Most people agree that it is important for a company to have a good reputation. There is a value that can be ascribed to reputation that is very real – both intangible, i.e., related to the perceptions of a company, that is its brand – and a hard, dollars and cents, value too. I wrote about this back in 2007, and cited research that showed that a company’s reputation can have a measurable impact on its stock price.
Yet an article in the New York Times DealBook yesterday argued that corporate reputations are becoming increasingly irrelevant. It said that Wall Street is leading a trend in which size and tech rule the day, and people and corporate reputations – well, they just don’t matter as much anymore.
I share a few key excerpts below. I do not completely agree, of course (and would be surprised if anyone in the field of PR does) but it is interesting reading, and writer Steven Davidoff makes some excellent points – what do you think?
Reputation is dead on Wall Street…Why does reputation no longer matter?
The reason is unfortunate and partly attributable to why we got into the financial crisis. People simply don’t matter as much on Wall Street as they used to. Instead size and technology carry the day.
Today’s Wall Street is not the Wall Street of 1907
Until the 1980s… Wall Street was made up of traditional partnerships. These were small groups of investment bankers [who] put their individual reputations on the line, because there were so few of them.
But this began to change in the 1980s. Trading markets became much more sophisticated, and trading and brokerage became the investment banks’ primary business. This is a technology game. The better the technology, the better the trading and brokerage operation. Individuals became less important.
The growth of more complex capital markets and a global economy also created much larger financial institutions… These banks could use their assets and position to compete in the market for finance and trading.
These trends have become omnipresent in corporate America generally as it too has exponentially grown. And when these companies failed or otherwise committed a wrongdoing, their size allowed their reputation to be ignored. After all, it wasn’t the executive’s fault that the bad event happened. It was just the economy or other external factors.
