Proof that a good reputation improves the bottom line

  A study, reported in the European Management Journal recently, examined the economic benefits of a company’s corporate reputation among a sample of UK listed firms.  It revealed a significant positive relationship between the company’s media reputation and the level of its trade accounts payable and the number of days of trade credit received.  This indicates that a favourable media reputation influences a supplier’s credit risk perception of a firm and helps the firm to use trade credit as a source of finance.  This means that a good corporate reputation (presumably through ethical business behaviours, fair treatment and transparency) is regarded as a valuable intangible asset which can lead to competitive advantage and a stronger performance.