The Role of Corporate Reputation in the Stakeholder Decision-Making Process

Although it is widely accepted that corporate reputation influences organization-stakeholder interactions, there is no theoretical framework that conceptualizes this aspect in stakeholders' decision-making processes for establishing various forms of relationships with a firm. By adopting an interdisciplinary approach, this article provides a theoretical model that explains the role corporate reputation has in the process through which stakeholders decide to establish relationships with a firm. It is argued that the stakeholder decision-making process for exchange with a company is based on several exchange rules: corporate reputation, social legitimacy, pragmatic legitimacy, and exchange benefits. The article concludes with a case study of James Hardie Industries in Australia, which illustrates the function of the proposed conceptual model.