Reputation Drivers in Oil and Gas Sector

II Reputation Drivers in Oil and Gas Sector 
 
Abstract 
Purpose The purpose of this paper is to explore how do companies leverage on their 
sustainability reports for enhancing their reputation. Is the current reporting is consistent with 
what found in literature for the drivers that affect reputation. 
Design/methodology/approach A literature of reputation is reviewed with the aim of 
determining the most relevant drivers that affect  reputation. Afterwards these drivers are 
translated in to elements that can be investigated and used  in the content analysis.   A 
qualitative content analysis is applied to  the sustainability reports of the  top 13 companies in 
global fortune 500 list operating in the oil gas sector. The content analysis provides information 
on 32 elements which are constituting the reputational driver model which was developed. The 
content analysis framework will check the existence of the elements through a scorecard that 
was developed. The scorecard requires three types of information for each disclosed element. 
These areas are  (i) vision and goals, (ii) management approach, and (iii) performance indicators 
. 
Findings  The content analysis reveals a low level of comprehensive reporting in the areas of 
“vision and aims” and “performance indicators”, while the “management approach” area is 
performing good enough among most of the companies explored. As expected, the companies 
achieved the highest score in reporting for the drivers of “Environment” and “Safety” . Still some 
drivers are not very well covered such as the “regulatory compliance” and “Delivering customer 
promise”. Within each driver , there are still some elements that are badly reported or not 
mentioned in the reports of some companies although their importance. The study revealed 
some differences which can be more investigated about differences in reporting between 
companies operating substantially outside their home location and companies operating 
substantially within their countries of origin.  
Conclusion Companies should pay more attention for the comprehensiveness of their 
sustainability reports by disclosing focused and relevant information for their stakeholders on 
the 3 areas of disclosures defined in the content analysis. Stakeholders are increasingly 
demanding more information. Therefore, companies should increasingly engage with 
stakeholders to close the gaps that are raised which can result in negative consequences on 
their reputation.  
Limitations 1)The reputation measurement models are still lacking consensus in literature. 
2)Further  future research is needed in order to operationalize these models and move form 
theory to practice. 3) Further companies in the content analysis might have shown more and 
different results.  4)This study was not showing the quality of the information disclosed which 
requires more in depth investigations and research.
1. Introduction 
 
   1.1Objective 
Although companies are increasingly disclosing information about their sustainability 
performance in the sustainability reports they publish and with a leading performance for the oil 
and gas companies, it is highly questionable whether the current trends can contribute in 
meeting the stakeholders expectations and satisfying all their doubts and concerns that are 
affecting these companies reputations. In the literature there are doubts also whether the 
current annual, stand-alone CSR or social and environmental reports can satisfy the increasing 
demand for accountability (Adams, 2004; Milne & Gray, 2007).
[26]
 
The aim of the work is to construct a model that can check the consistency between the factors 
they have to disclose to enhance their corporate reputation among stakeholders and what the 
companies in the oil and gas are reporting in their sustainability reports. In other words, the 
objective of this work to check whether companies are leveraging on their sustainability reports 
for better be perceived by stakeholders and hence improve their reputation.  
The sustainability reports of the top 15 oil and gas companies listed in the global fortune 500 list 
will be used as the context through which we will test how companies are managing their 
corporate reputations.  
The main research question that this study will try to answer is: 
How do companies leverage on their sustainability publications for the favor of reputation?  
A qualitative content analysis is made for that purpose for the publications of the top 15 oil and 
gas companies listed in the global fortune 500 list. For the top 15 companies, we found that only 
12 companies of them are publishing their sustainability reports. We added one company more 
to the study, so that the total number of companies examined in this study is 13 companies.  By 
studying the sustainability reports of the companies more deeply, we can have a better 
understanding on the degree of consistency and recommendations on how to enhance the 
publications of the company in a way that will lead to a better reputation advantage for them in 
the future.  To achieve this, the work follows six related steps: 
First, literature relating to reputation is reviewed in order to select the model; we are going to 
apply afterwards in the qualitative content analysis. 
Second, after choosing the model, a further breakdown of the model was required in order to 
make the model applicable for extracting the information needed and performs the qualitative 
analysis. In other words to move  from theory to practice.
2 Reputation Drivers in Oil and Gas Sector 
Third, an evaluation criterion was set by reviewing the best practices in the literature for the 
content analysis. In the meantime, a search protocol was defined for each element in the model, 
after wards a score card was developed.  
Fourth, a qualitative content analysis was performed on 13 companies representing the top 13 
companies operating in the oil and gas sector which are listed in the global fortune 500 list.  
Fifth, a thorough analysis was conducted to the results obtained and then presentation of the 
findings. 
Sixth, a conclusion was drawn for the work performed and the most relevant findings that were 
observed.  
Overview  
Before going in to details for the literature review, it is important to explore the relationship 
between corporate social responsibility and Reputation. 
Far from being distinct the two concepts are largely overlapping. In other words, when taking a 
stakeholder perspective, Corporate Reputation and CR are both expressed through similar and 
overlapping corporate behaviors and understood in terms of similar and overlapping 
stakeholder perceptions. In this way rather than viewing reputation and responsibility as two 
separate concepts, they may more usefully be thought of as two sides of the same coin. 
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3 Reputation Drivers in Oil and Gas Sector 
 
  1.2 Research Motivation 
Warren Buett (Chairman and CEO, Berkshire Hathaway) once said: "It takes 20 years to build a 
reputation and five minutes to ruin it
 [1]
. Examining corporate reputation is becoming more 
important today than ever. This is due to many factors such as: increased public awareness 
about corporate actions and issues, increased requirement for transparency, higher 
expectations by multiple stakeholder groups, word-of-mouth and online communication, 
customer’s personal experience with a company’s products and services, effect of the influence 
of opinion leaders, growth in interest groups and increased attention from media have all 
contributed to the importance of assessing and actively managing a company’s reputation.
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Additionally, A growing body of research argues that good corporate reputations have strategic 
value for the firms that possess them (Dierickx and Cool, 1989;Rumelt, 1987; Weigelt and 
Camerer, 1988).[11]. Companies who manage well their reputation, will access lots of benefits. 
Enjoying a good reputation yields many rewards: not least the continuing trust and confidence 
of customers, investors, suppliers, regulators, employees and other stakeholders, the ability to 
differentiate the business and create competitive advantage,  there is general agreement that 
corporate reputations contribute significantly to the long run competitive advantages of 
organizations and that their management is of critical importance to companies (Dowling, 2004; 
Rose and Thomsen, 2004; Fombrun,1996).
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Employees stay longer and work harder for 
companies that are liked. Individuals prefer to work in firms having good reputations (Greening 
and Turban, 2000; Lievens and Highhouse, 2003; Lievens et al., 2001; Martin, 2009a, 2009b; 
Turban and Greening, 1997).
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 These advantages will lead to positive consequences for the 
business 
1. Profitability 
2. Access to capital  
3. Long term business continuity 
4. Charge premium prices 
5. Attract and retain customers 
6. Attract qualified employees  
7. Supplier choice 
8. Evaluation of new products 
9. Suppliers loyalty 
10. Community support  
11. Product response 
A bad reputation, conversely, can result in a loss of customers, unmotivated employees, 
shareholder dissatisfaction and ultimately the demise of the business itself.
[1]
 
For Oil and Gas companies, they are nowadays receiving  a lot of attention and  started to 
defend their positions and for them the issue of reputation and its consequences  became of a 
great strategic value for them and the way they manage it will determine substantially their 
future. The sector is facing huge challenges and the biggest companies started to highlight these 
challenges, these include climate change, bribery and corruption, health and safety, 
environmental performance and community development.
4 Reputation Drivers in Oil and Gas Sector 
 
 
 
2. Literature Review 
 
  2.1 What is reputation? (Definition of reputation) 
According to the Compact Oxford English Dictionary, reputation is 'the beliefs or opinions that 
are generally held about someone or something'. Depending on the field of study, reputation 
may have different meanings [Gaultier-Gaillard, Louisot, 2006] but always constitutes an 
intangible asset
 [1]
. the concept of corporate reputation has been of major interest in the 
academic literature from the 1950s onwards. Corporate reputation has been the focus of much 
of the academic research during the past two decades (Logsdon and Wood 2002). 
 In recent years, there has been increased emphasis on the value of the reputation by both 
scholars and practitioners (Fombrun and Van Riel 2004; Bromley 2002; Chun, 2005; Hillenbrand 
and Money, 2006; Helm, 2007; Chettamronchai, 2010). 
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There is general agreement among 
practitioners and scholars alike that the way in which the public perceives a company is crucial 
in determining its success (eg Brown, 1998; Fombrun, 1996).
[6] 
Over the past 20 years, a growing 
body of studies has addressed the topic of corporate reputation. While the definition of 
corporate reputation is debatable, the one proposed by Gotsi and Wilson (2001, p. 29) is 
instructive: “A corporate reputation is a stakeholder’s overall evaluation of a company over 
time. This evaluation is based on the stakeholder’s direct experiences with the company, any 
form of communication and symbolism that provides information about the firm’s actions 
and/or a comparison with the actions of other leading rivals.” Another definition after following 
a review of the corporate reputation literature, Walker (2010) defines corporate reputation as 
“a relatively stable, issue specific aggregate perceptual representation of a company’s past 
actions and future prospects  compared against some standard”
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. Third definition recognizes it 
as a social phenomenon: It is socially complex and intangible, highly specific to each 
organization and part of a process of “social legitimization” of the organization (Martin de 
Castro et al 2006). There is also an historical aspect (Hall 1992; Yoon et al 1993; Murray and 
White 2004). It is perceptual (Fombrun 1996; Wartick 2002), emotive (Groenland 2002) and 
comprises affective and cognitive dimensions (Llewellyn 2002; Schwaiger 2004).
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. 
 
Fombrun 
who did a very solid work considering corporate reputation (1996: 72) defines corporate 
reputation as “a perceptual representation of a company’s past actions and future prospects 
that describes the firm’s overall appeal to all of its key constituents when compared with other 
leading rivals.” 
[25]
 .Fombrun included only affective elements and he excluded cognitive 
elements. Alternatively, (Gray/Ballmer) define corporate reputation as a valuation of a 
company’s attributes, performed by the stakeholders, what would almost completely exclude 
affective components. “Hall” combines cognitive und affective components by formulating that 
a company’s reputation consists of the knowledge and the emotions held by individuals.
[3] 
The
5 Reputation Drivers in Oil and Gas Sector 
definitions of Dowling, Argenti and Druckenmiller and Rindova indicate that reputation is a 
“collective representation” of images and perceptions, not merely a self-promotional message. 
It involves relationships with all stakeholders and is gained, maintained, enhanced or detracted 
from over time
 [30]
.  Fombrun and van Riel (2004) touch on predictability by proposing that 
reputation involves stakeholder judgments “about a company’s ability to fulfill their 
expectations” but most definitions and descriptions consider that reputation is a collection of 
images and behaviors (cfArgenti and Druckenmiller 2004, Dowling 1994)
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.A functional 
definition of corporate reputation states Corporate reputations are intangible assets that 
provide firms with sustainable competitive advantage in the marketplace ( Boyd et al. , 2010 ; 
Roberts and Dowling, 2002 ;Shamsie, 2003 ).Therefore, corporate reputation is a collective 
construct that describes aggregate perceptions of multiple stakeholders about a company’s 
performance (Fombrun, 1996). It is a stakeholders overall evaluation of a company over time. 
This evaluation is based on the stakeholders’ direct experience with the company, and any other 
form of communication and symbolism that provides information about the firm’s action and/or 
comparison with the actions of other leading rivals (Gotsi& Wilson, 2001). It is a distribution of 
opinions (the overt expression of a collective image) about the person/entity, in a stakeholder or 
interest group (Bromley, 2001). Walker (2010) found five key attributes that are usually 
emphasized in corporate reputation definitions: 
(1) Reputation is based on perceptions;  
(2) it is the aggregate perception of all stakeholders;  
(3) it is comparative;  
(4) it can be positive or negative; and  
(5) it is stable and enduring.
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Walker (2010) divided corporate reputation definitions into 5 groups:  
(1) perceptual definitions which focus on defining corporate reputation as stakeholder’s 
viewpoints about the overall perceptions regarding both internal and external aspects about an 
organization 
(2) aggregate definitions forstakeholder perceptions  about an organization 
(3) comparative definitions which compares reputation to other competitors in the market 
(4) positive or negative definitions which means that reputation can be either positive or 
negative 
(5) temporal definitions which means that reputations are time-specific and can change over 
time (Gray and Balmer 1998, Mahon 2002, Rhee and Haunschild 2006).
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6 Reputation Drivers in Oil and Gas Sector 
 
  2.2Difference between Image, identity and reputation 
Until the 90s, corporate image and reputation were often used synonymously (Gotsi& Wilson, 
2001)
. [14]
. Up to the eighties, the attention was dedicated to corporate image; from the nineties 
a great importance is progressively attributed to corporate brand and to corporate reputation. 
Chun (2005) draws a distinction between image, identity, and desired identity. Image refers to 
“how others see us,” identity is “how we see ourselves,” and desired image is “how we want 
others to see ourselves.” 
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2.2.1 Corporate image 
 Corporate image represents how an organization is perceived by its stakeholders (WEI, 2002). 
Corporate image is not what a company presumes to be, but it is composed of the existing 
opinions (the feelings and the convictions) in the mind of the stakeholders (ABRATT and SHEE, 
1989: 68; BERNSTEIN, 1984; ALESSANDRI, 2001).
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 It asks the question “What does the 
organization believe others think of the organization?” (Brown et al. 2006).
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Some definitions for corporate image from the literature:  
 View of the organization developed by its stakeholders; the outside world’s overall 
impression of the company” (Hatch and Schultz 2003). 
 Mental associations that organization members believe others outside the organization 
hold about the organization” (Brown, Dacin, Pratt and Whetton 2006). 
 A short-term, or momentary, perspective of an organization at a particular point in 
time” (Bick, Jacobson, and Abratt 2003).
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2.2.2 Corporate Identity  
Corporate identity has been defined as one of the attributes of a company that addresses the 
questions, what are we? ‘Andwho are we? ‘(Balmer&Greyser, 2003). It’s the internal 
stakeholders’ perceptions about an organization (Albert and Whetten 1985). Organizational 
identity refers to the associations held by the organizational members about an organization. 
Identity asks the question “Who are we as an organization?” (Brown et al. 2006).This position 
allows affirming that the corporate identity is a presentation of the organization conceived at 
strategic level, with the purpose to develop a positive corporate image and corporate reputation 
(ALESSANDRI, 2001).
 [8]
 
Corporate identity results from assessments by insiders to an organization, though insiders can 
be aware of how outsiders perceive their organization and the attitudes outsiders hold towards 
it (Bartel et al., 2007; Bouchikhi and Kimberly,.2008; Deephouse and Carter, 2005).
[15] 
Following 
are some of the various definitions of corporate identity that are prominent in the literature. :
7 Reputation Drivers in Oil and Gas Sector 
 The construed external image of the firm. It’s what a member believes outsiders think 
about the organization.  (Dutton,Dukerich, and Harquail, 1994). 
 What members perceive, feel and think about their organization: a collective, 
commonly-shared understanding of the organizations distinctive values and 
characteristics (Hatch and Schultz, 1997). 
 The set of values and principles employees and managers associate with a company 
(Fombrun, 1996). 
 What employees feel and think about their organization. It focuses on questions relating 
to organizational culture. It gives a business its distinctiveness”(Balmer, 2001). 
 A strategic manifestation of corporate-level vision and mission, underpinned by the 
strategies which a corporation employs in its operation or production”(Melewar and 
Wooldridge, 2001).
[19]