Executive Summary
The purpose of this study is to explore the influences of the negative corporate CEO and corporate social responsibility reputations on the changes in consumers’ brand attitudes and purchase intentions.
In this study, the case of ‘American Apparel’ has been used as a stimulus of negative CEO and CSR reputation. American Apparel had long been known for its socially responsible and ethical business practices, enjoying a good reputation as a result. This reputation, however, declined after reports that the company received 70% of its products from third-party suppliers, contrary to their “Made in Downtown L.A.” label. Sexual harassment lawsuits against the founder, Dov Charney, brought further criticism, as did the company’s controversial advertising. The case of American Apparel provided research inspiration concerning how a company’s negative CEO and CSR reputation can affect consumers’ attitude and purchase intention.
The empirical results support significant effects of brand awareness and perceived quality on brand attitude and purchase intention. Furthermore, respondents’ brand attitudes and purchase intentions are reduced after they are being provided with the information on negative corporate reputation. This result confirms that negative corporate reputation significantly aggravates consumers’ attitudes and purchase intention.
The results of this study further suggest that consumers definitely process the negative corporate reputation, however… any kind of negativity (studied) would damage the relationship with consumers. The stimuli of this study, which represent CEO and CSR reputation, are related ethical issues…. Thus, based on the results of this study, we can imply that ethical reputation can be perceived as a homogeneous attribute that damages brand equity regardless of the type of reputation, such as those of a CEO or CSR. This also implies the critical strategic cues that one type of ethical reputation can mitigate the negative impact of another type of reputation and recover damaged brand equity, because consumers are aware of different type of reputations as compatible information about the company.
As the case of Microsoft shows, Bill Gates’s personal philanthropic reputation compensated for a damaged brand equity resulting from the company’s violation of antitrust laws (Sohn and Lariscy 2012). As this example demonstrates, a company can mitigate negative impacts to its reputation by actively managing the favorable ethical reputation of other aspects of the company. Any kind of favorable ethical reputation interchangeably recovers brand equity damaged by negative ethical reputation.
Research Notes
Multiple regression analysis and paired samples T-tests were conducted to test the hypothesized relationships using a convenience sample of 212 respondents.
The Impact of Corporate Reputation on Brand Attitude and Purchase IntentionPublication Date
2016/10/28
Publication
Fashion and Textiles
Author(s)
Na Young Jung, Yoo-Kyoung Seock