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Company Reputations: Who's Tops—and Who's Not?

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This chapter is from the book
If you were asked to name two or three companies that you most respect, trust, and admire, which companies would you put on your short list? Charles Fombrun and Cees Van Riel explain why company reputation is so important.

You can’t build your reputation on what you’re going to do.

—HENRY FORD

If you were asked to name two or three companies that you most respect, trust, and admire, which companies would you put on your short list? Would you name a huge company like General Electric? Or a small company like Bang & Olufsen? A computer company like IBM, or the Internet auctioneer eBay? Would the companies be American or Japanese, German or Dutch, French, Danish, or Italian? The maker of your television set (Sony), the coffee retailer who sells you your café latte (Starbucks?), or the company whose name probably first pops up when you turn on your laptop (probably Microsoft)?

Questions like these are interesting to think about because they speak to the visibility that some companies achieve over others and to the trust and respect we have for the many things they do. They therefore speak to a company’s reputation with consumers. Companies rightly care about being recognized (as well as what they are recognized for) because a good reputation attracts support from customers, investors, and potential employees.

The World’s Most Visible Companies

In the fall of 2000, with the help of various market research companies, we gathered nominations from consumers in 12 countries: Australia, Belgium, Denmark, France, Germany, Greece, Italy, the Netherlands, Spain, Sweden, the United States, and the United Kingdom. They represent three major regions of the world: the United States, Europe, and Australia.[1]

In each country, we asked participants to name two companies that stood out as having the best and worst reputations. We then compiled the open-ended nominations from representative consumers to identify the most visible companies in each country.

Who’s Most Visible in the United States?

Figure 3-1 identifies the 30 companies at the upper end of the distribution of nominations. Also shown on the chart are the 10 companies U.S. consumers were most aware of, for both good and bad reputation, in summer 2001.

03fig01.gifFigure 3-1. The most visible companies in the United States (summer 2001).

The results are instructive. For one, companies become visible for different reasons. Among the most visible companies were some that attracted enormous negative public attention throughout 2000 and 2001. This was the case for Bridgestone/Firestone and Ford, because of the accidental deaths caused when Firestone tires exploded on Ford Explorers. It was also true of Philip Morris due to its protracted court battle over the company’s past efforts to disguise from the public the negative health effects of tobacco. ExxonMobil continued to display a negative halo—reflecting the persistent association consumers make between the company and the decade-old Valdez spill of 1989. Clearly, ExxonMobil has not benefited from any positive carryover from Exxon’s merger with Mobil, a company that has long enjoyed more positive regard from the public. None of these companies attracted positive nominations.

Two companies earned nothing kudos: Wal-Mart and General Electric (GE). The fact that Wal-Mart took the number three spot on positive counts is remarkable, given recurrent media and activist criticism about the company’s damaging effects on small local stores that are driven out of business when a Wal-Mart store opens in a community. Clearly the public thinks very favorably of what Wal-Mart has achieved from providing highquality products at affordable prices, efficiently and effectively. GE also makes the grade for mostly positive nominations, often as not for its continuing ability to generate high returns and for the acclaimed style of GE’s former CEO, the legendary Jack Welch.[2]

Finally, two companies received mixed nominations: Microsoft and General Motors (GM). Microsoft’s nominations mirror the polarized public debate over its actions. On one hand, some respondents react negatively to the company because of its highly publicized tussle with the U.S. Department of Justice over allegations of monopolistic practices. On the other hand, many respondents clearly think highly of Microsoft, its products, and leaders. The ambivalent pattern combined to elevate Microsoft to the status of 2nd most visible company in the United States after Bridgestone/Firestone. In contrast, GM earned its mixed pattern of nominations from very different perceptions of its divisions: Most of GM’s positive nominations reflect public enthusiasm about its Saturn division. Consumers generally perceived other parts of GM in negative terms.

Who’s Most Visible in Europe?

We asked the same two questions of nearly 10,000 people in 10 European countries in the fall of 2000. Initially, we expected that some of the same global multinationals would probably receive the bulk of the nominations. In fact, we were wrong. Across countries, quite different companies were nominated—and patriotic fervor had much to do with the replies. For Germans, auto-maker DaimlerChrysler (the makers of Mercedes) reigned supreme. The French frequently thought of Renault, Italians applauded Fiat, Spaniards named telecom giant Telefonica, and Greeks praised their mobile phone company Panafon. Clearly, then, no demonstration of European integration emerged from these data: Instead, the results demonstrated that consumers in most European countries tend to praise their homegrown brands over those of other countries. Of the non-European companies nominated, Coca-Cola, McDonald’s, and Sony were the most frequently mentioned corporate brands.

In each European country, however, consumers were also quick to recognize their own companies’ faults: The French haven’t forgiven Total-Fina-Elf for the oil spill that devastated part of its Atlantic coastline in spring 2000 following the sinking of the tanker The Erika; the Danes chastise the former government telephone monopoly TeleDanmark (now known as TDC) for its ongoing difficulties in servicing consumers, as well as Cheminova for its involvement in producing insecticides and pesticides that harmed consumers and forced people to relocate from affected areas in the 1980s and 1990s. Finally, the Dutch have yet to forget the fireball collapse of World Online, the Dutch Yahoo! wannabe that imploded dramatically in 1999 from its inflated promises to investors and from brash overexposure.

To identify a pan-European set of the most visible companies, we compiled the results across all 10 European countries in which we carried out the study. Figure 3-2 summarizes the results. The most visible company based on total nominations received across all 10 countries was the French food retailer Carrefour. The company owns leading supermarket chains in Europe and earns most of its nominations for its visible retail outlets in France and Spain. Philips runs a close second and owes its nominations to the Netherlands, Belgium, and France. Both Carrefour and Philips, as well Ford (whose nominations come mostly from nominations to its Volvo-branded cars) and DaimlerChrysler, owe their top spots to the high number of positive nominations they received. In contrast, the most highly named U.S. companies in Europe were McDonald’s and Coca-Cola, both of which also received a large number of negative votes. The pattern is different than the one we observed in the United States, where negative publicity often fuels the highest levels of corporate visibility.

03fig02.jpgFigure 3-2. The most visible companies across ten countries in Europe (fall 2000).

Across Europe, people think most highly of companies that have powerful consumer brands: Car companies are heavily represented, as are food producers, retailers, and electronics—the companies that consumers are most likely to interface with in their daily lives. Named for best reputation status are each country’s top suppliers of retail goods, including companies like Siemens, Sony, BMW, and GM (for its Opel brand), whose reputations are wholly national. Named for worst reputation were companies that cross geographies, reaching well beyond Europe, with negative auras surrounding American icons McDonald’s, Microsoft, Nike, and (to a lesser extent) Wal-Mart. Also negatively viewed were France’s Total-Fina and Germany’s Deutsche-Telekom. On both sides of the Atlantic, consumers clearly have a profound distaste for companies whose actions they perceive to pose enduring threats to health, safety, and the environment.

Finally, the most visible companies in Europe have quite different national origins, and most of them earn their standing on a nationalistic basis—nominations from more than three countries are very rare indeed. It suggests that few companies are truly well-positioned in the hearts and minds of consumers across Europe. In other words, the reputational marketplace in Europe is still wide open, and there’s no company yet that can claim legitimate reputational standing as pan-European.

As in the United States, some European companies received mixed nominations as both good and bad companies. In the United States tobacco was the chief villain and Philip Morris its poster child. In Europe, by comparison, Philip Morris earned no negatives and even received above average nominations for ’best reputation’. In the United States, Wal-Mart was unanimously praised, whereas in Europe it earned a significant number of nominations for worst reputation. The duality of the reputations of these companies is a recurring pattern that holds true in Europe for Microsoft, Shell, PSA-Peugeot-Citroen, and GM as well. These splintered images, we suspect, probably do affect the operating performance of these companies: Polarized consumers are unlikely to deliver the kind of unfailing support that managers need in order to generate sales. It suggests a latent tension that executive teams in these companies should address if they are to improve their market results with consumers.

Who’s Most Visible in Australia?

In fall 2000, 1,019 Australian consumers were asked to nominate best and worst companies in Australia. Figure 3-3 shows the results. The most visible company in Australia was Telstra, the country’s semi-private telecommunications monopoly. Commonwealth Bank (the country’s oldest commercial bank) and the well-known retailer Coles-Myer took second and third place respectively. Like Philip Morris and Microsoft in the U.S., Telstra’s reputation was heavily splintered—being nominated as tops on both positive and negative counts. In contrast, Commonwealth Bank owed its visibility mostly to negative nominations, whereas Coles-Myer enjoyed the strongest positive halo of all.

03fig03.gifFigure 3-3. The most visible companies in Australia (fall 2000).

Cross-country comparisons of the most visible companies suggest some generalizations:

  • Companies are often nominated more positively when they market very popular consumer products and services, when they own key products that carry the corporate brand name (Coca-Cola), or when they rely on a very recognizable logo (Mercedes), all of which are heavily advertised.

  • Most companies that top the negative nomination charts often do so because their names have become indelibly tied to products that cause harm—they damage health (Philip Morris, RJ Reynolds), kill people (Ford and Bridgestone/Firestone), have damaged the environment (Total-Fina, ExxonMobil, Shell), or are thought to take advantage of consumers (Microsoft, Telstra).

  • Public impressions are driven partly by the visibility of the industries in which these companies operate. They’re also influenced by the visibility of the companies themselves—many have huge advertising and communications budgets, and so develop high public profiles. Some are catapulted into visibility because of scandal or crisis.

Most clearly, however, visibility is only a precursor to reputation. The question before us is therefore this: If we focus on any single company, what specific criteria do people think about when they evaluate the company? And how do companies really compare when we go beyond the “beauty pageants” that characterize the nominations-process, and actually ask people to rate companies on a standardized list of criteria?

Various instruments have been proposed to address this issue.[3] Fortune magazine publishes one of the best-known measures of corporate reputation, one that is derived from answers to eight questions about the company’s products, leadership, and results. Over the years, many have criticized Fortune’s instrument and data collection methodology.[4] To overcome some of these problems, we created the Reputation Institute in 1999 to undertake careful research and develop a standard indicator that could be used worldwide with different types of stakeholders. The Reputation Quotientsm (RQ) instrument is what emerged from joint work with our research partner Harris Interactive. In the next section, we describe the RQ and how we have used it since 1999 to develop detailed ratings and analyses of some of the most visible companies in the world.

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