An ongoing discussion in organizational studies has focused on the path-dependent nature of organizational reputation. To date, however, there has been little explanation about when and why some constituents’ reputation judgments remain stable, whereas others are more prone to change. We contribute to this research by developing a relational theory of reputational stability and change. Our fundamental argument is that differences in constituent-organization relationships, as well as in the reputational communities that surround these relationships, affect the stability and change of reputation judgments. First, we highlight three relationship characteristics—favorability, history, and directness—and theorize that the reputation judgments of constituents with more unfavorable, longer, and more direct relationships with an organization are more stable, whereas the reputation judgments of constituents with more favorable, shorter, and more indirect relationships with the organization are less stable. We then develop the concept of reputational communities as a key source of indirect information about organizations. We highlight that the immediacy, size, and level of agreement within reputational communities affect how influential they are in changing individual constituents’ reputation judgments. Specifically, we propose that more immediate and larger reputational communities with a higher level of agreement are most likely to change individual constituents’ reputation judgments, whereas more distant and smaller reputational communities with a lower level of agreement are least likely to do so. Overall, we position constituents’ relationships with an organization and the communities that surround these relationships as central elements for understanding reputational stability and change.
Financial Hegemony, Diversification Strategies and the Firm Value of Top 30 FTSE Companies in Malaysia
