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The impact of market actions on firm reputation
Author(s) -
Basdeo Dax K.,
Smith Ken G.,
Grimm Curtis M.,
Rindova Violina P.,
Derfus Pamela J.
Publication year - 2006
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.556
Subject(s) - reputation , repertoire , action (physics) , business , industrial organization , affect (linguistics) , competition (biology) , marketing , microeconomics , economics , psychology , sociology , social science , physics , communication , quantum mechanics , acoustics , ecology , biology
Drawing on signaling theory, we hypothesize that a firm's reputation is shaped by its own market actions and the actions of its industry rivals. We view market actions as signals that convey information about the underlying competencies of firms and influence stakeholder evaluations of them. We find that the total number of a firm's market actions, the complexity of its action repertoire, the time lag in rivals' responses to its actions, and the similarity of its repertoire with those of its rivals positively affect its reputation. These results suggest that a firm's reputation is influenced both by its own actions and by its rivals' actions. Copyright © 2006 John Wiley & Sons, Ltd.