Testing the Validity of a Model of Reputation and Credibility

Abstract

Reputation and credibility are concepts familiar to us all. Examples include whether to believe the product claims made by a manufacturer’s advertising, credit check/ verification for a new account, or whether to believe delivery dates or claims made by a vendor. The value of a firm’s overall reputation is easily seen in its relationship to a firm’s revenues: as a firm’s reputation increases, so does its sales (Shapiro 1982). A firm with a good overall reputation owns a valuable asset—“goodwill”: brand names, corporate logos and customer loyalty. Brand names can often be repositories for a firm’s reputation: high quality performance on one product can often be transferred to another product via the brand name (Moorthy 1985).