Relationships Between Productivity, Reputation, and Strategy
Businesses seek to maximize productivity because it increases efficiency, motivates
employees, and can help firms compete on the strategic elements of time, cost, and quality.
Productivity has been shown to be positively correlated with reputation such that firms with good
reputations tend to have higher productivity. Reputation can be improved through corporate
social responsibility initiatives that seek to enhance social and environmental wellbeing.
Improved reputation can provide a sustainable competitive advantage and increase the perceived
quality of a firm’s goods or services.
Stuebs and Sun hypothesized that reputation would not only
increase productivity but would reduce labor costs and therefore improve labor efficiency in
regards to both of its determinant variables (i.e. productivity and cost). However, the results of
the study showed that a firm’s reputation does not determine the cost of labor or affect it
A company’s reputation is of great importance since it is a key element of a
successful marketing strategy and it has been found to impact productivity. Firms have ways of
influencing and changing their reputation such as through corporate social responsibility (CSR)
efforts. This essay will first define CSR and show how it can be used as a tool for businesses to
improve their reputation, and then it will examine issues pertaining to the study done by Stuebs
and Sun, as well as related research in the fields of productivity, efficiency, and firm reputation,
and the relationship that these elements have in regards to strategic objectives.
Corporate Social Responsibility and Reputation
Corporate Social Responsibility is the philosophy that businesses should operate in
accordance with not only legal, but also ethical and social standards in regards to the community
and the environment. CSR is often associated with sustainability efforts and includes an
rganizations’ efforts to address a wider variety of social and environmental problems”
(Lindgreen and Swaen 2010)
. There is some debate on what specifically constitutes CSR and
how it is defined. An accepted and established summary of CSR is that it “
continuing commitment by an organization to behave ethically and contribute to economic
development, while also improving the quality of life of its employees (and their families), the
local community, and society at large” (Watts and Holme 1999).
Oftentimes companies that go above and beyond in terms of social and sustainability
efforts are rewarded by increased loyalty among customers. Indeed, this is often the motivation
for implementing many CSR initiatives. Different studies have tried to show a correlation
between CSR and improved financial performance, but CSR is more easily linked to firm
reputation as Charles Fombrun and Mark Shanley outline in their articled entitled “What’s in a
Name? Reputation Building and Corporate Strategy.” CSR can aid firms in “differentiating
themselves from competitors and building a better image and reputation” (Fombrun and Shanley
1990). Differentiation and reputation have important strategic implications for creating a
sustainable competitive advantage. A good reputation can be an invaluable asset in the
marketplace. Therefore, from a strategic standpoint, firms can use CSR as a tool to improve
their reputation and thus improve the perceived quality of their goods and services.
Reputation and Productivity