Financial Performance and Sustainable Corporate Reputation: Empirical Evidence from the Airline Business

Abstract

A good corporate reputation is essential, and it is becoming increasingly relevant for both companies and stakeholders. In this context, Fortune magazine publishes an annual ranking of corporate reputation, therefore listing the most admired companies in the world. Since corporate reputation is considered an intangible asset, it is difficult for competing firms to create similar products or services in the long run. Numerous researchers have concluded that financial performance is strongly connected to corporate reputation. The purpose of this study was to elicit the importance of financial performance in determining an adequate sustainable level of corporate reputation. Using financial indicators and the VIKOR method for a sample of airline companies, we compared the rankings generated by the VIKOR method to the ones published by Fortune. Empirical results showed that when introducing additional financial indicators in the VIKOR method, the VIKOR ranking tends to become similar to the Fortune one. When we introduced 10 financial indicators in the VIKOR method, we obtained similar rankings in 8 of the 10 years of analysis. Our study addresses stakeholders who follow corporate reputation details and may assist them in formulating investment decisions by relying on financial results.

Social Impact Enhancement: Developing Social Businesses through Impact Measurement, Performance Measurement, and Knowledge Management

“…Arshad et al (2012) report that the social responsibility activities of companies were directly related to corporate reputation and financial performance. Batrancea, Nichita, et al (2022) reach the same conclusion. Since measuring and evaluating performance and impact can enhance corporate social impact and performance, actively using certain performance criteria and impact measurement strategies can also potentially solve social businesses' financial challenges by enhancing their reputation.…”

“…A study conducted by Cocis et al (2021) concludes that airline companies with a high and positive reputation record good financial performance and equilibrium. Batrancea, Nichita, et al (2022) also find a "fairly strong link" between financial performance and corporate reputation. Interestingly enough, for social organisations, corporate reputation is directly and positively related to enhanced social impact scale.…”

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