An investigation on how corporate reputation comes into play in the norwegian innovation index

Abstract

The importance of corporate reputation has been growing over the last decades, with CEOs consistently ranking corporate reputation as a firm’s most critical key intangible resource (Hall, 1993). On a parallel and similar development, the topic of innovation has also grown to become a major focus on the agendas of CEOs, with innovation deemed necessary to offer companies a sustainable competitive advantage (Lawson and Samson, 2001). While the financial impact of corporate reputation and innovation have been well documented in the literature, research on the linkages between innovation and corporate reputation has been limited. Moreover, existing measures of innovation typically adopt methodologies on the national or firm level and do not take into account consumer perceptions in their calculations, even though it is consumers and not firms that are the best judges of the value created by innovation (Andreassen, Kurtmollaiev and Lervik-Olsen, 2016; Andreassen, Kurtmollaiev and Lervik-Olsen, 2017). In aiming to fill the gap in the literature, this study draws inspiration from the Norwegian Innovation Index (NII) in Andreassen et al. (2016) and Andreassen et al. (2017), an innovation index measured through the perspective of customers. We seek to expand the framework and introduce a new independent variable, corporate reputation, to form the conceptual model, used to investigate our research question of how corporate reputation influences perceived relative attractiveness, perceived firm innovativeness and customer loyalty. Using a quantitative, cross-sectional research design surveying 206 consumers of Norwegian retail banks and subsequently employing a PLS-SEM path modelling technique using SmartPLS for analysis, the findings reveal a surprising negative relationship between corporate reputation and perceived firm innovativeness by consumers. In contrast, corporate reputation positively affects perceived relative attractiveness and customer loyalty, highlighting the importance of a strong corporate reputation. Finally, the positive effect of customer satisfaction on perceived firm innovativeness underscores the importance of introducing innovations targeted at addressing actual customer needs and generating customer satisfaction.