Reputation Symposium 2019 - Saïd Business School
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ISSUE 26
MICHAELMAS TERM 2019 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION
Reputation Symposium 2019
A selection of new research presented
at our annual conference, from closed
networks to stakeholder demands in a
crisis, and the power of online memes
Comment
Measuring sustainablility – what are the
implications for corporate value?
The Big Interview
The award-winning financial journalist
Diana Henriques on what Black Monday,
Bernie Madoff and the financial crisis taught
her about trust and regulation, and why she
still has faith in the ‘soft power’ of reputation
News and appointments
WWW.SBS.OXFORD.EDU/REPUTATION 1
COMMENT:
MEASURING SUSTAINABILITY
2019 could prove a watershed year www.value-balancing.com), a cross– https://tinyurl.com/wh3vs7w) to solve this
for the reputation of business: a year sectoral partnership of eight global problem, with advisors from Oxford Saïd.
in which the CEOs of the world’s founding member companies including
largest companies moved away from BASF, Deutsche Bank, Novartis and SAP, The reputational stakes are high: this
the overriding preoccupation with which is developing a new model for year’s Edelman Trust Barometer, one of
value creation for shareholders to a measuring and managing the positive and the leading surveys of its kind, recorded
commitment to “the benefit of all negative impacts of corporate activity. The that 62 per cent of employees would
stakeholders”. The quote comes from initiative is also supported by the OECD, like CEOs to take the lead in tackling
the US-based Business Roundtable’s and on a pro bono basis by Deloitte, EY, societal challenges. The same survey
new Statement on the Purpose of a KPMG and PwC. recorded that 60 per cent of respondents
Corporation (https://tinyurl.com/y5ygufqs). believe that a good reputation is essential
The declaration, signed by 181 chief This focus on redefining the purpose of to improve consumer sales in the
executives, encourages firms to prioritise business is an important and fundamental short term, but that further actions are
environmental, social and corporate one both for Saïd Business School and for necessary to maintain this reputation.
governance (ESG), and comes hot on the our research centre. Colin Mayer, Peter With the recent calls for a climate
heels of other high-profile declarations, emergency, issues of “climate justice”
notably the “Blackrock Letter” headed
“Purpose & Profit” from Larry Fink, CEO
‘How does corporate will only gain more prominence.
of the world’s largest asset manager reporting relate to The field is changing fast. At our centre
(www.blackrock.com/corporate/investor- reputation? How should we are involved with research into a
relations/larry-fink-ceo-letter). number of core questions: how does
we reassess sustainability corporate reporting relate to reputation?
The reputational consequences of this and intangible value?’ How should we reassess brands,
shift arise from the expectations they sustainability practices and intangible
create among different audiences, Moores Professor of Management Studies value? How can better metrics on
particularly given the added pressure at Oxford Saïd, is leading the British organisational impact be designed and
of public policy initiatives such as the Academy’s Future of the Corporation operationalised? Our future plans in this
Green Deal by the new President of the programme, which has just produced area include the hosting of a seminar
European Commission, Ursula von der its “Principles for Purposeful Business” series, launching in early 2020, as part
Leyen (https://tinyurl.com/u9wgqqb). (https://tinyurl.com/r7x6eck) aimed at of a project entitled Accounting for
Which initiatives are likely to gain most enhancing the connectivity of corporate Social Capital, which will bring together
traction and credibility? One candidate purpose, information and decision-making. practitioners from different sectors and
is the World Business Council of scholars from different disciplines within
Sustainable Development (WBCSD), How external audiences – from and beyond Oxford Saïd. We will engage
founded in 1995 and now backed by customers and activists to regulators and with the VBA, the WBCSD and other
over 200 companies. Its goal is to use shareholders – perceive the outcomes organisations to explore how they can
a “science-based approach” to global of these initiatives, depends on how make measuring sustainability count for
social and environmental challenges, successfully new standards are created, their stakeholders.
including the United Nations Sustainable implemented and communicated. Dennis West
Development Goals (SDGs). The most There is currently no uniform guidance
potentially influential WBCSD programme or accepted standard for social- Dennis West is a Researcher at our
is Redefining Value, which is particularly environmental reporting. The Global centre and a DPhil student at the Centre
concerned with linking management Steering Group (https://gsgii.org) and for Socio-Legal Studies. His research
decision-making and external disclosure. the Impact Management Project focuses on the formation of social-
(https://impactmanagementproject.com) environmental metrics, and he is
Another more recent initiative is the value are working on the Impact-Weighted involved in the Accounting for Social
balancing alliance (VBA – see Accounts Initiative (IWAI – Capital project.
Reputation is a termly magazine published by the Oxford University Centre for Corporate Reputation, Saïd Business School,
Oxford OX1 1HP. Tel: + 44 (0)1865 288900. Enquiries to: reputation@sbs.ox.ac.uk. Website: www.sbs.oxford.edu/reputation
©2019 Saïd Business School. No part of this publication may be reproduced or transmitted in any form without the prior permission
of the publisher.
2 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION
The presentations at this year’s annual Reputation
Symposium ranged as widely as always, from studies REPUTATION
of white-collar prisoners to the power of Facebook
commentary, and how wrongdoers are penalised SYMPOSIUM
within closed networks of Chinese entrepreneurs.
Below and overleaf we present a digest of some
2019
really stimulating research.
Is not guilty the same as innocent? straightforward in disclosing negative The protective power of closed
Should firms always be forthcoming with news. What is more, firms may have networks
information for investors? When facing significant negative returns even when When individuals behave badly to others,
a regulatory investigation, they can they are cleared of any wrongdoing. do they always face mistrust in the future,
either disclose immediately or wait until The finding may be important for and what reputational penalties arise from
an advanced stage of the process, for managers considering the impact of different contexts? To shed light on these
example when the regulator makes regulatory investigations, and suggests a mechanisms, Sonja Opper has analysed
a public declaration. Eugene Soltes need for them to account for the degree networks of Chinese entrepreneurs.
presented research that analysed of investor attention when deciding on Previously, it was understood that the
the records of investigations by the the level of voluntary transparency they penalty for misbehaviour depended
Securities and Exchange Commission choose. The research may also have on the gravity and scale of the offence
and compared the relevant corporate other implications such as for when it and the “detection rate” and different
disclosures and their impact. Whether becomes relevant to make a disclosure. “characteristics” of the offender.
or not such investigations – which can Professor Opper’s findings suggest
also involve other federal agencies – Eugene Soltes, Associate Professor at that the network structures, first of the
are pursued depends on evidence Harvard Business School, and David entrepreneurs as a whole and then of the
of wrongdoing, but also on political Solomon, Assistant Professor at the individual offender, are crucial. Closed
considerations and resource constraints. Carroll School of Management, Boston entrepreneurial networks seek to impose
The authors find that rather than reward College: “Is ‘not guilty’ the same as stronger reputation punishments than
firms for being straightforward, financial ‘innocent’? Evidence from SEC financial
and labour markets punish firms for being fraud investigations” continued overleaf ➜
WWW.SBS.OXFORD.EDU/REPUTATION 3
open networks, but the more firmly
the offender is embedded in their own
‘Firms obfuscate and relationships such as insurance and
supervision in transit. Whereas in the past
network, the less damage they suffer. misinform the public they might have relied on the judgment
The counter-intuitive conclusion: while
closed networks are most effective in
by using a variety of of widely recognised experts, the audit
work is now more widely distributed and
monitoring and detecting malfeasance metrics and ignoring subject to more formal mechanisms.
within the entire network, closure around climate science’ Professor Shortland concludes that there
is an upward price pressure because of a
the offender guards against penalties.
new kind of wealthy buyer who is armed
Sonja Opper, Professor of International ambiguity is in part due to the lack with the firepower of their law firms, and
Economics at the Lund University of regulation and generally accepted this requirement limits access to those
School of Economics and Management: standards. The research examines the valuable pieces. This finding is significant
“Surviving bad behaviour: what explains relationship between social activism and because the case demonstrates how a
the reputation penalty?” these new corporate practices. These market that was traditionally privately
kinds of studies highlight how companies governed and based on reputational
respond to pressure from activists, and mechanisms is now dominated by a
Greening the grey areas of the firm also how they can avoid greenwashing: legally formal and professionalised
Are sustainability reports merely for example, by embracing science-based system. This example may have
for reputation enhancement? Their practices and metrics that focus on important lessons for the “legalification”
conclusions can be presented in outcomes and impact, rather than on the and professionalisation of other fields.
simple terms, but the different inputs and outputs of corporate practices.
ways of accounting they use can be Anja Shortland, Professor in Political
extremely complex. Edward Carberry Edward Carberry, Associate Professor, Economy at King’s College London,
and Matthew S. Urdan investigate Matthew S. Urdan, PhD candidate, at and Andrew Shortland, Professor of
how genuinely corporate impacts are the College of Management, University Archaeological Science at Cranfield
reflected in environmental reporting. of Massachusetts: “Sustainability in the University: “Governance under the
In their analysis of S&P 500 firms, Anthropocene and the institutionalisation shadow of the law: trading high-value
they conclude that companies often of corporate greenwashing” fine art”
engage in a sophisticated act of so-
called “greenwashing” – in this context,
New rules at the top of the art market Stakeholder demands in a crisis
decoupling reporting practices from
actual outcomes – and conclude that When highly priced artworks change Crisis management involves addressing
greenwashing of this kind has become hands, the reputation of the auction the demands of different stakeholders
institutionalised across sectors. houses plays an important role in the simultaneously. Jonathan Bundy and his
transaction. However, the processes co-authors develop a new way of thinking
The authors argue that firms obfuscate of verification are complex and not well about the nature and role of different
and misinform the public by using a understood. Anja Shortland presented forms of social evaluation by different
variety of metrics and ignoring climate research into how leading organisations in audiences, in categories identified by
science. Although some frameworks the art market identify forgeries and trace reputation scholarship including approval,
exist, such as the Global Reporting the legitimate chain of ownership. The legitimacy, reputation, status and the
Initiative and the Sustainability standard operating procedures of auction celebrity of the firm involved. The
Accounting Standards Board, this houses involve multiple contractual framework in this research connects
4 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION
REPUTATION
SYMPOSIUM
2019
different fields of activity, ranging from “Organisational hubris” describes a collective beliefs and the feedback loops
public relations and communications to situation when there is over-confidence between external reputation and internal
management and strategy. As a result, among members of a firm. This internal organisational culture.
it increases the clarity for those studying phenomenon can be induced and
the dynamics of corporate reputation exacerbated by external factors. Daniel Daniel Gamache, Assistant Professor
in times of crisis. The potential insights Gamache and Kevin Curran propose that at Terry College of Business, University
may show new ways for firms to adjust positive social evaluations can affect of Georgia, and Kevin Curran, a former
their approach to different stakeholder collective attitudes at the organisational Research Fellow at our centre and now
demands. The implications of multiple level. For this to become hubristic, it Assistant Professor at the University of
reputations in crises requires managers must satisfy certain conditions, including Amsterdam Business School: “Simply the
to think carefully about the allocation of best: how positive social evaluations can
blame and admission of guilt. Tensions
arise from the difficulty of addressing the
‘Organisational hubris lead to organisational hubris”
different demands of each relationship, describes a situation Lessons from white-collar prisoners
since one might impact on another.
when there is over- The reputational impact of serving a prison
Jonathan Bundy, Assistant Professor confidence among sentence is at the extreme end of the
at the W.P. Carey School of Business,
Arizona State University; Mike Pfarrer,
members of a firm’ spectrum. For white-collar professionals,
often highly regarded by their peers, the
Professor, and Farhan Iqbal, PhD that a sense of pride and confidence fall can be particularly severe and difficult
candidate, at the Terry College of is so pervasive that it becomes to recover from. William Harvey is leading
Business, University of Georgia: “Wicked characteristic of that organisation. This a study observing and interviewing 70
problems: managing multiple social research offers insights into how to inmates at a federal prison in the US.
evaluations in a crisis” distinguish organisational hubris from The insights gained shed light on the
that of individuals. The former can limit relationship between reputation and
the influence of leadership because it identity, and on the processes involved in
Suffering from good reputation can foster insularity in the organisational overcoming the challenges of rebuilding
Are there circumstances in which a good decision-making process. This has a reputation in an environment where
reputation can harm an organisation? further implications for the role of feedback on reputation is absent.
In such situations, working on one’s
self-image becomes a key coping
mechanism. The authors introduce the
concept of “contribution” to argue that
perceptions of future value are more
important than perceptions of past actions
when individuals attempt to recover
from reputation loss. More broadly, this
may also be a useful consideration for
the strategies of companies facing legal
proceedings and regulatory sanctions.
William Harvey, Professor of Management,
and a former Research Fellow at our
centre, and Navdeep Arora, both at Exeter
University Business School; Dimitrios
Spyridonidis, Associate Professor,
University of Warwick Business School:
“Down and out? A case study of white-
collar prisoners in the United States
attempting to recover from reputation loss”
Daniel Gamache: distinguishing organisational hubris from that of individuals continued overleaf ➜
WWW.SBS.OXFORD.EDU/REPUTATION 5
REPUTATION
SYMPOSIUM
2019
Rongrong Zhang: examining stigma spillover from deviant organisations
How organisations can exacerbate Mary Anne Case, Professor of Law and why do others fail to rebuild their
scandals at University of Chicago Law School: reputation? Rongrong Zhang and her co-
What are the actual consequences for “Institutional Responses to #MeToo authors explore the case of the Chinese
the accused in the aftermath of the Claims: #VaticanToo, #KavanaughToo and infant formula industry after it became
movements precipitated by #MeToo? the Stumbling Block of Scandal” known that the milk was adulterated with
While it is clear that individuals often melamine.
feel the need to deny any wrongdoing Decontamination from toxic reputation
out of self-preservation, the situation is They argue that spillovers of stigma
more complex for organisations. Mary Companies can suffer reputation damage from deviant organisations are difficult
Anne Case studies the recent past of by mere affiliation to an industry or a to avoid because customers generalise
the Catholic Church. Her findings shed larger group of firms. How can some the culpability of some actors to the
light on how the institution’s response to firms escape a stigmatised industry entire industry. As a result, these
accusations of widespread sexual abuse spillover effects pose a serious threat
was guided by the internal structures and to the survival of all firms. They identify
beliefs within the organisation. different strategies of de-stigmatisation:
while some only induce short-term
The canon law doctrine of scandal effects, other approaches allow the
defines it as a barrier to the offender successful firms to return to financial
practising their faith. By publicly health and competitiveness in the long
acknowledging the sins behind the term. The clue seems to lie in the way
scandal, the offending clergymen would firms deal with pride and shame, and
not be able to be led to salvation as how these can be used in communicating
intended by canon law. This points to with stakeholders to contain spillovers
a fundamental difference between the of stigmatisation. In other words, the
rationale of the Church and of public potential for “contamination” does not
law. Secrecy is seen internally as an come from mere similarity of firms, rather
important tool, but externally evaluated it arises from social evaluations. The
as an illegal cover-up. This case is potential findings of this preliminary study
important to understand other contexts are important in understanding other
whereby powerful actors may incentivise cases of industry-wide stigmatisation or
secrecy by invoking a similar doctrine of loss of reputation, such as in the financial
scandal. Organisations may learn lessons sector after the global financial crisis.
from the Church’s example in other
complex contexts such as the oversight Rongrong Zhang, PhD candidate, Milo
of police conduct, national security, Shaoqing Wang, PhD candidate, and
or internal investigations within large Royston Greenwood, Professor of
private corporations. William Harvey: criminals’ reputations Strategic Management, Alberta School
6 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION
of Business, University of Alberta: Business, University of Missouri: shows that reputation is less affected
“Rebuilding reputation after categorical “The Joke’s on Us: The Power of Social when disclosure and apologies
stigma spillover” Media to Influence Evaluations of are accompanied by positive user
Corporations and their Leaders” comments. Conversely, reputation is
more adversely affected when denials
Why online memes should be taken
seriously ‘Metaphors, parodies and blaming are accompanied by
negative user comments. These findings
Memes – pictures given a graphic and other figurative are important for firms to understand
treatment, with humorous/pointed short
comments reflecting on an individual
communications can that positive comments do not offset
negative ones.
or subject – are a well-established have effects on social
phenomenon on the web. Graphical
representations are also very important
approval by audiences’ Michael Etter, Senior Lecturer at King’s
Business School; Matthes Fleck,
in corporate communication. Can these Professor of Applied Sciences, Lucerne;
tiny visuals cause harm to corporate The power of social media comments Roy Mueller, Associate Consultant,
reputations? Rhonda Reger proposes in a crisis Farner Consulting: “User comments and
that such social media content does The mechanisms that govern the individuals’ reactions to corporate crisis
indeed have the power to positively or assessments of crisis situations by social responses: the amplification effect on
negatively affect how firms and their media audiences are not thoroughly reputational outcomes”
leaders are perceived. Her laboratory understood. To address this gap,
studies show that metaphors, parodies, Michael Etter and his co-researchers
and other figurative communications analysed Facebook comments. They
can have effects on social approval by found that inappropriate responses
audiences. The research contributes to crises followed a certain pattern.
to our understanding of the power On the one hand, firms issued
of non-factual, often funny, and apologies and provided additional
seemingly meaningless content on information. On the other hand, they
social media. outright denied responsibility and
blamed someone else. The authors For the complete programme from the
Rhonda Reger, Professor of identified a new phenomenon called the Reputation Symposium 2019 see
Management, Trulaske College of “amplification effect”. Their research https://tinyurl.com/sefpqkm.
WWW.SBS.OXFORD.EDU/REPUTATION 7
What is the purpose of ‘brand activism’, when
is it authentic, when is it a risk, and what are its REPUTATION
limitations? In a fascinating panel, our guest speakers
explored the implications of their research into ‘activist SYMPOSIUM
firms’, from an indigenously owned oil pipeline in
Canada to a clothing chain set up to support the
2019
homeless in Melbourne.
Should firms take a stand? convenience store chain in the US – we Melbourne. First, they give 100 per cent
Daniel Korschun, Associate Professor of found that, unsurprisingly, if people agree of profits to the cause of resolving youth
Marketing, LeBow College of Business, with your stand they’re going to be drawn homelessness – which is not unique: a lot
Drexel University to you. The strange effect is when they of companies make monetary donations.
disagree with you. If you are one of these HoMie also holds VIP shopping days once
My research started in social values-driven companies that talks about a month where they close their stores to
responsibility and how people respond yourselves in a certain way, what I’m the public, opening up to homeless youth
to it, but it didn’t take long for me to finding is a real tolerance for this, so long in Melbourne, who receive free, brand-
realise that in social responsibility as the stand’s not too extreme. new clothing, lunch, hygiene kits, haircuts,
or sustainability, as you dig deeper, all sorts of things.
eventually you get to a political matter. When the stand becomes extreme,
I see two very broad trends: one is, people have a knee-jerk reaction, but with HoMie also has a pathways programme,
consumers have been asking more and most stands, companies aren’t trying to where they transition youth who are
more not just what a company makes push the limits, they’re trying to make sleeping rough into paid internship
and what it does, but who is behind a stand within reason. When we see a positions at HoMie, with on-the-job
it and what their motivations are, and values-driven company, even people that experience, accredited retail training
using that to make decisions about their disagree with it can respect it. I always and general mentorship and support.
consumer choices. The second big look at this as consumers evaluating This model has been so successful that
trend is polarisation and the fact that the relationship overall, looking at the they’re helping other businesses in the
the middle ground is starting to company and saying, ‘Are they being area to offer this model. HoMie is really
drop out as people are taking sides. honest with me or are they withholding backing up what they say with what they
So companies are increasingly being information from me?’ By abstaining from do. In our research we call this “authentic
asked to address some of these issues a stand, while the company thinks that brand activism”.
and take a stance, and people are saying it’s keeping them out of trouble, it can be
that they want to know more about increasing the risk. What happens when that’s not the case?
what the company is about: what is your An example is the ad that Nike released
stand on abortion? What is your stand My feeling is that companies don’t like about a year ago with Colin Kaepernick
on the death penalty? risk and they assume that consumers (the NFL player known for controversially
don’t like risk either. Well, consumers kneeling during the US national anthem
The editor of Journal of Marketing, don’t like risk in the products that they’re before games to highlight racial
Christine Moorman, does a poll of chief buying, but they like it when companies inequality): ‘Believe in something even if
marketing officers once or twice a year, take risks based on values, because it it means sacrificing everything’.
and she’s been asking them recently communicates more about what they’re
whether their companies should take a all about. These political issues are When they came out with this ad, a lot
stand: 21 per cent say yes, a company opportunities to reveal to consumers of the questions were surrounding the
absolutely has to jump in and do it. That and employees who they are, what they authenticity of this message: the fact
leaves the other 79 per cent that say that stand for, and demonstrate that they that what they were known for in the
they should stay out of it and be neutral have the courage to act on it, even when past is not reflective of the message.
on everything. it’s difficult. Nike are known for sweatshops and,
recently, issues around discrimination.
In my research, my general conclusion Further to that, they didn’t actually
What makes a ‘transformative’ brand? back it up with authentic practice: they
is that they’re both right. It really
depends on the company. Much of it is Jessica Vredenburg, Assistant Professor, didn’t donate to the Black Lives Matter
the expectations that the company is Auckland University of Technology, and campaign; in fact, they still maintained
bringing already: companies that make Amanda Spry, Lecturer, RMIT University, their sponsorship with the NFL teams
claims that they’re values driven and Melbourne that were condemning Kaepernick. This
make decisions based on beliefs, if they is what we refer to in our research as
don’t take a stance they are viewed as We’re looking at the marketing dimensions “wokewashing” – like “greenwashing”
hypocrites. That’s an obvious danger. of brand activism through HoMie, a with socially aware movements. Now
What about the people that disagree with clothing company based in Melbourne. what’s interesting is that despite this
this stand? How are they going to react? What is special about HoMie is their being arguably an inauthentic practice,
In the research I’ve done – including brand values. The company was set up to Nike did benefit from it: they had
field experiments at a major pharmacy tackle the issue of youth homelessness in increased sales, their stock prices went
8 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION
Perspectives on activism: Daniel Korschun, Amanda Spry, Jessica Vredenburg, Harrie Vredenburg and Connie Van der Byl
up. We’re trying to understand what’s intermediary by Delbert Wapass, the The purchase of the pipeline and the
happening, what’s changing in society Chief of the Thunderchild First Nation, expansion is a $7 billion project. The idea
that these things can coexist. an indigenous community in Western is that it will be entirely financed through
Canada. He asked whether I would a syndicated bond issue, with no initial
Consumers now feel increasingly represent them on the board of directors outlay by indigenous communities, in
disenfranchised from local leadership, of a newly formed oil company called recognition of the fact that they are
government and agencies and are looking Prairie Thunder Resources in which the the owners of the resources. It can
to others in positions of power who First Nation had just taken a 16 per cent be financed on the basis of the assets
might be able to help affect some sort of equity stake. that currently exist on the ground and
social change. Increasingly we are seeing the long-term shipping contracts. Of
brands step into a space where they are Fast forward to about a year ago. In the income, 20 per cent will go directly
pursuing not only market performance Canada there’s been a big challenge with to indigenous communities through a
but social change, and this is different getting new market access for Canadian community investment fund, 80 per
from social enterprises and not-for-profits oil and gas. Every pipeline proposal cent will go to an indigenous sovereign
that have existed primarily for doing has been opposed by environmental wealth fund, to be invested globally in a
good. We’re seeing brands that are truly groups tied with indigenous groups. diversified portfolio.
hybrids, balancing market performance The Trans Mountain pipeline was built
with societal change. 60 years ago in the mid-1950s, at C. V. der B. To link to this concept
which time of course you didn’t consult of brand activism, there are two key
At the same time, we’ve observed environmental or indigenous people. things. The first is that this isn’t a typical
that brands are being elevated to an It’s been running for the past 60 years. business-to-consumer firm. This is an
institutional role and are starting to It was owned by Kinder Morgan, a big infrastructure project in a commodity
act as guides for behaviour, norms Texas firm. A year ago, [after expansion industry, so that creates some nuances
for consumers and competitors and plans were continuously blocked] Kinder and complexity. There are no direct
for the industry regulators. These Morgan said, ‘We’ve had enough’, and customers, but there’s been significant
kinds of brands – which we refer to as so the federal government of Canada opposition, so brand does factor into this
“transformative” brands – are the brands purchased it. story. The other really important thing
that are acting as legitimate leaders. is that this is now providing agency to
The Chief of the Thunderchild First indigenous communities in Canada, when
Nation and I, and other people from that hasn’t existed in the past. There has
A partnership designed for societal the oil and investment industries, been regulated consultation, but it’s been
impact started talking about a way through typically transactional or one way, and
Harrie Vredenburg, Professor & Suncor the impasse: indigenous communities this represents a significant movement
Chair in Strategy & Sustainability, purchasing the pipeline. We came up towards meaningful engagement and
Haskayne School of Business, University with the name “Project Reconciliation” collaboration. The other key is that this
of Calgary, and Connie Van der Byl, because in 2015 Canada engaged in a is a new start-up per se, it’s not an
Associate Professor in the Bissett School “truth and reconciliation commission” incumbent firm that’s suddenly picking
of Business, Mount Royal University between Canada and its indigenous up on a social change. The social action
people, inspired by South Africa. One is really embedded in the mission and the
H.V. All my work is in the area of of the calls to action was that Canada’s purpose of this organisation so all three
energy and sustainability and the indigenous people would have real elements of sustainability, economic,
environment. Two-and-a-half years sustainable benefit from the resources environment and social change, are part
ago I was approached through an and infrastructure in Canada. of the mission.
WWW.SBS.OXFORD.EDU/REPUTATION 9
The award-winning financial journalist Diana Henriques reflects on what Black
Monday, Bernie Madoff and the financial crisis have taught her about trust and
regulation, and why she still has faith in the ‘soft power’ of reputation.
THE BIG INTERVIEW:
DIANA HENRIQUES
Whom should you trust? The question Exposing how the unscrupulous look Given the increasing complexity of
is ever-present during a fascinating to exploit that human fallibility has financial instruments and operations,
discussion with Diana Henriques, undoubtedly been a driver in her career. the money and time required to unravel
the acclaimed financial journalist and At her first local paper, the Lawrence stories in this area are considerable. Such
bestselling autho – recently appointed a Ledger in New Jersey, she had an early complexity is also the conman’s friend:
Visiting Fellow with our centre – whose lesson in “fake news”, reporting on the the mystique of investment “black boxes”
work over five decades has illuminated public meetings to consider plans for is what enabled Madoff to thrive for so
the troublesome intersections between affordable housing for the local black long. “He made you feel safe because
trust, regulation and reputation. For community in a largely white suburb. the complexities that were far beyond
Henriques there is just as much emphasis “The newspaper played a significant you he treated as if they were ordinary
on the “should” as the “whom” in that role in navigating that community to a arithmetic,” says Henriques. Even when
first sentence. She is a dissenter in the good outcome,” she says, holding the one expert, Harry Markopolos, called
increasingly widespread call for more line against the misinformation coming Madoff out, his analysis of why Madoff’s
trust, whether at the negotiating table, in from opponents to the plan. “It gave me investment returns were unfeasible was
the boardroom or the voting booth. a taste of what I got into this business impenetrable to the regulators at the SEC.
to do.”
A certain amount of trust, she What is Henriques’ prescription for
acknowledges, is essential to the smooth She has seen numerous peaks and a more dependable financial sector?
running of humankind. “We know that troughs in the reputation of the media Humility on the part of investors, for
high-trust societies tend to perform over her career – remember how vilified one: know what you cannot know,
better economically. A threshold level of the Washington Post was at the time of and make decisions according to well-
trust is essential for modern commerce, Watergate, she says, until it was proved established principles. As an illustration,
for healthy communities – heaven knows right. But despite the current pressure she mentions two happy endings in the
– for healthy employee relationships.” on traditional media from sometimes Madoff saga: investors who from long-
But trust is immensely problematic, freewheeling online competition and established principles of safe dealing
especially when it substitutes for other – investment limits and the requirement
more robust and objective indicators.
“Until you understand how trust operates
‘We need to recognise of third party custodians – walked away
despite their strong desire to invest.
cognitively, how it operates in our mental that we are not very
machinery, you can’t be trusted to use
it wisely,” she says. “You need to be
good at discovering “We need to recognise that we are
not very good at discovering who is
humble about the fact that your own trust who is trustworthy trustworthy and who isn’t,” she says.
Geiger counter, its default position is to
say, ‘Yes, I trust you.’ And if you don’t
and who isn’t’ “We become tribal, we tend to trust
people who look and sound a lot like
know that, you’re going to rely on it in relentless assaults on its credibility, she us, people who are attractive. I mean
situations where you should not do so.” is buoyed by how robust the media as if Elizabeth Holmes at Theranos” – the
a whole is proving to be – particularly discredited blood testing company
The epitome of this is Bernie Madoff, in her own investigative sphere: “I am currently facing prosecution – “had been
the infamous perpetrator of the world’s exhilarated by the quality of investigative five foot two, dumpy with acne scars,
largest Ponzi scheme. Henriques was reporting: Mother Jones, websites would any of that had happened?”
the first journalist to interview him in like Vox, Buzzfeed and Politico. The In addition, bad apples get too much
prison after his conviction in 2009. In her Associated Press is doing extraordinary mileage out of “reputation borrowing”, in
compelling bestseller on his activities, investigations [as is] USA Today – and, part because of the carelessness – and
The Wizard of Lies, she writes with great of course, the Washington Post, the greed? – of those they borrow from.
understanding of the skills that enabled Wall Street Journal and the New York Theranos and another currently troubled
Madoff to thrive, and with forensic Times.” She is also an admirer of the “unicorn” WeWork exemplify this: “Look
authority about the mechanisms that non-profit ProPublica and its partnerships at the trophy board that Theranos put
made it possible, but it is our willingness with news organisations across the together, [and] at the investment bankers
to be fooled, the systemic human country, including small local outlets. that were at WeWork’s beck and call.”
fallibility, that is the most important “It’s a new world. It’s a new landscape.
lesson: “In a world full of lies,” she It hasn’t solved the business model So given human fallibility, and the
concludes, “the most dangerous ones problem yet, but it is rebuilding the systemic global financial disasters that
are those we tell ourselves.” reputational component.” she has covered in her time – 1987’s
10 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATIONBlack Monday is the focus of her most
recent book A First-Class Catastrophe –
does she have any confidence that things
have changed meaningfully for the better?
“It’s a little better than it has been – and
I’m taking a long view on that,” she says.
“I think there is more realism than there
has been. I think there’s more awareness
of what we don’t know. I think there is a
modest improvement in the media and
the investing public’s awareness that you
need to be a lot more careful.”
Photo: Fred Conrad
One thing that hasn’t improved – and
her self-confessed hobby horse – is
“the tendency to devalue reputation as
a critical piece of policy equations”. She
learnt a lesson long ago when reporting
on the pioneering junk bond investment
bank Drexel Burnham Lambert. “They ‘Even honest people will tolerate dishonest people without blowing the whistle’
treated media and regulators with
absolute arrogance and when they got in culture versus regulation in countering The worst of those worlds is to have the
trouble and needed a regulatory bail-out, bad behaviour. She comes down firmly rules and not have a budget to enforce
they had no reservoir of goodwill to draw on the side of regulation. “The notion them, because that leads people to think
on to help them through that crisis.” that you can have a deregulated market that they’re safe when they’re not. And
makes as much sense as the notion you that’s where we are now.”
Henriques points to Wells Fargo as can have deregulated traffic,” she says to
an instructive current example of a me, and as she has said previously: “We The Federal Reserve illustrates a
longstanding disregard for reputational cannot trust some unwritten rule. Even different facet of reputational threat:
risk going all the way to the top. The honest people will tolerate dishonest the vulnerability of a vital lever of “soft
board’s attempts to plead ignorance people without blowing the whistle.” power”, which is being undermined to
of sales irregularities and fraud, and to the point that its future effectiveness
blame management, were untenable Wall Street’s once fiercesome watchdog, might be reduced. Henriques observes
since “problems at that bank were the Securities and Exchange Commission “in horror” the constant attacks on
exposed by the Los Angeles Times a (SEC), the origins of which provide the the Fed from President Trump. “The
year before the board did a single thing focus for her next book, has fallen far reputation of the Fed is really the best
about it. Unfortunately regulators and from its illustrious origins, in her eyes. example in American financial history of
prosecutors have been remiss in not “The guys that went to Washington in the the extent to which the soft power of
holding boards accountable.” She is 1930s knew what an unregulated market reputation can be used. The Fed has not
sceptical of the ads that Wells Fargo looked like, and they knew the damage always been right; on balance in recent
is currently running in the US asking it could do, so they were determined to years, it’s been a good central bank and
customers for forgiveness, with images regulate it,” she says. Its third chairman, a badly conflicted bank regulator. But the
of stagecoaches evincing its legacy in the William O. Douglas, famously summed reputation of the Fed in crisis after crisis
Wild West, albeit that trying to apologise up its purpose as “the investors’ has been the difference between chaos
is better than “the tendency in the past to advocate”. “You don’t have to travel far and survival. Time and again you can see
ignore these scandals”. into the current SEC practice to see how that its reputation struck fear into the
far we’ve come from that.” The problem, hearts of malefactors, put confidence
The most under-regarded and critical as usual, is money. “We’re not willing in the hearts of the frightened, gave
reputation of all for Henriques is that to fund the regulatory enterprise to the legislators and regulators the heart to go
of the regulators and overseers of the level it needs to be funded,” she says: on. There is no more powerful example
financial sector. There is much debate “You could do what some countries do: of the extent to which, if you have
among practitioners and academics about have no speed limit. Or you can invest reputation you can do almost anything,
the relative importance of organisational in meaningful enforcement of the rules. and if you don’t, you can’t do anything.”
WWW.SBS.OXFORD.EDU/REPUTATION 11NEWS
AUGUST
Our Reputation Symposium took
place at Exeter College and Saïd APPOINTMENTS
Business School, 28-30 August. For
the full programme see https://tinyurl. Kevin McSweeney Professor of Management
com/sefpqkm. At the symposium dinner joined the centre as a at Saïd Business School.
we presented our annual awards: Best Postdoctoral Research
Published Paper went to Samuel P. Fellow in September. Kevin holds a
Fraiberger, Roberta Sinatra, Magnus His research interests bachelor’s degree
Resch, Christoph Riedl and Albert-Laszlo lie at the intersection (BA) in History and
Barabasi for “Quantifying reputation of strategy, Political Science,
and success in art” (https://tinyurl.com/ entrepreneurship and a Master of Arts
rjdrm82); Best Dissertation went to Abbie organisation theory. (MA) degree in
Griffith Oliver for “Think crisis, think Political Science, and
female?: stakeholder reactions to CEOs He is particularly a Master of Business
following corporate violations”. interested in the resource- Administration (MBA) degree
acquisition practices of in Strategic Innovation, all from
Our Research Fellow Rohini Jalan co- organisations and new ventures. the University of Rhode Island. He
organised and presented her research Specifically, he focuses on how socio- completed his PhD in Management
at a symposium titled “Producing cognitive factors (e.g., reputation, from Mays Business School at Texas
technological futures: on automation, status, institutional logics) surrounding A&M University in August 2019.
ethics, and inequality” at the Annual entrepreneurs, executives and
Meeting of the Academy of Management organisations influence resource- In September two of our Research
in Boston. acquisition practices. He employs a Fellows took up new academic
variety of methods in his research, posts: Kevin Curran, as Assistant
SEPTEMBER ranging from pure qualitative methods Professor of Entrepreneurship and
Our Research Fellow Eva Schlindwein to qualitative comparative analysis Innovation at the University of
gave a talk at the Technische Universität (QCA) and traditional econometric Amsterdam; Ellen He as Presidential
Dresden with the title “Organisational methods. He will be working Fellow at the Alliance Manchester
reputation: current insights and debates”. with Professor Michael Smets, Business School.
OCTOBER
Our director Rupert Younger led the
Corporate Affairs Academy programme Intergovernmental Working Group on roles and responsibilities of cultural
for its second session of the year International Standards of Accounting institutions in Italy. He is co-chair, with
at Oxford Saïd (www.sbs.ox.ac.uk/ and Reporting (ISAR). The focus was Oxford Saïd’s Professor Bob Eccles and
programmes/corporate-affairs-academy). on sharing and evaluating different Professor Colin Mayer, of the Oxford-
measurements of the private sector’s Berkeley-Hermes EOS Working Group
Our Researcher Dennis West contribution to the attainment of the UN on Purpose, which held meetings at the
participated in two workshops with the Sustainable Development Goals. University of California, Berkeley, and in
Value Balance Alliance (VBA) in Frankfurt New York.
as an academic advisor. The VBA is NOVEMBER
concerned with creating a standardised Rupert Younger taught on the MD@ Our Postdoctoral Research Fellow
model for measuring and disclosing eni programme at Castel Gandolfo in Gregory Clark, whose research involves
the environmental, human, social and Italy, part of the senior management mathematical analysis of networks, has
financial value companies provide to training organised by Eni Corporate published a paper, “Stably computing
society (see p2). He also presented University. He was also the keynote the multiplicity of known roots given
at the United Nations Conference on speaker at the italiadecide conference leading coefficients”, in Numerical Linear
Trade and Development (UNCTAD) in Milan, speaking on the reputations, Algebra with Applications.
CONTACT US
We welcome your feedback. Please send any comments to: reputation@sbs.ox.ac.uk. The Oxford University Centre
for Corporate Reputation is an independent research centre which aims to promote a better understanding of the way
in which the reputations of corporations and institutions around the world are created, sustained, enhanced, destroyed
and rehabilitated.
For full details of our research and activities, and for previous issues of Reputation, see: www.sbs.oxford.edu/reputation.
12 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATIONYou can also read
