of Maryland, College Park.She received her Ph.D. in management from the LeonardN. Stern School of Business at New York University. Hercurrent research focuses on the social construction ofmarkets and the sociocognitive dynamics of the creationof intangible assets, competitive advantage, and value.

Ian O. Williamson ([email protected]) (Ph.D.,University of North Carolina, Chapel Hill) is an assistantprofessor of management at the Robert H. Smith School

of Business, University of Maryland, College Park. Hisresearch primarly focuses on understanding how sociol-ogy, information technology, and marketing theories can

be used to complement traditional human resource man-agement perspectives on the recruitment and selection ofhuman resources. He is also a past president of the Man-agement Faculty of Color Association (MFCA).

Antoaneta P. Petkova ([email protected]) is adoctoral candidate in the Management and OrganizationDepartment at the Robert H. Smith School of Business,University of Maryland, College Park. Her research fo-cuses on the role of intangible assets and processesthrough which they can be accumulated by firms.

Joy Marie Sever ([email protected]) is a se-nior vice president at Harris Interactive and founder ofthe companys Reputation Practice. She received herPh.D. in social psychology from the University of To-ronto. She is responsible for designing and managingcustomized corporate reputation programs using theReputation Quotient SM assessment (which she code-signed with Charles Fombrun, executive director of theReputation Institute.



18/18

Documents

AMJ-2005- Summary and Resp