Living Up to Expectations: Corporate Reputation and Persistence of Firm Performance

Luis Cabral

Strategy Science, 2016, vol. 1, issue 1, 2-11

Abstract: I develop a theory of corporate reputation as a source of persistence in firm performance. I show how a relatively simple and reasonable assumption regarding the dynamics of corporate reputation leads to a self-reinforcing process whereby cross-firm differences in corporate reputation (and performance) are significant and relatively permanent. Numerical simulations suggest that persistence in cross-firm differences is largely due to endogenous investment incentives: firms with higher corporate reputations invest more in corporate reputation. I provide a series of examples consistent with the model’s prediction.

Keywords: persistence of firm performance; reputation; resource-based approach (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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