- by admin
- Posted in Internationalization
- March 23, 2015
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Reputation is considered an intangible asset which can affect positively or negatively the internationalization process from the beginning on the Internet can be relevant for this study. This asset affects the domestic and international performance for both types of companies, large and SMEs.
It is generally accepted that the way the Internet evolved in the last decade began to represent the second universe for companies and for their customers. This virtual world basically does not work after the same rules like the physical world, but both are connected in a way, thereby any bad or good reaction had in one affects the other.
One of the most important resources which can alter the success and the speed of internationalization of SMEs and which can be distinguish easily within the internet-related literature is online reputation.
A firm’s reputation is “a perceptual representation of a company’s past actions and future prospects that describe the firm’s overall appeal to all its key constituents when compared to other leading rivals” as Fombrun (1996, p. 38) explains in his book (Reputation: Realizing Value from the Corporate Image). A firm’s reputation has been widely considered by Amit and Schoemaker (1993) and Barney (1991) to be a valuable resource.
Firms with positive reputations benefit because they are more attractive to customers, suppliers, employees and investors. Roberts and Dowling (2002) and Rindova et al. (2006) argue that this attractiveness can yield price, cost and selection advantages that may persist over time and according to Rindova et al. (2006), reputation involves both visibility and quality.
Simply supervising their website(s), social media accounts, etc. or going even further using more complex tools based on the semantic analysis of the collaborative tags like TagClouds or TagClusters, companies are able to manage the image their customers form about them and about their products. Thereby they manage one of their most important intangible assets, their reputation. With the reputation spread by their online community of fans, the internationalization of their brand and products will be much easier and less expensive.
Some academics consider online reputational ratings and reviews to have a high influence on the sales of less popular products. This means that a high numbers of favorable online ratings and reviews will be particularly influential for the product offerings of a new firm on a foreign market despite the lack of previous familiarity on the part of buyers in that market (Reuber and Fischer, 2011). However, Reuber & Fischer (2011) argue that it cannot be expected for firm-specific resources to be significantly related to a firm’s success in pursuing international opportunities.
The existent literature proposes that the Internet is allowing entrepreneurial firms to overpower tangible resource limitations, by reducing the cost of communication, search, and interaction as Arenius et al. (2006) and Loane (2006) indicate. Thus, companies need to acquire the intangible resource of an online reputation in order to compete internationally.
- Amit, R., Schoemaker, P.J.H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33–46.
- Arenius, P., Sasi, V., Gabrielsson, M. (2006). Rapid internationalization enabled by the Internet: The case of a knowledge intensive company. Journal of International Entrepreneurship, 3(4), 279-290.
- Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
- Fombrun, C.J. (1996). Reputation: Realizing Value from the Corporate Image. Harvard Business School Press, Boston MA.
- Loane, S. (2006). The role of the internet in the internationalisation of small and medium sized companies. Journal of International Entrepreneurship, 3(4), 263-277.
- Reuber, R., & Fischer, E. (2011). International entrepreneurship in internet-enabled markets. Journal of Business Venturing, 26(6), 660-679.
- Rindova, V.P., Kotha, S. (2001). Continuous “morphing”: competing through dynamic capabilities, form and function. Academy of Management Journal, 44(6), 1263–1280.
- Roberts, P.W., Dowling, G.R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23(12), 1077–1093.