Research released today by the Judge Institute of Management, Cambridge’s Business School, suggests that environmental and social credibility will have a significant impact on the future reputation of Multinational corporations.

Within three scenarios of the future business climate (fortress world, market world & transformed world) the CEOs of the Global Fortune 500 were asked to rate the significance of seven elements of reputation to the preservation of a positive corporate reputation.

34% of the CEOs from the Global Fortune 500 completed the survey - if combined the revenues of their respective companies' amount to almost US$5 Trillion. Taken holistically this small group of people controls the direction of massive capital flows, their daily decisions affecting the current and future lives of billions worldwide.

The table shows the seven elements of reputation listed in order of their perceived future impact on the preservation of a positive corporate reputation. The scores are averaged across differing scenarios and they represent CEOs opinion regardless of the business climate. By averaging the scores we have, in effect, put a ‘damper’ on outliers, extracting the underlying trends.

RANK

1st

1: [LV] LEADERSHIP & VISION

2nd
2: [Q] QUALITY
=
3: [KS] KNOWLEDGE & SKILLS

3rd
4: [SC] SOCIAL CREDIBILITY
=
5: [FC]FINANCIAL CREDIBILITY

4th
6: [EC] ENVIRONMENTAL CREDIBILITY

5th
7: [EM] EMOTIONAL CONNECTIONS

In his foreword to the report Sir Mark Moody-Stuart, the chairman of Anglo American plc, suggests that “It is not surprising that Leadership and Vision, Quality and Knowledge and Skills consistently rank in the top three. With the possible exception of Quality these are all elements which are difficult to measure”.

Despite recent financial scandals (Enron, WorldCom etc.) CEOs predict that in the near future social credibility will be as important as financial credibility, and environmental credibility will only be marginally less important.

On average, and in virtually all of the data variations, ‘Emotional Connections’ was considered to be the least important element to the preservation of a positive corporate reputation. However its average score suggests that it is still of medium significance.

The remaining six elements form a core group, whose upkeep is predicted to be invaluable to the future preservation of a positive corporate reputation.

The position of the seven elements displays considerable regional variation, for example: European companies consistently assign the future importance of ‘Environmental, Financial and Social Credibility’ a higher level of significance to the preservation of a positive corporate reputation than their North American counterparts.

Download the executive summary [pdf, 600KB]
http://www.cus.cam.ac.uk/~akob2/ReputationsSurvey.html

Notes for editors :

Forecasting the Impact of Sustainability Issues on the Reputation of Large Multinational Corporations (executive summary) is released on April 10th 2003.

The project was supported by the British Safety Council.

The views expressed in FORECASTING THE IMPACT OF SUSTAINABILITY ISSUES ON THE REPUTATION OF LARGE MULTINATIONAL CORPORATIONS are not necessarily those of the British Safety Council.

Arlo Brady is a doctoral candidate at the Judge Institute of Management, Cambridge University. He is a consultant for a number of multinationals on sustainable development issues, specialising in ‘triple bottom line’ strategy, reputation, branding and sustainability reporting.

The Judge Institute of Management is the University of Cambridge's business school. Founded in 1990, it has over 200 students and 70 teaching and research staff. It offers a portfolio of undergraduate, graduate and executive management programmes, including the Cambridge MBA. Teaching and Research benefit from a wide range of associate faculty in other departments within the university. The recent arrival of the Centre for Business Research means that the business school now hosts one of the largest concentrations of interdisciplinary business and management research activity in the Europe.

Cambridge University Judge Institute of Management

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