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Christine Falkenreck
Reputation Transfer to Enter

New B-to-B Markets
Measuring and Modelling Approaches

Dr. Christine Falkenreck
University of Kassel
Head of International Marketing Research
Mönchebergstr. 17
34125 Kassel
Germany
[email protected]
Dissertation ‘‘Impact on Reputation and Reputation Transfer in International Direct Marketing -

Empirical Research in Five B-to-B Markets’’ at the University of Kassel, Germany. Department
of Economics, Place of Disputation: Kassel, Date of Disputation, March 6, 2009
ISSN 1431-1941
ISBN 978-3-7908-2356-1 e-ISBN 978-3-7908-2357-8
DOI 10.1007/978-3-7908-2357-8
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Preface
An increasing number of products and services are not differentiated by inherent

features, but by the vendors, particularly their reputation and marketing communi-
cation. Consequently, a positive reputation provides competing vendors with a
virtually inimitable competitive advantage.
Contemporary research concerning antecedents and consequences of reputation
in the domain of marketing is dominated by branding and line extension issues.
Organizations’ communication efforts and the relation of reputation and the com-
munication media are not fully understood; nor have they been challenged up to
now. Moreover, customers’ perception of reputation is clearly embedded in their
cultural context.
However, contemporary marketing research restricts both conceptual and
empirical considerations to Western-type cultures. Frequently, even the differences
in Western-type cultures are neglected.
Considering these shortcomings in contemporary marketing research, Dr. Christine
Falkenreck investigates the opportunities and limits, and also the potential benefits and
dangers of transferring a vendor’s positive reputation to product categories never
produced or offered by the considered vendor.
Embedding the empirical investigation of both reputation management and
reputation transfer in a coherent theoretical framework, which is grounded in the
Commitment-Trust theory, is her merit. She derives and validates an integrated
model that appears to be valid in all cultures considered in her study. The results of
this analysis contribute substantially to our understanding of reputation measuring
and managing. These results are not restricted to academic interests and they
provided practitioners with a variety of new insights. Thus, this thesis will hope-
fully be widely discussed in both academia and management practice.
Working with Dr. Falkenreck is an outstanding experience. Hopefully she will
continue to engage in scientific marketing research.
Bielefeld, 17 May 2009 Ralf Wagner
v
Acknowledgements
Like a new product, a thesis follows a development process before its launch. A
successful outcome is largely determined by the development process and the people
who contribute to it. For this reason, there are a number of persons I would particu-
larly like to thank for their input, help and support during my doctoral research.
First and foremost, this Ph.D. dissertation may never have been written without
the encouragement of two key people: Professor Dr. Ralf Wagner, my supervisor at
the University of Kassel, and Dr. Annette Speitling, my helpful mentor at the
Strategic Marketing Department. I appreciate very much Professor Wagner’s in-
sightful advice on the way to conduct research. Many of our discussions not only
directly contributed to improving the quality of my thesis, but also greatly moti-
vated me and developed my interest and skills in academic research. In addition,
I would like to thank Professor Dr. Marcel Paulssen for devoting his time as a
second reader for my thesis.
I am grateful to the German medical devices and pharmaceuticals company that
financially supported this thesis, and TforG, the Belgian market research agency,
which was involved in the international CATI survey. My particular appreciation
goes to my colleagues Lilijana Sesar, Christel Wagener and Theodor Kikenberg, for
their friendly help and support during my stay at the Strategic Marketing Depart-
ment. Special thanks are also due to Jean Cropper, who turned my clumsy language
into readable English.
While I was writing this Ph.D. thesis, a vast number of people helped me in
various ways. Thanks to my non-marketing researcher friends, Barbara, Eric, and
Selli, for reminding me that however important and world-changing I think my
work is, in the grand scheme of things, there are many other important things to do.
Last but not the least, I would like to express my utmost gratitude to my dear
parents, Uwe and Christel Moll, my little sister Sabine, and my husband, Andreas,
for their support during the last 2 years.
I dedicate this work to the best daughters in the world, Thora and Celia, of whom
I am very proud.
Christine Falkenreck
vii
Contents
1 Definition of Research Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Structure of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Objective Targets of Thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3.1 Scientific Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3.2 Managerial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2 Theoretical Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Commitment-Trust Theory and the Nature of Commitment . . . . . . . . . . 11
2.2 Resource-Based and Knowledge-Based View . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Reputation as a Resource, an Intangible Asset
and a Barrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3 Perspectives on Corporate Reputation and Reputation Transfer . . . . . . . 21

3.1 Perspectives of Relationship Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.1.1 Organizational Buying Behavior and the Impact
of Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.1.2 Commitment and Trust in Organizational
Buying Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 Defining Corporate Reputation in B-to-B Relationships . . . . . . . . . . . . . . . 29
3.2.1 Reputation, Corporate Identity and Image . . . . . . . . . . . . . . . . . . . . . . . 31
3.2.2 Reputation vs. Brand Identity, Brand Imagery
and Brand Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3 A Standard Construct of Reputation–Useful and Appropriate? . . . . . . . . 36
3.3.1 League Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.3.2 The Reputation Quotient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.3.3 Measuring RQ in Different Cultures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.3.4 Relationship-Driven Measurement Approaches . . . . . . . . . . . . . . . . . 44
3.3.5 The Need for Valid and Cross-Culturally Practicable
Measures of CR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ix
x Contents
3.4 The Concept of Reputation Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

3.4.1 Reputation Transfer vs. Brand Transfer: Chances
and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.4.2 Levels of Reputation and their Transferability . . . . . . . . . . . . . . . . . . . 52
3.5 The Relevance of Direct Marketing Media to Build CR . . . . . . . . . . . . . . . 53
3.6 Defining and Quantifying Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.6.1 Cultural Frameworks–an Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3.6.2 Hofstede’s Cultural Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
3.6.3 Hofstede’s Cultural Characteristics of Countries
under Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4 Development of Constructs and Related Hypotheses . . . . . . . . . . . . . . . . . . . . 65

4.1 The C-OAR-SE Procedure for Scale Development . . . . . . . . . . . . . . . . . . . . . 65
4.2 Formative Versus Reflective Measurement Models . . . . . . . . . . . . . . . . . . . . 67
4.2.1 Reflective Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.2.2 Formative Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.2.3 Single Item Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.2.4 Overview on Theoretical and Empirical
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.3 Moderating and Mediating Effects in Causal Models . . . . . . . . . . . . . . . . . . 72
4.4 Applying the Bonferroni-Holm’s Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.5 Development of Constructs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.5.1 Overview of Measurement and Formation
of Constructs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.5.2 Corporate Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
4.5.3 Perceived Innovativeness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.5.4 Perceived Fit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
4.5.5 Purchase Decision Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
4.5.6 The Moderating Impact of Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
4.5.7 Reputation Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
4.5.8 Word of Mouth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
4.5.9 Relationship Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.5.10 Media-enabled and Personal Direct Marketing . . . . . . . . . . . . . . . . . 90
4.5.11 E-Readiness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
4.6 Related Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
4.6.1 Perceived Innovativeness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
4.6.2 Purchase Decision Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
4.6.3 Relationship Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
4.6.4 Word of Mouth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
4.6.5 Perceived Fit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
4.6.6 Personal and Media-enabled Direct Marketing . . . . . . . . . . . . . . . . . . 98
4.6.7 Reputation Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
4.6.8 E-Readiness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
4.6.9 Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Contents xi
4.6.10 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

4.6.11 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
4.7 Structural Model of Reputation and Reputation Transfer . . . . . . . . . . . . 103
5 Empirical Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

5.1 Markets Under Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
5.1.1 Selection of Countries and Definition of Target Groups . . . . . . . 108
5.1.2 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
5.1.3 Development of Standardized Questionnaire . . . . . . . . . . . . . . . . . . . 111
5.2 The Measurement Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
5.2.1 Formal Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
5.2.2 Evaluation Criteria for Indicators and Constructs . . . . . . . . . . . . . . 114
5.2.3 Creation of SmartPLS Structural Model . . . . . . . . . . . . . . . . . . . . . . . . 116
5.2.4 Treatment of Missing Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.2.5 Content Validity of Reflective Constructs . . . . . . . . . . . . . . . . . . . . . . 116
6 Results and Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

6.1 Synopsis of Measurement Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
6.2 Model Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
6.2.1 Examination of Sample Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
6.2.2 Moderating Effects on Reputation Transfer . . . . . . . . . . . . . . . . . . . . . 121
6.2.3 Moderating Effects on Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
6.2.4 Mediating Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
6.2.5 Reliability and Content Validity of Reflective Constructs . . . . . . 124
6.2.6 R-Square and Q2 Predictive Relevance of Structural
Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
6.2.7 Cross Loadings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
6.2.8 Fornell–Larcker Criterion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
6.2.9 Reliability and Content Validity of Formative Constructs . . . . . 133
6.2.10 Multicollinearity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
6.2.11 Summary of Content Adequacy of Formative Constructs . . . . . 137
6.2.12 Structural Model, Evaluated by Country
and Stakeholder Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
6.3 Assessment of Research Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
6.4 Findings related to Countries and Stakeholder Groups . . . . . . . . . . . . . . . 166
6.4.1 Findings Related to all Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
6.4.2 Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
6.4.3 Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
6.4.4 Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
6.4.5 Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
6.4.6 Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
6.4.7 Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
6.4.8 Pharmacists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
6.4.9 Doctors and Nurses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
6.5 Discussion of Research Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
xii Contents
7 Conclusions, Implications and Research Suggestions . . . . . . . . . . . . . . . . . . 183

7.1 Scientific Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
7.2 Managerial Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
7.3 Conclusions and Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Annex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Abbreviations
AMAC America’s most admired companies

B-to-B Business-to-business
B-to-C Business-to-consumer
CC Corporate communications
CR Corporate reputation
e.g. (exempli gratia) for example
IDV Individualism
i.e. (id est) that is
KBV Knowledge-based view
LV Latent variable
MAS Masculinity
WOM Word of mouth
n.a. Not applicable
n.s. Not significant
NWOM Negative word of mouth
SEM Structural equation model
SET Social exchange theory
SR Sales representatives
PWOM Positive word of mouth
PDI Power distance index
RBV Resource-based view
RM Relationship marketing
RQ Reputation quotient
UAI Uncertainty avoidance index
xiii
Formula Symbols
Z Vector of the dependent (endogenous) latent variables

z The unexplained variance
x Vector of an exogenous latent variable
R2 Variance explained
Q2 Stone–Geissers cross-validated R2
f2 Effect size
gi Coefficient capturing effect of indicator xi
z Test value
VAF Variance inflation factor
ri Regression coefficient
xv
List of Figures
Figure 1.1 Structure of work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 2.1 National culture’s influence on resources, based on Griffith
et al. (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 2.2 Theoretical framework, formation of intangible assets
and competitive advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 3.1 Differences between B-to-B and B-to-C markets, Enlargement
based on Backhaus/Voeth (2007) and Plinke (1999) . . . . . . . . . . . . . . . 27
Figure 3.2 Different clusters of definitions of image and reputation . . . . . . . . . . . 32
Figure 3.3 Linking identity, image, culture, buying behavior and reputation . . 33
Figure 3.4 Linking influencing elements of stakeholders perception . . . . . . . . . . 36
Figure 3.5 Different components forming corporate reputations based
on Fombrun et al. 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Figure 3.6 Typs of reputation- or brand transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 4.1 Reputation: A formative or a reflective construct? . . . . . . . . . . . . . . . . . 67
Figure 4.2 Reflective measurement model
Source: Edwards and Bagozzi (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Figure 4.3 Formative measurement model
Source: Diamantopoulos et al. (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Figure 4.4 Measure development of formative constructs, based
on Diamantopoulos (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Figure 4.5 Moderator model
Source: Eggert et al. (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Figure 4.6 Modeling moderating effects in PLS using reflective constructs
xvii
xviii List of Figures
Figure 4.7 Modeling moderating effects in PLS, using formative constructs

Source: Eggert et al. (2005) p. 113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Figure 4.8 Mediator model
Figure 4.9 Stakeholder-specific concepts of corporate reputation,
modified from Meffert and Bierwirth (2002); Helm (2006) . . . . . . . . 78
Figure 4.10 Development of the construct ‘‘reputation’’ based
on implications of Griffith et al. (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Figure 4.11 Structural model of reputation and reputation transfer . . . . . . . . . . 104
Figure 5.1 PLS Two-block model, based on Chin (1998) . . . . . . . . . . . . . . . . . . . . 114
Figure 5.2 SmartPLS structural model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Figure 6.1 PLS structural model including moderating effects
on reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Figure 6.2 Mediator model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Figure 6.3 All countries, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Figure 6.4 Australia, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Figure 6.5 Finland, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Figure 6.6 Germany, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6.7 Spain, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Figure 6.8 Russia, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Figure 6.9 Purchasers, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Figure 6.10 Pharmacists, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Figure 6.11 Doctors and nurses, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Figure 6.12 Decisiveness of a trustful relationship to the supplier . . . . . . . . . . . 164
Figure 6.13 Importance of trust in the recommendations of sales
representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Figure 6.14 Importance of a suppliers’ positive reputation . . . . . . . . . . . . . . . . . . . 165
Figure 6.15 Decisiveness of a good reputation of the supplier . . . . . . . . . . . . . . . 166
List of Tables
Table 2.1 Social exchange theory vs. commitment trust theory . . . . . . . . . . . . . . . . 10

Table 3.1 Categorization of reputation. Enhancement based on Fombrun
and van Riel (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 3.2 Items and components of the reputation quotient . . . . . . . . . . . . . . . . . . . . 41
Table 3.3 Measurement concepts of corporate reputation: An overview . . . . . . 47
Table 3.4 Chances and risks of brand extension. Based on Aaker (2003) . . . . . 52
Table 3.5 Hofstede’s scores regarding the five countries included
in the survey Based on http://www.geert-hofstede.com . . . . . . . . . . . . . 61
Table 4.1 Applying the C-OAR-SE procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Table 4.2 Theoretical framework for assessing reflective and formative
models Source: complied from Coltman et al. (2008) . . . . . . . . . . . . . . . 71
Table 4.3 Empirical framework for assessing reflective and formative
models Source: Compiled from Coltman et al. (2008) . . . . . . . . . . . . . . 72
Table 4.4 List of manifest variables used with reflective constructs . . . . . . . . . . . 80
Table 4.5 List of manifest variables used with formative constructs . . . . . . . . . . . 80
Table 4.6 List of manifest variables used with single Item constructs . . . . . . . . . 80
Table 4.7 E-readiness ranking and scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Table 4.8 Overview of hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Table 5.1 Hofstede’s scores in the selected countries . . . . . . . . . . . . . . . . . . . . . . . . 109
Table 5.2 Evaluation criteria of PLS structural model based on: Krafft
et al. 2005, p. 85; Fornell and Larcker 1981; Chin 1998) . . . . . . . . . 114
Table 5.3 Evaluation criteria of reflective constructs . . . . . . . . . . . . . . . . . . . . . . . . . 115
Table 5.4 Evaluation criteria of formative constructs . . . . . . . . . . . . . . . . . . . . . . . . 116
Table 5.5 Validation criteria of PLS models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
xix
xx List of Tables
Table 6.1 Evaluation criteria of reflective and formative constructs

and structural model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Table 6.2 Moderating effects on reputation transfer . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Table 6.3 VAF-values of mediating effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Table 6.4 List of evaluated mediator effects on reputation transfer
and reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Table 6.5 Outer loadings of reflective constructs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Table 6.6 Overview, quality criteria reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Table 6.7 Overview, quality criteria of reputation transfer . . . . . . . . . . . . . . . . . . . 126
Table 6.8 Overview, quality criteria of perceived innovativeness . . . . . . . . . . . 126
Table 6.9 Overview, quality criteria of WOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Table 6.10 R2 and Q2 values of different countries and
stakeholder groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Table 6.11 Cross-loadings of reflective constructs: All countries . . . . . . . . . . . . 129
Table 6.12 Cross-loadings of reflective constructs: Australia . . . . . . . . . . . . . . . . 129
Table 6.13 Cross-loadings of reflective constructs: Finland . . . . . . . . . . . . . . . . . . 130
Table 6.14 Cross-loadings of reflective constructs: Germany . . . . . . . . . . . . . . . . 130
Table 6.15 Cross-loadings of reflective constructs: Russia . . . . . . . . . . . . . . . . . . . 131
Table 6.16 Cross-loadings of reflective constructs: Spain . . . . . . . . . . . . . . . . . . . . 131
Table 6.17 Fornell–Larcker criterion, data of all countries . . . . . . . . . . . . . . . . . . . 132
Table. 6.18 Fornell–Larcker criterion, data of Australia . . . . . . . . . . . . . . . . . . . . . 132
Table 6.19 Fornell–Larcker criterion, data of Finland . . . . . . . . . . . . . . . . . . . . . . . . 132
Table 6.20 Fornell–Larcker Criterion, data of Germany . . . . . . . . . . . . . . . . . . . . . 133
Table 6.21 Fornell–Larcker criterion, data of Spain . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Table 6.22 Fornell–Larcker criterion, data of Russia . . . . . . . . . . . . . . . . . . . . . . . . . 133
Table 6.23 Quality criteria of formative constructs: evaluation
of data, ‘‘all countries’’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Table 6.24 Quality criteria of formative constructs: evaluation
of data ‘‘Germany’’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Table 6.25 Quality criteria of formative constructs: evaluation of data
‘‘Spain’’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
List of Tables xxi

‘‘Finland’’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
‘‘Australia’’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
‘‘Russia’’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Table 6.29 All countries, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Table 6.30 Australia, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Table 6.31 Finland, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Table 6.32 Germany, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Table 6.33 Spain, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Table 6.34 Russia, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Table 6.35 Purchasers, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Table 6.36 Pharmacists, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Table 6.37 Doctors and nurses, significant paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Table 6.38 Direct impact of innovativeness on reputation . . . . . . . . . . . . . . . . . . . 153
Table 6.39 Direct impact of innovativeness on reputation transfer . . . . . . . . . . 154
Table 6.40 Significant paths of innovativeness on WOM . . . . . . . . . . . . . . . . . . . . 154
Table 6.41 Significant paths of purchase decision involvement on WOM . . . 155
Table 6.42 Significant paths of relationship quality on reputation . . . . . . . . . . . 155
Table 6.43 Significant paths of relationship quality on reputation transfer . . . . 156
Table 6.44 Significant Paths of Relationship Quality on WOM . . . . . . . . . . . . . 156
Table 6.45 Significant paths of WOM on reputation . . . . . . . . . . . . . . . . . . . . . . . . . 157
Table 6.46 Significant paths of WOM on reputation transfer . . . . . . . . . . . . . . . . 157
Table 6.47 Significant paths of perceived fit on reputation transfer . . . . . . . . . . 158
Table 6.48 Use of direct marketing media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Table 6.49 Significant paths of media-enabled direct marketing
on reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Table 6.50 Significant paths of personal direct marketing on reputation . . . . 160
Table 6.51 Significant paths of personal direct marketing on reputation
transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
xxii List of Tables
Table 6.52 Significant paths of media-enabled direct marketing

on reputation transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Table 6.53 Significant path of reputation on reputation transfer . . . . . . . . . . . . . 162
Table 6.54 Significant path of E-readiness on media-enabled DM . . . . . . . . . . 162
Table 6.55 Significant path of reputation on perceived fit . . . . . . . . . . . . . . . . . . . . 163
Table 6.56 Overview on the fulfillment of hypotheses . . . . . . . . . . . . . . . . . . . . . . . 167
Chapter 1
Definition of Research Problem
In today’s world, where ideas are increasingly displacing the physical in the production of
economic value, competition for reputation becomes a significant driving force, propelling
our economy forward. (Alan Greenspan 1999).
This quotation of Alan Greenspan (1999) summarizes the importance today of

corporate reputation (CR). This work is about creating global corporate reputations –
using reputation transfer to enter new markets more easily – and focuses on
special impact factors on both reputation and reputation transfer in the B-to-B
context.
1.1 Introduction
Researchers recognize organizational reputation as a valuable intangible asset that

contributes to organizational performance. However, limited attention has been
paid to the extent to which CR encompasses different stakeholders’ perceptions that
may have differential effects on the positive economic outcomes associated with
the possession of a favorable reputation (Rindova et al. 2005). Thus, CR has been
the focus of much academic research (e.g., Deephouse, 2000; Lewellyn 2002;
Longsdon and Wood 2002; Eberl 2006; Helm 2007; Bromley 2002; Fombrun
et al. 2000; Walsh and Wiedmann 2004; Fombrun and Shanley 1990; Hall 1992).
It captures a combination of social and economic contributions that a firm makes to
its various stakeholders (Helm 2007; Bromley 2002). Reputation provides a com-
pany with sustainable competitive advantages (Barney 1996) because it influences
stakeholders’ economic choices vis-à-vis the organization (Deephouse 2000).
In 1997, Doney and Cannon called for more research that investigates the role of
national culture on buyer-seller relationships in general. Prior cross-cultural studies
in marketing have focused on various issues: advertising (Alden et al. 1993),
product development (Nakata and Sivakumar 1996), fairness (Kumar et al. 1995),
organizational culture (Deshpandé et al. 2000), innovativeness (Steenkamp et al.
1999) and customer benefits (Homburg et al. 2005). Nevertheless, cross-national
C. Falkenreck, Reputation Transfer to Enter New B-to-B Markets, 1

Contributions to Management Science,
DOI 10.1007/978-3-7908-2357-8_1, # Springer‐Verlag Berlin Heidelberg 2010
2 1 Definition of Research Problem
differences in B-to-B marketing management have largely been neglected (Homburg

et al. 2005), especially in the field of corporate reputation research (Gardberg 2006;
Walsh and Wiedmann 2004). Although there are many studies of relationship
marketing, they are mostly based on national data sets (Homburg et al. 2005).
Surprisingly, the factors “reputation” and “national culture” are discussed sepa-
rately in recent research: Walsh and Beatty (2007) investigate the impact of customer-
based CR on service firms’ performance, while Hewett et al. (2006) evaluate the
influence of national culture and industrial buyer-seller relationship in the US and
Latin America and Griffith et al. (2006) investigate culture’s influence on relation-
ship and knowledge resources between the US and Japan. Very few empirical
studies apply the America-based measurement concept “Reputation Quotient”
(RQ) of Fombrun et al. (2000) outside the US (Gardberg 2006; Walsh and Wiedmann
2004; Aperia et al. 2004) – the aim was not to learn about cultural differences, but to
test RQ measures internationally. Moreover, the studies concerned with reputation
management and related fields of image transfer, as well as brand extensions, make
up a continuum of the basic entity under consideration (Bromley 2002).
According to Fombrun (1996), a company’s reputation is determined by four
main elements: its values, actions it takes, open-minded and honest communication,
and general company image. Völckner and Sattler (2006) as well as Doney and
Cannon (1997) define a company’s reputation as the extent to which firms and
people in the industry believe a company is honest and concerned about its
customers. Unfortunately, what is defined as “honest and concerned” varies signifi-
cantly across cultures and, therefore, leads to different perceptions of CR on the one
hand and different possibilities of reputation transfer on the other.
It is also true that a company can have a negative CR (Bromley 2002). What
about a definition of CR if at least a certain stakeholder group believes a company is
“devious” and “unconcerned”? Whether all types of stakeholders base their percep-
tions of CR on the same fundamental set of dimensions or on specific expectations,
is still discussed controversially (Bromley 2002; Fombrun et al. 2000; Gatewood
et al. 1993), leading to a variety of research questions such as:
l Do companies have one reputation or many? (Fombrun and Shanley 1990;
Bromley 2002).
l Reputation for whom or for what purpose? (Lewellyn 2002).
l Do stakeholder groups use different criteria to evaluate a company’s reputation?
(Meffert and Bierwirth 2002; Helm 2007).
l If the criteria to evaluate CR are different, is there also a difference between CR in
the context of B-to-B and B-to-C, and what about a cross-cultural impact on CR?
Popular measurement approaches of the “most visible companies” (Fortune 500-
index) or so-called “reputation rankings of most admired companies” can hardly be
applied to the “most invisible companies” in the field of Business-to-Business
(B-to-B) relationships, companies just known by their own limited range of
products, employees, competitors, suppliers and customers. Fortune magazine’s
America’s Most Admired Company (AMAC) survey, as well as a similar
study by Britain’s Sunday Times, use determinants on CR like advertising or
1.1 Introduction 3
visibility in the media. Even charitable contribution (Fombrun 1996) is difficult to

evaluate if applied to companies working in the field of B-to-B. The Harris-
Fombrun Reputation Quotient (RQ), the Financial Times/Price WaterhouseCooper
World’s Most Respected Companies, the Hill and Knowlton/ Economist Intelli-
gence Unit Corporate Reputation Watch are all focused on decisive determinants of
reputation for companies working in the B-to-C context. How can these millions of
perceptions be captured and measured or managed?
Today, companies need to differentiate themselves from their competitors, as
products are more and more interchangeable. An overarching reputation in this
context is a strategic tool for managing a company’s external presence in global
markets. To manage these corporate reputations – as they can vary from country to
country, from stakeholder to stakeholder, or from decade to decade – they must be
measurable (Fombrun 1996; Fombrun and Gardberg 2002; Helm 2007). Unfortu-
nately, neither researchers nor practitioners have yet found a cross-nationally valid
instrument to measure reputation (Fombrun and Wiedmann 2001; Fombrun and
Gardberg 2002).
Corporate reputation radiates a strong company appeal-it helps companies to
obtain good employees, makes customer acquisition easier, increases customer
loyalty, can be implemented as a competitive performance factor and is helpful
for the procurement of capital (e.g., Wiedmann and Buxel 2005; Helm 2007;
Dowling 2001; Little and Little 2000; Eberl and Schwaiger 2005). The literature
on reputation in general has been growing in recent years (e.g., Fombrun et al. 2000;
Fombrun and van Riel 1997; Dunbar and Schwalbach 2000; MacMillan et al.
2005), although it is still restricted to the B-to-B context.
Interest in CR is growing while the globalization of companies is entering a new
phase. Compared with one of the new “global players”, the Chinese computer
company, Lenovo, its major competitors, IBM, DELL and Hewlett-Packard, may
feel old-fashioned and conservative: Lenovo has no headquarters, venues for meet-
ings of its senior managers rotate among its bases around the world, and its
development teams consist of people in several centers around the world, often
working together virtually (Bishop 2008). When it became a global brand in 2005,
the company located its marketing department in Bangalore and made huge efforts
to integrate the different cultures within the company to divert from its image as a
“Chinese company”. IBM, instead of selling its PC business to Lenovo, could have
used its valuable reputation to position against such newcomers. In times of sharp
increases in the number of new companies in emerging markets, there is no weapon
more effective than this inimitable resource of corporate reputation as one of the
“best known American companies” (Fortune 500).
The study is located in the context of relationship marketing, which comprises
the new institutional economic approach, the network approach and the behavioral
approach (Kotler and Keller 2006).
l The new institutional economic approach uses modern economic theories to
explain the development and breakdown of relationships like transaction cost
theory and agency theory.
l The network approach focuses on the interactive character of relationships in the

field of B-to-B marketing and takes an inter-organizational perspective.
l The behavioral perspective of relationships refers to relational constructs like
trust and satisfaction, the conceptualization and economic evaluation of customer
commitment.
Referring to the commitment-trust theory of Morgan and Hunt (1994), as well as to
more recent resource-based and knowledge-based views, the concept of corporate
reputation in this work is part of the behavioral perspective of relationships. The
framework of the commitment-trust theory integrates elements of relationship
marketing as a strategic option (Morgan and Hunt 1994). As customer commitment
does not necessarily lead to customer loyalty (Fullerton 2003), relationship market-
ing needs to incorporate further activities (Homburg and Krohmer 2006).
Although widely outlined, the concept of CR today still seems to lack an agreed
theoretical basis, and this limits practical applications (Bromley 2002) and the
comparison of hypotheses results. With reference to the B-to-B context, little is
known about the cross-cultural impact factors on CR: The use of direct marketing
media, word-of-mouth communication (WOM), the perceived innovativeness of a
company and the importance of trust. Therefore, in this study the author investi-
gates two dimensions that reflect:
l how an organization is perceived in the minds of stakeholders from different
countries (corporate reputation) and what influences this perception.
l the extent to which an organization is perceived by its customers as being able to
produce a new product range (reputation transfer on pharmaceuticals) which
differs significantly from the core products (medical devices).
A structural model of the suggested impact factors on reputation is developed and
tested using data from Australia, Finland, Germany, Russia and Spain in the
empirical context of organizational buyers.
1.2 Structure of Work
Marketing in the B-to-B context is very different from marketing in the B-to-C
context (e.g., Backhaus and Voeth 2007). Are all the above perceptions of reputa-
tion in all contexts of equal importance? Can we expect the reputation of a B-to-B
company to be influenced and generated by the same factors as in the context B-to-C?
Is it really feasible and adequate to have one single measurement construct of
corporate reputation, if there are so many different stakeholder groups in different
contexts? In order to address the research questions, this work is structured in seven
parts: theoretical (Chaps. 1–3), empirical (Chaps. 4–6) and “learning” (Chap. 7). This
work introduces and tests a structural model that aims to extend the commitment-trust
theory framework (Morgan and Hunt 1994) with respect to a company’s reputation
and comprises national culture as a determining variable for both reputation and
reputation transfer.
1.2 Structure of Work 5
Part I
• Definition of Problem, Introduction and Structure of Thesis
• Scientific and Managerial Objective Targets of Thesis
Part II Part III

Theoretical Background The Concept of Reputation and Reputation
• Commitment-Trust Theory and the Transfer in the Context of Economic
Nature of Commitment Perspectives
• Resource-Based View and Knowledge- • Defining and Measuring Corporate Reputation
Based View • Influencing Factors on Reputation Transfer
• Reputation as a Resource and a Barrier • Cultural Frameworks and Hofstede’s Dimensions
Part IV
Definition of Constructs and Development of Hypotheses
Attribute Classification, C-OAR-SE Procedure, Introduction of Structural Model
Part V
Empirical Survey
Development of Questionnaire, Measurement Model, Evaluation of Data
Part VI
Research Evaluations and Findings,Discussion of Results
Part VII
Conclusions for Academia and Industry
Limitations and Recommendations for Future Research Approaches
Fig. 1.1 Structure of work
Figure 1.1 presents the structure of this work. First, the theoretical part is
introduced: In part I, the aim, the structure and the targets of this study are
described. Part II explains the theoretical background and focuses on commitment,
trust, and the resource-based and knowledge-based views. Reputation as a barrier
and as an intangible resource is also outlined in part II. Part III completes the
theoretical section by introducing the concepts of CR and reputation transfer as well
as different cultural frameworks. Special attention is also focused on the relevance
of direct marketing media to build CR.
The first three chapters of this work are the basis for generating the hypotheses,
the constructs and the structural model. Part III discusses the current state of
research in the fields of corporate reputation, reputation transfer, branding and
culture and examines the definitional landscape of these keywords. Concepts of
measuring corporate reputation are also presented and evaluated in this part.
Different concepts for quantifying culture are introduced, and the cultural impact
on organizational buying behavior is discussed.
Part IV defines the constructs, introduces the hypotheses and finally presents
the structural model. The research design of this study is a multi-stage one,
and essentially follows the C-OAR-SE procedure suggested by Rossiter (2002).
Therefore, one main objective of part IV is to discuss formative versus reflective

measurement models as well as single-item indicators (Bergkvist and Rossiter
2007). As the research data are split not only into five country data sets, but also
into three stakeholder groups, the Bonferroni-Holm’s procedure is included in this
chapter.
In part V, the empirical part of the thesis draws on an application example of
selling medical equipment and pharmaceuticals to hospitals. A telephone survey
based on a standardized questionnaire provides data from Australia, Finland,
Germany, Spain, and Russia. This cross-cultural empirical example focuses on
the stakeholder group of customers, divides them by purchasers, pharmacists, users
and countries and discusses differences and similarities in the perception of CR.
In part VI, research findings are presented and discussed, and scientific and
managerial implications are outlined. Part VII draws general conclusions on the
importance of CR and trust, subsumes the most interesting findings of this study,
outlines limitations and gives recommendations for future research approaches.
1.3 Objective Targets of Thesis
Reputation is one of the rare subjects that can be put through different analytical
frames to produce research that is exciting, path breaking, of interest to academics
and practitioners, and incomplete (Mahon 2002). As research into reputation as
such is at a nascent stage (Money and Hillenbrand 2006; Helm 2007), the construct
of reputation is described first in a holistic context, and impact factors on corporate
reputation in a cultural context are monitored. In contrast, factors influenced by CR
are also discussed. The second objective is to develop hypotheses, perform empiri-
cal market research and discuss results to describe and analyze the relationship
between the constructs corporate reputation and reputation transfer.
l Its impact on other constructs, embedded in the national culture of buyers
l The impact factors of other constructs on CR and reputation transfer in the B-to-B
context
Therefore, the data set is not only evaluated country specifically (national culture),
but also by stakeholder groups (B-to-B context) to compare potential different
impact factors on CR and reputation transfer.
1.3.1 Scientific Objectives
In recent publications, CR has been interpreted as a stakeholder-related construct

(Helm 2007). While some authors state that – according to stakeholder group
affiliation – a specific set of criteria is relevant to accurately evaluate the reputation
of a firm, others call for comparability of data and favor standardized measures.
1.3 Objective Targets of Thesis 7
Theoretical foundations of CR, as well as the empirical examination of the impact

of reputation on stakeholders’ buying decision, has remained scarce (Eberl 2006),
this is especially true in the B-to-B context.
A framework is proposed delineating four stages through which reputation
transfer research contributes to marketing science: theory development, acquisition
of meaningful data, analysis of the data to test the theory, evaluation and learning.
Thus, the scientific objective of this work is focused on:
l Developing a conceptual framework focused on impact factors on reputation and
reputation transfer
l Discussing the differences in the importance of relationship quality, WOM
communication and personal and media-enabled direct marketing media
l Presenting influencing factors on purchase decision involvement
l Challenging the overall need of a perceived fit of the new product category for
reputation transfer
l Discussing differences in customers’ opinions of CR
l Evaluating the chance to successfully transfer a company’s reputation to a new
product range
The aim is to understand the following:
l A cross-culturally valid construct of reputation applicable in a B-to-B setting,
based exclusively on relationship and knowledge resources
l The cross-cultural importance of trust and CR
l Impact factors on reputation and reputation transfer in the B-to-B context, which
are influenced by national culture
l Impact factors on reputation and reputation transfer, which are not influenced by
national culture
The connectivity between CR, reputation transfer and related constructs is dis-
cussed: relationship quality, perceived innovativeness, WOM, personal and media-
enabled direct marketing media, purchase decision involvement and the perceived
fit of the new product range to the existing product portfolio.
1.3.2 Managerial Objectives
It is frequently assumed that CR has a positive effect on a variety of business-

relevant economic and pre-economic variables (Groenland 2002; Davies et al.
2002; Walsh and Wiedmann 2004; Griffith et al. 2006). If a company transacts in
international settings, the management of CR is confronted with the additional
challenge of cultural differences. Learning about the impact factors on CR and
reputation transfer in different cultures may lead to more focused communication
strategies toward customers (or stakeholder groups) in different cultures.
The structural model introduced in this study outlines the impact of relationship
quality, personal and media-enabled direct marketing media, purchase decision
involvement, WOM, perceived fit and perceived innovativeness on reputation and

reputation transfer in five different countries and three different stakeholder groups.
Thus, the managerial objectives of this work are focused on:
l Providing advice for the use of different direct marketing media across countries
and stakeholder groups
l Discussing the impact of WOM on reputation by also evaluating its influencing
factors
l Outlining the impact factors on CR across countries and stakeholder groups
l Discussing the importance of reputation versus trust in different business rela-
tionships
l providing advice for impact factors on reputation transfer to find out if there are
cultures or certain stakeholder groups where reputation transfer offers an easy-
entry into new markets
Significant differences between the countries and stakeholder groups are discussed.
Countries are identified where a positive reputation is more important than the trust
in a supplier or its representatives. Conditions which either support or inhibit the
transference of reputation are evaluated.
Following the findings of Hofstede (1983), nationality is important to manage-
ment for at least three reasons:
l Nations are political units, rooted in history. This also influences the forms of
government, legal and education systems, labor and employer association struc-
tures.
l Nationality or regionality has a symbolic value to citizens; they derive facets of
their identity from it.
l Nationality is important for psychological reasons. Our thinking is partly
conditioned by national culture factors.
Cultural programs are difficult to change; culture itself is quite stable and changes
only slowly. The findings of this study support the results of Hofstede’s (1983)
work, claiming that the assumption that management is the same or is becoming the
same around the world is not tenable in the light of differences in national cultures.
Chapter 2
Theoretical Framework
In 1968, Bartels proposed that a general theory of marketing should include seven
subtheories: (1) theory of social initiative, (2) theory of economic market separa-
tion, (3) theory of market roles, expectations, and interactions, (4) theory of flows
and systems, (5) theory of behavior constraints, (6) theory of social change and
marketing evolution, and (7) theory of social control of marketing. This illustrates
how extensive the fields of application in marketing theory are.
Since the 1960s, several marketing theories related to the above subtheories have
been developed (Hunt 2002). The strategic area of relationship marketing was first
defined by Berry (1983, p. 25) as “attracting, maintaining and [. . .] enhancing
customer relationships”. Thus, relationship marketing refers to activities directed
toward establishing, developing, maintaining, and retaining successful relations
(Berry and Parasuraman 1991; Morgan and Hunt 1994). Hunt (2002) also made it
clear that a company’s efficiency and effectiveness are always enhanced by estab-
lishing relationships with all potential stakeholders. Nevertheless, Gummesson
(1995, p. 15) observes that “not all relationships are important to all companies
all the time”. For this reason, a fundamental thesis of relationship marketing
strategy is to identify, develop and nurture a suitable relationship portfolio
(Hunt, 2002).
A theory used in relationship marketing since the 1970s is social exchange
theory (SET), based on works of Homans (1958, 1961, 1974), Blau (1960, 1964)
and Thibaut and Kelley (1959). SET is widely viewed as one of the most influential
conceptual paradigms in organizational behavior (Cropanzano and Mitchell 2005;
Friman et al. 2002). As exchange ideology is also said to influence individuals’
sensitivity to organizational politics, job satisfaction and commitment, SET is used
to evaluate buyer-seller relationships (Witzel 2006). The following table differ-
entiates SET from the theory of commitment and trust proposed by Morgan and
Hunt (1994). The latter theory is also outlined and referred to in more detail in the
following chapter.
SET suggests that there are as many as six different resources influencing
interpersonal attachments: love, status, information, money, goods and services.
Although most of these are not fully appreciated by organizational scientists, SET is

10 2 Theoretical Framework
said to have “the potential to provide a unitary framework for much of organiza-
tional behavior” (Cropanzano and Mitchell 2005, p. 875). This theory is based on
certain rules of exchange, although it remains unclear which exchange rules apply
to each resource. Reciprocity or repayment in kind is one of these exchange rules
(Blau 1964) (Table 2.1).
Major objections to or problems with SET are quoted as follows (Miller 2001):
l SET reduces human interaction to a rational process that arises from economic
theory.
l The theory assumes that the ultimate goals of a relationship are intimacy and
reciprocity. These are not the “ultimate” relationship goals.
l SET proposes that relationships have a linear structure. In reality, relationships
do not develop this way.
l SET is based on an individualist mindset, which may limit its application in and
description of collectivist cultures.
The author supports Gummesson’s observation that SET does not take into consid-
eration that not all relationships are important to a buyer or seller all the time. This
also impacts relationship portfolio investments and might influence the develop-
ment of relationship commitment of suppliers and customers in equal measure.
In the light of the exchange orientation of relationships, in which trust and commit-
ment are developed, the analytical approach of information economy does not seem
appropriate. A theory focused on the explanation of mental processes relevant to the
development of relationship commitment and trust is therefore regarded as more
suitable: “To be an effective competitor (in the global economy) requires one to be a
trusted cooperator (in some networks)” (Morgan and Hunt 1994, p. 20).
Table 2.1 Social exchange theory vs. commitment trust theory

Social exchange theory Theory of commitment and trust
SET is a social, psychological and sociological This theory highlights the psychological and
perspective behavioral perspective
Social behavior is an exchange of goods, Relationship marketing refers to activities
material goods but also non-material ones, directed toward establishing, developing and
such as symbols of approval or prestige maintaining successful relations
SET explains social change and stability as a This theory explains the formation of long-term
process of negotiated exchanges between relationships through the key mediating
parties variables of commitment and trust
SET is mainly applied in the field of marital This theory posits that relationship marketing
satisfaction and the quality of family life requires commitment and trust
SET has roots in economics, psychology and This theory has roots in psychology and
sociology behavioral marketing
SET is tied to rational choice theory and This theory is tied to marketing theory
structuralism, and features many of their
main assumptions
Whether or not commitment and trust emmerge Commitment and trust are viewed as key
between the exchanging partners is a mediating variables of successful
function of the perceived costs or the relationships
rewards one expects at a later date from the
relationship exchange
2.1 Commitment-Trust Theory and the Nature of Commitment 11
There has been growing interest in possible additional factors contributing to a

long-term prosperous exchange between business associates (e.g. Friman et al.
2000). For this reason, some studies (e.g. Eberl 2006) also evaluate the impact of
CR on buying behavior based on stimulus-object-response (S-O-R) theory. This
theory is based on stimulus-response theory, a theoretical model of behavioral
psychology. S-O-R theory tries to explain buying behavior and enhances stimulus-
response theory by integrating cognitive and affective (emotions, motives, attitudes)
psychological processes. This theory is primarily focused on general buying
behavior; the important antecedents of commitment and trust related to buying
processes in the healthcare business are not explicitly discussed.
Game Theory – the science of studying agent behavior in a multi-agent environ-
ment (Aumann 1987) – is also a frequently used theoretical framework to explain
reputational issues (Helm 2007). These “solution concepts” are usually based on
what is required by norms of rationality. Today, game theory is a unified field
theory for the rational side of social science, where “social” is interpreted broadly to
include human as well as non-human players, such as computers (Aumann 1987).
These models presume either no rationality or bounded rationality on the part of
players. Weigelt and Camerer (1988, p. 443) point out that “in game theory the
reputation of a player is the perception others have of the player’s values. . . which
determine his/her choice of strategies”.
In this study, the theory of commitment and trust (Morgan and Hunt 1994) is
used to analyze international B-to-B relations in the medical sector, as this theory
postulates a number of psychological factors that may be important. Trust and
shared values form the basis of buyer-seller relationships (Friman et al. 2002),
especially in a competitive marketplace. Morgan and Hunt (1994) and Wilson
(1994) suggest that commitment and trust are central constructs in marketing
relationships as they positively influence cooperative behaviors.
Further important relationship factors are discussed in the theories of the resource-
based view (RBV) and the knowledge-based view (KBV). These theories, discussed
in the following chapters, conceptualize a company’s relationship resources as con-
sisting of commitment and trust (e.g. Johnson and Selnes 2004; Morgan and Hunt
1994) and knowledge resources (e.g. Grant 1996; Morgan et al. 2003).
2.1 Commitment-Trust Theory and the Nature

of Commitment
Morgan and Hunt, as well as several other researchers (e.g. Ganesan 1994;
Moorman et al. 1993; Keller and Stolper 2006) claim that B-to-B relationships
require commitment and trust. Their results imply that commitment and trust are
key mediating variables to understanding the relationship development process
between buyers and sellers. According to the theory of Morgan and Hunt (1994),
customer commitment to the vendor has been found to mediate the effects of a
number of variables such as quality, shared values, communication and trust on a

number of consumer behavioral intentions, including customer retention, advocacy,
and acquiescence. Trust serves as a governance mechanism that limits opportunistic
activities as well as a facilitating mechanism for developing commitment (Morgan
and Hunt 1994). Commitment includes the desire to continue the relationship and
work to ensure its continuance (Morgan and Hunt 1994; Moorman et al. 1993) in
what is described as the long-term orientation of a party toward a partner (Morgan
and Hunt 1994).
As business partners interact with one another on a regular basis, trust may
develop (Friman et al. 2002). Trust is defined as one party’s confidence in its
partner’s reliability and integrity (Morgan and Hunt 1994). According to the
literature, the construct of trust is an important element of long-term buyer-seller
relationships in a business environment (Griffith et al. 2006; Anderson and Narus
1990; Dwyer et al. 1987). Trust, the willingness to rely on an exchange partner in
whom one has confidence, is viewed as an important feeling: because of its ability
to moderate risk in the buying process (Morgan and Hunt 1994). Trust captures the
company’s belief that another company will perform actions that result in positive
outcomes for the company, as well as not take unexpected actions that could result
in negative outcomes (Anderson and Narus 1990). A trusted supplier reduces
behavioral uncertainty of the buyer by reducing risk, search costs (such as opportu-
nity or disincentive costs) and expenses (Ganesan 1994; Windsperger 1994) as well
as opportunistic activities (Morgan and Hunt 1994). In the same vein, Moorman
et al. (1992) claim that information provided by a trusted party is used more and
provides greater value to the recipient.
Commitment is defined as a desire to maintain a relationship (Morgan and Hunt
1994; Moorman et al. 1992) or resistance to change the supplier (Pritchard
et al. 1999). Commitment in the B-to-B context is closely related to loyalty
(Abdul-Muhmin 2005; Homburg and Krohmer 2006). Organizational commitment
is specified as “the relative strength of an individual’s identification with and
involvement in a particular organization” (Mowday et al. 1979, p. 226). Managers
and researchers have paid considerable attention to organizational commitment,
which has been shown to be a predictor of important organizational outcomes
such as turnover, absenteeism, and tardiness (see also Brown and Peterson 1993;
Ko et al. 1997).
Thus, relationship marketing literature has recognized that customer commit-
ment is a complex multidimensional construct that includes at least an affective,
continuance and normative component (Gruen et al. 2000; Gilliand and Bello 2002;
Meyer et al. 2002). The first component, affective commitment, is based on liking,
loving and identification (Allen and Meyer 1990; Albert et al. 2008). Customers
acquire an emotional attachment to their partner in a consumption relationship and
start to like, or even love, the brands or service providers they deal with (Albert
et al. 2008; Fullerton 2003; Meyer et al. 2002). For this reason, friendship and trust
are closely related to affective commitment (Price and Arnould 1999; Doney and
Cannon 1997).
2.2 Resource-Based and Knowledge-Based View 13
Continuance commitment refers to dependence and switching costs (Allen and

Meyer 1990) and was developed as a means of explaining the extent to which
employees feel bound to an organization (Fullerton 2003). Anderson and Weitz
(1992) established that parties become committed when one party takes specific
actions that will bind it to another party. These actions include contract or service
agreements that limit free choice for the duration of the contract (Anderson and
Weitz 1992). In 1990, Allen and Meyer suggested a third, distinctive component of
commitment, normative commitment. This reflects a perceived obligation to remain
in the organization, related to the propensity to leave of Morgan and Hunt (1994).
A single relationship can be based on either affective, continuance or normative
commitment, all three forms of commitment or none of the forms of commitment
(Meyer et al. 2002). Findings of Fullerton (2003, p. 343) also state that “the effects
of affective commitment in a relationship must be viewed in the light of the degree
to which continuance commitment is also present in the relationship”. Taking into
consideration affective, continuance, and normative components of commitment
can lead to deeper understanding of customer relationship management (Meyer
et al. 2002; Fullerton 2003).
Nevertheless, marketing science still offers no answers on how many dimensions
or components are involved in relationship commitment (Witzel 2006; Albert et al.
2008), if and how the components differ between B-to-B and B-to-C-and how
commitment and trust in a company influence its CR (Fombrun et al. 2000).
2.2 Resource-Based and Knowledge-Based View
Business strategy theorists have questioned the external-only focus of the industry-
based theory advocated by Porter (1980, 1985), although this theory has contributed
successfully to business strategy (Hunt and Lambe 2000; Jacobson and Aaker
1985). In contrast, the resource-based theory focuses on internal factors to explain
business strategy (Hunt and Lambe 2000). The company, not the industry, is the
appropriate unit of analysis for understanding performance in the theory of the
resource-based view, industry structure does not determine company behavior. As
CR is viewed as an intangible internal asset of a company, this chapter focuses on
the basic items of the RBV and the theory of the KBV.
Penrose (1959) makes it clear that a company is more than an administrative
unit; it is also a collection of productive resources. A company develops competi-
tive advantages by expanding its unique knowledge and capabilities, and by
knowing the specific product and market context in which this knowledge creates
value. Resources, representing what can be done by the company and the competi-
tive environment, representing what should be done to compete effectively in
satisfying customer needs, are both essential in the strategy-development process
(Priem and Butler 2001). According the RBV model of Peteraf (1993), four condi-
tions underlie sustained competitive advantage, all of which must be met. These
include superior resources (heterogeneity within an industry), ex post limits to
competition, imperfect resource mobility, and ex ante limits to competition. Two

factors which limit ex post competition are imperfect imitability and imperfect
substitutability. As an example, Peteraf (1993) mentioned non-tradable assets that
develop and accumulate in the company. Resources are imperfectly mobile if they
cannot be traded.
Hunt and Morgan (1995) define resources as any tangible or intangible entity
available to a company that enables it to produce a market offering efficiently and
effectively and which has value for some market segments. Resources shall be hard
to imitate and can be financial, physical, legal, human, organizational, informational
or relational; their characteristics are heterogenic and only restrictedly mobile
(Hunt and Morgan 1997; Hunt 2000; Barney 1996). Based on the work of Penrose
(1959); Wernerfelt (1984); and Barney (1991), the RBV theory suggests that there
can be heterogeneity or company-level differences among companies that allow
some of them to sustain competitive advantage. Most scholars argue that it is
mainly intangible resources that explain performance heterogeneity (Wernerfelt
1984; Peteraf 1993; Penrose 1959).
The key points of the RBV are listed in the VRIN criteria (Barney 1991; Peteraf
1993):
l Valuable – the resource must be used in a value-creating setting.
l Rare – to be of value, a resource must be rare.
l Inimitable – if a valuable resource is controlled by only one company, it could be
a source of competitive advantage as competitors are not able to imitate the
strategic asset perfectly.
l Non-substitutable – if competitors are able to counter the company’s value-
creating strategy with a substitute, prices decrease.
The condition that resources need to be rare to be a possible source of sustainable
competitive advantage is unnecessary (Hoopes et al. 2003), because within the
implications of the other VRIN criteria, any resource that follows from the previous
characteristics is inherently rare. Within the framework of the RBV, the chain is as
strong as its weakest link and dependent on the resource displaying each of the four
characteristics in order to be a possible source of sustainable competitive advantage
(Barney 1991). Priem and Butler (2001) controversially claim that the VRIN
characteristics of resources are necessary, but not sufficient to give them a sustain-
able competitive advantage.
Extending the literature on RBV, researchers have argued that the RBV of
idiosyncratic interorganizational linkage can be a source of relational rents and
competitive advantage (Dyer and Singh 1998; Griffith and Harvey 2001). In
addition, researchers claim that both relationships (Johnson and Selnes 2004;
Morgan and Hunt 1994) and knowledge (Grant 1996; Morgan et al. 2003) are key
strategic resources, as they can provide a company with a unique resource barrier
position in the marketplace. The greatest limitation of the RBV is that it only
partially explains how companies develop strategies that allow them to exploit
their individual resources. During the last two decades, extensions of the RBV have
been developed to fill this gap in business strategy.
2.2 Resource-Based and Knowledge-Based View 15
The dynamic capabilities view of the firm is one extension of the resource-based
perspective. It refers to how capabilities evolve and how organizations deal with
environmental turbulence (Helfat et al. 2007). The term “dynamic” differentiates
one capability (e.g. the operational ability to develop new products) from another
form of ability (e.g. the ability to reform the way the organization develops new
products) (Zahra et al. 2006). As resources in the context of the dynamic capabil-
ities view, the RBV and the KBV are developed to enhance customer value. These
strategic management approaches can also help advance the subordinated direct
marketing approaches of a company.
During the 1990s, a number of ideas and streams of research converged to
produce what is described as “the knowledge-based view of the firm” (Grant
2002). Some researchers argue that the KBV is a natural development of resource-
based thinking where the concept of resources is extended to include intangible
assets and, specifically, knowledge-based resources (Grant 1996; Decarolis and
Deeds 1999). These researchers identify four major streams of research on knowl-
edge: sourcing, internal transfer, external transfer, and integration of knowledge.
Other researchers consider the KBV as a useful extension of organizational learning
to strategy and organization theory, an extension that is capable of informing
research and providing new insights into organizational functioning (Kogut and
Zander 1992, 1996). In the light of this, others argue that knowledge should be
treated as a process of ongoing social construction and not as a resource (Spender
1996). Finally, some researchers believe that a theory of strategy must be a theory of
the firm, if it is to be a theory of strategy at all (e.g. Conner and Prahalad 1996).
Eisenhardt and Santos (2001) claim that Penrose’s seminal work on the growth
of the firm (1959) is an important starting point for understanding organizational
learning. Penrose describes how learning processes create new knowledge and form
the basis of the growth of organizations through the recombination of existing
resources: Companies are able to grow competitive imitation only by continuously
recombining their knowledge and applying it to new market opportunities. In a
pharmaceutical industry study, Henderson and Cockburn (1994) used knowledge
sourcing arguments to explain research productivity. The findings are consistent
with other studies that link external knowledge sourcing with innovation and
performance (Powell et al. 1996). External linkages help managers become aware
of the content and location of new technical knowledge. In dynamic environments,
searching for, identifying, accessing, and sharing new knowledge are important
activities to achieving innovative performance (Eisenhardt and Santos 2001).
Knowledge can also be transferred across a company’s boundaries through
alliances and acquisitions (Lane and Lubatkin 1998). External knowledge transfer
is affected by the relationship between the sender and the recipient. According to
Eisenhardt and Santos (2001), knowledge-based thinking may yet become a theory
of strategy of an organization, as there is already a consistent body of empirical
results capable of informing theory-building and managerial practice. These find-
ings point to a knowledge-based theory.
Some streams of research include the resource or capability analysis of
a company (Barney 1991; Prahalad and Hamel 1990). Extending this to the
inter-organizational level, the KBV argues that individual and common knowledge
bases of inter-organizational partners are developed by the sharing of information
comprising local, social knowledge together with an understanding of the partner
organization to allow for the development of competitive advantages of the inter-
organizational relationship (Grant 1996; Morgan et al. 2003). The sharing of
information accelerates problem resolution because of an increased amount of
information in the relationship. This input then leads to the generation of new
knowledge (Griffith et al. 2006).
l Knowledge is the important productive resource in terms of market value and the
primary source of Ricardian rents (Grant 1996).
l Different types of knowledge vary in their transferability (Nonaka 1990).
l Knowledge is subject to economies of scale and scope. Its initial creation is more
costly than its subsequent replication.
l Knowledge is created by human beings, and to be efficient in knowledge
creation and storage, individuals need to specialize (Simon 1991).
l Producing goods or services requires the application of many types of know-
ledge (Kogut and Zander 1992).
According to Grant (2002), the key contribution of the knowledge-based approach
is in offering understanding of the process in which knowledge inputs are converted
into goods and services and the role of the company in this process. As illustrated in
Fig. 2.1, and according to the exant literature (e.g. Morgan and Hunt 1994; Griffith
et al. 2006) relationship resources consist of trust and commitment.
When a company has confidence in its partner’s willingness to forgo opportu-
nistic activities, it is more willing to commit to the relationship and pursue long-
term, common goals (Morgan and Hunt 1994). In line with Grant (2002), the author
conceptualizes “knowledge resource” as the sharing of generalized information
about the company and its products. The term “problem resolution” explains the
sharing of information to assist a partner, when unexpected problems arise
that could disrupt the exchange relationship (Griffith et al. 2006). The view is
that problem resolution and information sharing both contribute to the enhancement
of trust.
If a company develops trust in and commitment to its partners, it is more willing
to invest in a long-term relationship (Morgan and Hunt 1994). As a result, a
Relationship Resources Knowledge Resources
Information Problem
Trust Commitment
Sharing Resolution
National Culture
Fig. 2.1 National culture’s influence on resources, based on Griffith et al. (2006)
2.3 Reputation as a Resource, an Intangible Asset and a Barrier 17
resource is created that is valuable and unique to the inter-organizational partners,

imperfectly imitable, and without a strategically equivalent substitute (Griffith et al.
2006).
The focus on specific customer needs and a general customer-friendly company
setting will naturally lead to integrated, personalized direct marketing approaches.
The goal is heterogeneity in marketing activities among companies that are condu-
cive to sustaining competitive advantages by building relationship equity (Krafft
et al. 2007). The development of new knowledge through information sharing
contributes positively to the further enhancement of trust and improves the effec-
tiveness of a relationship.
Research indicates that relationship and knowledge resources, as well as their
linkage to trust and commitment, may vary under different national cultures
(Griffith et al. 2006; Doney et al. 1998; Bhagat et al. 2002).
2.3 Reputation as a Resource, an Intangible Asset

and a Barrier
In today’s markets, marketers are faced with environmental turbulence stemming

from technological advances, changes in consumer demand, and new regulations
(Helfat et al. 2007). These developments can affect organizational performance and
also cause competitive advantage to erode or even become redundant. The RBV
approach characterizes companies as heterogeneous bundles of resources and rent
seekers, aiming their strategies at obtaining superior performance in the form of
Ricardian rents (Wernerfelt 1984; Hunt and Morgan 1995: Grant 1996). A com-
pany’s sustainable competitive advantage and superior performance are then deter-
mined by the possession of valuable, rare and imperfectly imitable resources (e.g.
Barney 1991; Srivastava et al. 2001). From this point of view, positive abnormal
returns are economic rents for unique and specialized resource combinations, rather
than market power.
Barney (1996, p. 45) describes socially complex resources as those “that enable
an organization to conceive, choose, and implement strategies because of the
values, beliefs, symbols, and interpersonal relationships possessed by individuals
or groups in a firm”. Examples also include organizational culture, trust and
reputation among customers. In the resource-based view of the firm, CR is consid-
ered an extremely important resource (Schweizer and Wijnberg 1999) as it has been
shown to be a determinant of corporate performance (Aaker 1989; Herbig and
Milewicz 1993).
The RBV unites two approaches: on the one hand, strategic advantages of
companies are traced back to the fact that companies dispose of strategically
valuable resources. On the other hand, it is also necessary for a company to exploit
its resource advantages in a more efficient and effective manner than its
competitors. Interestingly, in 1991, Barney lists some examples of social complex

resources:
l organizational culture
l trust
l reputation among customers
l managerial teamwork
Competitive intangible assets lead to competitive advantage. According to Fom-
brun et al. (2000) and Eberl (2006), trust and commitment are determinants of
corporate reputation. As discussed within the theories of RBV and KBV, relation-
ship and knowledge resources constitute a company’s intangible assets, which are
identifiable as non-monetary assets that cannot be seen, touched or physically
measured.
Kaplan and Norton (2004) suggest splitting intangible assets into legal and
competitive intangibles (see Fig. 2.2). According to Hall (1992), intangible
resources which are assets, and which enjoy legal protection, are: intellectual
property rights, contracts, copyrights and trade secrets. Following Kaplan and
Norton (2004), competitive intangibles are: human capital (the skills, training and
knowledge of employees), information capital (systems, databases and networks),
and organization capital (company culture, leadership, alignment and teamwork).
An organization is aligned when all employees have a commonality of purpose,
a shared vision, and an understanding of how their work can support the overall
company strategy (Kaplan and Norton 2004).
The author proposes to extend the definition of Kaplan and Norton (2004)
regarding organization capital by focusing on the feature of CR. CR is an intangible
asset that may lead to a company’s competitive advantage (Barney 1991; Roberts
and Dowling 2002; Zabala et al. 2005).
Hall (1992) argues that the analysis of a company’s intangible resources should
play a major role in a company’s strategic management process. Certain resources
legal intangibles competitive intangibles

Human Capital Competitive
trade marks Intangible Assets
Organization Capital Advantages
copyrights
patents Information Capital Reputation
Relationship Resource Knowledge Resource

Theoretical
frameworks:
Information Problem Commitment-
Trust Commitment
Sharing Resolution Trust Theory,
RBV, KBV
Hofstede’s
National Culture dimensions
Advantages
Fig. 2.2 Theoretical framework, formation of intangible assets and competitive advantages
2.3 Reputation as a Resource, an Intangible Asset and a Barrier 19
like company reputation are built up over time and a competitor may not be able to
perfectly imitate it (Santala and Parvinen 2007, p.172), so that they work like
market barriers. Researchers found that a strong CR increases customers’ confi-
dence in products and services, avertising claims and in the buying decision
(Fombrun and van Riel 1997; Lafferty and Goldsmith 1999).
The competitive landscape changes too much, too often, and too unpredictably
for a company to forge a permanently sustainable advantage. The value of a good
reputation is still given insufficient appreciation by investors (Vergin and Qoronfleh
1998) and other stakeholders. CR, as an intangible resource which is valuable,
inimitable, and sustainable, can be regarded as a competitive advantage and also as
a barrier to competitors. From this perspective, Griffith et al. (2006) claim that
relationship resources, such as trust and commitment, and knowledge resources,
characterized by information sharing in inter-organizational exchanges, for exam-
ple, are key strategic resources because they provide a company with a unique
resource barrier position in the marketplace.
Chapter 3
Perspectives on Corporate Reputation and
Reputation Transfer
Research on reputation refers to the perceptions of a company by its stakeholders,

how a company may manage these perceptions, and the effect these perceptions
have on the company and its performance (Carter and Deephouse 1999). This
chapter focuses on specific definitions of CR and argues the feasibility and sense
(or non-sense) of a standardized construct of reputation. Different types of CR
measures and the relevance of direct marketing to build CR in a B-to-B context
are discussed. The author introduces the method of reputation transfer, before
building a bridge between reputation, reputation transfer and different concepts
of culture.
CR can be broadly defined as a set of collectively held beliefs about a company’s
ability to satisfy the interests of its various stakeholders. Bromley (1993) points out
that the word reputation has a variety of meanings. Recent studies on corporate
reputation have emphasized the plurality of perceptions and representations around
a company, referring to “corporate reputation” as a multifaceted rather than a mono-
lithic concept (Dowling 2001; Helm 2007). According to Balmer (1998), the word
reputation is derived from the Latin word “reputance” which means “to recon”. In
German, reputation is a synonym of esteem and renown (Schwaiger 2004). Yet,
although the interest in the concept of CR has constantly grown within the last two
decades, a precise and commonly agreed upon definition is lacking. Empirical
research exploring the drivers of reputation among specific categories of stakeholders,
however, is still scarce (Gabbioneta et al. 2007). While the consequences of good
reputation have been broadly investigated, research on the formation of judgment
among different stakeholders is less abundant. Fombrun and Shanley (1990) observe
how stakeholders evaluate companies based on a number of marketing and accounting
signals indicating performance, institutional signals indicating conformity to social
norms and strategy signals indicating strategic postures. A replication of this research
on a different national sample essentially confirmed Fombrun and Shanley’s findings
(Brammer and Pavelin 2006). In 2004, building on Fombrun and Rindova’s (1998)
work, Sjovall and Talk draw on cognitive attribution theory in order to develop an
interpretation of the formation of observers’ impressions about companies. Their
findings led to the result that stakeholders tend to pay attention to actions that are

22 3 Perspectives on Corporate Reputation and Reputation Transfer
perceived as important to their interests and values. Stakeholders, then, tend to make
inferences about corporate dispositions (their trustworthiness, reliability, social re-
sponsibility, etc.) based on observed actions that are interpreted as reflections of the
former and/or situational constraints. While Sjovall and Talk’s framework increases
our knowledge of the mechanisms that underlie the formation of individual evaluation,
virtually nothing is known cross-culturally about the relationship between CR and
reputation transfer in different stakeholder groups. To find out about the main subject
of this work, CR and reputation transfer, the evaluation of different definitions and
measures of CR is essential.
In recent publications, CR has generally been interpreted as a stakeholder-
related construct (e.g., Helm 2007; Eberl 2006; Carter and Deephouse 1999).
Stakeholder literature refers to methods that organizations can use to assess and
deal with external and internal groups on a given issue (Mahon and Wartick 2003).
Stakeholder theory recognizes that various stakeholders – important groups that
affect and are affected by a company, such as customers, suppliers or employees –
may have different expectations of a company. Freeman’s (1984) exposition of
stakeholder theory directed managerial attention to the variety of individuals and
groups that influenced, and were influenced by, a company. Stakeholder theory
recognizes that different stakeholders may have different expectations of a company
(Freeman 1984; Donaldson and Preston 1995). In line with this theory, Bromley
(2002, p. 36) claims that commercial and industrial companies “have as many
reputations as there are districts in social groups”. These conflicting expectations
lead to the development of multiple reputations as perceived by these groups
(Carter and Deephouse 1999). Regarding stakeholder groups of suppliers and
customers, it is not always possible to satisfy every stakeholder and have a
favorable perception of a company’s reputation from each. Inconsistent perceptions
of a company’s reputation may be held by different stakeholders (Zinkhan et al.
2001; Dowling 2001; Carter and Deephouse 1999). As for smaller or not widely
known companies, in contrast, corporate reputations depend on the relatively
homogeneous social networks of communication (Bromley 2002). This fact is
also appropriate to the CR of widely unknown B-to-B companies.
Thus, empirical evidence on stakeholders’ perception of CR is weak (Eberl
2006; Helm 2007) and even weaker in cross-cultural contexts (Gardberg 2006;
Walsh and Wiedmann 2004). Following the literature, CR can be categorized in
(Table 3.1) as follows:
Rowley (1997) incorporated a network perspective in stakeholder theory by
recognizing that the company and its stakeholders are embedded in a set of
relationships with different actors. This may be one reason why a company’s
reputation matures and develops over time. In line with Walsh and Beatty (2007)
and MacMillan et al. (2005), CR implies:
l That different stakeholder groups may hold different views of the same com-
pany’s reputation based on their own needs, economic, social, and personal
background (Fombrun 1996; Zinkhan et al. 2001)
l And is enhanced in this study by the empirical investigation on the impact of a
different cultural background on CR
3 Perspectives on Corporate Reputation and Reputation Transfer 23
Table 3.1 Categorization of reputation. Enhancement based on Fombrun and van Riel (1997)
Discipline Categorization of reputation
Accountancy Intangible asset (e.g., Barney 1991; Hall 1992; Grant 2002; Gabbioneta et al.
2007).
Economics Sustainable competitive advantage (e.g., Deephouse 2000; Eberl 2006;
Roberts and Dowling 2002; Zabala et al. 2005)
Marketing Viewed from a customer’s or end-user’s perspective, concentrated on the
development process of reputation (e.g., Fombrun et al. 2000; Williams
et al. 2005; Helm 2007; Eberl 2006)
Organizational The perception of the organization held by an organization’s internal
behavior stakeholders
Sociology Aggregate assessment of a company’s performance relative to expectations
and norms in an institutional context
Strategy Viewed as asset and mobility barrier (e.g., Griffith et al. 2006)
The definition of Fombrun et al. (2000, p. 243) of CR as “a collective assessment of

a company’s ability to provide valued outcome to a representative group of
stakeholders” is not overall suitable, as it is focused on the positive and valued
outcomes (Bromley 2002). As CR is also influenced by cultural and ethical evalua-
tions, a further definition must also permit the attribution of negative or undesirable
characteristics.
The subsequent sections focus on the definitions of CR and reputation transfer
in economic science, where the emphasis is placed on the B-to-B context and a
stakeholder-related definition of CR. Different clusters of meanings highlight the
analysis of the concepts of reputation and reputation transfer. In detail, the next
chapters will:
l Introduce the concept of CR within the context of relationship marketing
l Give an overview of actual definitions of CR
l Review different measurement concepts of CR
l Introduce the concept of reputation transfer
l Review actual cultural frameworks
l Investigate the impact of Hofstede’s cultural values on stakeholders’ attitudes
toward the development of trust, use of media, innovations and relationships in
the countries included in this research work
Past research indicates how good reputation draws customers to a company’s
products and enhances repeat purchases, improves a company’s ability to recruit
top people, and makes it a better candidate for favorable treatment by the media
(Fombrun 1996; Fombrun and van Riel 2004). The aim of this work is to extend
our knowledge of the method of reputation transfer by investigating the drivers
of corporate reputation among a specific group of stakeholders: organizational
buyers.
3.1 Perspectives of Relationship Marketing
Since being recognized as a separate field of inquiry over 80 years ago, marketing
has made enormous strides in terms of becoming a scholarly discipline. The
definition of marketing has evolved and changed throughout the last decades. To
Kotler and Keller (2006, p. 6), marketing is “a societal and managerial process by
which individuals and groups obtain what they need and want through creating,
offering and exchanging products and services. . .”. This chapter gives a short
overview of two different theoretical approaches of relationship marketing (RM)
and defines the outline of the research context of this study.
Today, marketing practice is related to the retention of customers and the
management of relationships, also extending beyond the buyer-seller dyad to
include partners through the value chain (Day and Montgomery 1999; Webster
1992; Morgan and Hunt 1994). RM has substantially influenced marketing theory
and has become an important issue in this field (e.g., Palmatier et al. 2006). Several
studies in both business-to-consumer (B-to-C) and B-to-B contexts suggest that
there is considerable customer heterogeneity in relationship behavior. The belief
that RM investments build more trusting customer relationships (Morgan and Hunt
1994) and improve financial performance has led to massive spending on RM
programs (Palmatier et al. 2008). The RM concept was defined by Berry (1983,
p. 25) as “attracting, maintaining and (. . .) enhancing customer relationships.”
Morgan and Hunt (1994, p. 22) define RM as “all marketing activities directed
toward establishing, developing, and maintaining successful relational exchanges.”
Stone, Woodcock and Wilson (1996, p. 675) refer to the goals and benefits:
“Relationship marketing is the use of a wide range of marketing, sales, communi-
cation, service and customer care approaches to
– Identify a company’s individual customers
– Create relationships between the company and its customers that stretches over
many transactions
– Manage that relationship to the benefit of the customers and the company.”
In the context of industrial marketing, Jackson (1985, p. 2) describes RM as
“marketing oriented toward strong, lasting relationships with individual accounts.”
Doyle and Roth (1992, p. 59) indicate that “the goal of relationship selling is to
earn the position of preferred supplier by developing trust in key accounts over
time.” There is wide agreement that the concept of RM is different from traditional
or transactional approaches to managing exchanges. Given the contextual charac-
ter of marketing knowledge (Sheth and Sisodia 1999), there is no “general theory”
of RM. Their concept of RM is built on three distinct, interrelated, theoretical
approaches:
l The behavioral perspective of relationships refers to relational constructs like
trust and satisfaction, and the conceptualization and economic evaluation of
customer retention (e.g., Morgan and Hunt 1994).
3.1 Perspectives of Relationship Marketing 25
l The network approach focuses on the interactive character of relationships in

the field of B-to-B marketing and takes an interorganizational perspective (i.e.,
Håkansson and Snehota 2006) with reference to the development of intercom-
pany relationships.
l The new institutional economic approach uses modern economic theories to
explain the development and breakdown of relationships like transaction cost
theory (e.g., North 1990) and agency theory (scholars in the field of marketing
and organizational behavior include, among others, Basu et al. 1985; Eisenhardt
1985). RM in this context is seen as a question of matching particular relation-
ship dimensions to the situation, with the overall goal of minimizing the costs of
structuring and managing a given relationship.
According to the findings of Coviello et al. (2002), a more pluralistic conceptuali-
zation of marketing is required. They evaluated four aspects of marketing, classified
by exchange and managerial dimensions:
l Transaction Marketing refers to economic transactions: The impersonal mana-
gerial focus is set on products or brands and formality in exchange.
l Database Marketing is based on information and economic transaction; the
personalized managerial focus is set on products, brands or customers in a target
market.
l Interaction Marketing is related to the interactive relationships between a buyer
and seller; the interpersonal managerial focus is based on commitment, trust and
cooperation.
l Network Marketing is a connected relationship between companies in which
contact may vary from distant to close; the managerial focus is related to
connected relationships between companies in a network.
According to Coviello et al. (2002, p. 42), the broad concept of RM is “redefined
to reflect three separate constructs: database, interaction and network market-
ing.” Their findings also support the assumption that B-to-B and service market-
ing are different from consumer and goods marketing. In 2002, database and
network marketing were implemented and used with companies to a lesser
degree. Nevertheless, since then, the network economy has been constantly
growing.
Located in the field of direct marketing, this study is focused on organizational
relationships, concentrating on the enlargement of the commitment-trust theory
as well as the resource-based and knowledge-based views and conceptualizing
customer retention. Understanding the nuances of the behavioral perspective of
relationships in comparison to interaction marketing, instead of trying to find new
clusters, may lead to a new strategic view of the goals of relationship marketing. In
the author’s opinion, a state-of-the-art approach in relationship marketing com-
prises personalized database marketing, which includes knowledge about the cross-
cultural use of direct marketing media in certain stakeholder groups, as well as
interaction marketing.
3.1.1 Organizational Buying Behavior and the Impact

of Reputation
As already discussed, this work has its emphasis in RM in the B-to-B context and is
closely related to the stakeholder group of organizational buyers. This subsection
gives a short overview of the characteristics of organizational buying behavior and
highlights the possible impact of CR.
Although in Western-type countries, the turnover in investment and industrial
goods is four times as high as the turnover in consumer goods industries (Federal
Statistical Office). The companies involved in this business are hardly ever known
to the public.
As an example, let us think about two of the world’s best-known companies: In
the industrialized world, nearly everybody knows Coca-Cola and McDonald’s, but
who knows anything about companies supplying Coca-Cola with the colorants or
McDonald’s with the packing materials? Thus, the reputation of these B-to-B
companies also plays an important role with regard to risk reduction of purchasing
decision, customer relationship management and marketing strategies (Dowling 2001).
Purchasing decisions are not only made by individuals, but also by organiza-
tions. Raw materials, product components or machine equipment, spare parts,
services, or commodities are internationally purchased by smaller or larger buying
organizations (Webster and Wind 1972). A group of employees responsible for
purchasing products for an organization is the “buying center”.
If products today are more or less comparable, how can buying organizations
differentiate between them? Perceived or cognitive differentiation is “the ability of
individuals to perceive differences in the features of a stimulus object and to make
fine distinctions between that object and others” (Zinkham and Munderrisoglu
1985). Customers must be aware and subjectively convinced of a certain advantage
of a brand, a product or a service (Webster and Wind 1972). A supplier does not
necessarily have to produce high-tech products, as long as this attribute is valuable
and useful to its customers and their perception of this attribute related to this brand
or product is dominant. A certain degree of formalism and individualism, as well as
multi-organizational decision making, long-term relationships and a high degree of
dynamic interactions between deciders, buyers and sellers determine the derived
demand of organizations (Webster and Wind 1972; Kleinaltenkamp 2000).
As Håkansson and Snehota (1989, p. 187) note, when it comes to B-to-B, “no
business is an island”, referring to the interdependency of most B-to-B markets, in
which business relationships of one sort or another are inevitable. The pioneer work
of Naudé and Holland (1996) led to the development and application of relationship
theory in the B-to-B sector, which refers to marketing concepts associated with
long-term relationships. Håkansson and Snehota (2000) focus marketing research in
the B-to-B setting on four cornerstones:
l Relationships exist between buyers and sellers.
l Business relationships are connected by networks.
3.1 Perspectives of Relationship Marketing 27
l A relationship is a combination that includes elements of both market and

hierarchy.
l Relationships are confrontational and therefore innovative.
To explain the differences between industrial marketing and B-to-B marketing,
Fig. 3.1 shows the different steps involved in the markets for industrial goods,
consumer goods and goods sold and purchased in B-to-B markets. Manufacturers
can sell their goods directly to buying organizations through sales representatives or
to wholesalers. The main difference between industrial marketing and B-to-B
marketing is that the focus is not only on professional buyers. It is essential that
the users of the goods are also included in the direct marketing approach of a
company.
In the literature, industrial marketing, industrial goods marketing and investment
goods marketing are often used synonymously (Backhaus and Voeth 2007; Ahlert
et al. 2003). These types of marketing are exclusively concentrated on the market-
ing of goods and services which are not intended to be sold to wholesalers. On the
other hand, B-to-B marketing also includes marketing activities to wholesalers,
retailers and buying organizations (Webster and Wind 1972).
B-to-B relationships are characterized by an exchange between two or more
parties (Backhaus and Voeth 2007). Research has identified several factors that
enhance marketing and management in business relationships: commitment and
trust, shared values and open and honest communication (Webster and Wind 1972).
RM in international B-to-B relationships is more complicated to maintain because
of language barriers and cultural differences (Friman et al. 2002).
Manufacturer
Manufacturer
(Organization)
Production Manufacturer
Manufacturer
Trade (Organization)
Production Wholesale Buying

Manufacturer Manufacturer User
Trade Trade Organization
Buying
Manufacturer User
Organization
Wholesale
Manufacturer Retail Trade Consumer
Trade
Manufacturer Retail Trade Consumer
Manufacturer Consumer
Markets for Industrial Business-to-Business Markets for consumer

Goods Markets goods
Fig. 3.1 Differences between B-to-B and B-to-C markets, Enlargement based on Backhaus/Voeth
(2007) and Plinke (1999)
The buying decision-making process of an organization is characterized by the

involvement of multiple individuals. Buying decision rules or standards may be
applicable, and purchases occur as a result of derived demand (Backhaus and Voeth
2007). Differences in organizational transactions can be focused on the decision-
making units (users, influencers, deciders, gatekeepers like secretaries, and buyers).
For business companies, the buying objective is usually to increase profits by
reducing costs or increasing revenues. Organizations often employ people who
are professional purchasing agents and who are specialists at finding what their
employer needs. Taking into consideration this special customer relationship, is it
nevertheless possible to use CR as a competitive advantage and reputation transfer
as a tool for an easier market entry?
Trust and commitment in B-to-B relationships are important, although the basic
conditions between organizational buyers and suppliers are characterized by buying
decision rules and derived demand: A positive reputation of the supplier and a
trustful relationship between buyer and seller are ideal conditions for an easier
market entry of new products.
Critical to a long-term buyer-seller relationship is a good understanding between
partner companies. Friman et al. (2002) discuss the importance of knowledge and
stress that acceptance of one another’s organizational cultures is crucial to success-
ful business relationships.
3.1.2 Commitment and Trust in Organizational Buying Behavior
Trust, the willingness to rely on an exchange partner in whom one has confidence
(Morgan and Hunt 1994), can be described as an expectation about the other party’s
honesty and benevolence (Ganesan 1994). As business partners repeatedly interact
with one another, trust may develop (Friman et al. 2002). This trust permits the
buyer to make a commitment to a single source whose prior behavior has been
satisfactory, with the confidence that this supplier will continue to perform in a
similar manner. Ganesan (1994) claims that trust and dependence play key roles in
determining the long-term orientation of firms in a relationship, and both are related
to environmental uncertainty, transaction-specific investments, reputation, and
satisfaction in a buyer-seller relationship.
Trust has always been an essential part of healthcare within the relationships
between staff, management (Firth-Cozens 2004; Witzel 2006) and partner organiza-
tions. Organizational trust is defined as the extent to which one is willing to ascribe
good intentions to, and have confidence in, the word and actions of other people
(Cook and Wall 1980). In the literature on organizational trust, the act of trusting on
the part of managers is almost never considered (Firth-Cozens 2004). Customer
satisfaction and customer loyalty are seen to be influencing factors of organizational
buying decisions (e.g., Homburg and Krohmer 2006). Satisfaction may develop
through personal experience or, less directly, through opinion and the experience of
3.2 Defining Corporate Reputation in B-to-B Relationships 29
peers, related to the perceived standard of delivery or product quality, and may also
depend on the duration of the relationship (Swaminathan and Reddy 2000).
The development of purchasers’ commitment refers to the motivation to stay
with a supplier: a strong belief in and acceptance of the organization’s goals and
values, a willingness to exert considerable effort on behalf of the organization and a
strong desire to remain in the relationship with the supplier (Porter et al. 1974;
Moorman et al. 1992; Friman et al. 2002). Nevertheless, especially purchasers in
organizational markets often face switching costs resulting from the fact that they
have made a commitment to a certain technology product (i.e., all syringe pumps
used in one hospital are bought from one supplier), or a certain buying organization
(which may purchase products for more than 100 hospitals).
Organizational commitment, unlike satisfaction, is a relatively stable attitude. In
various industry settings, a non-opportunistic and flexible nature of customer
orientation has been found helpful to develop customer trust and commitment
and thereby generate a competitive advantage for the supplier (Farrelly and Quester
2003; Saparito et al. 2004; Williams 1998). To reduce supply chain costs, hospitals
no longer negotiate their contracts with their suppliers; instead, designated buying
organizations are in charge. This may lead to the development of calculative
commitment between buyers and suppliers. With regard to organizational buying
behavior, calculative or continuance commitment can be caused, for example, by
signing long-term purchasing contracts between numerous hospitals and buying
organizations. In this connection, de Ruyter, Moorman and Lemmink (2001)
propose to define commitment as a calculative act in which costs and benefits are
examined.
It can be distinguish between two types of commitment: affective commitment
expresses the extent to which customers like to maintain their relationship with
their supplier, whereas calculative commitment refers to a company’s motivation to
continue the relationship because it can not easily replace its current supplier (Allen
and Meyer 1990).
3.2 Defining Corporate Reputation in B-to-B Relationships
Although interest in the concept of CR is constantly growing, a precise and

commonly agreed upon definition is still lacking (Barnett et al. 2006; Helm
2007). In addition, limited attention has been paid to the extent to which reputation
encompasses various stakeholders’ perceptions that may have different effects on
the positive economic outcome associated with the possession of a favorable
reputation (Eberl 2006; Helm 2007).
Reputation is viewed mainly as a valuable, intangible asset that provides a
company with competitive advantages (Barney 1991; Roberts and Dowling 2002;
Zabala et al. 2005), unless it is a positive reputation. CR influences stakeholders’
economic choices (Fombrun 1996; Deephouse 2000; Rindova et al. 2005; Barnett
et al. 2006). More than 10 years ago, Fombrun and van Riel (1997) identified
several distinct views of reputation, including economics, strategic, marketing,
organizational, and accounting, each with its own traditions of defining the concept
and conducting research.
To ask people about a company’s reputation in the B-to-C context is simple:
Awareness and visibility of a company’s reputation in this context is often asso-
ciated with a positive reputation (Gardberg 2001, 2006). The more a company is
known and visible, the better people are able to judge its reputation, based on past
and planned actions the company has taken. Fombrun (1996, p. 72) defines CR as:
“A corporate reputation is a perceptual representation of a company’s past action
and future prospect that describes the firm’s overall appeal to all of its key
constituents when compared with other leading rivals.” Under this definition of
CR, only affective reactions are integrated and cognitive components are excluded
(Schwaiger 2004). According to Gray and Balmer (1998), CR is a valuation of a
company’s attributes, performed by the stakeholders, which almost excludes affec-
tive components.
In the context of B-to-B relationships, CR is considered as a general, spanning
information substitute (Homburg and Krohmer 2006), evaluated by interested
stakeholder groups. A good or bad reputation of an organization is determined by
the signals that it gives out about its nature (van Riel 1995):
l It influences stakeholders’ economic choices (Benjamin and Podolny 1999;
Deephouse 2000) and may have a positive impact on a company’s financial
performance (Fombrun and Shanley 1990; Podolny 1993; Roberts and Dowling
2002).
l It is defined as a collective representation of a company’s past behavior and
outcomes that depict its ability to render valued results to multiple stakeholders
in the future (Fombrun and Rindova 1998).
l It can be viewed as one of a set of organizational constructs, just like identity,
image and learning, which are parallel, individual, level constructs (Gardberg
2006; Bromley 2000; Whetten and Mackey 2002).
l Positive CR makes it easier to charge premium prices by signaling product
quality (Klein and Leffler 1981; Fombrun 1996), attracting better job applicants
(Stigler 1962) and facilitating access to capital markets (Beatty and Ritter 1986).
l A favorable reputation can generate higher returns for companies by building
mobility barriers against industry rivals (Caves and Porter 1977).
All the above-listed benefits are provided through CR by signaling information
about past and future activities (Fombrun 1996). According to Lewis (2001, p. 31),
CR “is the product, at any particular moment, of a fermenting mix of behavior,
communication and expectations”. At a strategic level, reputation is often viewed as
a key, intangible asset of a company that helps to create value (Zabala et al. 2005;
Roberts and Dowling, 2002) and explains certain facets of the performance of the
company. Intangible assets are often associated with share price, and market assets
such as customer loyalty are often linked to cash flow. Both concepts lead to value
creation (MacMillan et al. 2004).
According to Dowling (2001), for companies in the risk management business

such as pharmaceuticals and medical devices, CR is doubly important, as these
companies have to rely on the trust of their customers. Wiedmann and Prauschke
(2005) define CR as an overall stakeholder relationship variable and claim that the
concept of CR can be either a market asset or a mediator or moderator between
internal, intangible assets and market assets. Therefore, CR, as a determinant of
corporate success, is a market asset.
To the author’s best knowledge, no attention at all has been paid to differences in
influencing factors on reputation in the B-to-B context compared with the B-to-C
context. This may be one reason why, even today, there is a problem of defining the
concept of CR (Barnett et al. 2006). According to the literature, even precisely
distinguishing CR from corporate identity and corporate image seems to be difficult
(e.g., Barnett et al. 2006; Helm 2007).
3.2.1 Reputation, Corporate Identity and Image
Following Fombrun and van Riel (1997), CR is often labeled “brand image” and
focuses on the nature of information processing.
The role of corporate image and reputation has been studied in terms of its
conceptualization, antecedents, and consequences (see reviews by Biehal and
Sheinin, 2007). Empirical studies confirm the power of a corporate brand and the
relationship between corporate branding and corporate reputation (e.g., Argenti and
Druckenmiller, 2004). Balmer (1998, p. 963) postulates that “the key to acquiring a
favorable image and reputation is the management of an organization’s identity
[. . .].” Reviewing the literature, the most fundamental barrier to the creation of one
definition is the confusion concerning the concepts of identity, image and reputation
(e.g., Barnett et al. 2006; Eberl, 2006; Helm, 2007; MacMillan et al.; 2004; Money
and Hillenbrand, 2006).
Subsequent studies have measured the benefits of well-managed corporate iden-
tity, and have thus concentrated on the concepts of corporate image and reputation.
In 1960, Bristol (p. 13) defined corporate image the way Fombrun defines corporate
reputation today: “It is in all essentials, merely the picture which your organizsation
has created in the mind of your various publics.” Bevis (cited by Bernstein 1984,
p. 125) defined corporate image as “. . . the net result of interactions of all the
experiences, impressions, beliefs, feelings and knowledge that people have about a
company.” Fombrun and van Riel (1997) sought to subsume image and identity
with reputation, as image and identity, from their perspective, are the basic compo-
nents of reputation. According to Dowling (2001), corporate image (CI) refers to
stakeholders’ overall evaluation of the qualities associated with the company, and
the emotional reaction those qualities produce. Dowling also links a company’s
image to its perceived ability to meet the needs of the stakeholders.
The term image is defined as the subjective attitude and impression a person has
with regard to a certain object, in that the image is able to replace the missing
information about a product if the brand is known. (Kroeber-Riel and Weinberg

2003, Mayer and Mayer 1987). For this reason, image plays an important role in the
behavior and the decision process of the customer. The following image functions
are part of this decision process (e.g., Kroeber-Riel and Weinberg 1996; Mayer and
Mayer 1987):
– knowledge function
– ego defensive function
– value expression function
– adjustive function
Burmann, Schaefer and Maloney (2008) also discuss the impact of the industry
image, not only on the perception of potential investors but also on other relevant
stakeholders of corporate brand management.
The following Fig. 3.2 outlines the different approaches to defining CI and CR
separately. Unfortunately, even measurement concepts of CI do not differentiate the
wording correctly. Presenting measurement concepts of CI, van Riel, Stroeker and
Maathuis (1998) claim that a “good reputation” is an influencing factor of CI.
Falkenreck and Wagner (2008) extend the cluster of defining CR of Schwaiger
(2004), Eberl (2006) and McMillan et al. (2005) by not only referring to relation-
ship drivers like commitment, trust and knowledge resources: Their findings addi-
tionally highlight and confirm the impact of national culture on CR.
Similarly to Foreman and Whetten (1994), van Riel (1995) claims a possible
multiplicity of organizational identity. He developed a method to access organiza-
tional identities that focused on the design of a branding strategy and distinguished
four identity strategies depending on the degree of endorsement that the business
Corporate Image versus Corporate Reputation
Corp. Image = Corp. Reputation Corp. Image ≠ Corp. Reputation

Bromley (1993); Dowling 2001
Reputation is a Reputation is Reputation is “Realizing

determinant of created by created by value from the
image. relationship relationship corporate
drivers and drivers. image.”
influenced by
van Riel/Stroeker/ national Schwaiger (2004); Fombrun (1996),
Maathuis(1998) Eberl(2006); Walsh/Wiedmann
culture. McMillan et al. (2004
(2005) Helm (2007)
Falkenreck/Wagner
(2008)
Fig. 3.2 Different clusters of definitions of image and reputation

unit label uses. These range from “low degree of parent visibility”, and “low
identification with parent brand” to “high parent visibility”, and “high identification
with corporate brand level”. According to van Riel (1995), the last approach
requires a strict coordination of communication strategy to show the strength of
the group, whereas a low degree of parent brand visibility leads to greater autonomy
at the business unit level.
The next Fig. 3.3 the author summarizes the link between corporate identity,
image, culture, buying behavior and CR in B-to-B settings: In line with Bruhn
(2004), corporate identity and corporate image of the company and its products are
interactive. In addition, this study claims that corporate identity is also influenced
by the culture of the parent company and the culture of its international stake-
holders. Through direct marketing media, or WOM, the image of a company or its
products influences organizational buying behavior.
Corporate image generates CR, and CR determines how a company is perceived
by its stakeholder groups.In the context of Fig. 3.3, the author defines CR as
l The “net” affective or emotional reaction of stakeholders in the B-to-B
context.
l CR-influencing features in this context are exclusively linked to relationship
drivers and
l Are influenced by the national culture of the different stakeholder groups.
Corporate Identity influences National Culture

Set of values and principles Cultural Values
(direct) marketing
influences
activities create
influences
Company and Product Image influences Buying Behavior of

Subjective image based on different Organizational
associations of stakeholders Customers
influences
generates perceptions
Corporate Reputation–the “net” affective

or emotional reaction of stakeholders in
the B-to-B context on
• perceived quality of products and
services
• emotional appeal
Fig. 3.3 Linking identity, image, culture, buying behavior and reputation
3.2.2 Reputation vs. Brand Identity, Brand Imagery

and Brand Equity
According to Aaker (1991, p. 7), a “brand is a distinguishing name and/or symbol

(such as a logo, trademark, or package design) intended to identify the goods or
services of either one seller or a group of sellers, and to differentiate those goods or
services from those of competitors.” Powerful brands create meaningful images in the
minds of consumers (Keller, 2003), with brand image and reputation enhancing
differentiation, and this could have a positive influence on buying behavior (Gordon
et al. 1983; McEnally and de Chernatony 1999). While the power of branding is
widely accepted in consumer markets, knowledge of the nature and importance of
branding in industrial markets is limited (Kuhn and Alpert 2004). Rosenbroijer
(2001) claimed that in the sales-dominated nature of the industrial marketing envi-
ronment, it is important that brands have no place in the B-to-B context. Others are of
the opinion that brands are nevertheless valuable in such an environment (e.g.,
Gordon et al. 1993; Low and Blois 2002; McDowell Mudabi et al. 1997). Fournier
(1998) argues that brand realtionships have many of the characteristics of human
interpersonal relationships, including commitment or attachment. According to
Aaker (1991), while deciding between industrial purchase alternatives, the decisive
factor can be influenced by what a brand means to the buyer. Thus, a company’s
reputation can also be a decisive factor with regard to industrial purchase alternatives.
Brand equity is the effect that brand knowledge has on consumer response to the
marketing of a brand (Keller 2003). This effect can only occur when the brand is
known and when the customer possesses favorable, strong and unique brand
associations. This can be triggered through the initial choice of the brand identity
(brand name and logo) and through the integration of brand identities into the
supporting marketing program.
The idea of branding has been increasingly extended from products to corporations.
Keller (2003, p. 83) defines brand imagery as referring “to a more intangible aspect of
the brand”, how people think about a brand in abstract terms, rather than what the
brand actually does. Imagery associations can be formed directly (own experience and
contact with the brand) or indirectly (e.g., communicated through advertising or by
word of mouth). In a B-to-B setting, user imagery can be related to the size or type of
organization. User imagery may also be focused on the perceptions of a group as a
whole (Keller 2003). A number of different types of associations related to either
performance or imagery may be linked to a brand (Keller 2003). Regardless of
whether the corporate branding is focused on the corporation itself, it derives from
an alignment between strategy and communication (Forman and Argenti 2005).
Brand associations make up the brand image. Keller (2003, p. 87) argues that to
“create brand equity, it is important that the brand has some strong, favorable and
unique brand associations.” Brand awareness refers to linking brand elements, the
brand name, logo, packaging, product jingles and slogans, to the brand associations
in the memory of the user. According to Keller and Sood (2003), brand elements
make up the brand identity; therefore, they are important to enhance brand
awareness and facilitate the formation of brand associations. In the B-to-B context,
studies now show that brand awareness plays a less important role than suggested
by Keller (2003). In their study, Kuhn and Alpert (2004) tried to transfer Keller’s
model for building brands empirically to the B-to-B context. Their findings do not
support some of Keller’s brand equity building factors. In their Australian B-to-B
study, organizational buyers care less about product slogans or brand names, but
more about the company itself and its products. Caring about the company itself
means caring for its reputation (Fombrun 1996).
Although often unavailable in the consumer market, the sales force is a major
brand-building tool in the B-to-B setting (Gordon et al. 1993). Purchase choice can
therefore also depend on the company’s people. The study of Kuhn and Alpert
(2004) confirmed that Australian customers identified with manufacturer brands and
spoke about relationships with company representatives rather than products.
Respondents of their study mentioned their positive relationships with company
representatives, but in no way expressed a sense of community or engagement.
Brand resonance and brand feelings also do not seem to be evident among the
organizational buyers surveyed. Keller’s (2003) brand building block model lacks
relevance in the B-to-B market investigated in Kuhn and Alpert’s study. In discuss-
ing their experiences, respondents referred to the product functionality and tangible
product information as reasons for purchasing. This outlines the difficulties of
transferring the theoretical brand building process unchanged from B-to-C to B-to
B contexts. The purchase decisions in the study of Kuhn and Alpert (2004) were
involved in tender processes, and are therefore comparable to the setting of the study
underlying this work. According to Argenti and Druckenmiller (2004), branding and
reputation are closely linked, if they refer to corporations.
Careful management of a corporate brand can enhance reputation by guiding a
company’s actions (Forman and Agenti 2005). Bergstrom, Blumenthal and
Crothers (2002, p. 133) claim that a “brand is the sum total of all perceived
functional and emotional aspects of a product or service [. . .].” Brands can be
sold, balanced or trademarked. Most marketing literature deals with the endorse-
ment of one brand by another brand in the same product category (image transfer by
line extensions, e.g., Aaker and Keller 1990; Park et al. 1991), products comple-
menting one another or linking organizational associations to product associations
(Keller 2003). Reputations are the product of relationships between organizations
and the general public (Dozier 1993), influenced by internal and external elements.
Leading companies understand that a strong reputation is not built overnight. It is an
ongoing process that involves rigorous measurement and tracking as well as
creative strategies for engaging with stakeholders (Fombrun 2008).
As Fig. 3.4 shows, a strong link between brand performance and CR is essential,
since the brand is the promise and the reputation is the external evaluation of
whether or not the company is delivering on this promise (Fombrun 2008). Just
as branding is closely related to CR, so is corporate communication (CC). Fombrun
and Rindova (1998) point out that communication benefits do not only result from
the frequency of communications: As communications make a company more
transparent, stakeholders know more about the company’s operations and goals.
Influencing Elements Reason Why

Stakeholders’
Primary Associations Perception of a Stakeholder
Company Value
Brand Elements • “Great place
Name, Logo, Symbol, to work”
Character, Claim… • Market share
Brand • Financial
Awareness performance
internal
Marketing Strategy • Licensing
Corporate Reputation
Price, Portfolio, Product Brand opportunities
Brand Performance
Quality, R&D… Attachment • Brand
extension
opportunities
Communications Corporate
Sponsoring, Fairs, Identity
Relationship
Brochures, Internet, Marketing
Events, Sales Represen- Product and
• Stakeholder
tatives, Advertising… Company
commitment
Image and trust
• Purchase
Secondary Associations decision
Employer
external
Culture of company or origin, involvement

Branding
Culture of customers, • Reduction of
Competitors’ Propensity to
Environmental situation leave
Fig. 3.4 Linking influencing elements of stakeholders perception
3.3 A Standard Construct of Reputation–Useful and

Appropriate?
As Larkin (2003, p. 5) pointed out, “The biggest hurdle in making the case for
building, maintaining and managing reputation is how to measure it effectively.” A
large body of academic literature is concerned with the conceptualization and
measurement of CR. This chapter offers an overview of this issue.
The abstract construct of reputation is difficult to measure in a mathematical
way. Thus, it is difficult to define conceptualization and measurement of CR
(Sandig 1962; Money and Hillenbrand 2006; Eberl 2006; Helm 2007). Due to the
increasing awareness of the value of the concept to both practitioners and scholars
(MacMillan et al. 2005; Fombrun and van Riel 2004; Bromley 2002), more
measurement concepts of CR have emerged. Recent reputation studies (Fombrun
and Shanley 1990; Cordeiro and Schwalbach 2000; Wartick 2002; MacMillan et al.
2005) and formative versus reflective measurement concepts (Eberl 2006; Helm
2006, 2007) provide some insights into the relationship between stakeholder-
specific activities and the problem of measuring corporate reputation.
On the one hand, due to the variety of measurement concepts and definitions of
CR, researchers (e.g., Money and Hillenbrand 2006; Helm 2007) assert that
3.3 A Standard Construct of Reputation–Useful and Appropriate? 37
companies do not know what reputation measures they should use in which
circumstances and what aim and value the different models offer. On the other
hand, Bennett and Kottasz (2000), as well as Waddock (2003), claim that the need
for a valid measurement concept of CR is just applied pressure of the practitioner
world. How useful are CR measurement concepts, if they can not be used by
practitioners to answer strategic questions?
Is it possible to standardize measurement of CR even if there is not a precise and
commonly agreed upon definition (Barnett et al. 2006)? Some authors supporting
the perceptual view of reputation doubt that the diverse reputations of a firm are
comparable. Dowling (1988, p. 28) states that investigations of reputation call for
an adaptive approach: “It is necessary to customize this set of factors (and attri-
butes) used to describe a company (. . .). The role of people and their norms and
values will determine which types of factors should be selected”. He concludes that
a measurement model for reputation needs to be adapted to each stakeholder group.
Unfortunately, this makes it impossible to compare the results.
Other research approaches show that financial performance, which is often
analyzed within the context of CR (Deephouse 2000, does not have a decisive
impact on reputation at all (Helm 2007). As suggested by Gatewood et al. (1993),
inconsistent perceptions across stakeholder groups might be attributed to different
correlates of reputation, whereas consistent perceptions indicate that reputation is a
general construct. In the first case, reputational analysis needs to be limited to
specific roles of a firm: reputations such as a firm’s reputation as a supplier, as an
investment choice, or as an employer.
Studies describing organizational identity are primarily based on input from
organizational members. Most studies examine the identity of the organization as a
whole (Bernstein 1986; Atamer and Calori 1993; Foreman and Whetten 1994,
Gioia and Thomas 1996), whereas others consider that an organization has multiple
identities or reputations (Helm 2007; Dowling 2001; van Riel 1995; Gustafson and
Reger 1999). Regarding research work on CR, authors normally focus on one to
three stakeholder groups in one country. For example, Helm (2007) and Eberl (2006)
concentrate on customers, shareholders and employees in a German B-to-C setting.
Both researchers use different constructs of CR.
Bernstein (1986), together with a focus group of top managers concluded that
organizational identity is influenced by the following dimensions: value for money,
technical innovation, service, social responsibility, reliability, imagination, quality
and integrity.
The following sub-chapters focus on actual measurement concepts of CR. As an
introduction to the various concepts, the first type of CR measurement is presented:
league tables outline the score of the “most visible” or “most admired” companies.
On a more strategic level, the reputation models of Fombrun et al. (2000,
Sect. 3.3.2), Gardberg (2006, Sect. 3.3.3) as well as Walsh and Wiedmann (2004,
Sect. 3.3.3) provide information on the use of a “Reputation Quotient” (RQ). The
RQ model suggests to understand the beliefs of individuals as well as stakeholders
regarding an organization’s reputation impact on their attitudes in terms of the
emotional appeal that people feel toward a business (Money and Hillenbrand 2006).
A different approach on the measurement of CR is provided by MacMillan et al.

(2005) and Eberl (2005). Details on the relationship-driven measurement approaches
can be found in Sect. 3.3.4.
3.3.1 League Tables
In 2007, the Reputation Institute identified and examined 183 public lists that
provide ratings and rankings of companies in 38 countries (Fombrun 2007).
Sixty-one of the lists provide a rating and/or ranking of a set of companies (most
of which, also 61, were located in the US), based on an overall measure of
reputation. Only two lists focus exclusively on providing ratings based on perceived
quality of products or services of the rated companies. The main criteria used to rate
companies in these internationally publicized reputation lists are the following
(Fombrun 2007): overall reputation, workplace, citizenship, performance, leader-
ship, innovation, governance, and products.
The first and best-known league tables of reputation for industrial and commer-
cial companies are those published annually in the US business magazine, Fortune
(Bromley 2002). League tables have existed since 1983 and are based on large data
samples from executives, directors and, among others, securities analysts, who rate
a selection of companies on various attributes relevant to corporate success.
The often-cited rankings in Fortune, Management Today and the Financial
Times emphasize reputation criteria such as being well-known, respected and
having high or low levels of financial performance or innovativeness. The most
enduring and visible reputation survey in the market is probably Fortune’s annual
list of “America’s Most Admired Companies”. Similar ratings can be found in the
Financial Times, Asian Business and the Manager Magazin. Since 1987, the latter
has conducted surveys to measure CR. In 2000, the authorized agent performed a
random CATI survey of about 2,500 executives, who were asked to rate the top 100
German companies according to the following criteria: quality of management,
innovativeness, ability to communicate, environmental responsibility, financial and
economic stability, product quality, value for money, employee orientation, growth
rates, attractiveness to executives, and internationalization. However, the calcula-
tion of the “overall reputation index” is not explained.
Social rating agencies such as the Council on Economic Priorities (CEP) and
investment funds such as Kinder, Lydenberg and Domini (KLD) also rate compa-
nies on various aspects of social performance and contribute to the current prolifer-
ation of reputational ratings (Fombrun 1998).
Stakeholders can be influenced by these lists and the visibility conferred upon
them by the media. How are companies selected for inclusion in these lists?
According to Fombrun (2007), none of the 183 lists are comprehensive, as various
filters are applied by the rating agents, which also influence which companies are
included in the lists. The “top of the mind awareness of corporate brands” (van Riel
2002, p. 368) generally refers to visibility of the company in the media, stock
quotation, size (referring to turnover or number of employees), long-established-

ness and company activities of general interest (Fombrun and van Riel 2004). Some
rankings include all types of companies, whereas others examine only the largest
companies or focus on a certain type of industry. Among others, Gatewood et al.
(1993) claim that using Fortune criteria to measure reputation is not appropriate for
all stakeholder groups. They especially focus on job applicants’ perception of
corporate reputation, which does not seem to be correctly captured by the set of
criteria. The authors conclude that any perception is a function of the information
that is available to an individual at a given time. This would also not make it
possible to standardize a reliable measurement model of corporate reputation.
The traditional league table approach to assessing and comparing CR faces a
number of problems associated with defining and measuring reputation:
l Bromley (1993) criticizes the eight categories of Fortune magazine as being
inconcise.
l A survey may not sample the stakeholder groups best informed about the
company (Bromley 2002).
l The particular attributes on which respondents are asked to rate a number of
selected companies vary from one survey to another (Kay 1993).
This leads to the fact that not even the results on the same company coming
from different league tables are comparable. None of the above-mentioned rankings
can be considered as an objective measure of CR–and particularly not in the
B-to-B context.
3.3.2 The Reputation Quotient
In the definition of Fombrun and Gardberg (2003, see also Fombrun 1996, Fombrun
and Rindova 1998; Fombrun and van Riel 1997), CR is a collective representation
of a company’s past actions and results that describes the company’s ability to
deliver valued outcomes to various stakeholders.
To develop a cross-national instrument to measure reputation, in 1999 the
Reputation Institute created an index called Reputation Quotient (RQ) that sum-
marized people’s perceptions of companies based on twenty attributes (Fombrun
and Gardberg 2002). Researchers agree that a stakeholder-specific approach can be
delicate (Sobol et al. 1992; Fryxell and Wang 1994; Rindova et al. 2005) because
one stakeholder group can hardly reflect the “overall perception of a firm by its
stakeholders”, i.e., CR (defined by Fombrun and Rindova 2000, p. 78).1
1
For recent stakeholder-specific studies, see, e.g., Wright and Fill (2001), Helm (2007), and
Rindova et al. (2005). For a cross-stakeholder approach, see, e.g., Ravasi and Fombrun (2004),
Rabe (2005), and Carter and Deephouse (1999).
Figure 3.5 lists the various components influencing corporate reputation. As van
Riel and Fombrun (2002) explained, the six components were designed for using
the RQ with any stakeholder group. So far, the collected RQs only focus on the
general public (Wartick 2002), and apply mostly to “most visible” and generally
known B-to-C companies. Nevertheless, Fombrun and Wiedmann (2001) assume
that there are no great differences between the perception of individuals belonging
to different stakeholder groups. Different perceptions between stakeholders with
regard to B-to-C or B-to-B contexts are not discussed at all. Thus, with the RQ
measurement concept in mind, Groenland (2002, p. 308) concludes that “a rigorous
conceptual definition still lacks in this study” and that “the validity of the construct
remains unclear.”
The literature has already discussed that the RQ dimensions “vision and leader-
ship” and “financial performance” might be more important to investors than to
customers (Gabbioneta et al. 2007; Fombrun and Wiedmann 2001; Reynolds et al.
1994; Caruana, 1997). Moreover, some dimensions are difficult to measure across
cultures (Gardberg 2006; Walsh and Wiedmann 2004). Nevertheless, there are
several empirical studies which try to measure corporate reputation based on the
above components (e.g., Helm, 2007; Gardberg 2006; Walsh and Wiedmann 2004).
To construct a global database, the 20 attributes on the left side of Fig. 3.5 were
grouped into six conceptual categories: Emotional Appeal, Vision and Leadership,
Products and Services, Workplace Environment, Social Responsibility, and Finan-
cial Performance (Fombrun et al. 2000). This “balanced instrument for measuring
reputation” was developed by reviewing the items contained in the eight most visible
measures of corporate reputation, including Fortune’s Most Admired Companies,
Far Eastern Economic Review and Financial Times (Fombrun et al. 2000).
Like, Trust, Respect Emotional Appeal
Strong Brand, Innovativeness,

Quality, Value Products and Services
Inspiring Vision, Leadership,

Vision & Leadership
Clear Value, Well-Managed
Appealing WP, Employee Reputation
Workplace Environment
Talent, Past Results
Low Risk, Growth, Standing,
Financial Performance
Recognizing Opportunities Renown,
Citizenship, Prestige
Environmental Ethics Social Responsibility
Fombrun’s Components of
Reputation, included in RQ
Components of Reputation
in B-to-B Contexts
Fig. 3.5 Different components forming corporate reputations based on Fombrun et al. 2000
Table 3.2 Items and components of the reputation quotient

Emotional appeal
l I have a good feeling about this company
l I admire and respect the company
l I trust this company
Products and services

l Stands behind its products and services
l Develops innovative products and services
l Offers high-quality products and services
l Offers products and services that are good value for money
Vision and leadership

l Has excellent leadership
l Has a clear vision for its future
l Recognizes and takes advantages of market opportunities
Workplace environment
l Is well-managed
l Looks like a good company to work for
l Looks like a company that would have good employees
Financial performance
l Has a strong record of profitability
l Looks like a low-risk investment
l Is better than its competitors
l Looks like a company with strong prospects for future growth.
Social responsibility
l This company supports good causes
l Is an environmentally responsible company
l Maintains high standards in the way it treats people
From these publications, 27 items were listed and reviewed by their research partner,
Harris Interactive. This company added five items, so that the item list contained
a total of 32 items (Fombrun et al. 2000) (Table 3.2).
Results show that constructs referring to the components “vision and leader-
ship”, “social responsibility” and “workplace environment” reveal more missing
values than “emotional appeal” and “products and services” (Fombrun and Gardberg
2002). Possibly, with reference to organizational buyers, these so-called “general
reputation drivers” (Genasi 2001; Fombrun 2001) are of no interest to these
stakeholder groups, assuming they are able to judge it. The author therefore
suggests that important components of CR in the B-to-B context are barely related
to vision and leadership, workplace environment, financial performance or social
responsibility, as B-to-B companies are simply not “most visible”, and only little is
known about these companies. On the other hand, “emotional appeal” as well as
“products and services” have a strong impact on a B-to-B company’s CR, even in
the eyes of buying organizations.
Companies doing well in these annual RQ surveys were B-to-C companies like
Johnson and Johnson, Lego, Ferrari and Microsoft. No details are published in the
above papers regarding the measurement scales used, but before filling out the
questionnaire, people were also asked to rank the importance of the single items
determining the constructs.
Bromley (2002) notes that even though the name “Reputation Quotient” implies
arithmetic attributes, Fombrun does not calculate an arithmetical quotient. Accord-
ing to Bromley (2002), calculating RQs or benchmarks for comparing CRs calls for
a departure from the traditional league table method, but still depends on question-
able assumptions about the legitimacy of psychometric assessment.
Using the dimensions of the RQ, Helm (2007) developed a formative construct
of CR based on the following ten indicators: quality of products, value for money,
environmental engagement, company’s attitude toward employees, company
growth, social responsibility and citizenship, financial performance, qualification
of management, compliance with advertising promises. In addition, the constructs
loyalty and own experiences were used to evaluate different stakeholders’ percep-
tions of a company’s reputation. This structural model was tested on three different
stakeholder groups (shareholders, employees, and customers), and no significant
differences were found regarding the company’s reputation, which is located in the
B-to-C setting.
The aim of the study of Helm (2007) was to create one valid construct of
reputation to be used comprehensively on all stakeholder groups. However, taking
into account the comments of Bromley (2002), that a survey may not sample the
stakeholder groups best informed about the company, the reputation construct of
Helm (2007) can not be used in the B-to-B context, as knowledge about, as well as
the interest in, organizational suppliers varies significantly among the various
stakeholder groups (Meffert and Bierwirth, 2002).
3.3.3 Measuring RQ in Different Cultures
Most empirical research work on CR has been conducted in the US, using US
samples (Brown and Perry 1994; Fombrun and Shanley 1990; Fryxell and Wang
1994). Many of these studies were based on data from Fortune magazine’s
“America’s Most Admired Companies”, and were mostly related to CR features
of B-to-C companies.
Recently, some authors have published papers using German (Dunbar and
Schwalbach 2000) or Scandinavian (Aperia et al. 2004) data or conducted a
qualitative analysis of CR on a cross-cultural basis (Gardberg 2006). Nevertheless,
little empirical research has examined CR formation and implications in a cross-
cultural or comparative context. The external validity, or generalize ability of
existing empirical research related to CR in the B-to-B context is still lacking.
In 2000, the Reputation Institute initiated two empirical studies, nominations
and focus groups, to explore cross-cultural validity issues. Companies examined in
the course of these studies were the ones with “the most visible reputations in 12
European countries” (Gardberg 2006, p. 40). The target group of the survey
comprised five focus groups averaging seven participants, with no direct customers
of the companies included. The goal was to find out if CRs may or may not be
functionally equivalent cross-culturally and to determine if the RQ (see Sect. 3.3.2)
could serve as a cross-cultural measure of CRs. In this context, and in line with
Singh (1995) and Brislin (1980), the following cross-cultural equivalences were
investigated:
l Functional equivalence – the relationship the variable has with its antecedents or
consequences (Singh 1995).
l Conceptual equivalence – this term refers to whether the variable is expressed in
similar attitudes or behaviors across nations.
l Instrument equivalence – whether “the scale items, response categories and
questionnaire stimuli [are] interpreted identically across nations”, (Singh 1995,
p. 605).
l Translation equivalence – translated items measure the identical concepts to the
original items (Brislin 1980).
According to Gardberg (2006), some findings of the above study were:
l The participants’ replies reflect corporate branding strategies or a visible divi-
sion or brand rather than the corporate parent.
l Some consumers believed that a certain product was a separate entity.
l The Dutch and British focus groups suggested additional items that were neither
elements of the RQ nor items in prior CR scales.
l The role of the CEO in reputation formation was in dispute in three of the five
focus groups.
The literature on cross-national differences in expectations of appropriate leader-
ship styles suggests that charismatic leadership is not universally appreciated
(House et al. 1999; Lord and Maher 1991). According to Gaines-Ross (2000),
David Larcker claimed that a 10% change in CEO reputation results in 24% change
in a company’s market capitalization, which seems to be relevant only in the US.
Visionary leadership of a company involves a relationship between an individual
(leader) and one or more followers based on leader behaviors (Waldman et al. 2004)
and is related to cultural values impacting on the decision-making process: e.g.,
perceptions of respect, strong admiration, distance, integrity or trust. It should
therefore be noted that the importance of vision and leadership on CR is also
influenced by cultural values. In line with Hofstede (2001, p. 232) it is argued
that leadership is more important in individualist cultures: “managers from more
individualist cultures tended to stress leadership and variety, whereas those from
less individualist countries tended to stress conformity and oderliness.”
Following the findings of Gardberg (2006), this cross-cultural research still
supports the contention that constructs and instruments developed in the US context
may require review before generalizing to other institutional environments
(Rosenzweig, 1994; Boyacigiller and Adler 1991). “Developing a scale for mea-
suring corporate reputation that is cross-culturally valid will facilitate rigorous
research on a valuable intangible asset” (Gardberg 2006, p. 60).
Walsh and Wiedmann (2004) measured an extended RQ, based on a qualitative
analysis of CR in Germany. Study results suggest that when using the RQ model in
Germany, additional variables need to be added. Walsh and Wiedmann (2004)
called for future researchers to measure stakeholders’ experience as well as their

involvement in the requested company. According to Walsh and Wiedmann (2004),
measuring CR in Germany requires dimensions like sympathy, transparency, fair-
ness, perceived customer orientation of the organization and stakeholder feelings of
satisfaction and trust.
Using US RQ scales in CR measurement approaches in European countries, the
studies of Gardberg (2006) and Walsh and Wiedmann (2004) have shown that this
can not be carried out without changes or amendments in the RQ dimensions.
Interestingly, neither study argues that the differences found in CR measurement
criteria between the US and Europe may be influenced or caused by cultural
differences between the countries.
To the author’s best knowledge, the link between a company’s reputation and the
national culture of buyers has not been investigated at all. Although the cultural
dimension of individualism versus collectivism has been widely researched (e.g.,
Homburg et al. 2004; Waldman et al. 2004) and has also been linked to economic
growth (Hofstede 1980, 2001, Waldman et al. 2004), up to now no empirical study
crosslinked the different impact factors on reputation to the cultural backround of
the country under consideration.
3.3.4 Relationship-Driven Measurement Approaches
In addition to the dominating RQ concept of Fombrun et al. (2000), there exist CR

measurement approaches based on relationships drivers. In this work, the concepts
of MacMillan et al. (2005) and Eberl (2006, based on the CR measurement concept
of Schwaiger 2004) are introduced. Interestingly, both concepts do not measure CR
directly, but use other constructs (sympathy, competence, trust, and commitment)
to circumscribe it. Both concepts also try to enhance the theory of commitment and
trust (Morgan and Hunt 1994).
Taking into consideration the remarks of Bromley (2002), the SPIRIT (Stake-
holder Performance Indicator and Relationship Improvement Tool) approach of
MacMillan et al. (2004) proposes a measure of the experiences that stakeholders
have of a business. On a strategic level, the measurement criteria provide an insight
into the asset-generating activities that an organization could perform or engage in
to improve CR as an intangible asset. As a consequence, the SPRIT approach also
follows the “visibility approach” of companies proposed by Fombrun et al. (2000).
The main difference is that in the SPIRIT model of CR is located in the B-to-B
context, and measures are exclusively based on the direct experiences of the
stakeholders with the companies in question: a measure of stakeholders’ experience
of inside and outside influences of the company.
This includes experiences of what the media and pressure groups say about an
organization, and is therefore focused on the constructs of loyalty and WOM. The
measures can be used to assess an organization’s ability to engage in asset-generating
activities, such as investing in positive public relations (Money and Hillenbrand 2006).
No single construct of reputation exists in this approach. CR is measured

indirectly by evaluating antecedents of commitment and trust, and ten other latent
variables are included in the structural model for business relationship customers:
other trust-related behaviors, compliance, loyalty, creative cooperation, material
and non-material benefits, coercive power, termination costs, communication and
past trust-related behavior (MacMillan et al. 2004).
The measurement concept of CR used in the study of Eberl (2006) is based on
CR determinants of Schwaiger (2004). In line with the concept of MacMillan et al.
(2005), no single construct of reputation is used. CR is measured by evaluating the
following antecedents of competence and sympathy: quality, attractiveness, perfor-
mance and responsibility (Eberl 2006). The construct of responsibility incorporates
indicators like fairness, merited identity over time, credibility or corporate social
responsibility. The construct of attractiveness is related to the findings of Fombrun
and Shanley (1990) and refers to the stakeholders’ perception based on a company’s
visibility in the media. As the study of Eberl (2006) is located in the B-to-C context,
this can be regarded as appropriate. The goal of the study by Eberl (2006) was to
develop a CR measurement concept that contains cognitive and affective compo-
nents of CR. For this reason, the constructs “quality” and “performance” have also
been included in the measurement concept.
3.3.5 The Need for Valid and Cross-Culturally Practicable

Measures of CR
Bromley (2002) reviewed existing approaches to assessing and comparing CR such as

league tables (e.g., Fortune), Fombrun’s RQ, benchmarks and case study methods.
With regard to the first three measurement concepts, Bromley (2002) questioned the
legitimacy of the applied psychometric assessments. He had two further concerns:
l The first is his skepticism of overall scores of reputation such as the RQ of
Fombrun et al. (2000) and the Fortune measures, which are derived from
applying exactly the same model of reputation across different stakeholder
groups and cross-culturally.
MacMillan et al. (2005) and Helm (2007) agree that this is seen as problematic,
as different stakeholder groups are likely to vary regarding their values and beliefs
(still without discussing cultural differences).
l Bromley’s (2002) other criticism is related to reputation scores and rankings that
are derived from the sum or average of scores on a number of sub-scales.
Bromley recommended that there should be certain thresholds for an organiza-
tion to have a good reputation including, for example, the achievement of a
minimum score on product quality.
Judgment of CR is based on different issues that are important to different stake-
holder groups (Bromley 2002; Wartick 2002).
The following Table 3.2 lists the measurement concepts evaluated in Sects. 3.3.2,
3.3.3 and 3.3.4. Two main actual approaches can be distinguished:
l measurement concepts based on Fortune’s ranking and the dimensions of the RQ
(Fombrun et al. 2000) and
l concepts, where impact factors on CR are created by relationship drivers like
trust, sympathy, competence or commitment.
This study aims to extent the latter approach by cultural impact factors on CR.
Nevertheless-contrary to the relationship drivers approaches of Eberl (2006),
Schwaiger (2004) and MacMillan et al. (2004)-in this work one construct of
reputation is used to investigate the impact factors on CR (Table 3.3).
In their book on market research, Lee and Lings (2007) point out that for the
reliability of research data, it is essential to avoid asking respondents things they
can not judge. As already discussed, studies have confirmed that Keller’s (2003)
brand influencing and building elements like brand feelings and slogans are of
minor importance in B-to-B relationships. These companies are neither “most
visible” nor “most admired”, and are therefore hardly included in Fortune’s rank-
ings. The findings of Helm (2006) and Gardberg (2001) show that consumers
usually have no detailed knowledge about the special characteristics of a company.
Some stakeholders may have more profound knowledge of a firm’s reputation than
others (Helm, 2006). This may lead to a rather narrow view of reputational
attributes, which therefore argues against the detailed formative construct of CR
proposed by Helm (2007).
According to Helm (2006) and Schultz, Mouritsen and Gabrielsen (2001),
respondents often use “intuition” when answering multi-faceted scales of reputa-
tion, and they are unable to discriminate between the criteria they are asked
to quantify. Respondents can not remember company-specific undertakings, and
everything gets lost in “a general impression of how the company performs”
(Schulz et al. 2001, p. 37). No wonder Wartick (2002) called for more explanatory
and predictive power while measuring reputation. No wonder Drolet and Morrison
(2001) claim that even the second or third item contributes little to the information
obtained from the first item.
Dutton and Dukerich (1991) examined how perceptions of identity guided
individuals’ interpretation of organizational features. In open-ended questions, all
the respondents replied that organizational identity of a certain B-to-B company
was related to a “professional organization with uniquely technical expertise”,
whereas only 44% connected this company’s identity with “ethical, scandal-free,
and altruistic”, and 36% to “commitment to welfare of the region”. Gestalt psy-
chologists confirm that a holistic perception of the overall CR leads to a more
intense mental effect than the summed perceptions of the single facets of CR.
While the ranking approaches are highly influenced by past financial perfor-
mance data, Brown and Perry (1994) agree with Fombrun and Shanley (1990) that
CR is also determined by non-economic criteria. In line with these statements,
Dowling (2004) states that two major factors need to be considered while analyzing
CR: a fact-oriented reputation referring to a company’s financial and product
Table 3.3 Measurement concepts of corporate reputation: An overview
Strategic level Asset generating activities Intangible asset Market asset/ performance/ barrier for
competitors
Fombrun et al. (2000), Gardberg Relying on visibility and uniqueness Beliefs: based on Fortune’s ranking: Intention and behavior: Suggestion of
(2006) Walsh and Wiedmann vision & leadership financial a development of scales
(2004) measurement concept is performance social responsibility recommended for B-to-B, B-to-C
based on the reputation quotient products and services workplace
beliefs helm (2007) environment attitude: Emotional
appeal
Activities associated with the Beliefs: based on Fombrun’s RQ Intention and behavior: Development
development of a monolithic Quality of products value for of loyalty, positive consumer
reputation development of scales money social responsibility experiences empirically tested in
to measure reputation, loyalty and leadership work environment B-to-C context
consumer experience corporate citizenship financial
performance qualification of
management attitude: Loyalty
MacMillan, Money, Downing, Outside influences of media and SPIRIT approach attitude: reputation Intentions: suggest scales to measure
Hillenbrand (2005) concept is pressure group. Services, is created by trust and loyalty and word of mouth
3.3 A Standard Construct of Reputation–Useful and Appropriate?
based on drivers in relationships communications, shared values commitment, positive or negative empirically tested in B-to-B
Eberl (2006) Schwaiger (2004) emotions
Activities associated with the Beliefs: based on Schwaiger (2004). Intention and behavior: Observe and
development of commitment Reputation is created by understand what consumers want
competence and sympathy empirically tested in B-to-C
attitude: Commitment
47
performance and an emotional reputation, based on a company’s “personality” and

social responsibility. According to Helm (2006), a measure of overall reputation
performs rather well when integrated into a structural model that links reputational
perceptions to attitudinal, intentional, and behavioral outcomes. The structural
model on CR and reputation transfer introduced in this work deals with these
criticisms by focusing on reputation in the particular stakeholder relationship of
organizational customers. It does not seek to aggregate the scores from one stake-
holder group with those from other stakeholder groups, nor does it use dimensions
to quantify CR, which can not be judged by organizational customers.
Just like the SPIRIT approach proposed by MacMillan et al. (2004), the predic-
tive power of the structural model used in this work derives from the overall pattern
in each stakeholder relationship and in each of the five countries. It is the key aim of
this work to achieve additional knowledge on the cross-cultural influencing factors
on CR and on the possibility of transferring CR on new product ranges.
3.4 The Concept of Reputation Transfer
One of the main arguments of this study focuses on the transferability of reputation
and on the question of how CR can be derived from reputations at other levels. The
name of a company, as with any name, can carry and develop a complexity of
associations pointing to particular reputational content (Schweizer and Wijnberg
1999). In addition, the company name can function as a reputation indicator of a
group (Landon and Smith 1997). Understanding better how this transferability
operates is of great importance, especially in the B-to-B context. The concept of
transfer can be found in studies on “image transfer”, “attitude transfer” or “affective
transfer” (Ganassali and Didellon 1996; Gwinner 1997).
In this study, the transfer of reputation is also referred to as part of the knowledge
resources of a company. The way a company “shares knowledge” with its custo-
mers by communicating details of new products or product ranges, is an essential
part of relationship marketing (Grönroos 2000). Heider’s (1958) Balance Theory
refers to relations and attitudes that describe a theoretically relevant property of the
knowledge structure. Heider (1958) argues that when two unlinked or weakly
linked nodes (e.g., different product ranges of one company) share a first-order
link (e.g., a company’s reputation), the association between these two should
strengthen.
As discussed before, a company’s CR is built on signaling information about
past and future activities (Fombrun 1996). Thus, following Heider’s (1958) Balance
Theory and the concept of CR, customers unconsciously transfer their attitude
toward the company and its products on the new product (or product range) and,
by doing so, facilitate the market entry of the new product. Facing some new or
unexpected associations (e.g., a new product or product range), consumers tend to
alter their perceptions in order to harmonize them (Heider 1958; Cornwell et al.
2005). A comparable process of “meanings transfer” takes place in the celebrity
3.4 The Concept of Reputation Transfer 49
endorsement process. The mental associations the new product or product range
receives by transferring the reputation of the parent company, generates a positive
goodwill effect among customers that translate into attitude and behavior toward
the new product. In line with Keller’s (2001) impact factors on brand transfer
processes, Gwinner (1997) argues that the image transfer process is influenced by
moderating factors such as product involvement and the degree of similarity or fit
between the new product and the parent image. In this context, the perceived fit is
conceptualized as the extension’s perceived similarity to the parent brand and refers
to dimensions such as product category and attributes, e.g., image (Keller 2003;
Park et al. 1991). Keller argues that the higher the perceived fit of the new product
with the parent brand, the more positive customers evaluate the extension. From a
marketing communications perspective, introducing a new product as a brand
extension means that the introductory campaign can concentrate on the product
itself without having to create brand awareness (Keller 2003). The literature on the
abstract term image transfer uses this wording differently, and mostly refers to
sponsorship activities (Chien, Cornwell and Stokes 2005; Gwinner 1997; Cliffe and
Motion 2005). Image transfer defined by Bruhn (2005) refers to the possibility of
transferring the positive image of the sponsored person to the advertising company
or related product.
To study the ways of transferring reputation also refers to external trust in a
certain company (Schweizer and Wijnberg 1999), but the nature of this relationship
is not immediately clear due to the lack of precise definitions of either concept.
Related to the marketing context, Doney and Cannon (1997) define trust as the
perceived trustworthiness and credibility of a target. In most relevant studies, the
definition of reputation in some way includes the concept of credibility (Fombrun
1996; Ganesan 1994; Doney and Cannon 1997); a favorable reputation is seen as
the prerequisite for the attribution of credibility or trustworthiness to a company. In
this context, trust is also closely related to the way a company communicates
(Schweizer and Wijnberg 1999), including assumptions about the trustworthiness
of the media used.
Thus, trust can play different roles in the reputation building process, depending
on the mode or media of information transmission. According to Schweizer and
Wijnberg (1999), three different modes of how information about a particular entity
is acquired can be distinguished:
l A stakeholder can acquire firsthand experience by direct interaction with a
company. Reputation, in the eyes of this particular actor, is then influenced by
gathering and evaluating company-specific information.
l Information on a specific company may be acquired in an indirect mode through
an agent acting as a “reputation maker”. Trust in this company can then develop
based on secondhand information.
l A stakeholder can acquire information about a company by deriving and trans-
ferring it from other related entities or levels to the company.
The next subsection outlines the differences between reputation transfer and brand
transfer, and also focuses on the chances and risks of these concepts.
3.4.1 Reputation Transfer vs. Brand Transfer: Chances and Risks
Introducing new products is both risky and expensive, especially without the help of
an established brand. For many companies, brand extensions are part of their
marketing strategies, a way to complete their product portfolio and also to meet
their customers’ needs (Keller 2003; Sjödin 2007). Companies try to capitalize on
brands that already draw favorable attention from customers (Aaker and Keller
1990; Blichfeldt 2005). Keller (2003) identifies three choices a company can make
when introducing a new product:
1. It can develop a new brand for this new product.
2. It can apply it to one of the existing brands.
3. It can use a combination of a new brand with an existing brand.
Approaches 2 and 3 describe a brand extension, when a company uses an estab-
lished brand name to introduce a new product (see Fig 3.6). In the case where the
parent brand is used to introduce a new product that targets a new market segment
within an existing product category, a line extension has been made (Keller 2003;
Kaufmann et al. 2006). A category extension is defined by the fact that the parent
brand is used to enter a different product category from that currently served by the
parent brand. Literature reviews by Czellar (2003), Grimes, Diamantopoulos and
Smith (2002), as well as Hem et al. (2003), confirm that most research has been
Reputation
Brand Transfers
Transfers
Vertical
Vertical or Horizontal
Transfer of Horizontal Transfer of Brand
Transfer of Reputation
Brand
Transfer of Transfer of Line- Franchise- Concept- or

particular particular Step- Step- Extension: Extension: Category
reputational reputational up: down: Transfer of Transfer of Extension:
content content Transfer Transfer brand name brand name Transfer of
onto a onto a on products of on products of brand name on
on products/ on products/ higher lower the same different products of
product product price or price or product product other product
ranges of the ranges of quality quality- category and categories categories of
same product other product level level the same same product other product
category, categories, product line line lines
step-up/ step-up/
step-down step-down
possibilities possibilities
refer to refer to
reputational reputational
values values
Fig. 3.6 Typs of reputation- or brand transfers

3.4 The Concept of Reputation Transfer 51
carried out on understanding the factors that determine whether customers form
positive or negative attitudes toward products that are introduced through brand
extensions. The conclusion of these authors is that brand extensions from well-liked
brands are accepted by the customers if the new product “fits” to the existing parent
brand. On the other hand, the risk of dilution or damage to the perceptual equity of
the brand has been discussed (Keller and Sood 2003). A well accepted strategy to
enter new markets is to take advantage of an existing brand’s equity and launch
brand extensions into related product categories (Aaker 1991). Thus, marketers are
concerned about the negative impact that brand extensions may have on the parent
brand (Schwager 2004; Keller 2003). Nevertheless, the empirical evidence on this
issue is mixed. Loken and John (1993) claim that unsuccessful extensions can dilute
a brand by diminishing the attribute-specific beliefs that are associated with it.
Other studies find that brand equity is not diluted by unsuccessful extensions (John
et al. 1998; Keller and Aaker 1992), and may even be enhanced if high-quality
products are added to the brand portfolio (Dacin and Smith 1994). The concept of
brand transfer needs to be separated into vertical and horizontal transfers, whereas
the concept of reputation transfer unites both types of transfer, but is closely related
to CR itself. A vertical step-up or step-down reputation transfer onto a lower or
higher price or quality level may only be successful if this fits to the company’s
reputation and is closely related to its values and identity.
According to Keller (2003), typically 80–90% of new products are line exten-
sions. With regard to the empirical study introduced in this work, the medical
devices company is carrying out a category extension into pharmaceuticals. Tauber
(1981) identifies seven general strategies for establishing a category or franchise
extension:
1. Introducing the same product in a different form (chewing gums and chewy
candy).
2. Introducing products that contain the brand’s distinctive taste, ingredient, or
component (a certain cake is available as a cookie).
3. Introducing companion products for the brand (Levi’s jeans and sweat shirts).
4. Introducing products relevant to the customer franchise of the brand (motor-
cycles and bicycles).
5. Introducing products that capitalize on the firm’s perceived expertise (new
research products within the product range).
6. Introducing products that reflect the brand’s distinctive benefit, attribute, or
feature (new types of Rolex watches).
7. Introducing products that capitalize on the distinctive image or prestige of the
brand (like Porsche selling not only cars, but also sunglasses, shoes and suit-
cases).
In this work, and in line with Helm (2007), Schweizer and Wijnberg (2004), the last
strategy on the list is identified not as a brand – or franchise extension – but as a
transfer of a brand’s reputation: If this new product is advertised using the image or
prestige of the parent brand, the reputation of a brand is transferred (see Sect. 3.4.2)
(Fig. 3.6).
Table 3.4 Chances and risks of brand extension. Based on Aaker (2003)
Risks Chances
– Parent brand is not strong enough for brand – Customers transfer the positive image on a
extension (weak transfer of image) new product (“goodwill” transfer)
– Image of parent brand does not fit to the brand – Advancement of publicity and trust
extension – Synergy effects regarding marketing mix
– Only weak synergy effects regarding activities
Marketing mix activities – Exploitation of new target groups
– Brand erosion – Enhancement of brand competence
– Negative spill-over effects on parent brand – Revitalization and consolidation of parent
– Spill-over problem: Image problems of one brand
product are transferred on other products – Positive spill-over effects on the parent brand
– Neglecting marketing activities of the parent
brand may lead to chances for competitors
Keller (2003) claims that the main advantage of a well-known and well-liked
brand is that customers form expectations over time concerning a brand’s perfor-
mance. These expectations may be transferred, in part, also to the extension
product, and may lead to an improvement of parent brand image, while at the
same time, reducing the risk perceived by the customer.
“When a brand extension succeeds and is accepted as a member of the extension
category, the number of elements that are unique and distinctive to the parent and
extension categories decreases, and the number of elements that are common
between them increases” (Kumar 2005, p. 184).
As listed in Table 3.4, previous research on the effects of brand extensions have
focused on whether the failure, poor quality, or low typicality of an extension has an
adverse effect on parent brand evaluations (Keller 2003; Kumar 2005). Quality
perceptions and other positive associations are more easily transferred to the
extension product when the similarity between the two categories is high (Cohen
and Basu 1987).
3.4.2 Levels of Reputation and their Transferability
The ability of transferring the organization’s positive reputation when introducing

new products and services ensures its long-term success in evolving markets
(Schweizer and Wijnberg 1999). Particularly in industrial markets, where function
and importance of brands differ from those in consumer markets, the more general
concept of transferring a company’s reputation is appropriate. Important features
referring to a successful transfer of reputation can be listed as follows:
l Concept-consistency perceptions of customers rely on the extension product’s
ability to accommodate the reputation concept of the parent brand. This requires
the transfer of the values and identity of a company to new products and/or
services and the related brands when entering new markets. Reputational content
3.5 The Relevance of Direct Marketing Media to Build CR 53
of the corporate level of reputation may be derived from inside and outside a
company’s boundaries (Schweizer and Wijnberg, 1999).
l Findings (e.g., Doney and Cannon 1997; Zaheer et al. 1998) identify a positive
relationship between the extent of external trust and reputation. This explains the
transferability of reputational content between the individual and the corporate
level. The level of individual reputation can be defined as including reputations
of particular individuals who are employed by the company or who represent it,
i.e., sales representatives.
As already discussed, previous studies on CR have investigated the multi-
dimensionality of a company’s reputation (e.g., Fombrun and Shanley 1990;
Meffert and Bierwirth 2002). The transference of reputation between the individual
product level and the corporate level can work both ways, either CR being per-
ceived as a substitute for individual reputation, or vice versa (Schweizer and
Wijnberg 1999). In this study, the focus is on transference from the corporation
to the new product range.
With this transference pattern, the reputation of the company rubs off on the new
product range; it is attributed with characteristics which are derived from the
perception of the company. This mechanism has also been observed in a study
where different reputations of companies forming an alliance had an impact on the
level of trust between the representatives of the companies involved (Smith and
Barclay 1997) and where CR generally impacted the trust in representatives of a
certain company (Dasgupta 1988). To the author’s best knowledge, and in contrast
to brand extension literature, no theoretical framework has yet been established for
the investigation of reputation transfer.
3.5 The Relevance of Direct Marketing Media to Build CR
When pursuing a relationship marketing strategy, the supplier has in mind the
welfare of its customers. To generate relationship benefits, a customer needs to
perceive value when consuming goods, services or information, and this can only
be achieved if suppliers improve the quality of customer contacts. Therefore, a new
or improved way of communicating with customers as well as the management of
activities and handling of interactions is an essential part of relationship marketing
(Grönroos 2000). The belief that the success of relationship marketing efforts is
positively related to the amount and specificity of consumer information, however,
raises questions about what media are used by the customers and if these media
have an impact on a company’s reputation. Saxton (1998) asserts that CR is the
reflection of an organization over time as seen through the eyes of its stakeholders
and expressed through their thoughts and words. Therefore, the company’s respon-
sibility is to shape those thoughts and words (Forman and Argenti 2005).
In an age of 24/7 media coverage, the Internet, and always-on communications,
coupled with the growing interest in sentational news, companies and even entire
industries have to face the influence of direct marketing media and WOM on
reputation. Nevertheless, to the author’s best knowledge, the connectivity between
direct marketing media, reputation and reputation transfer has not yet been empiri-
cally investigated. This chapter highlights the importance of corporate communi-
cation and direct marketing media in building corporate reputation (CR) and
introducing new product ranges.
Corporate communication (CC) can be defined as “an instrument by means of
which all consciously used forms of internal and external communications are
harmonized as effectively and efficiently as possible to create a favorable basis
for relationships with the groups upon which the company is dependent” (van Riel
1995, p. 26). In general, the literature on CC focuses on the value of corporate
communication to brand management and reputation management (Forman et al.
2005) as an important means of targeting or informing stakeholders (Wiedmann
and Prauschke 2006, Dentchev and Heene 2004).
Corporate image and CR are driven mostly by the need to offer good value to the
stakeholders, corporate communication plays an important role in image formation
(Dowling 2001): It can publicize an organization’s strengths and successes and help
position the ideal image of the company, the brand or the product.
Direct marketing is a special, individual aspect of classic marketing (Wagner
and Parwoll forthcoming). It is the tool for informing and targeting customers, for
example, and involves all sorts of marketing media meeting the requirements,
expectations and interests of stakeholder groups (Mann 2004). Direct response
marketing media focus on direct contact to target groups like customers and opinion
leaders, among others (Krafft et al. 2007).
Direct marketing media can be used to reach all stakeholder groups, possibly
with different messages: to influence the interpretations and perceptions of stake-
holders, for example (Rindova and Fombrun 1998, Forman and Argenti 2005).
Knowledge about what media customers use to be informed about new products
and services is essential for companies to use these media efficiently for reputation
building. Bruhn (2003) distinguishes three types of direct marketing:
l Passive direct marketing, used specifically to introduce new products, is char-
acterized by only a small degree of individualization (mailings, mail packages
including brochures, etc.). Generally, the consumer is given no possibility for
response.
l Response-oriented direct marketing offers the possibility to react (see-and-write-
card, electronic newsletters, mailings, Internet sites with integrated possibility to
react, and online hotlines). Regarding electronic newsletters, the degree of
individualization may vary, and the kind of information sent can be selected
and requested by the addressee (Mann, 2004). However, the way to react is
determined by the sender, which restricts individual communication.
l Interaction-oriented direct marketing is individually designed. Face-to-face
communication, telephone calls, meetings during fairs, Internet relay chats,
and via virtual communities. Both communication partners need to act flexibly
to avoid an ineffective or sudden end.
3.6 Defining and Quantifying Culture 55
Studies by Wiedmann (2004) and Dowling (2001) confirm that a company’s

communication policy influences public CR. Also, Fombrun and Rindova (1998,
p. 210) note that “communications that make a firm transparent enable stakeholders
to appreciate the firm’s operations better, and so facilitate ascribing to a better
reputation”.
3.6 Defining and Quantifying Culture
This section aims to propose a definition of culture and highlight its impact on
buying behavior in organizations. It also gives a short overview of different cultural
approaches and focuses especially on Hofstede’s cultural values. The last subsec-
tion highlights the cultural particularities of the countries involved in this survey.
Increasingly, international markets create not only opportunities but also chal-
lenges for companies in B-to-B markets (Homburg et. al. 2005). More open and
integrated markets make it more complex to understand customer needs and to what
extent culture affects relationships. Culture, which supports openness of communi-
cation and involvement in decision making and sharing of information, will also
encourage and reward trustworthy behavior (Firth-Cozens 2004) and relationships.
Thus, when its customers are located in various countries, companies must be
responsive to local cultures (Bower 2005). Corporate culture influences managers’
perceptions and motivations (Barney 1991), corporate identity affects how
managers both interpret and react to environmental circumstances (Dutton and
Dukerich 1991). Shared cultural values and a strong sense of identity therefore
guide managers, not only in defining what their companies stand for, but also in
justifying their strategies for interacting with key stakeholders (Porac and Thomas
1990).
How to define culture? Taylor provides one of the earliest definitions of culture:
“. . .the complex whole which includes knowledge, belief, art, morals and custom
and any other capabilities acquired by a man as a member of society.” (1871, in
McCort and Malhotra 1993, p. 97). Kroeber and Kluckhohn argue that “Culture
consists of patterns, explicit and implicit, of and for behavior acquired and trans-
mitted by symbols, constituting the distinctive achievement of human groups,
including their embodiments in artifacts. The essential core of culture consists of
traditional (i.e., historically derived and selected) ideas and especially their attached
values. Cultural systems may, on the one hand, be considered as products of action,
and on the other, as conditioning elements of further action.” (Kroeber and
Kluckhohn 1952, in Brislin et al. 1973, p. 4).
In the literature, national culture is defined as the values, beliefs and assumptions
learned in early childhood that distinguish one group of people from another (Beck
and Moore 1985; Hofstede 1991). This definition corresponds to Hofstede’s (1991)
notion of national culture as software of the mind and with Jaeger’s (1986, p. 179)
“common theories of behavior or mental programs that are shared”. National
culture is embedded in everyday life. In this work, “national culture” is defined in
line with Hofstede (2001) as the homogeneity of characteristics that separates one
human group from another, provides a society’s characteristic profile with respect
to norms, values, and institutions, and affords an understanding of how societies
manage exchanges.
There is empirical evidence that national cultures vary and that a variety of
management practices, including strategic decision making (Schneider and
DeMeyer 1991; deMooij and Hofstede 2002; Homburg et al. 2005) and leadership
style (Dorfman and Howell 1988) are influenced by cultural impacts. These studies
indicate that different cultures are likely to interpret and respond to the same
strategic issue in different ways. Strategic issues are external and internal events,
conditions or trends of an organization which affect the company’s performance
(Schneider and DeMeyer 1991). However, the impact of culture often tends to be
neglected in the investigation into different stakeholder attitudes (e.g., Gardberg
2002; Walsh and Wiedmann 2004).
Attempts to understand cultural systems traditionally focus on values (Burgess
and Steenkamp 2006). Cultural value priorities affect behaviors that interest mar-
keters by shaping and justifying individual, group, and organizational beliefs and
goals. The cultural framing of vendors and customers impacts all types of busi-
nesses, and consequently also has an impact on the success of reputation transfer.
The culture of the national environment in which an organization operates affects
the management process through the collective mental programming of its members
and managers (Trompenaars and Hampden-Turner 1997). Culture, according to the
above definition, is neither observed nor measured directly. Instead, indicators,
grasping particular aspects of the knowledge reservoir, are considered. A quantifi-
cation of culture according to this definition is essential to derive sound results
which are superior to conceptual considerations and anecdotal evidence.
Although in relationship marketing literature, the concepts of trust, commitment
and knowledge resources play an important role, researchers have yet to gain an
understanding of the influence of national culture on theses key resources (Griffith
et al. 2006; deMooij and Hofstede 2002). Researchers have explored the influence
of national culture on specific relationships or knowledge constructs (e.g., Doney
et al. 1998). Prior research has largely overlooked the influence of national cultures
on the development of relationships between suppliers and buying organizations.
The failure to address national culture’s influence on reputation building and the
different uses of direct marketing media has resulted in limited theoretical and
managerial insights into how culture influences a company’s intangible resources.
Moreover, much of the existing international business research on customer rela-
tionships consists of single-country studies (Griffith et al. 2006), and research work
focused on CR has been mostly conducted in the US (Fombrun 2007).
The competitive advantages regarding relationship marketing derived from
correctly adapted management practices come from the congruence between man-
agement practices and the characteristics of customers’ national culture: better
performance outcomes (Denison and Mishra 1995). Given the existing literature’s
limitations, this work makes its contribution by specifically addressing the follow-
ing research questions:
l Does national culture influence the impact of a company’s reputation on organi-

zational buying decisions?
l Does national culture influence the possibility of transferring a company’s
reputation on new product ranges?
To answer these questions, Hofstede’s (2001) multidimensional, national cultural
framework is integrated in the survey to theorize differences in relationship
resources (i.e., the influence of relationship quality on word of mouth, reputation
and reputation transfer), and knowledge resources (i.e., the influence of perceived
innovativeness on reputation) in intercultural B-to-B buyer-seller relation-
ships. Given the theoretically meaningful national cultural distinction between
Russia, Australia, Germany, Finland and Spain, and the continued importance
of business relationships between a German-based company and companies in
other countries, understanding how organizational buyers from other countries
perceive a company’s reputation has significant theoretical and managerial
implications.
3.6.1 Cultural Frameworks–an Overview
A lot of different models of national culture can be found in the literature assuming
that societies vary along specific cultural dimensions. Kluckhohn and Strodtbeck
(1961) classified cultures in terms of value orientation. Dimensions included in
their framework were: the nature of people, a person’s relation to nature and to
others, time and space orientation, and doing versus being.
The Rokeach Value Survey (RVS) is a survey instrument introduced by Rokeach
(1969) to operationalize the value concept. The RVS is characterized by two
different kinds of values: instrumental values apply to many different countries
and are socially desirable, while terminal values refer to idealized end states of
existence or lifestyles. Clearly, the value of being broadminded is the antagonism of
being dogmatic in the sense of Rokeach (1973).
The latest studies based on the Rokeach Value Survey are related to ethical
questions (Marques 2009; Sheppard and Young 2007) or refer to gender differences
(Kracher and Marble 2007; Stedham et al. 2007).
Hall (1976) separates cultures into high- and low-context and refers to the
impact of context on how communication occurs within a culture. Triandis
(1994) argues that cultures differ with regard to the information they gain from
the environment. He classifies culture types in simple versus complex, individualist
versus collectivist, and tight versus loose. During the 1990s, several studies were
published based on Hall’s cultural framework (e.g., Singelis and Brown 1995;
Gudykunst et al. 1996).
Trompenaars and Hampden-Turner (1998) refer to universal problems that lead
to corresponding cultural dimensions: Individualism versus communitarianism,
universalism versus particularism, specific versus diffuse, affective versus neutral,
achievement versus ascription, and so on. The basic assumption is that the culture
of any country becomes salient in dealing with the following three main problems:
employees’ attitude toward their fellow men, time and the environment.
Most recent cultural studies based on the cultural dimensions of Trompenaars
and Hampden-Turner (1998) refer to cultural effects on job satisfaction and orga-
nizational commitment (Lok and Crawford 2004) as well as on information
technology usage behavior (Calhoun et al. 2002) or business ethics (Moon and
Woolliams 2000).
The Schwartz Value Survey (1994) is based on an empirical study of over 60,000
individuals in 63 countries worldwide. In this approach, the responses are char-
acterized by ten motivational values and seven cultural-level dimensions. Each of
these dimensions is a composite index of a set of values which varies according to
the culture.
Studies of other scholars based on the Schwartz Value Survey were mostly
published in the 1990s and refer to managerial work values. More recent studies
have been published by Schwartz himself (Schwartz and Boehnke 2004), evaluat-
ing the structure of human values.
Although each of the above cultural frameworks has certain advantages,
this work focuses on four of the five dimensions identified by Hofstede (2001).
Hofstede’s model is generally accepted as the most comprehensive (Kogut and
Singh 1988) and remains the dominant, most cited model of culture used in
international business research (Kirkman, Lowe and Gibson 2006; Griffith et al.
2006; Homburg et al. 2005). Hofstede (2001) used a work-related context and
originally applied his framework to human resources management. The framework
is increasingly being used in business and marketing studies to compare cultures, to
support hypotheses, and as a theoretical framework for comparing cultures even if
the dimensions are measured with new or adopted instruments (e.g., Milner et al.
1993; Homburg et al. 2005; Griffith et al. 2006; Lu et al. 1999).
The work of Hofstede (2001) is most applicable to this study, because the norms
and value approach underlying Hofstede’s framework is directly related to the
attitudinal and behavioral approach in the current study (see Doney et al. 1998).
One major criticism of Hofstede’s assessment of culture is that the scales assess
national organizational culture, but since this application domain is selling products
to hospitals, this feature is an advantage in this application. The organizational
context has been identified as important for research examining individual
responses concerning job-related attitudes (Rousseau 1978; Sutton and Rousseau
1979). As in Hofstede’s original survey, organizational members are involved in
this empirical research project (purchasers, pharmacists and product users like
doctors and nurses). His conclusions regarding “cultures in organizations” are
therefore applicable.
Generally, the model’s validity, reliability, stability and usefulness have been
confirmed over time (Hofstede 2001; Newburry and Yakova 2006). Four indices of
culture were developed during the 1960s and 1970s based on surveys of IBM
employees: power distance (PDI), uncertainty avoidance (UAI), individualism
(IDV) and masculinity (MAS). As only Western countries were included in the
survey, the fifth dimension, long-term orientation, which focuses on virtues leading
to future rewards, versus short-term orientation, referring to virtues associated with

the past and the present, has not been taken into account. The scores of this
dimension do not vary significantly in Western cultures. The next chapter explains
the different dimensions in more detail.
3.6.2 Hofstede’s Cultural Dimensions
To quantify cultural differences in the relationship between key company resources

and customers’ attitude toward the company, Hofstede’s (2001) multidimensional,
national cultural framework is used in this work. According to the classic definition
of Hofstede (2001, p. 9), culture is a “collective programming of the mind that
distinguishes the members of one group or category of people from another”.
Hofstede (2001, p. 15) also clearly distinguishes between values and culture: “In
studying ‘values’, we compare individuals, in studying ‘culture’, we compare
societies.”
Hofstede (2001) identified five dimensions along which countries can be classi-
fied: power distance index (PDI), individualism (IDV), uncertainty avoidance index
(UAI), masculinity (MAS) and long-term orientation (LTO). He argues that a
country can be positioned along these five dimensions to provide an overall
summary of its cultural type. Hofstede’s five dimensions are describes as follows:
PDI is the way that society addresses inequalities among people when they occur
(Homburg et al. 2004). This dimension describes the extent to which the less
powerful members of organizations and institutions (like the family) accept and
expect that power is distributed unequally. This represents inequality (more versus
less), but defined from below, not from above. According to Hofstede (2001, p. 29),
PDI is related “to the different solutions to the basic problem of human inequality.”
IDV refers to how people in a society perceive themselves in relation to others.
Individualism versus collectivism refers to the degree to which individuals are
integrated into primary groups (Hofstede 2001). The word “collectivism” in this
sense has no political meaning: it refers to the group, not to the state. The level of
individualism or collectivism in a society affects the organization’s members’
reasons for complying with organizational requirements. A meta-analysis by
Bond and Smith (1996) indicates that collectivist cultures tend to show higher
levels of conformity than individualistic cultures, whereas individualistic cultures
place higher emphasis on individual initiative (Hofstede 2001). Thus, this cultural
dimension is the most commonly used to study, compare and explain organizational
behavior in B-to-B or B-to-C settings (e.g., Homburg et al. 2004).
Masculinity (MAS) versus femininity, refers to the distribution of emotional
roles between the genders, which is another fundamental issue for any society to
which a number of solutions are found. According to Hofstede (2001), masculinity
is the degree to which a society exhibits assertive versus nurturing behavior. In the
sense of Hofstede, masculinity and femininity refer to the dominant gender role
patterns in the vast majority of traditional and modern societies. Hofstede’s (1980)
studies reveal that women’s values differ less across societies than men’s values. In
cultures with high scores in MAS, the dominant value is success; masculine values
reflect emphasis on work goals, assertiveness, and earnings (Hofstede and Associ-
ates 1998; Srite and Karahanna 2006). Status, performance, competitiveness, inde-
pendence and achievement are also important in cultures with high scores in MAS,
and role differentiation between males and females is large (de Mooij 1998). The
dominant values in countries with low scores in MAS care for others and value
quality of life, status is not so important. Role differentiation between males and
females is small.
UAI measures the degree to which societies perceive themselves as threatened
by uncertain, risky, ambiguous, or undefined situations (Homburg et al. 2004).
According to Hofstede (2001, p. 29), UAI is related to the “level of stress in a
society in the face of an unknown future.” People in uncertainty avoiding countries
are more emotional and motivated by inner nervous energy. The opposite type,
uncertainty accepting cultures, are more tolerant of opinions which differ from their
own, and they try to have as few rules as possible. It indicates to what extent a
culture programs its members to feel either uncomfortable or comfortable in
unstructured situations. Unstructured situations are novel, unknown, surprising,
and unusual (Hofstede 1980). Uncertainty avoiding cultures try to minimize the
possibility of such situations by strict laws and rules, safety and security measures,
and on the philosophical and religious level by a belief in absolute truth: “There can
only be one truth and we have it” (de Mooij 1998). In terms of information
processing and persuasion, uncertainty-oriented individuals tend to process argu-
ments and use few heuristic cues (Petty and Cacioppo 1981). On the other hand,
certainty-oriented individuals engage in less systematic information processing and
rely more on heuristic cues.
Above Table 3.5 outlines Hofstede’s dimensions. Hofstede (2001) added a fifth
dimension after conducting an additional international study with a survey instru-
ment developed with Chinese employees and managers. This dimension, long-term
orientation (LTO), based on Confucian dynamism, was applied to 23 countries.
Hofstede’s five dimensions can also be found to correlate with other country,
cultural, and religious paradigms.
Four out of the five countries included in the survey are Western-type countries;
according to Hofstede (2001), all five countries score similarly in LTO and are
short-term oriented. For this reason, this dimension has been excluded from the
evaluation of the survey.
Although Hofstede’s (2001) dimensions provide a way to classify a country’s
culture, countries share similarities as well as differences across cultural dimen-
sions. Selecting the countries included in the survey, one goal was to find five
countries which differ significantly regarding the scores of Hofstede’s dimensions.
In the field of RM, the existence of trust and commitment between the parties, as
well as the intense exchange of information, are considered to be important for
business relationships (Homburg and Krohmer 2006; Huff and Kelley 2003;
Morgan and Hunt 1994). An important question is whether societal culture influ-
ences the tendency of individuals and organizations to trust (Huff and Kelley 2003).
Table 3.5 Hofstede’s scores regarding the five countries included in the survey Based on http://
www.geert-hofstede.com
Individualism (IDV) vs. Masculinity (MAS) vs. Power distance Uncertaintyavoidance
collectivism femininity (PDI) (UAI)
Australia: 93 Germany: 72 Russia: 93 Russia: 95
Germany: 73 Australia: 68 Spain: 50 Spain: 80
Finland: 68 Spain: 48 Australia: 32 Germany: 60
Spain: 53 Russia: 36 Germany: 30 Finland: 54
Russia: 39 Finland: 30 Finland: 28 Australia 48
Above Table 3.5 outlines Hofstede’s dimensions. Hofstede (2001, p. 159) argues
that trusting someone “implies some tolerance of ambiguity and a potential loss of
control.” Thus, he concludes that cultures scoring low in the dimension of uncer-
tainty avoidance (UAI) tend to trust others more easily. Griffin (1975) suggests that
the protection of one’s reputation is a force for being trustworthy. In addition,
Hofstede (2001) argues that preferential treatment of one customer over others is
considered bad business practice and unethical in individualist societies. In collec-
tivist societies, to treat one’s friends better than others is natural and ethical, and
sound business practice. Hofstede’s (2001) findings on business practices imply
that the importance and the impact of a positive reputation differ across cultures,
although this topic is not explicitly discussed in his study. “Although supplier
commitment is not a necessity in most B-to-B relationships, it benefits the customer
by reducing uncertainty” (Homburg et al. 2005, p. 9). Uncertainty is more prevalent
in cultures scoring high in UAI; according to Hofstede (2001), these countries show
more fear of the unknown and more fear of tomorrow. “In collectivist societies, the
personal relationship prevails over the task and over the company and should be
established first” (Hofstede 2001, p. 239). In contrast, in individualist societies, the
task and the company prevail over any personal relationships. Commitment influ-
ences the supplier evaluation process and serves as a choice criterion that qualifies
one supplier over the others. Nevertheless, a supplier’s commitment is not a
qualifier during partner selection, because the enduring desire and effort to maintain
a valued relationship is not a necessary condition for all B-to-B relationships.
Homburg et al. (2004) claim this to be an additional “nice-to-have” feature.
3.6.3 Hofstede’s Cultural Characteristics of Countries under

Consideration
According to Hofstede (2001), organizations are symbolic entities working accord-

ing to implicit models in the minds of their members. The crucial dimensions
are power distance and uncertainty avoidance. Power distance has an impact on
“who decides what, and uncertainty avoidance is involved in answering the ques-
tion how one can ensure that what should be done will be done” (Hofstede 2001,
p. 375). Therefore, national culture, in which an organization operates, affects the
management process through the collective mental programming of its members

and managers (Trompenaars and Hampden-Turner 1997).
This chapter highlights the cultural differences and characteristics of the five
countries included in the survey. As the establishment of commitment is fundamental
to a company’s success in its operations (Morgan and Hunt 1994; Griffith et al.
2006), special attention is focused on differences in the underlying intercultural
associations of relationship resources (i.e., the attitude toward trust and commit-
ment, and relationship quality), knowledge resources (the importance of information
sharing: WOM, use of media, perceived innovativeness of a company) and their
linkage (i.e., the influence of relationship quality or innovativeness on WOM).
3.6.3.1 Australia
The Geert-Hofstede analysis for Australia reflects the high level of individuality.
This refers to a preference for a loosely knit social framework in which people are
supposed to take care of themselves and their families (Hofstede 1980). The
Individualism (IDV) index for Australia is 93. This individuality is reinforced in
Australian’s daily lives and must be considered when traveling and doing business
in their country. Privacy is considered the cultural norm and attempts at personal
ingratiating may meet with rebuff. Although trust is more easily developed in lower
UAI societies like Australia (Hofstede 2001), it is difficult for trust to transfer from
one entity to another (Doney et al. 1998).
Given this cultural foundation, Australian companies are expected to attempt to
minimize social interdependence in its interactions with others (Hofstede 2001;
Triandis 1994). Companies “tend to focus on benefits to the individual” (Cutler
et al. 1997, p. 43). People in highly individualistic cultures like Australia tend not to
follow norms (Roth 1995). Although companies from this cultural type engage in
relationships, they tend to restrain themselves from fully trusting their partners to
minimize potential opportunistic behavior of others, to whom they are not strongly
tied by cultural norms or group goals (Griffith et al. 2006). Although trust builds
commitment, in strong individualistic societies, full commitment to its interorgani-
zational partners is difficult to achieve (Hofstede 2001).
Australia, Finland and Germany are countries with small power distance (indices
between 28 and 32), compared to the world average of 55. This is indicative of a
greater equality and low hierarchy ranks across societal levels, including govern-
ment and organizations. It reinforces a cooperative interaction across power levels
and creates a more stable cultural environment.
3.6.3.2 Finland
The Geert-Hofstede analysis for Finland reflects extremely low levels in MAS
(index of 30) and PDI. This is indicative of a very feminine country with low
hierarchy levels. Finnish society, which is based on a strong need for technology
(less traditional agriculture), fosters openness with information and welcomes

innovations and changes. Decision structures are decentralized, managers are
involved in relevant purchasing decisions (Hofstede 2001). As Finland also scores
very low in UAI, the uncertainty inherent in life is easily accepted, and people have
a trusting attitude toward others.
3.6.3.3 Germany
In this survey, Germany scores highest in MAS (72) and second lowest in PDI (30)
compared to the other countries involved. Germany can be viewed as a very
masculine society, which nevertheless has low hierarchy levels. Individualistic
cultures, which tend to focus on individual benefits, typically value personal
achievements (Hofstede 2001), and consumers expect greater supplier flexibility
to meet their individualistic needs (Salter and Niswander 1995). Employees are
expected to act as “economic men” and commitment to the organization is higher
than in cultures scoring low in IDV. Individualistic societies tend to see advertising
as a useful source of new product information and rely on the media. In these
societies (Germany, Finland, and Australia), a larger share of public and private
money is spent on healthcare.
According to Hofstede (2001), cultures scoring low in UAI are expected to show
more confidence in the advertising industry, although these societies are more
concerned with data and facts.
3.6.3.4 Russia
The Geert-Hofstede analysis for Russia indicates just estimated scores. Russia was
not included directly in Hofstede’s country survey. The analysis reflects the
extremely high level in UAI (index of 95) and PDI, with an index of 93. Countries
scoring high in UAI show low professionalism, high uniformity, high conservatism,
high secrecy (Salter and Niswander 1995) and stronger interpersonal and interor-
ganizational ties (Money et al. 1998). Authority is based on tradition, and as
decision structures are centralized, managers rely on formal rules (Hofstede
2001). What is different, first of all, is that dangerous innovations can be successful
simply if they are supported from upper hierarchy levels. Information is constrained
by hierarchy. These cultures tend to focus more on problem solving and prevention
as well as on control (Roth 1995).
In this study, Russia is the society scoring lowest in IDV (index value: 39).
According to Hofstede (2001), this leads to relying on social networks for informa-
tion rather than using the media as a useful source of new product information.
Concerning the presentation of data and facts, feminine cultures are more interested
in “the stories behind the facts” (Hofstede 2001, p. 311). DeMooij (1998, p. 71)
claims that the skepticism of feminine cultures like Russia and Finland toward
advertising stems from their markets having been “swamped by advertising
reflecting US masculine values, thus advertising is not made for the local culture
and is not liked.” The masculine orientation of imported advertising from the US is
a lesser problem for other masculine markets such as Australia and Germany.
3.6.3.5 Spain
The Geert-Hofstede analysis for Spain indicates that it is an average society in

terms of the dimension of MAS, scoring high in UAI and above average in PDI.
Low scores in IDV lead to low commitment of employees toward the organization.
In business, personal relationships prevail over task and company. Members of
Spanish society believe in collective decisions. Persons in low IDV societies tend
not to believe in advertising or other direct marketing media, but in social networks
for information. Innovations are less important, and fewer invention patents are
granted within these societies. According to Hofstede’s (2001) findings, in Spain
and Russia less money is spent on healthcare.
Chapter 4
Development of Constructs and Related
Hypotheses
The theoretical parts I–III of this work have paved the way to generate the
constructs and develop the hypotheses for the explorative study, which is based
on an empirical survey. Part IV is structured as follows: First, a short overview
of the C-OAR-SE procedure (Rossiter 2002) is presented, followed by an introduc-
tion of formative versus reflective measurement models as well as moderating
and mediating effects. The following sections outline the requirements of the
Bonferroni-Holm’s test and its execution and demonstrate the development of
constructs and related hypotheses. Finally, the structural model of reputation and
reputation transfer is introduced.
4.1 The C-OAR-SE Procedure for Scale Development
As the research design of this study is a multi-stage design and essentially follows
the C-OAR-SE procedure suggested by Rossiter (2002), this chapter gives a short
introduction of this method.
The C-OAR-SE procedure refers to a sixfold classification of measures,
allowing for both reflective and formative perspectives as well as single- and
multi-item scales (Diamantopoulos 2005). How to establish content validity is
the main purpose of this method (Rossiter 2002, 2005): “construct definition,
object classification, attribute classification, rater identification, scale forma-
tion, and enumeration and reporting”. The C-OAR-SE procedure draws mainly
on the works of Bollen and Lennox (1991), Edwards and Bagozzi (2000), and
Fornell and Bookstein (1982), on attribute classification and posits that a new
scale development procedure in marketing is needed (Rossiter 2002). In line
with Jarvis et al. (2003), Rossiter (2002, 2005) argues that the traditional
procedure, with its strict emphasis on factor analysis and internal consistency
reliability has led to the delineation of conceptually necessary items and the

66 4 Development of Constructs and Related Hypotheses
addition of unnecessary and conceptually inappropriate items just to obtain a

high alpha value.
According to Rossiter (2002) the first step of the C-OAR-SE procedure for
scale development requires that constructs be conceptually described in terms of
the object and the attribute (dimension of judgment) and their components.
Furthermore, the construct has to by specified by a certain rater entity. In applying
C-OAR-SE, expert judges are used to ratify the classification of the object.
Rossiter (2002) distinguishes between group raters (e.g., industrial buyers) and
expert raters (in this study: sample of market managers). The object part can be
classified as concrete singular or have multiple components (Rossiter 2002;
Bergkvist and Rossiter 2007). The goal is that nearly every rater describes the
object in an identical way.
Subsequently, the item parts of the object or construct are put together with the
item parts of the attribute, including all the main components in a scale. Attribute
classification decisions refer to the general construct definition of formative
(formed) versus reflective (eliciting, see Sect. 4.2) or concrete (e.g., a single item
construct). Rossiter (2002) recommends randomizing the order of the multiple-item
scales while carrying out the survey, which has also been accounted for in the CATI
survey of this study.
With reference to the enumeration rules, different objects and attribute types
lead to variations: “Enumeration rules imply that indexes will receive absolute total
scores and items for reflective attributes will receive averaged scores” (Rossiter
2002, p. 325). For indexes as well as reflective constructs, Rossiter (2002) re-
commends using a scale of 0–10, where 10 is the maximum score, rather than
open-ended total scores. He also proposes a polarity of scales and scales having a
common-sense meaning and adds that “no number of additional items, the standard
way to increase reliability, would compensate for lack of validity” and produce a
better score (Rossiter 2002, p. 328). To Rossiter (2002, p. 332), reliability measure
should be regarded as no more than a precision of score estimate, and not as an
“ersatz estimate of evidence of validity”.
Unlike Diamantopoulos and Winklhofer (2001), Rossiter did not confine this
treatment to formative measurement. He proposed a general procedure for devel-
oping marketing measures. For this reason, the C-OAR-SE approach is discussed
controversially in the literature. Finn and Kayande (2004) suggest that while
Rossiter’s procedure refocuses on the conceptualization of constructs, it has the
potential to create an important gap by advocating against empirical validation of
constructs. Diamantopoulos (2005) identifies some potentially problematic areas
under the various steps of C-OAR-SE and also questions the procedure’s sole
reliance on content validity. In this study, the following steps of C-OAR-SE
procedure have been carried out:
Following the recommendations of Diamantopoulos and Winklhofer (2001) and
Rossiter (2002, 2005), the next section outlines the different types of measurements
related to a construct (Table 4.1).
4.2 Formative Versus Reflective Measurement Models 67
Table 4.1 Applying the C-OAR-SE procedure

Steps of C-OAR-SE C-OAR-SE procedure applied in this study
procedure
Construct definition Initial definitions of all constructs
Object classification Interviews with two marketing research experts about the classification of
Attribute classification objects and attributes. One object was defined as concrete singular. In
addition, concrete, formative and eliciting attributes were found
Construct definition Object and attribute classification was added to the definition of
constructs
Rater identification This step was omitted – no rater entity judged further on the object-on-
attribute finalizations
Scale formation Appropriate rating scales were discussed, and four-point Likert-scales as
well as rankings from 1 to 5 were used
Enumeration This step was omitted – no indexes or averages were used to report an
estimate of the reliability
formative reflective
The management is
innovative
I trust in products of this
company
This company offers
excellent product quality
This company cares for
Reputation
The workforce is friendly customer opinions
This company offers

This company shares
reasonable prices
expertise as a partner
This company acts
socially responsible
Fig. 4.1 Reputation: A formative or a reflective construct?
4.2 Formative Versus Reflective Measurement Models
A construct is a “conceptual term used to describe a phenomenon of theoretical

interest” (Edwards and Bagozzi 2000, p. 156–157). Structural equation models
include relationships among sets of latent constructs. The assessment of these
variables has a long tradition in social science (Churchill 1979; Nunally 1978).
Related measurement scales for such constructs are either formative or reflective in
nature (e.g., Bollen and Lennox 1991; Diamantopoulos and Winklhofer 2001).
Figure 4.1 shows that the measurement of a construct it is solely dependent on
the content: The formative indicators are viewed as an explanatory combination and
are all referring to different components or fields of reputation. With reference to
the reflective formation of construct, all indicators are related to a perceptual,
subjective view of reputation.
Figure 4.1 indicates that the use of an incorrect measurement model undermines
the content validity of constructs, misrepresents the structural relationship between
them and also diminishes the usefulness of management theories (Coltman et al.
2008). With reflective (or effect) measurement models, causality flows from the
latent construct to the indicator. When causality flows in the opposite direction –
from the indicator to the construct, a formative (or causal) index is generated
(Edwards and Bagozzi 2000; Diamantopoulos and Winklhofer 2001).
The following subsections describe the attribute classification of constructs in
more detail and offer an overview of theoretical and empirical considerations in the
literature.
4.2.1 Reflective Measures
“Most researchers in the social sciences assume that indicators are effect indicators.
Cause indicators are neglected despite their appropriateness in many instances”
(Bollen 1989, p. 65). The reflective measurement model is based on classic test
theory (Lord and Novick 1968), whereas measures denote effects of an underlying
latent construct (Bollen and Lennox 1991). Causality leads from the construct to the
indicator, and according to the literature, these indicators are “reflective” (Fornell and
Bookstein 1982), “effect” (Bollen and Lennox 1991) and “eclicting” (Rossiter 2002).
Figure 4.1 indicates the latent variable j representing the common cause shared by all
items xi reflecting the construct (Diamantopolous et al. 2008) (Fig. 4.2).
Each item corresponds to a linear function of its underlying construct plus
measurement error. If the measurement error di ¼ 0, the reflective construct
would represent a perfect correlation between the indicators (Eberl 2006). This
also explains why reflective measurement models must have highly positive corre-
lations of the indicators (Bollen 1984). A change in the reflective variable causes
variation in all measures simultaneously (Diamantopolous et al. 2008).
Where:
x1
latent reflective variable
ifactor loading capturing the
x2 effect of on xi
x3 xi is the ith indicator of the latent

variable
i is the measurement error for

the ith indicator:
xi = i + 1
Fig. 4.2 Reflective measurement model

Source: Edwards and Bagozzi (2000)
4.2.2 Formative Measures
With few exceptions (e.g., Law and Wong 1999), formative measures have been a
largely neglected topic within organizational research. Nearly all the work in the
area of formative measurements has been published by researchers housed in sociol-
ogy or psychology (e.g., Bollen and Lennox 1991), marketing (e.g., Diamantopoulos
and Winklhofer 2001; Jarvis et al. 2003; Rossiter 2002) and strategy (Fornell
et al. 1990).
Formative scales are used when a construct is viewed as an explanatory combi-
nation of its indicators (Fornell and Bookstein 1982; Fornell 1987). In the literature,
these scales are also referred to as “cause” (Bollen and Lennox 1991) and “formed”
(Rossiter 2002). The formative construct is defined as a total weighted score across
all the items, where each item represents an independent dimension (Fig. 4.3).
Causality flows from the indicators to the construct (Edwards and Bagozzi 2000;
Diamantopoulos and Winklhofer 2001). The disturbance or error term z is specified
at the construct level and comprises all remaining causes of the construct, which
are represented in the indicators and are not correlated to the latter. A good
formative scale is one that completely exhausts the entire domain of the construct
(Diamantopoulos, Riefler and Roth 2008).
Attribute classification of a construct is formative if the construct is viewed as an
explanatory combination of its indicators (Fornell and Bookstein 1982: Fornell
1987). All indicators need to represent an independent dimension on its own
(Diamantopoulos et al. 2008); for this reason, “omitting an indicator is omitting a
part of the construct” (Bollen and Lennox 1991, p. 308).
A formative measurement model, in isolation, is underidentified and can there-
fore not be estimated (Bollen 1989); the established measures are only applicable
for reflective scales. Indicators of formative constructs are therefore tested on
multicollinearity to examine possible linear dependencies (see Fig. 4.4). In addi-
tion, the nomological validity is tested (Diamantopoulos 1999).
Where:
x1
latent formative variable
r12 disturbance term
r13 x2 xi the ith indicator of the latent
variable
r23
i coefficient capturing effect
x3 of indicator xi
r13 regression coefficients of
on x3
Fig. 4.3 Formative measurement model

Source: Diamantopoulos et al. (2008)
Collection of Ensuring external

Exact content Elimination of
indicators validity by using a
specification of Items with high
covering all facets nomological
construct multi-collinearity
of the construct network
Fig. 4.4 Measure development of formative constructs, based on Diamantopoulos (1999)
4.2.3 Single Item Indicators
During the last few years, a discussion on the predictive validity of multiple-item
versus single-item measures of the same construct has emerged. Increasingly,
marketing academics advocate the use of multiple-item measures. Others, like
Bergkvist and Rossiter (2007) argue that single-item measures are acceptable.
According to Drolet and Morrison (2001), even the second or third item contributes
little to the information obtained from the first item. In the case of very modest error
term correlations between items, the incremental information from each additional
item is extremely small. As the increasing information content of the reflective
constructs is only marginal after the third indicator, in this survey all reflective
constructs have been restricted to up to three items.
Rossiter (2002) proposed one theoretical argument for using a single-item
measure rather than a multiple-item measure: If the object is concrete singular (it
consists of one object that is uniformed imagined) and the attribute is concrete, too.
In addition, Bergkvist and Rossiter (2007) argue that single items can be used if
additional items run the risk of tapping into other predictive attributes, i.e., if the
items are attempted synonyms of the original attribute. Moreover, if common
methods bias in predictor and criterion, a single-item measure can be used.
4.2.4 Overview on Theoretical and Empirical Considerations
Latent variables are widely utilized by organizational researchers in studies of intra-

and inter- organizational relationships (Diamantopoulos et al. 2008). As Jarvis,
Mackenzie and Podsakoff (2003) observe, conceptual definitions of constructs are
specified at a more abstract level, which sometimes includes multiple formative
and/or reflective first- or second order dimensions (e.g., Diamantopoulos and
Siguaw 2006; Diamantopolous et al. 2008). Diamantopoulos and Siguaw (2006)
as well as Rossiter (2002), strongly recommend that the choice between formative
and reflective models be driven fundamentally by theory. It should be based on the
“auxiliary theory”, specifying the “nature and direction of the relationship between
constructs and measures” (Edwards and Bagozzi 2000, p. 156). When developing a
multi-item organizational measure from a pool of items, the decision, whether the
construct is formative or reflective, needs to be made. The only difference resulting
from applying a formative versus reflective measurement approach relates to the
causal priority between the construct and its indicators (Diamantopoulos and
Siguaw 2006). It should be based on the “auxiliary theory” (Blalock 1968; Costner
1969), specifying “the nature and direction of the relationship between constructs
and measures” (Edwards and Bagozzi 2000, p. 156).
The following tables show a review of the current literature on reflective and
formative measurement models and refer to theoretical and empirical considera-
tions. The theoretical implications refer to the nature and content of the constructs,
whereas the empirical considerations are focused on correlations between the items
and measurement errors.
Edwards and Bagozzi (2000) recommend the use of a combination of reflective
and formative specifications in more complex measurement models. This has been
taken into consideration with regard to the empirical survey: eleven constructs are
included in the structural model – four constructs are reflective, four are formative,
one is a single-item measure, and two other scales consist of international scales on
e-readiness (EIU 2007) and culture (Hofstede 2001). The constructs and measure-
ment models are presented in further detail in Sect. 4.5.
Tables 4.2 and 4.3 show the differences between empirical and theoretical
considerations when deciding on multi-item measures of constructs and give an
overview on the existing literature.
Table 4.2 Theoretical framework for assessing reflective and formative models
Consideration Reflective model Formative model Relevant
literature
Theoretical considerations
1. Nature of Latent construct exists Latent construct is formed Borsboom et al.
construct l Latent construct exists l Latent construct is a (2003, 2004)
independent of the combination of its
measures used indicators
2. Direction of Causality from construct to Causality from construct to Edwards and
causality item item Bagozzi
between items l Variation in the construct l Variation in the construct (2000)
and latent causes variation in the does not cause variation Rossiter (2002)
construct item measures in the item measure Jarvis et al.
l Variation in item measures l Variation in item (2003)
does not cause variation in measures causes Diamantopoulos
the construct variation in the construct et al. (2008)
3. Characteristics Items are manifest by the Items define the construct Rossiter (2002)
of items used construct l Items need not share a Jarvis et al.
tomeasure the l Items share a common common theme (2003)
construct theme l Items are not Diamantopoulos
l Items are interchangeable interchangeable et al. (2008)
l Adding or dropping an l Adding or dropping an
item does not change the item may change the

conceptual domain of the conceptual domain of the
construct construct
Source: complied from Coltman et al. (2008)
Table 4.3 Empirical framework for assessing reflective and formative models
Consideration Reflective model Formative model Relevant
literature
Empirical considerations
1. Iteminter Items should have high Items can have any pattern Cronbach (1951)
correlation positive of intercorrelation but Churchill (1979)
intercorrelation should not possess the Diamantopoulos
l Empirical tests: assessing same directional and Siguaw
internal consistency and relationship (2006)
reliability by Cronbach’s l Latent construct is a Diamantopolous
alpha, average variance combination of its et al., 2008
extracted, and factor indicators
analysis
2. Item relationships Items have similar sign and Items may not have similar Bollen and
with construct significance of significance of Lennox
antecedents and relationships with the relationships with the (1991)
consequences antecedents/ antecedents/ Diamantopoulos
consequences as the consequences as the and Winklhofer
construct construct (2001)
l Empirical tests: l Empirical tests: assessing Diamantopoulos
establishing content nomological validity by and Siguaw
validity by theoretical structural linkage with (2006)
considerations, assessing another criterion variable
convergent and
discriminant validity
empirically
3. Measurement Identifying the error term Identifying the error term Diamantopoulos
error in item is possible is not possible if the (2006)
l common factor analysis formative measurement
model is estimated in
isolation
Source: Compiled from Coltman et al. (2008)
4.3 Moderating and Mediating Effects in Causal Models
In this section, we attempt to distinguish between the properties of moderator and

mediator variables. First, a clear differentiation needs to be made between these two
functions, which are often used interchangeably (Baron and Kenny 1986):
l The moderator function of third variables partitions a focal independent variable
into subgroups that establish its domains of maximal effectiveness in regard to a
given dependent variable.
l The mediator function of a third variable represents the generative mechanism
through which the focal independent variable is able to influence the dependent
variable of interest.
A moderator can be defined as a qualitative or quantitative variable that directly
affects the direction and/or strength of the relation between a predictor variable and
a dependent variable (Baron and Kenny 1986). Although they may influence
4.3 Moderating and Mediating Effects in Causal Models 73
moderating
variable
latent exogenous latent endogenous

variable variable
Fig. 4.5 Moderator model

Source: Eggert et al. (2005)
E1 E2 E3 M1 M2 M3 E1 x M1, E1 x M2 ……. E3 x M3
ex. variable
exogenous moderating
x
variable variable
mod. variable
a b c
endogenous
variable
Fig. 4.6 Modeling moderating effects in PLS using reflective constructs

Source: Eggert et al. (2005)
complex formative and reflective effects, moderating effects are rarely examined in
economic research (Homburg and Giering 2001).
The principle of a moderating effect is presented in Fig. 4.5. To analyze
moderating effects using the PLS software, not only the relationship between
exogenous and endogenous variable but also the direct impact of the moderating
variable on the endogenous variable as well as the impact of an interacting variable
is investigated (Eggert et al. 2005). Using a path diagram framework, the interacting
variable is calculated as a product of the exogenous variable and the moderating
variable. The essential properties of a moderating variable are summarized in
Fig. 4.6: The impact of the predictor variable (path a), the impact of the moderating
variable (path b) and the interaction or product of these two (path c). The moder-
ating hypothesis is supported if, independently from the strength of the path
coefficients a and b of the exogenous variable and the moderating variable, the
interaction (path c) is significant (Baron and Kenny 1986).
Moderating effects specify when certain effects will hold, while mediating
effects specify how or why such effects occur (Baron and Kenny 1986). A given
variable functions as a mediator to the extent that it accounts for the relation
between the predictor (exogenous) variable and the endogenous (criterion) variable.
Modeling moderating effects using SmartPLS is more comfortable than using
covariance-based software such as LISREL, as these correlations may help to
provide a more accurate estimation of the interaction effect.
Using reflective variables for exogenous and moderating variables, the original
indicators need to be standardized (mean ¼ 0, variance ¼ 1) or centered (mean ¼ 0)
(Eggert, Fassott and Helm 2005) and then integrated in the structural model. Since
formative indicators are not assumed to reflect the same underlying construct, the
product indicators between two sets of formative indicators will not necessarily tap
into the same underlying interaction effect. PLS calculates for the exogenous
variable as well as for the moderating variable the standardized construct values
on case level. The interacting effect is then calculated by one single indicator,
generated by the multiplication of each construct value.
The strength of interaction effect f can be calculated by using the R-square values:
R2incl: interacting variable R2baisc model
f2 ¼ (4.1)
1 R2basic model
Even a small interaction effect can be meaningful under extreme moderating
conditions if the resulting changes are meaningful (Chin et al. 2003). To illustrate
mediation, the basic causal chain involved in mediation is depicted in Fig. 4.7. This
model assumes a three-variable system, two causal paths feeding into the endoge-
nous variable: The direct impact of the independent variable (path c) and the impact
of the mediator (path b). Path a leads from the independent variable to the mediator
(Baron and Kenny 1986).
The path from the dependent variable to the mediator is denoted as a, and its
standard error is sa. The path from the mediator to the dependant variable is b, and
its standard error is sb (Fig. 4.8).
ab
z ¼ qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi (4.2)
b2 s2a þ a2 s2b
indicator
E1 E2 E3 M1 M2 M3
ex. variable
moderating exogenous
x
variable variable
mod. variable
a b c
endogenous
variable
Fig. 4.7 Modeling moderating effects in PLS, using formative constructs

Source: Eggert et al. (2005) p. 113
4.4 Applying the Bonferroni-Holm’s Procedure 75
Fig. 4.8 Mediator model,

Source: Eggert et al. (2005) exogenous a mediator
variable variable
b
c
endogenous
variable
If the test value z 1.96, it can be concluded on a significance level of p < 0.05,
that there is no significant direct effect (a · b ¼ 0).
To calculate the strength of the mediating effect, the formula to calculate the
variance accounted for is:
ab
VAF ¼ (4.3)
abþc
A VAF-value of 0.5 means that 50% of the effect of the exogenous variable on the
endogenous variable is based on the mediator variable. Regarding behavioral
intention, Fishbein and Ajzen (1975) assumed that the impact of both attitudes
and normative factors on behavior is mediated through it.
4.4 Applying the Bonferroni-Holm’s Procedure
Interpretation of results that include multiple statistical tests has been an issue of
great concern for some time in the literature. The basic problem is that when
multiple tests are undertaken, each at the same significance level (a), the probability
of achieving at least one significant result is greater than that significance level
(Zaykin et al. 2002; Hochberg 1988). In this study, multiple treatment comparisons
are also carried out. The survey data set is split twice: in five different countries and,
additionally, in three different stakeholder groups. Moreover, the data are evaluated
threefold: results related to all countries, split into single country data and by
stakeholder groups. For this reason, each participant in this survey may be included
in three different data-evaluations.
This fact may result in an increased probability of rejecting a null hypothesis
when it would be inappropriate to do so. The typical solution to this problem has
been to lower the a values for the table (i.e. establish a table-wide significance
level) and therefore reduce the probability of a spurious result. In this study, an
enhancement of the sequential Bonferroni test – the Bonferroni-Holm’s procedure –
was used for multiple comparisons to retain a global risk of 5% by the adaptation of
the decisional threshold to each comparison.
According to Moran (2003), the most common procedure has been the applica-
tion of the sequential Bonferroni adjustment (Holm 1979; Miller 1981; Rice 1989).
The application of this procedure was chosen because the modified Bonferroni
procedure is less conservative than the sequential Bonferroni test (Hochberg 1988).
Both procedures contrast the ordered p-values with the same set of critical values.
Holm’s procedure rejects a hypothesis only if its p-values and each of the smaller
p-values are less than their corresponding critical-values (Holm 1979). Thus, it
controls the family-wise error rate in the strong sense.
The problem of statistical data involving multiple statistical tests is the follow-
ing: the more individual tests that fall below a, the lower the probability that they
are all spurious (Hochberg 1988). It also illustrates the principle that several
relatively high p-values can be a stronger indication of significance than one
relatively low p-value. To address the problem of multiple statistical tests within
this study, all path correlations significant in the countries or stakeholder groups on
a p ¼ 0.05 level were successfully tested based on the Bonferroni-Holm’s proce-
dure. The results are shown in the Annex.
4.5 Development of Constructs
A central concern in scientific research is external validity, or the extent to which a

theorized or observed relationship among variables can be generalized to other
settings (Rosenzweig 1994; Gardberg 2006).
Bernstein (1986) concluded that organizational identity is influenced by the
following dimensions: value for money, technical innovation, service, social
responsibility, reliability, imagination, quality and integrity. Can the relationship
in question replicate with people of other cultures, in other countries of the world
(Krathwohl 1985)? Following the literature on the development of one valid
construct of CR, there have been frequent discussions about international generali-
zation (MacMillan et al. 2005; Eberl 2006; Helm 2007). Particular attention has
been paid to the methodological dilemmas of cross-cultural research (Negandhi
1983; Ronen 1986; Gardberg 2006; Walsh and Wiedmann 2004).
As the current work is based on a cross-cultural study concerning five different
countries, the indicators of the construct “reputation”, as well as its influencing
factors, need to be suitable for all the countries included in the survey. The
questionnaire took some of the RQ dimensions of Fombrun et al. (2000, see
Sect. 3.3.2), but then, several others were added. While concentrating on cross-
cultural CR in a B-to-B context, only the following RQ questions were chosen:
Emotional Appeal
l I trust this company
Products and Services
l develops innovative products and services
l offers high-quality products and services
l offers products and services that are good value for money
4.5 Development of Constructs 77
Stakeholder groups in a cross-cultural B-to-B context may not have any knowledge
of some of the RQ dimensions. Moreover, the impact of financial performance
on CR is controversially discussed (Dunbar and Schwalbach 2000; Roberts and
Dowling 2002; McGuire et al. 1990).
In the light of the fact that Australian, Finnish and most of the German and
Spanish organizational buyers only purchase goods based on tender businesses,
their knowledge of “vision and leadership” approaches and their interest in the
financial performance of their suppliers is extremely limited. In tender businesses,
hardly any purchaser cares about the financial performance of future suppliers: If
the company which has won the tender is not able to supply, the next one on the list
will simply be chosen.
Regarding CR and the dimension of the workplace environment, for organiza-
tional buyers, the only personal contacts, if any, are the sales representatives of the
suppliers, so general judgments of the workplace environment can hardly be made,
as visits of these sales representatives take place exclusively in the offices of
organizational purchasers. The visibility of sponsoring activities is low, and they
are not usually communicated directly to all stakeholders. Consequently, it is
difficult for organizational buyers to evaluate the social responsibility of a company
in the B-to-B context. In the light of the recommendations of Gardberg (2006);
Walsh and Wiedmann (2004); Berens and van Riel (2004); Helm (2007), as well as
Lee and Lings (2007) discussed earlier, the following dimensions were excluded
from the empirical research of this work: vision and leadership, workplace envi-
ronment, financial performance and social responsibility.As the above stakeholder-
specific concept of CR indicates, the importance of certain dimensions varies
according to stakeholder group: To employees, the workplace environment is
most important. Customers are focused most on product and service quality. The
workplace environment of the suppliers’ employees is of minor importance, as long
as this dimension is not discussed negatively in the media (which then already
influences the CR factor of social responsibility). Regarding the impact factors on
B-to-C consumer specific reputation is concerned, one connection between con-
sumers and social responsibility is added by the author, as literature shows that
social responsible behaviour of companies does also impact CR (Fombrun et al.
2000; Walsh and Wiedmann 2004).
Helm (2006) argues that from a managerial standpoint, the conceptual disad-
vantages of using one identical measure of reputation for all stakeholder groups
are possibly outweighed by the opportunity to compare stakeholder groups’
perceptions. With regard to Fig. 4.9 and the various dimensions of reputation,
the author doubts that one single measure of reputation will help to work toward
one consistent reputation. The author casts doubts on the fact that “a consistent
reputation” (Helm 2006) exists at all – although this is an understandable mana-
gerial goal. Helm (2007) tried to solve this problem of a multi-faceted view of
reputation by developing a formative construct of CR consisting of nine completely
different indicators related to all dimensions of CR. This completely disregards
the fact
B-to-C B-to-B reputation

consumer- customer- investor- employee- supplier- specific to
specific specific specific specific specific the general
reputation reputation reputation reputation reputation public
B-to-B
general
consumers customers investors employees suppliers
public
product- vision and financial workplace social

emotional
and service leader- per- environ- respon-
appeal
quality ship formance ment sibility
National culture
Different Perceptions of Reputation
Fig. 4.9 Stakeholder-specific concepts of corporate reputation, modified from Meffert and
Bierwirth (2002); Helm (2006)
l That certain dimensions of CR are unimportant to specific stakeholder groups, and

l That most stakeholder groups are neither in a position to judge nor interested in
some of the dimensions
This work focuses on the B-to-B setting of organizational customers. In contrast to
customers in the B-to-C context, organizational customers are exclusively focused on
product and service quality. In both B-to-B and B-to-C contexts, the emotional appeal
of a company has an impact on CR. Thus, this work proposes only to include these two
dimensions in the survey. In line with the study of MacMillan et al. (2005), all 250
survey participants had practical experience in a medical device manufacturing
company. For this reason, as suggested by Walsh and Wiedmann (2004); Berens
and van Riel (2004), and Bernstein (1986), constructs such as innovativeness, rela-
tionship quality, purchase decision involvement and WOM have been included:
Relationship Quality
l I am satisfied with this company
l This company offers value for money
l This company takes my concerns and request seriously
Reputation
l I trust in products of this company
l This company cares for customers’ opinions
l This company shares expertise as a partner
Purchase Decision Involvement

l Even if competitors offer the same features as company X, I would prefer to buy
the products of company X
l I regularly check the outcome of my purchasing decisions
l I don’t care which brand I buy (reverse coding)
Innovativeness
l This company is known for innovative products
l This company is known for leading products
Word of Mouth
l I would recommend the medical devices of this company
l I would recommend the pharmaceutical products of this company
To find out about the influencing factors of the transferability of reputation, state-
ments on the use of certain direct marketing media, reputation transfer, and
perceived fit have also been included. The following chapters first give an overview
of the classification of the above constructs. Second, the derivation of each
construct integrated in the structural model is presented. Finally, the complete
structural model is introduced.
4.5.1 Overview of Measurement and Formation of Constructs
To find out about the impact factors on corporate reputation and reputation transfer
in the B-to-B context, the ability of organizational customers to perceive the fit of
a new product to the existing product range, the perceived innovativeness of a
certain company as well as the quality perception of brand or products are
included in the range of constructs. Scholarly work has also examined brand
attributes such as quality and advertising and their effects on the success of the
introduction of new brands or products (e.g., Grewal et al. 1998; Smith and Park
1992). The impact of these factors on reputation transfer has not yet been
examined. The following tables give a short overview of the constructs used,
their types of measurement and the questions related to each construct. Details on
the classification of each construct can be found in the following chapters
(Table 4.4).
The next table introduces the latent variables used with formative constructs
together with the related indicators.
In addition, as discussed in Sect. 4.2.3 and listed below, three single-item
indicators are used (Table 4.5).
Now that the manifest variables are presented in an overview, the constructs
used in the structural model are presented in detail (Table 4.6).
Table 4.4 List of manifest variables used with reflective constructs

Latent variable, reflective Questions defining the constructs/manifest variables
construct
Reputation,4-point-Likert Do you agree or disagree with the following statements on
scale company X?
l This company cares for customers’ opinions
l This company shares expertise as a partner
l I trust in the products of this company
Reputation transfer,4- Company X also supplies injectable drugs to more than 80 countries.
point-likert scale Knowing that, what is your opinion on purchasing these
injectable drugs?
l You would purchase them because you trust in the prod.
of company X
You would expect the same high product quality standard as
with other products of company X
Word of mouth,4-point- To what extent would you recom. medical devices/ products
likert scale of company X?
To what extent would you recom. the pharmaceutical products /
of comp. X?
Perceivedinnovativeness Do you agree or disagree with the following statements on
4-point-likert scale company X?
l Company X is a leading company
l Company X is an innovative company
Table 4.5 List of manifest variables used with formative constructs

Latent Questions defining the constructs/manifest variables
variableformativeconstructs
Media-enabled direct Which sources do you use to be informed about products?
marketing media l Brochures
l Internet
l Mailings
Personal direct marketing Which sources do you use to be informed about products
media l Symposia
l Fairs
l Visits of sales representatives
Relationship quality l This company offers value for money
l I am satisfied working with this company
l This company takes my concerns and requests seriously
Purchase decision If you think of the products you are purchasing/involved in the
involvement purchase process – to what extent do you agree with the
following statements?
l I do not care at all which brand I buy
l I regularly check the outcome of my purchasing decision
l Even if competitors offer the same features as company X, I
would prefer to buy the products of company X
Table 4.6 List of manifest variables used with single Item constructs
Latent Variablessingle item Questions or scores defining the constructs/manifest variables
construct
E-readiness E-readiness scores of the five countries involved in the survey
Perceived fit I think that injectable drugs fit to the product range of company X
Culture Hofstede’s score of the five countries involved in the survey
4.5.2 Corporate Reputation
Even in the economics literature, the term “reputation” is used differently in

different contexts. A survey on the diverse perceptions is given by Fombrun
(2001). CR is regarded as the result of a corporate branding in the area of marketing,
as a kind of goodwill in accounting and as the manifestation of a corporate identity
in the field of organization theory. Fombrun and Shanley (1990) argue that the
public construe a company’s reputation on the basis of information about its relative
position in an organizational field. The public do so by using market and accounting
signals indicating performance, institutional signals indicating conformity to social
norms, and strategy signals indicating strategic position. The difficulty arises when
one tries to work out how to measure the less visible B-to-B companies, where
neither conformity to social norms nor strategic positions are visible.
Current research on CR suffers from the fact that available studies are not based
on identical conceptualizations and formation of the reputation construct. Further-
more, most of the constructs on CR refer to the B-to-C context. Without conceptu-
alization and measurement, strategies to develop a company’s reputation remain
nebulous (Helm 2006). Generally, the proliferation of different measurement methods
of CR has raised the question of whether or not a standard construct of CR is
useful and appropriate (e.g., Helm 2007; Schwaiger 2004).
CR in this context is interpreted as a perceptual phenomenon that can be
measured by gathering information from observers. As theorized in sects. 2.2 and
2.3, unique key firm resources like CR may lead to competitive advantages (Fombrun
1996; Gardberg 2001). According to behavioral theories, all the positive behav-
ioral effects are triggered by perceptions and attitudes. CR needs to be inter-
preted as a perceptual, subjective construct, when taken as an explanation for
stakeholders’ behavior, and this calls for a poll- or survey-based measurement
approach (Helm 2006).
The combination of affective and cognitive components leads to the conceptu-
alization of CR as an attitudinal construct (Eberl 2006; Schwaiger 2004; Kroeber-
Riel and Weinberg 2003). Thus, evaluating CR not only appraises subjective
perceptions of a company’s attributes, but allows an intrinsic disposition toward
these attributes (Schwaiger 2004). This notion can also be found in US publications,
although they do not differentiate explicitly between the terms “corporate image”
and CR (Bromley 1993, see also Sect. 3.2.1) While conducting a cross-cultural study
using the RQ dimensions of Fombrun et al. (2000), Gardberg (2006) noted that,
although very often measured in the US, the dimension of CEO leadership does not
seem to be an appropriate measure of CR in some European countries. In a buyer-
seller relationship, Ganesan (1994) claims that trust plays a key role in determining
the long-term orientation of firms in a relationship, and that this factor is closely
related to reputation.
Trust is the key coordinating mechanism in community form (Adler 2002); it can
be engendered by direct interpersonal contact, for example, or by reputation
through a network of other trusted parties (Coleman 1990). Being an essential
part of the healthcare business, organizational trust is also fragile, and easily broken
by disconfirming acts (Firth-Cozens 2004).Values and norms can generate trust-
worthy behavior that leads to commitment (Morgan and Hunt 1994). Transferring
knowledge from beyond the company’s boundaries is an important strategy for
organizations to add depth and breadth to their knowledge-based capabilities
(Simon 1991). Sharing knowledge with customers and suppliers impacts positively
on a company’s reputation.
A study of Friman et al. (2002) indicates that sharing information and commu-
nicating in a proper way seem to enhance commitment and trust. In the literature,
customer orientation, as well as trust, is considered as a determinant of CR. In their
studies on CR, Fombrun et al. (2000), MacMillan et al. (2005), Helm (2007) and
Eberl (2006) included questions referring to the evaluation on external trust and
customer orientation (i.e., This company makes an effort to fulfill customers’ needs,
I trust in this company).
Commitment in B-to-B relationships refers to the partners enduring desire
and effort to maintain a valued relationship (Moorman et al. 1992). According
to Morgan and Hunt (1994), commitment to a relationship decreases the pro-
pensity to end a relationship and increases the willingness to invest in a
relationship.
In line with above Fig. 4.10, the construct of CR is based on the theory of
commitment and trust (Morgan and Hunt 1994) as well as the RBV and the KBV.
Using the following indicators, the multi-item indicator of “reputation” is measured
on a four-point Likert-scale:
Indicators Generating the Construct of Corporate Reputation
This This
I trust in company company
products of cares for shares
construct
this company customers’ expertise as
level
opinions a partner
Relationship Resource Knowledge Resource
Information Problem theory-

Trust Commitment
Sharing Resolution based
level
National Culture
Fig. 4.10 Development of the construct “reputation” based on implications of Griffith et al. (2006)
l I trust in the products of this company (Fombrun et al. 2000; Schwalbach 2002;
de Ruyter et al. 2001).
l This company cares for customers’ opinions (akin to studies of Helm 2007;
Schwalbach 2002; Eberl 2006).
l This company shares expertise as a partner (akin to studies of Friman et al.
2002).
In line with Jarvis et al. (2003), Diamantopoulos and Siguaw (2006), and Rossiter
(2002), the attitudinal construct of reputation is viewed as a reflective latent
variable:
l Each of the three items shares a common core, which is related to the construct
of reputation: trust, caring, sharing of expertise.
l The above indicators characterize a set of distinct causes which are interchange-
able. Dropping an indicator from this measurement model does not alter the
meaning of the construct (see also Jarvis et al. 2003 and Rossiter 2002).
l Direction of causality is from the construct to this measure (e.g., Diamantopoulos
and Siguaw 2006; Jarvis et al. 2003).
4.5.3 Perceived Innovativeness
According to Wieseke et al. (2008), marketing innovations are crucial to continuing

company success. In a survey conducted with 1,221 managers, 79% agreed with the
statement: “For the long-term success of our company, innovations are more
important than cost reductions” (Witt and Witt 2008). It can also be taken as
proof of the impact of innovativeness on CR, that the Fortune magazine, as well
as the German Manager Magazin, have included “innovativeness” as an influencing
factor in their CR measurement approaches.
Innovativeness forms the basis of a company’s success. It helps companies to
access resources, improve products and services, develop linkages and gain com-
petitive advantage (Wieseke et al. 2008). Innovations refer to creating new
resources or combining existing resources in new ways to develop and commer-
cialize new products, move into new markets, and/or services, and acquire new
customers (Swedberg 2000).
In the literature, there are reputational surveys including innovativeness (e.g.,
Fombrun et al. 2000; Eberl 2006), although some do not include it in their
measurement approaches (e.g., Helm 2007). Within the B-to-B context and in
line with Fombrun et al. (2000) and Eberl (2006), the construct of “perceived
innovativeness” is included in this survey. Fombrun et al. (2000) included the
following questions in their RQ-questionnaire: This company develops innovative
products and services, This company offers high-quality products and services.
Using the following indicators, the multi-item indicator of “perceived innova-
tiveness” is measured on a four-point Likert-scale:
l Company X is known for innovative products

l Company X is known for leading products
In line with the classification criteria of Diamantopoulos and Siguaw (2006) and
the criteria evaluations described in Sect.´4.2.1 and according to Jarvis et al.
(2003), the attitudinal construct of reputation is viewed as a reflective latent
variable.
4.5.4 Perceived Fit
Given that brand names are a firm’s most important assets, a substantial part of a
brand’s value is derived from its contribution to the launch of new products.
Perceived similarity, also called perceived fit, is characterized by “the number of
shared associations” between parent brand and extension product (Czellar 2003,
p. 103). Most prominently, Aaker and Keller (1990) argue that a greater similarity
between the parent and extension category should be conducive to successful brand
extensions.
However, the results of Smith and Park’s study (1992) do not support this
claim. Despite the empirical counter examples (e.g., Porsche or Yamaha), most
marketing scholars believe in the folklore of the necessity of the pre-condition of
product-related, or at least category-related, fit for the successful transfer of a
company’s reputation, a concept already included in modern marketing text-
books (e.g., Keller 2003). One of the rare exceptions is the study by Klink and
Smith (2001), who claim that brands may also be extended to perceptually
distant categories. The latter endeavor – sometimes referred to as concept
extension – highlights the importance of investigating the valuation of compa-
nies’ reputations in a more general way in order to have a clear view of reputa-
tion transfer.
Prior research suggests that the transfer of a company’s reputations is con-
strained by the degree of perceived fit between the established and the new
product categories, as well as the perceived brand strength. As with many other
marketing research results, all theory development, as well as empirical evidence
in this research domain, is almost exclusively restricted to Western-type markets
(Falkenreck and Wagner forthcomming).
According to Aaker and Keller (1990), perceived fit is determined and defined
mainly by the transferability – the proof of competence of the brand for the new
product.
Park et al. (1991) claim that fit can be divided in two dimensions: product fit
(product-feature similarity perception) and brand fit (concept-consistency percep-
tion). The current work is focused on the concept-consistency perception of the
customers.
Bergkvist and Rossiter (2007) evaluated single-item measures and concluded
that one empirical-based argument for the use of a single item can be made for
measures, in which the multiple items representing the construct are synonymous
attributes (see Sect. 4.2.3). The remaining attribute then needs to have a single
object and a concrete attribute. Following the arguments of Bergkvist and Rossiter
(2007), the question related to this single-item indicator to evaluate the general fit
of brand extension to the existing product range was measured on a four-point
Likert-scale and asked as follows:
l I think the new product range fits to the rest of the company’s product range.
4.5.5 Purchase Decision Involvement
To find out why customers choose certain brands, it its important for the marketers
to understand the complex decision process a customer goes through (Dholakia
2001). Many psychological factors affect the consumer’s decision when purchasing
a product, and some of these factors are also valid in the B-to-B context.
The examination of consumer involvement is well established in the marketing
literature (Mittal 1989; Petty and Cacioppo 1981; Helgenson et al. 1984; von
Wangenheim 2003; Dholakia 2001), although cross cultural examination of the
influence purchase decision involvement has on CR is virtually non-existent.
Among numerous definitions of involvement in the consumer literature, the most
commonly used definition is the one that includes the element of “personal rele-
vance with a product, purchase or advertising” (Petty and Cacioppo 1981; Zaich-
kowsky 1984, 1985). Studies show that involvement strongly influences the
consumer decision-making process (e.g., Krugman 1965; Gensch and Javalgi
1987; Helgenson et al. 1984). Nevertheless, high involvement in products can
rarely be found, as consumers are usually concerned about a very small number
of goods they are planning to purchase (Richins and Block 1991). Furthermore, in
the B-to-B context, the impact of involvement is controversially discussed and does
not seem to play an important role in influencing consumer behavior (von Wan-
genheim 2003; Giering 2000). As a result, inconsistency in the conceptualizations
and operationalizations of involvement across studies has produced conflicting
results concerning the exact nature and intensity of the influence of involvement.
Houston and Rothschild (1978) tried to develop a comprehensive definition of
involvement, and distinguish three types: product, purchase and response involve-
ment. As different organizational user groups are involved in this study, it focuses
exclusively on the impact of purchase decision involvement on CR and reputation
transfer in a cross-cultural context.
Some researchers support the notion that differentiation is an antecedent of
(purchase) involvement (Batra and Ray 1985). Others point out their questioning
of whether differentiation is an antecedent, a component or a consequence of
involvement (Zaichkowsky 1984; Zaichkowsky 1985). The multiple conceptuali-
zations of involvement generate confusion in the relationship between involve-
ment and perceived differentiation. Perceived or cognitive differentiation is “the
ability of individuals to perceive differences in the features of a stimulus object

and to make fine distinctions between that object and others” (Zinkham and
Munderrisoglu 1985).
Not only the definition, but also the measurement of involvement has long been a
controversial topic for researchers. There are many different involvement-driven
models in advertising, such as the elaboration likelihood model (Petty and Cacioppo
1981, 1983, 1986), the attitude-toward-the-ad model (Lutz 1985; Shimp 1982),
and the integrated information response model (Smith and Swinyard 1982, 1983).
A variable that influences the formation of consideration sets, apart from involve-
ment, is the decision-making context. Decision making can be memory-based or
stimuli-based (or mixed). Very few studies examine the same variable, relation or
process in both memory-based and stimuli-based contexts (e.g., Shapiro et al. 1997).
Mittal (1989) defines purchase decision involvement as the extent of interest and
concern that customers bring to bear upon a purchase-decision task. Purchase
decision involvement is analogous to the situational involvement of Houston and
Rothschild (1978), and is considered a mindset, not a response behavior. As such,
O’Cass (2000, p. 58) defines product involvement as “the degree a consumer is
involved in the product” and purchase decision involvement as “the degree a
consumer is involved in the purchase decision”.
The current work is located in the B-to-B setting and focuses directly on
organizational buying behavior and CR, the constructs of customer satisfaction
and loyalty are not examined any further and are not included in the structural
model (Mittal and Lee 1989). However, this paper includes the construct of
purchase decision involvement and its impact on CR and WOM will be further
investigated. Examining the impact of purchase decision involvement on CR aims
to enhance our understanding of customer decision making in the B-to-B context.
The findings of von Wangenheim (2003) show evidence that involvement in
products has virtually no impact on consumer behavior in B-to-B settings, and
least of all on WOM. These findings will be referred to and investigated further in
the current paper.
Unlike the study of Mittal and Lee (1989), who examined the impact of product
involvement and brand-decision involvement in a B-to-C setting, this structural
model is based on a combination of both constructs. For this reason, the purchase
decision involvement construct used in this work is on a par with three out of six
indicators used by Mittal and Lee (1989) in their causal model of consumer
involvement. Using the following indicators, the multi-item indicator of purchase
decision involvement is measured on a four-point Likert scale:
1. Even if competitors offered the same products as company x, I would prefer the
products of company x.
2. I don’t care which brand I buy (reverse coding).
3. I care about the outcome of my purchase decision.
In line with the classification criteria of Diamantopoulos et al. (2008) and the
criteria evaluations in Sect. 4.2.2, the attribute classification of this construct is
formative:
l The above indicators characterize a set of distinct causes which are not inter-
changeable as each indicator captures a specific aspect of the construct’s domain
(see also Jarvis et al. 2003; Rossiter 2002).
l Omitting an indicator potentially alters the nature of the construct (Bollen and
Lennox 1991).
l There are no specific patterns or magnitudes of intercorrelation between the
indicators (for measurement validity of formative constructs, see Sect. 6.2.9).
4.5.6 The Moderating Impact of Culture
A review of the literature reveals several specific shortcomings that have limited the
understanding of CR in a global context. No studies are available in the cross-
cultural B-to-B context, and existing studies are based on RQ measurement and
refer either to “most admired” or “most visible” companies (e.g., Fombrun et al.
2000; Fombrun and Gardberg 2002; Walsh and Wiedmann 2004) or are located in
the B-to-C context (e.g., Eberl 2006; Helm 2007; Gardberg 2006). Nevertheless, the
studies of Doney and Cannon (1997) and Homburg et al. (2005) on the relationship
between national cultures, trust and customer behavior also conclude that different
cultural environments impact on customer reactions.
In this study, culture is considered as a moderating variable and evaluated based
on Hofstede’s (2001) dimensions, although the “failure to address national culture’s
influence on relationship and knowledge resources jointly has resulted in limited
theoretical and managerial insights into how culture influences resources” (Griffith
et al. 2006, p. 2). As already discussed in Sect. 3.6.4, trust is expected to be more
important in cultures like Australia, Finland, and Germany, scoring low in UAI
(Hofstede 2001) and less important in cultures like Russia and Spain, scoring high in
UAI. On the other hand, the importance of a supplier’s positive reputation is
considered to be more important in cultures scoring high in UAI, like Russia and
Spain. These assumptions are related to the conclusions of Hofstede (2001) and
Griffin (1975), arguing that cultures scoring low in the dimension of uncertainty
avoidance (UAI) tend to trust other people more easily. In line with the findings of
Hofstede (2001), the impact of direct marketing media is expected to be more
substantial in masculine cultures or societies scoring high in IDV (e.g., Australia
and Germany).
4.5.7 Reputation Transfer
Reputations are difficult to duplicate because they derive from unique internal
features of companies (Fombrun and van Riel 1997). CR is externally perceived
and therefore largely outside the direct control of a company’s management
(Fombrun and Shanley 1990). According to Schweizer and Wijnberg (1999,

p. 261), “transferability of reputation can provide a powerful tool for corporate
reputation building”. However, it can be assumed that customers from different
cultural environments will not react identically.
Considering the central “transfer” between a company’s reputation and the new
product range, this study therefore investigates other possible impact factors on
reputation transfer: direct marketing media, WOM, perceived innovativeness and
relationship quality. The perceived fit of the new product to the existing product
range is also evaluated. The model also investigates moderating and mediating
effects, such as culture.
To find out about this construct, which is seldom considered in studies, the
following questions have been included in the survey:
What is you opinion on purchasing products of a certain new product range? Do
you agree with the following statements:
l I would purchase them because I trust in the products of this company.
l I would expect the same high standard of product quality as other products of
this company.
Attribute classification of this construct is reflective. Items related to the
construct of reputation transfer have similar sign and significance of relation-
ships with the antecedents and consequences, and content validity has been
established by theoretical considerations (Diamantopoulos and Siguaw 2006;
Rossiter 2002).
4.5.8 Word of Mouth
It has often been argued that word of mouth (WOM) can contribute significantly to
a company’s success in various ways (von Wangenheim and Bayón 2007). In this
work, the linkage between WOM, relationship quality, innovativeness, reputation
transfer as well as reputation is analyzed.
WOM, the informal advice passed between customers, has a powerful influence
on consumer behavior (von Wangenheim 2003). WOM may be positive (PWOM),
encouraging brand choice, or negative (NWOM), discouraging brand choice. WOM
is often the major reason for brand choice, but the contribution of PWOM and
NWOM to this influence is difficult to understand. Moreover, some groups are more
responsive to WOM than others (East, Hammond & Lomax, forthcoming).
Although consumers often attribute their brand choice to WOM, it is difficult to
observe cases where advice affects brand choice since WOM about a specific
category is relatively uncommon, and any effect is often delayed. When evidence
is scarce, too much weight may be given to the limited research that is available. In
the seminal work of Arndt (1967) it is argued that NWOM has twice as much
impact on purchase as PWOM. However, he studied only one brand, and systematic
research should be based on all the brands in a category and should include a range
of categories. In addition, although the category was familiar, Arndt used a new
brand about which there were few expressed opinions. In the absence of direct
evidence of the effect of WOM, inferences have been made from experimental
work on the impact of positive and negative information. It is well established that
negative information usually has more impact on judgment than positive informa-
tion (Skowronski and Carlston 1989) but this finding may not extend to the relative
impact of PWOM and NWOM on brand choice in familiar categories.
The study of Palmatier et al. (2006) shows that relationships have the greatest
influence on WOM and recommend that companies depending on WOM strategies
for new customers should implement effective relationship commitment programs.
The current work investigates the impact of WOM on corporate reputation and
reputation transfer success. In a nutshell, the objectives of this study are threefold:
to analyze how relationship quality translates into positive WOM, how positive
WOM impacts on CR and reputation transfer, and to explore moderating effects,
especially in the context of purchase decision involvement.
In line with Helm (2007), the questions related to this reflective multi-item
indicator were asked as follows:
l I would recommend the pharmaceutical products of company X
l I would recommend the medical devices of company X
Attribute classification of this construct is reflective. Items related to WOM have
similar signs and significance of relationships with the antecedents and conse-
quences as this construct: content validity has been established by theoretical
considerations (Diamantopoulos and Siguaw 2006), and convergent and discrimi-
nant validity has been assessed empirically. In the literature, the construct of WOM
has been measured as a two-item reflective construct (e.g., Ranaweera and Prabhu
2003), as well as a multi-item reflective construct (von Wangenheim 2003; von
Wangenheim and Bayòn 2007).
4.5.9 Relationship Quality
In B-to-B settings, suppliers need to understand the nature and the circumstances of
their customers because of the unique characteristics of the customers acting as
organizations (Rauyruen and Miller 2005; Backhaus and Voeth 2007) Relationship
quality is in general construed to be a post-consumption evaluation which depends
on perceived quality, value, expectations, and confirmation/disconfirmation – the
degree (if any) of discrepancy between actual and expected quality (Anderson and
Narus 2004). To evaluate the quality they can expect from a provider of goods,
customers rely on the signals that refer to unobservable attributes that affect the
ability of a firm to produce quality products (Rauyruen and Miller 2005).
The uncertainty about quality is widespread and an important feature of markets
for most company’s goods and services (Shapiro 1982). Keller (2003) listed the
general dimensions of product quality as follows: Reliability and durability,
performance of product operation, conformance quality, serviceability and style

and design. Rauyruen and Miller (2005) propose relationship quality to be a
construct comprising trust, commitment, satisfaction and service or product quality.
In the context of studies related to reputation, relationship quality does not only
refer to products and services, but also to the general quality perception of the
company. The Eberl study (2006) contained questions related to quality (proximity
to customers, value for money, reliable partner, product quality) and sympathy
toward the company (internationally accepted company, top-ranking level, a com-
pany the customer can identify with) using two different constructs, which are not
clearly unconnected, as both constructs refer, in part, to affective commitment.
To deliver value to customers it is essential that companies have an under-
standing of the factors that drive customer benefits (Homburg et al. 2004),
“customer value must be the central element of every business strategy” (Webster
1992, p. 22). According to Homburg et al. (2004), delivering high customer benefits
is a major successfactor in B-to-B settings.
In this work, one multi-item construct related to relationship quality is used. On a
four point-Likert-scale, the questions were asked as follows:
l This company offers value for money (Eberl 2006; Helm 2007; Anderson and
Narus 2004; Fombrun et al., 2000)
l This company takes my concerns seriously (Rauyruen and Miller 2005)
l I am satisfied with this company (Rauyruen and Miller 2005)
Attribute classification of above constructs is formative:
l Both constructs are viewed as an explanatory combination of its indicators
(Fornell and Bookstein 1982; Fornell 1987).
l All indicators represent an independent dimension in its own (Diamantopoulos
et al. 2008).
l Causality flows from the indicators to the construct, (Edwards and Bagozzi
2000; Diamantopoulos and Winklhofer 2001).
Following the literature, customer perceived value (Lin et al. 2005), as well as
customers’ commitment toward retailers (Sanchez-Pérez and Iniesta-Bonillo 2004)
have also been formatively measured.
4.5.10 Media-enabled and Personal Direct Marketing
Corporate communication (CC) is an important means of targeting or informing

stakeholders (Fombrun and Rindova 1998; Dentchev and Heene 2004) and
ascribing to a better reputation. Direct marketing media can be used to influence
the interpretations and perceptions of stakeholders (Rindova and Fombrun 1999;
Forman and Argenti 2005). Among others, this can also positively or negatively
impact the perceived fit of new products to the existing product range (Kumar
2005).
CC is achieved through media-enabled (e.g., the Internet, brochures and mail-

ings) and personal (e.g., symposia, fairs and visits of sales representatives) direct
marketing media. In line with the above arguments, the structural model indicates
the relationship between both types of direct marketing media and reputation as
well as reputation transfer.
Face-to-face communication, meetings during fairs as well as the execution
of symposia are very powerful examples of interactive direct marketing (Bruhn
2003; Mann 2004). In addition, in the B-to-B context, sales forces are a major
brand-building tool (Gordon et al. 1993). Gordon et al. (1993) claim that
purchase choice is also dependent on the company’s sales representatives and
its relationship with organizational buyers. This is also confirmed by the find-
ings of Kuhn and Alpert (2004): Customers identify with manufacturer’s brands
and claim to have good relationships with company representatives. To evaluate
the use of personal direct media in B-to-B settings, visits of sales representa-
tives and meetings at fairs and symposia are included as indicators in this
construct.
Online, or Internet marketing, is a recent tool which includes the use of elec-
tronic networks and data, not only to generate sales (e.g., electronic commerce) but
also to build and develop relationships between a company and its stakeholders
(Klaus and Wagner 2009). Electronic marketplaces are evolving rapidly in both
B-to-B and B-to-C settings, and established companies across all types of industrial
sectors are striving to improve the effectiveness of interactions between buyers and
suppliers on a global scale. To introduce new products, brochures and mailings are
frequently used as passive direct marketing tools (Mann 2004). As the empirical
study of the current work is also related to the introduction of a new product range,
the media-enabled direct marketing tools included in this construct are the Internet,
brochures and mailings.
Hofstede (2001), while comparing societies, claims that cultures impact a
society’s attitude toward direct marketing media. In addition, market entry for
new trade marks is more difficult in uncertainty-avoiding countries (in this survey:
Russia and Spain). Hence, the cultural impact on the different countries is expected
to influence the use of direct marketing media.
The questions related to these two multi-item constructs were asked on a ranking
scale as follows:
Which sources do you use to be informed about new products (open
question)?
Please indicate how important the following sources are to you by using a one-
to-five scale (one meaning not important, five meaning of most important):
l Fairs
l Symposia
l Visits of sales representatives
l The Internet
l Brochures
l Mailings
Attribute classification of the above constructs is formative:

l Both constructs are viewed as an explanatory combination of its indicators
(Fornell and Bookstein 1982; Fornell 1987).
l All indicators represent an independent dimension on its own (Diamantopoulos
et al. 2008).
l Causality flows from the indicators to the construct (Edwards and Bagozzi 2000,
Diamantopoulos and Winklhofer 2001).
Following the literature on direct marketing media, both Internet research abilities
(Brock and Zhou 2005) and e-service qualities (Collier and Bienstock 2006) have
been formatively measured.
4.5.11 E-Readiness
Culture not only impacts on individuals, by way of determining needs and desires,
but it also affects a society’s progress in building a digital interaction infrastructure
(Ho et al. 2007). This progress is quantified by the country’s national e-readiness.
According to Klaus and Wagner (2009), e-readiness refers to a country’s ability to
benefit from the electronic advantages of media like the Internet.
The data on e-readiness are taken from the EIU (2007). E-readiness is quantified
by scores from 1 to 10 comprising the following categories: connectivity, business
environment, consumer and business adoption, legal and policy environment, social
and cultural environment and supporting e-services.
Regarding media-enabled direct marketing media such as the Internet, a strong,
positive relationship is expected between the constructs of e-readiness and direct
marketing media. E-readiness will be measured exclusively based on the dataset of
all five countries, using the e-readiness scores for each of the five countries for
correlation.
4.6 Related Hypotheses
In the following subsections, the hypotheses related to the constructs will be

introduced. All hypotheses of this survey were developed to clarify the following
research questions:
1. Is reputation transfer influenced by reputation? Is this relationship between
reputation and reputation transfer significant across all countries and stake-
holder groups or related to market leadership?
2. In B-to-B relationships, what factors further influence reputation and reputa-
tion transfer? Are these factors identical across countries and stakeholder
groups?
4.6 Related Hypotheses 93
3. What role do the media play with regard to corporate reputation, reputation
transfer and perceived fit of the new product or product range? Is there a
difference regarding countries and stakeholder groups in the use of personal
direct marketing media and media-enabled direct marketing media?
4. The use of media varies across the countries. Is there a relationship between
the e-readiness score of the different countries and media-enabled direct
marketing?
5. Is it really true that purchase decision involvement plays no role in B-to-B
buying behavior? Is there a relationship between purchase decision involve-
ment and WOM in cultures with low scores in PDI?
6. What kind of impact does WOM have on reputation and reputation transfer?
What factors influence WOM across countries and stakeholder groups?
7. In the B-to-B context, does perceived innovativeness have an impact on
both reputation and reputation transfer? Can new products take advantage of
the perceived brand characteristics of the parent brand? What about the rela-
tionship between perceived innovativeness and WOM?
8. How important is the perceived fit of the new product or product range with
regard to reputation transfer success? Does corporate reputation influence this
fit across all countries and stakeholder groups? Is perceived fit also influenced
in all countries by both direct marketing media?
9. Is there a positive relationship between relationship quality and reputation?
Does the attitude toward the company also influence reputation transfer?
10. What about the impact of the national culture of buyers on the factors influen-
cing reputation and reputation transfer? Does national culture influence the
impact of a company’s reputation on organizational buying decisions?
The following subsections highlight the development of the construct-related
hypotheses implemented in the structural model.
4.6.1 Perceived Innovativeness
Several researchers have included the fact that a company is perceived as an

innovative company in their construction of components and parameters of
corporate reputation (e.g., Schwaiger 2004; van Recom and van Riel 2000;
Fombrun et al. 2000; Eberl 2006). This is not only relevant for marketing
theory, but also for marketing practice, because companies rely increasingly
on the success of new product introductions for future growth and profitability
(Steenkamp et al. 1999). Surprisingly, in some empirical studies, the innova-
tiveness of a company as an impact factor on reputation is not included (e.g.,
Helm 2007).
Deshpandé and Farley (2004) built a framework to examine the impact of
organizational culture, market orientation, organizational climate, and innovative-
ness on a company’s performance. Their findings show that in industrial nations,
the product pipeline and the range of new products play an important role With
reference to reputation transfer, we add that the perception of being an innovative
company can be decisive and this fact is expected to be different in the surveyed
countries.
To date, our understanding of how culture influences technology acceptance
is limited (Srite and Karahanna 2006). According to Hofstede (2001), countries
scoring low in IDV and high in UAI focus on control and quality function dev-
elopment rather than on innovativeness. Individualistic cultures typically value
personal achievements (Hofstede 1980) and demand greater efficiency, so in
individualistic cultures, a company’s reputation should be affected more strongly
by perceived innovativeness. For this reason, the first hypotheses are laid out as
follows:
H1. The perceived innovativeness of a company is expected to have a strong
positive effect on company reputation.
H1a. The relationship between perceived innovativeness and reputation is expected

to be weaker in cultures scoring high in UAI and low in IDV and MAS(e.g., Russia
and Spain)
H1b. The relationship between perceived innovativeness and reputation is expected

to be stronger in cultures scoring low in UAI and high in IDV and MAS (Australia,
Germany).
Thus, in line with the findings of Hofstede (2001), the author posits that national
culture impacts the cultural values an individual holds, which in return influences
the attitude towards innovations.
As discussed in Sect. 3.6.3, the Finnish society is based on openness with
information and has a strong requirement for technology and fosters openness
towards innovations and changes.
H2. There is a strong positive relationship between perceived innovativeness and
reputation transfer in cultures scoring very low in PDI and UAI (Finland).
H3. There is a strong positive relationship between perceived innovativeness

and WOM.
4.6.2 Purchase Decision Involvement
Purchase decision involvement refers to the extent to which customers view

products as meaningful and engaging objects and as being important to them
(O’Cass 2000). Mittal and Lee (1989) argue that consumers can be involved
in the product itself (product involvement) or in a purchase decision (decision
involvement).
Product involvement has been found to be an antecedent of purchase decision

involvement across items such as jeans and fashion clothing, but has not yet tested
in the B-to-B context (von Wangenheim 2003). As discussed in Sect. 4.5.5, the
construct of purchase decision involvement is built by three out of six indicators of
Mittal and Lee (1989). As medical devices (the core competence of the company
included in the survey) are mostly high involvement products for doctors and
nurses, in the country survey, the relationship between purchase decision involve-
ment and WOM is expected to be positive.
No effect of purchase decision involvement is expected to be significant regard-
ing corporate reputation. Following the literature, the decision-making process of
organizational buyers is not influenced by involvement (e.g., von Wangenheim
2003, Giering 2000, Richins and Bloch 1991) and purchase decision involvement is
not expected to influence CR. According to Hofstede, societies scoring low in UAI
are expected to be open for changes, innovations and for the willingness to take
over risks, and generally trust other people, this may also affect the relationship
between purchase decision involvement and WOM. As people from cultures
scoring high in UAI feel relatively powerless towards external forces and are not
allowed to make own decision, there purchase decision involvement is expected to
be weaker. In these cultures, no impact of purchase decision involvement on WOM
is expected. For further analysis, the following hypotheses related to the construct
of purchase decision involvement are developed:
H4. In cultures scoring low in UAI there is a positive relationship between
purchase decision involvement and WOM.
4.6.3 Relationship Quality
In line with Rindova et al. (2005) and Sharpiro (1982), this work proposes that
relationship quality is influenced by the signals that organizations send out when
they make their strategic choices about the resources deployed in producing
products and services. Stakeholders face uncertainty in evaluating companies as
potential suppliers of needed products (Benjamin and Podolny 1999). Reputation
influences organizational economic outcomes by alleviating stakeholders’ concerns
about the quality of a company’s products and inducing them to pay price premiums
for their products (Sharpiro 1982).
In addition, customers are likely to rely on signals of quality when the products
they purchase can only be evaluated with use over time, or require high levels of
specialized expertise to evaluate (Rindova et al. 2005, p. 8): “When customers find
product quality difficult to evaluate prior to purchase, they may use the quality of
inputs and/or the quality of the productive assets a firm uses to convert inputs into
outputs to form expectations about the quality of the final product.”
According to Keller (2003), the perception of quality of the products already on
the market can influence attitude and behavior toward a brand. For this reason, it is
considered important in the B-to B context and has been chosen as an impact factor
on reputation and reputation transfer.
H5. There is a positive relationship between the relationship quality and corporate
reputation.
H6. There is a positive relationship between relationship quality and reputation

transfer.
4.6.4 Word of Mouth
In recent decades, customer satisfaction has featured as one of the most important
topics in the marketing literature (Parasuraman et al. 1988, von Wangenheim and
Bayón 2007). This development has given rise to a number of conceptual models and
empirical studies on quantifying the impact of WOM and product involvement on
customer satisfaction (e.g., Anderson and Mittal 2000). The literature suggests that
purchasers in the B-to-B setting are not usually very involved in their purchasing
decisions (Zaichkowski 1985; Richins and Bloch 1991; von Wangenheim 2003).
Nevertheless, a positive relationship between purchase decision involvement, product
involvement and WOM is empirically confirmed (e.g., von Wangenheim 2003;
Hennig-Thurau and Hansen 2001). Furthermore, the impact of WOM on CR is
clear, although according to Dellarocas (2002), not investigated in detail: Buyers
and sellers rate one another in Internet-based feedback mechanisms, total quality
management concepts in companies require purchasers to rate their satisfaction
with suppliers, and users write reviews about products or services of certain
companies. The author suggests that all these WOM activities impact on CR.
H7. There is a strong relationship between relationship quality and WOM.
H8. There is a strong, positive relationship between WOM and reputation in market
leader countries like Germany, Spain and Finland.
H9. There is a strong relationship between WOM and reputation transfer.
H9a. This effect is expected to be stronger for the future product users of the new
product range.
H9b. This effect is expected to be stronger in market leadership countries.
4.6.5 Perceived Fit
When a company uses an established brand name to introduce a new product as a

category extension, the importance of the perceived fit of the new product to the
established product range or to the company in general is considered to be extremely

high (Tauber 1981; Keller 2003; Schwager 2004; Aaker and Keller 1990; Park
et al. 1991). “Perceived similarity, also called perceived fit, is characterized by
the number of shared associations (. . .)” (Czellar 2003).
Understanding how customers judge the goodness of fit between an extension
and a parent brand requires suppliers to have an intuitive understanding of exactly
which aspects of the new product and the existing brand category the customers will
compare (Park et al. 1991). Prior brand-extension research has conceptualized and
measured perceived fit as a function of product-similarity judgments in which
customers compare some aspects of the existing sets of products with those of the
extension product (Schwager 2004; Keller 2003; Madrigal 2000; Tversky, 1977).
Concept-consistency perceptions rely on the extension product’s ability to
accommodate the brand concept. The results of the study of Park et al. (1991)
show that the concept information that is carried with the brand name is taken into
account by the customers, which enhances the extension evaluation when the
product is consistent with the concept. In surveys referring to brand extension
products, the term “fit” was used rather than “being similar”. This is due to the
findings of Park, Lawson and Milberg (1989) that suggest that fit judgments
facilitate detection of the associative relationships among various brands on the
basis of not only features but also abstract concepts (see also Fiske 1982). To date,
researchers have not given adequate consideration to how a brand-name concept,
image or CR affects customers’ perception of the fit. Brand concepts position
products in the minds of customers (Keller 2003). Reputation concepts are related
to past activities of the company and refers to stakeholders’ overall evaluation of a
company over time (Gotsi and Wilson 2001).
Similarity judgments are primarily based on features. According to Keller
(2003), only two out of ten new products are successfully introduced to the
market. Keller (2003) cites reasons for product failure: The fit of the product
was poor, the product was not new or different, or the product did not go hand in
hand with familiarity. To the author’s best knowledge, no research has yet been
focused on the impact of perceived fit on reputation transfer. Hypotheses are
proposed as follows:
H10. There is a strong positive relationship between the perceived fit of the new
product range and reputation transfer.
H10a. This effect is expected to be stronger in cultures scoring low in IDV and high
in UAI (Spain and Russia).
H10b. This effect is expected to be weaker for cultures scoring high in IDV and low
in UAI (Australia, Finland and Germany).
H10c. As purchasers know best about the existing product portfolio of their
supplier, the effect of perceived fit on reputation transfer is expected to be stronger
for purchasers and weaker for pharmacists and doctors and nurses.
4.6.6 Personal and Media-enabled Direct Marketing
The strategic management approaches of the RBV and the knowledge-based view
(see Chap. 2) give valuable advice for the subordinated direct marketing
approaches of a company, as the goal is to enhance customers’ perceived value.
According to Grönroos (2000), value is perceived by the customer when using or
consuming the goods, services or information offered. The focus on specific
customer needs and a general customer-friendly company setting lead to
integrated, personalized direct marketing approaches to build relationship equity.
If relationship equity is influenced by direct marketing media, is there also a link
between direct marketing media, the creation of CR and a successful transfer of
reputation? To the author’s best knowledge, this impact has not yet been evaluated
in the literature. The structural model indicates a relationship between both
types of direct marketing media and reputation as well as reputation transfer.
Furthermore, some emphasis is placed on possible differences in the cross-cultural
use of direct marketing media.
Online, or Internet marketing, builds and develops relationships between a
company and its stakeholders (Krafft et al. 2007). Electronic marketplaces are
evolving in both B-to-B, and B-to-C settings. However, to introduce new products,
brochures and mailings are frequently used as passive direct marketing tools (Mann
2004). Concept consitency perception of the new product range is enhanced by the
use of direct marketing media (Schwager 2004).
Face-to-face communication is a powerful example of interactive direct market-
ing (Bruhn 2003; Mann 2004). As formerly discussed, in the B-to-B context, sales
forces are a major brand-building tool (Gordon et al. 1993, Kuhn and Alpert 2004).
Personal direct marketing carried out through meetings at symposia and fairs or
visits of sales representatives may impact CR and reputation transfer success in
these countries. The cultural impact on the different countries is generally expected
to influence the use of direct marketing media. As discussed in Sect. 3.6.3, some
cultures trust more in media, some others rely on relationships and networks.
Therefore, hypotheses are generated as follows:
H11. The use of direct marketing media varies significantly among the countries
and stakeholder groups.
H11a. There is a strong positive relationship between direct marketing media and
reputation.
H11b. There is a strong positive relationship between direct marketing media and
H11c. The impact of direct marketing media on reputation and reputation transfer
is expected to be stronger in cultures scoring low in PDI and UAI and high in IDV
(Australia, Germany, and Finland).
H11d. The impact of direct marketing media on reputation and reputation transfer
is expected to be weaker in cultures scoring high in UAI and PDI and low in IDV
(Russia and Spain).
4.6.7 Reputation Transfer
It seems plausible that norms and values linked to Hofstede’s dimensions will
influence the extent and manner in which the transfer of corporate reputation on
new product ranges can take place. As already discussed, the dimension of mascu-
linity versus femininity contrasts the emphasis on attributes such as achievement,
assertiveness and material success in high masculinity index cultures with a focus
on interpersonal relationships and characteristics such as modesty and caring
behavior in cultures with a high femininity index (Hofstede 2001). The studies by
Doney et al. (1997) and Schweizer and Wijnberg (1999) suggests a strong feminin-
ity dimension in a society’s mental programming as supporting the formation of
trust via the transference process. They justify their proposition by the higher
degree of benevolence present in feminine societies. Hofstede (2001) contrasts
benevolence with controlling behavior, an attribute more pronounced in masculine
cultures. A relevant hypothesis in this context would then be whether:
H12. Aculture characterized by a high femininity index (Russia and Finland)
provides, relative to a culture with a high masculinity index (Australia and
Germany), an environment more conducive to the successful transfer of reputation.
4.6.8 E-Readiness
E-readiness is progressing around the world, but at different rates. E-ranking shows
(EIU 2007) that world region scores for North America and Western Europe are
much higher than for Asia-Pacific (e.g., Australia) or Central and Eastern Europe
(e.g., Russia). E-readiness ranks and scores for the countries included in the survey
are listed in Table 4.7.
Included in the e-readiness ranking is the rapidity with which individuals and
businesses can take big digital steps to change how they communicate, share
information and work (EIU 2007).
Table 4.7 E-readiness Country e-readiness e-readiness

ranking and scores rank (of 69) score (out of ten)
Australia 9 8.46
Finland 10 8.43
Germany 19 8.00
Russia 57 4.27
Spain 26 7.29
Widespread connectivity and access to voice and data communications net-

works – technology infrastructure – are part of the e-readiness categories in the
rankings. The ranks and scores of the countries included in this survey vary
significantly. In the light of this, the author predicts that the e-readiness scores
will correlate with media-enabled direct marketing. Therefore, the hypothesis is
developed as follows:
H13. There is a strong, positive relationship between e-readiness of different
cultures and media-enabled direct marketing activities.
4.6.9 Reputation
Customers need to hold positive beliefs and favorable attitudes toward the core
brand (Aaker 1991; Aaker and Keller 1990). Keller (1993) classified brand associa-
tions into attributes, benefits (the personal value customers attach to a product or
service) and attitude (like or dislike). There has to be a transfer of favorable
associations from the original brand to the extension for the latter to be successful
(Aaker and Keller 1990).
The author suggests that in market leader countries-due to a long experience
with the company and the products-customer are easier willing to accept new
products by transferring the values and beliefs of the reputation of the parent
company on the new product range. Thus, the hypothesis is proposed as follows:
H14. There is a strong relationship between reputation and reputation transfer in
market-leader countries (like Germany, Finland and Spain).
The author considers that reputation also impacts the perceived fit of a new product
or product range. Up to now, to the author’s best knowledge, this has not been
empirically tested. The two hypotheses related to the link between CR, perceived fit
and national culture are proposed as follows:
H15. There is a strong, positive relationship between reputation and the perceived
fit of the new product to the existing product range.
H15a. The effect is stronger in cultures with high scores in UAI and PDI (Russia
and Spain) and weaker in cultures scoring low in UAI and PDI (Australia and
Finland)
4.6.10 Culture
Culture supports openness of communication, involvement in decision making and

the sharing of information, and encourages and rewards trustworthy behavior
(Hofstede 2001; Firth-Cozen 2004).
Values of customers differ significantly across cultures. Therefore, to argue

about cross-cultural commitment and trust, the general importance of a trustful
relationship between organizational buyers and their suppliers – and to learn more
about the general attitude of organizational buyers – needs to be evaluated. The
impact of culture on buying behaviour, according to Hofstede’s dimensions, is
related to the degree of individualism, masculinity, uncertainty avoidance and
power distance in a certain country. In line with de Mooij (1998), the author argues
that even if all consumers are offered the same goods, there remain significant
differences across the value systems of individual countries. Hofstede (2001)
claims that cultures scoring low in the dimension of UAI and PDI tend to trust
other people more easily, as these societies are more open and free to make their
own decisions. In line with Hofstede (2001) Huff and Kelley (2003) claim that
external trust that individuals within an organization have for external partners will
be higher for organizations from individual societies than for collective societies.
To find out about the question of whether societal culture influences the tendency of
individuals and organizations to trust (Huff and Kelley 2003), we propose the
following hypothesis:
H16. With reference to organizational buying behavior, trust in sales representa-

tives and supplier plays a more important role in cultures scoring low in UAI and
PDI (Australia, Finland) and a less important role in cultures scoring high in UAI
and PDI (Russia, Spain).
This hypothesis also takes into consideration that, according to Hofstede’s
findings, Russia and Spain (being feminine societies) have a stronger relationship
orientation. This can not be viewed as a contradiction, but as a reason for the lesser
importance of trust. As explained by Hofstede (2001, p. 305), this is only true
for relationships within peer groups and not regarding externals: “Conceptually,
valuing social relationships (culture femininity) converges with relying on external
frames of references as guides to behavior. . .”
The literature suggests that the protection of one’s reputation is a force for
being trustworthy (Griffin 1975). How decisive and influential is a good CR with
regard to the impact on organizational buying decisions. As already discussed in
Sect. 3.1.2, Hofstede’s (2001) findings on business practices regarding preferen-
tial treatment of customers and suppliers implies that the importance and impact
of a positive reputation differ across cultures, although this topic is not explicitly
discussed in his work. To examine the impact of Hofstede’s cultural dimensions
on reputation in organizational buying behavior, we propose the following
hypothesis:
H17. With reference to organizational buying behavior, a company’s reputation

plays a more important role in cultures scoring high in UAI and PDI (Russia,
Spain) and a less important role in cultures scoring low in UAI and PDI (Australia,
Finland, Germany).
Table 4.8 Overview of hypotheses

No. Construct-related hypotheses
H1 The perceived innovativeness of a company is expected to have a strong positive effect
on corporate reputation
H1a This impact of perceived innovativeness on corporate reputation is weaker in
cultures scoring high in UAI and low in IDV and MAS (e.g., Russia and Spain)
H1b The impact of perceived innovativeness on corporate reputation is stronger in
cultures scoring high in MAS and IDV and low in UAI (Australia and Germany)
H2 There is a strong positive relationship between perceived innovativeness and reputation
transfer in cultures scoring very low in PDI and UAI (Finland)
H3 There is a strong positive relationship between perceived innovativeness and WOM
H4 In cultures scoring low in UAI (Australia, Finland and Germany) there is a positive
relationship between purchase decision involvement and WOM
H5 There is a positive relationship between relationship quality and reputation
H6 There is a positive relationship between relationship quality and reputation transfer
H7 There is a strong positive relationship between relationship quality and WOM
H8 There is a positive strong relationship between WOM and reputation in market leader
countries like Germany, Spain and Finland
H9 There is a strong positive relationship between WOM and reputation transfer
H9a.This effect is expected to be stronger for the future product users of the new product
range
H9b. This effect is expected to be stronger in market leadership countries
H10 There is a strong positive relationship between the perceived fit of the new product range
and reputation transfer
H10a. This effect is expected to be stronger in cultures scoring low in IDV and high in
UAI (Russia and Spain)
H10b. This effect is expected to be weaker in cultures scoring high in IDV and low in
UAI (Australia, Finland and Germany)
H10c. As purchasers know best about the existing product portfolio of their supplier, the
effect of perceived fit on reputation transfer is expected to be stronger for purchaser
and weaker for pharmacists, doctors and nurses
H11 The use of direct marketing media varies significantly among the countries and
stakeholder groups
H11a There is a strong positive relationship between direct marketing media and
reputation
H11b There is a strong positive relationship between direct marketing media and
reputation transfer
H11c The impact of direct marketing media on reputation and reputation transfer is
expected to be stronger in cultures scoring low in PDI and UAI and high in IDV
(Australia, Germany, and Finland)
H11d The impact of direct marketing media on reputation and reputation transfer is
expected to be weaker in cultures scoring high in UAI and PDI and low in IDV
(Russia and Spain)
H12 A culture characterized by a high femininity index (Russia and Finland) provides,
relative to a culture with a high masculinity index (Australia and Germany), an
environment more conducive to the successful transfer of reputation.
H13 There is a strong positive relationship between E-readiness of different cultures and
media-enabled direct marketing activities
H14 There is a strong positive relationship between reputation and reputation transfer in
market-leader countries (like Germany, Finland and Spain)
H15 There is a positive relationship between reputation and the perceived fit of the new
product to the existing product range
(continued)
4.7 Structural Model of Reputation and Reputation Transfer 103
Table 4.8 (continued)

No. Construct-related hypotheses
H15a The effect is stronger in cultures with high scores in UAI and PDI (Russia and
Spain) and weaker in cultures scoring low in UAI and PDI (Australia and Finland)
H16 With reference to organizational buying behavior, trust in sales representatives and
supplier plays a more important role in cultures scoring low in UAI and PDI
(Australia, Finland) and a less important role in cultures scoring high in UAI and PDI
(Russia, Spain)
H17 With reference to organizational buying behavior, a company’s reputation plays a more
important role in cultures scoring high in UAI and PDI (Russia, Spain) and a less
important role in cultures scoring low in UAI and PDI (Australia, Finland, Germany)
4.6.11 Overview
To find answers on the research questions related to the structural model and the
constructs, this chapter gives an overview of the hypotheses developed (Table 4.8):
4.7 Structural Model of Reputation and Reputation Transfer
Based on the hypotheses developed in this work, a set of formative, reflective and
single-item indicators is generated to build the structural model of reputation and
This model provides this work with a conceptual framework for a quantitative
assessment of the impact factors on reputation and reputation transfer. The indica-
tors for the main constructs are based on theories of Fombrun (1996) and Morgan
and Hunt (1994). In line with Homburg et al. (2005), this work claims that national
culture impacts buying behavior; three out of five of Hofstede’s (2001) dimensions
and scores for measurement are used.
In the literature, some direct relationships are defined within the communication
channels and tools, but how strong the linkages are between media-enabled direct
marketing, personal direct marketing, reputation and reputation transfer has not
been discussed in detail (Karaosmanoglu and Melewar 2006; Dowling 2001; Dacin
and Brown 2002; Wiedmann 2004). Reputation and reputation transfer are expected
to be influenced by relationship quality, both direct marketing media, innovative-
ness and WOM.
In addition, the role of perceived fit of the new product range to the existing
range remains unclear: Keller (2003) discusses the necessity of the pre-condition of
product-related, or at least category-related, fit for the successful transfer of a
company’s reputation. Counter-arguments can be found in the study by Klink and
Smith (2001), who disagree that brands should not be extended to perceptually
distant categories. For this reason, the category fit is considered a possible
Purchase Decision
Involvement PDI
National Culture of +
Reputation Perceived
Buyers + Innovativeness
+/-
+
Personal + +/- Word of Mouth

Direct Marketing +
+ +
Media-Enabled Reputation
Transfer + Relationship Quality
Direct Marketing
+
+ + Perc. Fit of new
Prod. Range
E-Readiness +
latent endogenous variables

latent exogenous variables
Fig. 4.11 Structural model of reputation and reputation transfer
determinant of reputation transfer success and included in the structural model.

A positive relationship between reputation transfer and perceived fit is anticipated.
While influencing the public view and the perception of a company (Fombrun
1996; Dowling 2001), CR is regarded as an impact factor on the perceived fit.
Fig. 4.11 depicts the structural model and conjectural relations making up the
research hypotheses. Four latent endogenous and six latent exogenous variables
are integrated in this structural model.
Dacin and Brown (2002) assert that the research in corporate identity and
corporate association areas should focus on the role of direct communications,
WOM in third-party communications and emotions and feelings of individuals in
understanding how the constituents of organizations build impressions. The author
claims that this is also true to understand the impact factors on reputation. Although
these internal and external factors have been described by anecdotal articles, and
some of them have been studied individually, a comprehensive framework which
integrates the above aspects in one model has not yet been tested.
The relationship between industrial product importance, purchase decision in-
volvement and WOM has not been tested empirically to date, but a positive
relationship between the two constructs can be argued on the same grounds as the
relationship between product involvement and WOM in a consumer setting (von
Wangenheim and Bayòn 2007). WOM is estimated to be influenced positively by
relationship quality, innovativeness and PDI. The relationship between reputation
and reputation transfer is expected to be either positive or negative. For all
countries, a positive relationship is estimated between media-enabled direct mar-
keting and e-readiness.
4.7 Structural Model of Reputation and Reputation Transfer 105
In line with Dowling (2004), the structural model used in this work consists of
two major factors to analyze CR: The emotional part of reputation forms the
construct itself, based on a company’s “personality” (I trust in the products of
this company, this company shares expertise as a partner, this company cares for
customer opinions) and can also be found in the constructs of “WOM” and
“purchase decision involvement” and “relationship quality”. A fact-oriented repu-
tation referring to a company’s product performance is found in the constructs
related to reputation: Reputation transfer (I would expect the same product quality),
innovativeness (this company is known for innovative/leading products) and per-
ceived fit of the new product range. Two different types of direct marketing media
are integrated in this model in order to learn about the influencing power of the
media on a company’s reputation and to study cultural differences in the use of
direct marketing media. For this reason, the e-readiness scores have also been
considered a factor in media-enabled direct marketing.
Chapter 5
Empirical Survey
To define the goals of this research work, the relationship between the above set of
constructs was investigated and evaluated based on primary data collection in five
countries. This chapter outlines the background and the aim of the study, the
required structure of data, the development of the questionnaire, the target groups
and countries as well as the plan and structure of the research.
5.1 Markets Under Consideration
“Establishing the pharmaceutical brand position – the advantageous location a

product owns in the minds of physicians – is arguably among the most challenging
components of marketing development”, especially in today’s hypercompetitive
environment (Vanderveer and Pines 2007, p. 71). The maturation of markets such
as pharmaceuticals, medical devices and diagnostics needs superior strategic mar-
keting skills to find competitive advantages in them (Smith 2007). These markets,
in which the customer is a physician or related medical professional, have shown
double-digit growth rates, high levels of innovation and the penetration of every
developed and developing market (Smith 2007). From the 1990s, however, this
industry showed all the signs that it was maturing: declining growth rates and fewer
launches of new products (IMS Health 2006).
Although considered as an indication of growth for a company, introducing new
products and brand extensions may be critical (Kotler and Keller 2006). Generic
pharmaceuticals are identical to the branded products, except that they differ in
price and have different labels. To replace a successful branded pharmaceutical
product after patent expiry, sometimes up to 15 identical generic products are
brought onto the market. Being aware that the generic market for pharmaceuticals
is still a highly competitive market, the strategic marketing department of a medical
devices company decided, in the course of 2006, to carry out an international study
on customers’ brand perception and the company’s reputation. The existing product

108 5 Empirical Survey
range consistes of infusion pumps, cannulas, needles and syringes, intravenous

catheters as well as large- and small-volume containers of replacement fluids,
among others. The aim of the study was to learn about how the company was
perceived by its international customers: Corporate reputation and the perceived fit
of the new product range to the existing products in the field of medical devices.
Among others, knowledge needed to be extended regarding the manner in which
the existing brand and its new corresponding products should be paired (e.g., with
an advertising slogan). Branding strategy may influence corporate reputation for-
mation (Gardberg 2006). Is it possible to enter the new market of pharmaceuticals
by using the existing reputation of the company? Currently, the traditional approach
to pharmaceutical brand positioning involves customers essentially reacting to
statements developed by the marketing organization (Vanderveer and Pines
2007). Findings of Kuhn and Alpert (2004) claimed that in the B-to-B context,
very few customers pays attention to claims, slogans etc.
A good reputation in an international market consisting of comparable goods
may positively affect consumer choices among identical products (Keller 2003).
Besides marketer-controlled sources of information, brand associations and reputa-
tion can also be created in other ways (Keller 2003). Direct customer experience,
information communicated about the brand or product by sales representatives or
colleagues, word of mouth, assumptions or inferences from the brand itself (e.g.,
name or logo) influence a company’s image and build its reputation. To build brand
equity, to develop marketing programs and to design future communication strate-
gies, knowledge of customers’ sources of information needed to be an essential part
of the study. The focus of the study was located in the field of direct marketing
media to gain a deeper understanding of the various media used by different
customers in different countries. Taking into consideration the fact that sources of
information may vary from country to country and from stakeholder group to
stakeholder group, an international context was required, and up to five different
countries should be part of the study.
After discussions with regional heads of different business units, it was decided
to include three target groups: purchasers, as they specify the product tenders and
buy the goods, pharmacists, as they are involved in the ordering process of
injectable drugs, and the users of medical devices and pharmaceutical drugs, i.e.,
doctors and nurses in hospitals.
5.1.1 Selection of Countries and Definition of Target Groups
To discuss a company’s reputation with its customers requires a certain amount of

knowledge about the company and its products. The selection of countries to be
included in this survey therefore followed three main criteria:
l Years of sales activities of the medical device company in this country,
l Market position and penetration, and
5.1 Markets Under Consideration 109
l In order to evaluate the cultural impact, different scores regarding Hofstede’s

cultural dimensions.
Taking into consideration the market position of the companies in individual
countries was very important. On the one hand, the companies’ reputations in each
country were expected to differ according to market leadership positioning versus
follower positioning. On the other hand, certain knowledge on the company and its
product range needed to be available via the survey participants. Not knowing the
company and its products in this case meant not to be able to judge its reputation.
Market leader countries and follower countries were discussed with the global
regional heads of the strategic marketing departments to learn about market struc-
tures, sales figures and years of activity in these countries. Finally, the decision was
made on three market leader countries (Finland, Germany and Spain) and two
follower countries (Australia and Russia), where the market activities did not last
longer than 15 years and where customer knowledge of the medical device company
existed, although it was rather limited. In Germany, Finland and Spain, market
activities last between 50 and 150 years, so customer knowledge about the medical
device company was therefore expected to be based on long-lasting customer
relationships and product experience.
The only problem regarding the countries selected was the different number of
hospitals in each country: Russia was said to have more than 6,000 hospitals, while
Germany and Spain had about 4,000 hospitals. According to the literature, Australia
had around 1,000 hospitals, whereas Finland only had 100 hospitals. The number of
hospitals in each country refers to the population size. As Russia is the biggest
country on earth, ten participants were selected from five regions (Western, the
Urals, Central, Siberia and Privolzkhy) to ensure that the 50 hospital employees did
not all belong to one region.
Regarding Hofstede’s dimensions of the countries selected, all the countries
differed significantly in at least one out of four dimensions (Table 5.1)
The Australian dimension scores are similar to the US scores: low in UAI,
average in PDI, high in MAS and extremely high in IDV. According to Hofstede’s
research, Germany scores very high in MAS and, like Finland, low in PDI. Russia
was chosen because it scores high in UAI and extremely low in IDV.
The study of Newman and Nollen (1996) results in the fact that the UAI
dimension may not be a useful dimension for comparative research. They suggest
that measuring UAI in the early 1970s may have resulted in higher UAI scores in
Table 5.1 Hofstede’s scores in the selected countries

Individualism (IDV) vs. Masculinity vs. Power distance Uncertainty
collectivism femininity (MAS) (PDI) avoidance (UAI)
Australia: 93 Germany: 72 Russia: 93 Russia: 95
Germany: 73 Australia: 68 Spain: 50 Spain: 80
Finland: 68 Spain: 48 Australia: 32 Germany: 60
Spain: 53 Russia: 36 Germany: 30 Finland: 54
Russia: 39 Finland: 30 Finland: 28 Australia 48
Europe because of the cold war and memories of World War II. Newman and
Nollen (1996) also claim that UAI may be irrelevant as a concept in countries
labeled as having low scores in UAI, as clarity of policies and direction is a good
management practice, regardless of national culture (Denison and Mishra 1995).
Using Hofstede’s (2001) dimensions, the findings of Homburg et al. (2004) do
not support this. Their study indicates that countries scoring high in UAI care more
for tangible relationship sources and have low willingness to change (Homburg
et al. 2004). Intangibles seem to play a more important role in cultures scoring
low in UAI.
Following these discussions, this work is additionally focused on two non-
European countries: Regarding the dimension on UAI, Australia scores very low
(index of 48), whereas Russia scores very high (index of 95). This work takes into
consideration the focus set on intangible assets (corporate reputation) as well as the
close relation between caring for sick people and avoiding uncertainty (Firth-
Cozens 2004). For this reason, omitting the dimension of UAI in the field of
hospital care products can possibly bias the cultural results.
The definition of target groups was related to the customers of the medical
device company: purchasers in organizational buying centers (so-called “expert
buyers”, Darby and Karni 1973), pharmacists and users: doctors and nurses. The
coding of the questionnaire ensured that countries, regions and user groups could
later be identified in the survey data.
5.1.2 Data
Although cross-cultural studies have been diligently carried out, the core issue of
international business relationships – the benefits and the influence of cultural
differences on perceptions of these benefits – has largely been ignored (Homburg
et al. 2005).
This work aims to examine differences between customers of five countries and
looks more closely at possible differences between the various user groups of the
products related to this research (purchasers, pharmacists, doctors and nurses). The
data were collected using randomly chosen hospital addresses (available from the
market research agency, TforG, Belgium, who carried out the telephone survey) in
Australia, Germany, Finland, Russia and Spain as a sampling frame. A sample of
250 purchasers, pharmacists, doctors and nurses was randomly selected – 50
participants from each of the five countries. These stakeholder groups were
contacted by telephone by TforG and the questionnaire was read out to them.
Data were not only evaluated based on the individual countries, but also sum-
marized in three stakeholder groups: purchasers (purchaser, head of purchasing,
expert group member), pharmacists (head pharmacist), and doctors and nurses
(head nurse, intensive care unit (ICU) doctor, ICU nurse, anesthetist). Only 5.9%
of the participants claimed to have very little knowledge on the product range of the
medical device company, and 4.8% did not know the company at all. On the other
5.1 Markets Under Consideration 111
hand, more than 89% of the purchasers, pharmacists, doctors and nurses claimed to
be experienced in both the products and the company.
This questionnaire was pre-tested and re-adjusted in three countries: Germany,
Finland and Spain, in order to avoid misunderstandings regarding the content or the
general order of the questions, the pre-formulated, standardized answers, and also
to check the time required for each telephone interview.
To concentrate on one branch only-medical devices and pharmaceuticals, where
all stakeholders are involved in the hospital business-limits the chance of general-
izations of data. Nevertheless, to evaluate and compare B-to-B context data across
several Western and one Eastern country should make it possible to generalize at
least part of the results: the impact of culture, the use of direct marketing media, the
influencing role of WOM and relationship quality in the context of reputation and
5.1.3 Development of Standardized Questionnaire
In September 2007, a telephone survey was conducted with native speakers by an

independent market research agency in order to test the derived hypotheses. First,
questionnaire items were developed and pre-tested. Working with unobserved
latent constructs, single- and multi-item measures with four reflective (reputation,
reputation transfer, WOM, Innovativeness), four formative (PDI, perceived quality,
personal and media-enabled direct marketing) and four single items (e-readiness,
perceived fit, years of product experience, national culture of buyers) to operatio-
nalize corporate reputation and reputation transfer were used. The next section
provides information about the plan and structure of data collection.
Twenty-four questions and more that 80 sub-questions were asked by native
speakers in German, English, Finnish, Russian and Spanish and collected in a CATI
(computer-assisted telephone interview) system. All items were measured either on
a four-point Likert-type scale with “agree”, “somewhat agree”, “somewhat dis-
agree” and “disagree” as anchors, or on a 1–5 ranking scale, 1 meaning “I do not
use”, 5 meaning “I frequently use” with reference to the use of direct marketing
media.
The questionnaire was divided into two sections: The first 11 questions were
general questions on the use of direct marketing media, customer relationship,
consumer behavior and expectations toward suppliers in the field of B-to-B. The
company involved in this survey was not mentioned until the 12th question was
asked. Questions 12–24 were related to the relationship between the stakeholder
groups and the company, the willingness to recommend its products, the attitude
toward its existing and future product range as well as expectations and opinions of
buyers regarding the company’s sales representatives. Without asking for reputa-
tional details on a certain company, no general statements can be made on a certain
company’s reputation, on a company’s relationship toward its customers and on the
customers’ attitude toward the company’s existing and future product ranges. The
complete questionnaire can be found in Annex 1.
To enhance translation equivalence (Brislin 1980), the German questionnaire
was translated into the local languages and back-translated into German to ensure
that the concepts were consistent. Native speakers did the translations to ensure that
the spelling of specific words was changed to match local usage where necessary,
such as Australia.
The pre-test of the questionnaire was carried out at the marketing research
agency TforG and included German, Finnish and Spanish participants, three from
each country. This pre-test served as an additional check on the translations and the
wording of the questions. Some questions contained misunderstandings regarding
the alternative answers. Two questions were revised after the pre-test and the time
required for each telephone conversation was checked: Each call took about 25–30
min, which is a long period of time for a telephone survey. Nevertheless, as the
questionnaire consisted of two parts, it was not possible to shorten it significantly.
The international survey comprised several steps and was conducted over
18 months, including questionnaires, pre-tests and evaluations. The CATI tele-
phone survey was supported by a professional market research agency and took
2 weeks.
5.2 The Measurement Model
Partial Least Squares (PLS) is a powerful method of analysis because of the

minimal demands on measurement scales, sample size, and residual distributions.
It is primarily intended for causal-predictive analysis in situations of high complexity,
but low theoretical information (Jöreskog and Wold 1982). This can also be seen
as an advantage as “theory construction is as important as theory verification”
(Deshpande 1983, p. 107).
Although PLS can be used for theory confirmation, it can also be used to suggest
where relationships might or might not exist and to suggest propositions for later
testing (Chin 1998). Compared to the better known factor-based covariance fitting
approach for latent structural modeling like LISREL, EQS and AMOS applications,
SmartPLS, as well as MPlus applications of the variance-based approach, can
handle both types of formative and reflective scales. Formative item weights and
reflective item loadings, as well as structural model parameters, can be estimated
simultaneously (e.g., Fassott and Eggert 2005; Ringle and Spreen 2007).
The PLS approach is prediction oriented and variance based; latent variable
scores are explicitly estimated (Chin 1998). The approach estimates the latent
variables as exact linear combinations of the observed measures (Wold 1981).
Using the iterative estimation technique (Wold 1981), the PLS approach provides
a general model which encompasses, among other techniques, canonical correla-
tion, redundancy analysis, multiple regression, multivariate analysis of variance,
and principal components. Sample size can be smaller (Chin 1998); an extreme
5.2 The Measurement Model 113
example is given by Wold (1989) who analyzed 27 variables using two latent
constructs with a data set consisting of ten cases.
PLS is considered better suited to explaining complex relationships (Fornell
et al. 1990; Fornell and Bookstein 1982). Standard errors need to be estimated via
resampling procedures such as jackknifing or bootstrapping (Efron and Gong
1983). The blindfolding procedure omits part of the data matrix for the construct
being examined and then estimates the model parameters. This is done a number of
times based on the blindfold omission distance. The finite mixture approach can be
used to identify certain clusters within the evaluated sample.
Being a limited information method, PLS parameter estimates are less than
optimal regarding bias and consistency. The estimates will be asymptotically
correct under the joint conditions of consistency (large sample size) and consistency
at large (the number of indicators per latent variable becomes large). In this work,
this limitation does not influence the empirical results, as sample size varies
between 50 and 250 and the number of indicators per latent variable does not
exceed three indicators per construct.
5.2.1 Formal Elements
The PLS model consists of endogenous and exogenous constructs. Endogenous

constructs have their causal antecedents specified within the model under consider-
ation. The exogenous constructs outside the model are specified exclusively by
observed measures or indicators. Endogenous, as well as exogenous, constructs
may consist of reflective or formative indicators. The inner relations (inner model,
structural model) describe the relation between all constructs (latent variables)
corresponding to substantive theory and hypotheses. Z represents the vector of
the dependent (endogenous) latent variables, z is the unexplained variance and x is a
vector of a exogenous latent variable (Chin 1998).
The weight relations describe the weights between the latent variables and
their indicators. The outer relation describes the interrelationship between ob-
served and latent variables, and it defines how each block of indicators relates to
its latent variable (Chin 1998). The PLS two-block model presented below con-
sists of one formative exogenous (x) and one reflective endogenous (Z) construct
(Fig. 5.1)
The measurement model consists of the relationship between the constructs and
the respective indicators. The extent to which these indicators (x1, x2, y1, y2) reflect
their respective endogenous (Z) or exogenous (x) construct is determined by the
related loadings a, b, c, d (Chin 1998). A one-way causal relationship is estimated
between two related variables, constructs x and Z. As x can only explain a portion
of the variance in Z, the residual variance at this structural level is assumed to reside
in z. A sample data set can evaluate the parameters for the measurement model
(loadings a-d) and structural model (path coefficient p and variance z).
Structural p
Model
a b c d
Measurement
x1 x2 y1 y2
Model
Fig. 5.1 PLS Two-block model, based on Chin (1998)
Table 5.2 Evaluation criteria of PLS structural model based on: Krafft et al. 2005, p. 85; Fornell
and Larcker 1981; Chin 1998
Criterion Definition Evaluation
Measure (Ausmaß) Strength of relationship between Standardized betas, reliability of value
and significance the constructs is tested by a re-sampling
of PLS path bootstrapping procedure (t-values)
coefficient p
t-value PLS bootstapping procedure Threshold value: above 1.960
Nonparametric approach for
estimating the precision of the
PLS estimates
R square Explained portion of variance Interpretation is identical to that of
criterion for of a construct on another traditional regression
predictive relevance construct. Value can be Threshold values are 0.67 (substantial),
between 0 and 1 0.33 and 0.19 (weak effect), (Chin
1998)
Effect size f2 Impact of exogenous variable R2incl: R2excl: !
on endogenous variable f2 ¼ 0
1 - R2incl:
P
Stone-Geisser Test Predictive sample re-use Q2incl: Q2excl D ED
Criterion, Q2 technique, developed by q2 ¼ 2
Q2 ¼ 1 P
1 - Qincl: D ED
or q2 Stone (1974) and Geisser Threshold values: see R2
(1975)
PLS blindfolding procedure
5.2.2 Evaluation Criteria for Indicators and Constructs
To assess the significance and the explanatory power of the measurement model,
certain criteria should be evaluated (see Table 5.2 for an overview). The evaluation
criteria can be separated for the structural model as a whole as well as for formative
and reflective constructs (Fornell and Larcker 1981). All proposed criteria have
been used in this work.
5.2 The Measurement Model 115
Table 5.3 Evaluation criteria of reflective constructs

P 2
Cronbach’s Alpha Threshold n si
0.7, Nunally, (1978) a ¼ 1
n-1 s2x
0.4, for 2–3 indicators, Peter
(1997)
Confirmatory Thresholds average variance explained (identical with AVE-values): 0.5
Factor (Peter 1997) factor loadings > 0.5 (Backhaus et al. 2003, Nunally 1978)
Analysis significance test of factor loadings: t 1.96 (Backhaus et al. 2003)
P 2
Average It measures the amount of l var F
Variance variance that an LV AVE ¼ P 2 i P
li var F þ yii
Extracted component captures from its According to Diamantopoulos and Siguav
Fornell and indicators relative to the (2002), the threshold for the AVE is > 0.5,
Larcker amount due to measurement factor loadings should be > 0.7. l ,F and
i
(1981) error. As well as the yii are factor loading, factor variance, and
composite reliability unique/error variance, respectively
measure, the AVE is only
applicable to reflective
constructs
P
Composite Internal consistency for a given ð lI Þ2 var F
reliability of block of indicators r c ¼ P P Referring
ðð lI Þ2 var F þ yii Þ
construct This measure does not assume
to Hulland (1999) the threshold value
(Werts, Linn and equivalence among the measures
for the composite reliability is > 0.70
Jöreskog 1974) with its assumption that all
indicators are equally weighted
(Chin 1998)
Cross-loadings Test of discriminant validity, If an indicator loads higher with other latent
calculation of correlation variables, the appropriateness is
between latent variable recommended to be reconsidered, and
component score and other reflection of construct is unclear
indicators of the model
The Tables 5.3 and 5.4 list the criteria generally proposed for reflective and
formative constructs (Chin 1998; Diamantopoulos and Siguaw 2006; Ringle et al.
2006).
The criteria for acceptable psychometric properties require that (1) internal
consistency exceed 0.70; (2) loading in a confirmatory factor analysis exceed
0.50, (3) loadings are greater than cross-loadings, and (4) the square root of the
average variance extracted (AVE) exceeds the inter-construct correlations (Chin
1998; Fornell and Larcker 1981).
In an overview, the evaluation criteria for structural models proposed by
Herrmann, Huber and Kressmann (2006 see also Chin and Newsted 1999, p. 312
and Chin 1998, p. 318) show once again the different models and their validation
criteria. The table also separates between validation criteria for formative versus
reflective constructs.
The (Table 5.5) offers an overview of how the different validation criteria are
related to reflective or formative constructs as well as of different threshold values
referring either to the measurement model or to the structural model. It makes it
Table 5.4 Evaluation criteria of formative constructs

Content Ensures that the formation of formative Pre-test of indicators with experts
validity constructs generated by index regarding content, parsimony and
of construction is performed in a reliable criterion validity
construct way, (Diamantopoulos and
Winklhofer, 2001; Diamantopoulos
and Siguaw, 2006; Bagozzi et al.
1981)
Variance Testing multicollinearity of constructs VIF ¼ 1
2
1R
Inflation using an adjusted R value Using standardized weights of
Factor, (Diamantopoulos and Siguaw 2006). formative constructs followed by SPSS
VIF regression analysis.
Threshold value: < 12.
clear that especially with regard to the validation of constructs, completely different
measures are used.
5.2.3 Creation of SmartPLS Structural Model
The structural model shown below presents all endogenous and exogenous con-
structs: (Fig. 5.2)
5.2.4 Treatment of Missing Values
Data were captured subject to a number of standard procedures to check for missing
values and multivariate normality. The analysis of data revealed an average number
of missing values, and no systematic pattern of missing values was identified.
Missing values in the constructs are treated with the standardized procedure of
SmartPLS (Kristensen and Eskildsen 2005), which is considered to be robust
(Chatelin et al. 2002).
5.2.5 Content Validity of Reflective Constructs
In a reflective scale, all observed indicators are viewed as being caused by some
underlying common dimension or construct (Bagozzi et al. 1981; Fornell and
Bookstein 1982). Unlike items used in a formative scale, each item in a reflective
scale is assumed to share a common context, which is the underlying construct of
interest. An increase in the value of the construct leads to an increase in the value
for all the items representing the construct.
Table 5.5 Validation criteria of PLS models
Measurement model Structural model Selection of model
Reflective constructs Formative constructs
5.2 The Measurement Model
Weights Irrelevant No guidelines Structural No guidelines Group comparison (see Chin,

Parameters 1998)
Loadings > 0.8 Irrelevant T-values Two-way paths > 1.98 f2 test
t-Value One-way paths > 1.66 Two-way paths R2 > 0.19 Changes in Stone-Geissers Q2
> 1.98 (Redun-dancy)
Multicollinearity irrelevant Variance Inflation Multicollinearity Variance Inflation
Factor < 10 Factor < 10
Prediction validity Stone-Geissers Q2 Stone-Geissers Q2
(Redundancy) > 0 (Redundancy) > 0
Uni-dimensionality Crossloadings Irrelevant
Discriminancy Fornel-Larcker Correlation of
Criterion construct (<0.9)
Source: adapted from Hermann et al. (2006) based on Chin and Newsted (1999) and Chin (1998)
117
Fig. 5.2 SmartPLS structural model
The data were analyzed with a structural-equation-model approach using a

SmartPLS algorithm. Measurement tests for each construct were carried out first:
Cronbach’s Alpha values and a confirmatory factor analysis. These confirmatory
methods provide a comprehensive means for assessing and modifying theoretical
models (Anderson and Gerbing 1988). The results indicate acceptable psychomet-
ric reliability and validity. No indicators needed to be eliminated, as the loadings
did not fall below the threshold of 0.4 (Hulland 1999).
To assess the significance and the explanatory power of the structural model, one
must consider not only theory, but also measurement (Fornell and Larcker 1981).
The determination of the statistical significance of individual parameter estimates
can only be solved by using additional measurement testing methods (Bagozzi et al.
1981). The discriminant validity of the reflective variables is evaluated based on the
Fornell-Larcker criterion (Fornell and Larcker 1981) and on the cross-loadings of
all indicators generating the reflective constructs (Bollen and Lennox 1991).
Chapter 6
Results and Findings
The evaluation of research data starts with the presentation of some general
findings on the importance of CR and external trust to international purchasers in
organizational relationships. Subsequently, a detailed data analysis of ten different
measurement criteria is carried out. A synopsis of these criteria can be found in
Sect. 6.1, followed by the assessment of research hypotheses in Sect. 6.4. An
overview presenting the different structural models according to countries and
stakeholder groups can be found in Sect. 6.2.12; fit measures and significant paths
are integrated. The findings related to countries and stakeholder groups are sum-
marized in Sect. 6.4, followed by the discussion of research questions.
6.1 Synopsis of Measurement Criteria
During the evaluation phase of the data-sets of different countries and stakeholder
groups, the following criteria have been examined and measured (Table 6.1):
To evaluate the goodness of a structural model, it is not generally recommended
that all criteria need to be fulfilled simultaneously: “Fit indices should not be
regarded as measures of usefulness of a model. They contain some information
about the lack of fit of a model, but none about plausibility” (Browne and Cudeck
1993, p. 157, see also Peter 1999).
6.2 Model Validation
Data were subject to a number of standard procedures to check for missing values
and multivariate normality. The analysis of data revealed an average number of
missing values, but no systematic pattern of missing values was identified. The data
were then analyzed in several separate, but sequentially related steps. A correlation
analysis was conducted to learn about the nature and direction of relationships

120 6 Results and Findings
between different scales, as well as the strength of association. Understanding these

strengths of theses relationships was the basis for the application of the structural
model. In a final step, the data were analyzed, utilizing SmartPLS 2.0 (M3)
Beta. The purpose of the data analysis was to test the theoretical model develop-
ment empirically. A PLS path model can be validated at three levels (Tenenhaus
et al. 2004):
l The quality of the measurement model
l The quality of the structural model
l Each structural regression equation
The results of this analysis are reported in the following chapters. Sample sizes,
effect sizes, power of statistical tests and significance levels are discussed to provide
consistency in the results. An overview of all evaluated measurement criteria can
be found in Sect. 6.3. Although Tenenhaus et al. (2004) propose to also evaluate
a global criterion of goodness-of-fit as the geometric mean of the average
communality and the average R2, the author declines to do so. This measurement
criterion refers solely to reflective structural models (Amato et al. 2004) and can,
moreover, be manipulated easily by using single-item constructs, where the
communality is always ¼ 1. This positively impacts on the goodness of fit.
Table 6.1 Evaluation criteria of reflective and formative constructs and structural model
Criterion Threshold value Valid for Valid for Valid for
reflective formative structural
constructs constructs model
pffi
Multi-collinearity VIF < 10 ( )
pffi pffi
Significant weights and 0.1
loadings 0.7 für p¼ 0.05
pffi
Content validity Confirmatory factor analysis
( 0.5)
Pretest with experts
pffi pffi
AVE 0.5 (Diamantopoulos and
Siguaw 2002)
pffi
Cronbach’s alpha 0.7 (Nunally 1978)
0.4 (Peter, 1997)
pffi
Cross loadings Test of discriminant validity
pffi
Composite reliability 0.7
pffi pffi pffi
t-value 1.96
pffi pffi pffi
Significance of paths Reliability tested by a re-a
sampling bootstrapping
procedure
pffi
R2 0.19 (Chin)
pffi
Effect size f 2 >0
pffi
Stone-Geisser test Q or q 0
2 2
pffi
Bonferroni-Holm’s Proc.
pffi
Fornell–Larcker criterion A construct should share more
variance with its measures
than it shares with the other
constructs
6.2 Model Validation 121
6.2.1 Examination of Sample Size
It is essential to have an adequate sample size in order to apply the PLS latent
variable modeling approach. In this survey, sample sizes consisted of a total of 250
participants in five countries, i.e., 50 participants from each country. There were
four indicators per construct (reputation, purchase decision involvement, relation-
ship quality, personal and media-enabled direct marketing), and three (reputation
transfer, innovativeness, WOM). In addition, three single-item indicators were
used: perceived fit, culture (based on Hofstede’s scores for each country) and
e-readiness (EIU 2007 e-readiness rankings).
Based on their findings, Chin et al. (1996) have developed a rule of thumb
indicating that a tenfold sample size related to the number of indicators of the most
substantial construct. The maximum number of indicators in this survey is three,
which results in a maximum sample size of 30. As the present study consists of a
maximum of 250 and minimum of 50 samples, the required sample size is given.
6.2.2 Moderating Effects on Reputation Transfer
To test possible moderating effects on reputation transfer, the following constructs

have been evaluated:
Surprisingly, as shown in Table 6.2, except for Finland, no significant moderat-
ing effects on reputation transfer were found. In Finland, the only direct positive
path coefficients related to reputation transfer were perceived innovativeness,
WOM, perceived quality and media-enabled direct marketing. In addition, moder-
ating effects were positive regarding relationship quality, which was moderated on
reputation transfer through WOM.
Table 6.2 Moderating effects on reputation transfer

Moderating Rel. Media-enabled Personal DM Reputation Purchase
effects on quality DM moderated by moderated by moderated decision
reputation moderated relationship relationship by WOM involvement
transfer by WOM quality quality moderated by
WOM
All n.s. n.s. n.s. n.s. n.s.
Australia n.s. n.s. n.s. n.s. n.s.
Germany n.s. n.s. n.s. n.s. n.s.
Finland 0.116 n.s. n.s. 0.085 n.s.
(2.340) (2.307)
Russia n.s. n.s. n.s. n.s. n.s.
Spain n.s. n.s. n.s. n.s. n.s.
Purchaser n.s. n.s. n.s. n.s. n.s.
Pharmacists n.s. n.s. n.s. n.s. n.s.
Doctors and n.s. n.s. n.s. n.s. n.s.
nurses
A positive, significant path coefficient refers to the link between reputation and
reputation transfer: the effect of reputation on reputation transfer was moderated
through the predictor variable of WOM. This is remarkable because, as presented
later in the evaluation of the Finnish dataset, there was no direct effect of reputation
on reputation transfer: As Finnish customers openly discuss and recommend the
products, reputation has a positive impact on reputation transfer through WOM.
6.2.3 Moderating Effects on Reputation
Regarding all countries and stakeholder groups, moderating effects of moderator

variables on personal and media-enabled direct marketing media on reputation have
been evaluated, as the direct path coefficients show only little significance and vary
greatly across countries. Both direct marketing media do not affect the strength of
the relation between relationship quality or WOM as a predictor variable and
reputation as the criterion variable, and no significant path coefficients were found.
Furthermore, in Australia, Spain, Russia, and Finland, as well as in all stake-
holder groups, no moderating effects on reputation were found regarding the
moderator variable of purchase decision involvement through the predictor variable
of WOM. Positive, significant values were only found evaluating the German
dataset (path coefficient 0.260, t-value: 2.240) (Fig.6.1).
Fig. 6.1 PLS structural model including moderating effects on reputation

Purchase decision involvement affects the strength of the relation between

WOM as a predictor variable and reputation as the criterion variable. This is
remarkable because, as presented later in the evaluation of the German dataset,
the direct effect of purchase decision involvement on reputation was not significant.
6.2.4 Mediating Effects
The following mediating effects (for calculations, see Sect. 4.3) were found and
verified by calculating the VAF-value (variance accounted for). A VAF-value of
0.5 indicates that 50% of the effect of the exogenous variable on the endogenous
variable is based on the mediator variable (Eggert et al. 2005). (Fig 6.2)
The following table shows that in only three countries, a significant mediator
effect related to the above mediator model was found. With reference to the Finnish
VAF-value >1, effects of multicollinearity (see Sect. 6.2.10) referring to the
construct of media-enabled DM caused statistical suppressor effects (Table 6.3).
Suppression is defined as a variable which increases the predictive validity of
another variable (or set of variables) by its inclusion in a regression equation
(MacKinnon et al. 2000). However, it was suggested recently that suppression
should be viewed as adding interest to the results, rather than as a confound or
problem (Shrout and Bolger 2002).
exogenous variable mediator variable
Media-enabled a
direct Perceived Fit
marketing
c
Reputation
Transfer
Fig. 6.2 Mediator model
Table 6.3 VAF-values of mediating effects

Country Significant Interpretation
VAF-value
Russia 0.776 77.6% of the effect of media DM on reputation transfer is based on
mediator perceived fit
Australia 0.983 98.3% of the effect of media DM on reputation transfer is based on
mediator perceived fit
Finland 2.274 VAF >1: statistical suppressor effect due to multicollinearity in
construct “media-enabled DM”
Table 6.4 List of evaluated mediator effects on reputation transfer and reputation
Exogenous Mediator Endogenous Findings
variable variable variable
Relationship WOM Reputation Significant mediating effects regarding all countries
quality transfer (VAF-value of 0.691) and Germany (VAF-value
of 0.942)
Innovativeness WOM Reputation Significant mediating effects in Russia (VAF-value
transfer of 0.576)
Purchase WOM Reputation No significant mediating effects
decision
involvement
In addition, the following mediator-models have been evaluated on all countries

and stakeholder groups (Table 6.4):
Surprisingly, as listed in the above table, only very few countries show mediat-
ing effects regarding the mediator variable of WOM. Nevertheless, taking into
consideration the general importance of WOM for CR and reputation transfer, the
findings are valuable. With reference to the evaluation of the Russian structural
model in Sect. 6.2.12, Russia does not show a significant path correlation between
innovativeness and reputation transfer. Thus, this effect is mediated through WOM
and can nonetheless have an impact on reputation transfer success.
The above findings also influence the construct relationships of the German
structural model. As seen in Sect. 6.2.12, there is no direct significant impact of
relationship quality on reputation transfer. At a first glance, reputation transfer is
exclusively influenced by media-enabled direct marketing and WOM. The impact
of relationship quality on reputation transfer is mediated through WOM and
therefore also has to be taken as an influencing factor on reputation transfer. The
same is true with regard to the evaluation of the “all countries” dataset.
6.2.5 Reliability and Content Validity of Reflective Constructs
To assess the significance and the explanatory power of the measurement model,
certain criteria need to be evaluated. The following table refers to the outer loadings
of the reflective constructs.
The outer loadings vary around the threshold value of 0.7 (Diamantopoulos and
Siguaw, 2002). Critical values were found in relation to the indicator “shares
expertise” in Germany and Spain (0.6084 and 0.6620). For further information on
the research data, the outer loadings of the stakeholder groups of purchasers,
pharmacists, as well as doctors and nurses, can be found in the Annex.
The following Tables 6.5 and 6.6 give an overview on the quality criteria of all
reflective constructs: average variance extracted (AVE), Cronbach’s alpha, com-
posite reliability and confirmatory factor analysis.
Table 6.5 Outer loadings of reflective constructs

Constructs Indicators All Aus Fin Ger Rus Spain
countries
Innovativeness Innovative prod. 0.8898 0.9129 0.9071 0.9024 0.7573 0.9019
Leading prod. 0.8864 0.9398 0.6982 0.8840 0.8790 0.9554
Reputation Cares for cust. opinion 0.8195 0.8736 0.8587 0.6858 0.6935 0.8207
Shares expertise 0.8150 0.7835 0.9093 0.6084 0.8587 0.6620
I trust in products 0.8083 0.8683 0.8670 0.9050 0.7402 0.6867
WOM Would recommend 0.9297 0.8506 0.8629 0.9539 0.9768 0.9346
Medical Dev.
Would recommend 0.9200 0.8719 0.8788 0.9393 0.9790 0.9054
Pharma
RepTransfer Would purchase it 0.9147 0.9034 0.9585 0.9451 0.9890 0.9317
Expect same quality 0.8650 0.8715 0.9646 0.5895 0.9885 0.9120
Table 6.6 Overview, quality criteria reputation

Reputation Cronbach’s a Composite AVE Confirmatory factor analysis (three
reliability indicators)
Threshold >0.7 (Nunally >0.7 (Hulland >0.5 Indicator-reliability > 0.4 (Bagozzi and
1978) 1999) Baumgartner 1994)
>0.4 (Peter
1997)
All 0.746 0.8551 0.6636 0.826, 0.788, 0.829
Australia 0.800 0.8725 0.7271 0.774, 0.700, 0.708
Germany 0.642 0.7839 0.6529 0.668, 0.922, 0.696
Finland 0.852 0.9103 0.7739 0.857, 0.859, 0.921
Russia 0.653 0.8100 0.6059 0.763, 0.843, 0.725
Spain 0.551 0.7688 0.5577 0.717, 0.447, 0.890
Purchaser 0.798 0.8807 0.7225 0.878, 0.813, 0.858
Pharmacists 0.637 0.8037 0.5851 0.786, 0.737, 0.771
Doctors and 0.782 0.8725 0.7259 0.836, 0.841, 0.879
nurses
The overview of the quality criteria separated by the data of all countries (sample
size: n¼250), the five different countries (sample size of each country: n¼50),
purchasers (n¼58), pharmacists (n¼65) and users (n¼110) shows that all average
variance extracted scores (AVE) are above the threshold value of 0.5 (Fornell and
Larcker 1981). The AVE-value measures the amount of variance that a latent
variable component captures from its indicators relative to the amount due to
measurement errors. The composite reliability values, (the internal consistency)
of all reflective constructs exceed the threshold value of 0.7 (Hulland 1999).
Cronbach (1951) viewed reliability, including internal consistency measures, as the
proportion of test variance that was attributable to group and general factors. Specific
item variance, or uniqueness, was considered an error. Following the literature
on Cronbach’s alpha values, two different threshold values exist (>0.7: Nunally
1978, >0.4: Peter 1997), depending on the number of indicators used per construct.
In this study, as constructs consist of up to three constructs, a threshold Cronbach’s

alpha value of >0.4 (Peter 1997) is sufficient. Generally, most of all indicators
nevertheless exceed the threshold value of >0.7 (Nunally 1978). When a measure
has other desirable properties, such as a meaningful content coverage of some
domain and reasonable unidimensionality, a low Cronbach’s alpha value may not
be a major impediment to its use (Schmitt 1996) (Table 6.7).
The German and the pharmacist dataset show low Cronbach’s alpha values.
However, in line with the findings of Peter (1997), a value exceeding 0.4 is still
acceptable. Finland and Russia show very high Cronbach’s alpha values. All other
quality criteria referring to the construct of reputation transfer come up to the
threshold values. All values related to the confirmatory factor analysis exceed the
threshold value of 0.4 and fulfill this criterion (Table 6.8).
Surprisingly, referring to the construct of “perceived innovativeness” for Finland
and Russia, low but still acceptable Cronbach’s alpha values are found (Peter 1997).
Referring to the confirmatory factor analysis, Germany shows one very low value
not exceeding the threshold value of 0.4. All other quality criteria of the construct
“perceived innovativeness” comply with the threshold values (Table 6.9).
Table 6.7 Overview, quality criteria of reputation transfer

Reputation Cronbach’s a Composite AVE Confirmatory factor
transfer reliability analysis (two indicators)
All 0.741 0.8841 0.7943 0.891, 0.891
Australia 0.731 0.8706 0.7652 0.765, 0.765
Germany 0.453 0.7562 0.7906 0.993, 0.401
Finland 0.918 0.9609 0.9255 0.962, 0.962
Russia 0.977 0.9887 0.9776 0.989, 0.989
Spain 0.824 0.9189 0.8517 0.904, 0.938
Purchaser 0.730 0.8805 0.7871 0.887, 0.887
Pharmacists 0.651 0.8487 0.7426 0.862, 0.862
Doctors and nurses 0.712 0.8706 0.7767 0.881, 0.881
Table 6.8 Overview, quality criteria of perceived innovativeness

Perceived Cronbach’s Composite AVE Confirmatory factor
innovativeness a reliability analysis (two
indicators)
All 0.732 0.8819 0.7887 0.888, 0.888
Australia 0.836 0.9125 0.6649 0.815, 0.815
Germany 0.747 0.8876 0.7841 0.728, 0.377
Finland 0.500 0.7890 0.7025 0.838, 0.838
Russia 0.523 0.8037 0.7105 0.843, 0.843
Spain 0.846 0.9266 0.8768 0.932, 0.940
Purchaser 0.736 0.8836 0.7988 0.894, 0.894
Pharmacists 0.687 0.8561 0.9371 0.697, 0.747
Table 6.9 Overview, quality criteria of WOM

WOM Cronbach’s a Composite AVE Confirmatory factor
reliability analysis (two indicators)
All 0.831 0.9221 0.8556 0.925, 0.925
Australia 0.652 0.9263 0.7418 0.861, 0.861
Germany 0.884 0.9452 0.8971 0.938, 0.955
Finland 0.681 0.8627 1.0000 1.000, 1.000
Russia 0.954 0.9776 0.9635 0.982, 0.982
Spain 0.820 0.9173 0.8478 0.904, 0.938
Purchaser 0.771 0.8962 0.8926 0.945, 0.945
Pharmacists 0.932 0.9663 0.9918 0.996, 0.996
With regard to the quality criteria of WOM, all results were in line with the
threshold values. Russia and Spain show very high Cronbach’s alpha values,
whereas the values of Australia and Finland are relatively weak.
To assess whether the interaction effect and main effects were significant, a
bootstrap resampling procedure (Efron and Tibshirani 1993) was performed. The
results of 500 resamples confirm or disconfirm validity of the path coefficients. All
valid path coefficients and t-values are included in the tables in Sect. 6.2.12.
6.2.6 R-Square and Q2 Predictive Relevance of Structural Model
“No proper overall goodness of fit measures exist for models estimated using PLS”
(Hulland 1999, p. 202). Non-parametric tests like R2 for dependent variables, the Q2
cross-validation test (Stone-Geisser) and f 2 explaining the strength of effects are
used (Fornell and Bookstein 1982; Krafft et al. 2005) and discussed in detail in this
chapter.
Cross-validated R-square (i.e., Stone-Geisser’s Q2) between each endogenous
latent variable and its own manifest variables can be calculated automatically in
SmartPLS, Stone-Geisser’s Q2 by blindfolding and R2 by running the PLS proce-
dure (Chatelin et al. 2002). The significance levels of the regression coefficients can
be computed using the Student’s t statistic and cross-validation methods like boot-
strapping. The bootstrap samples are built by reasampling with replacements from
the original sample. The procedure yields samples consisting of the same number of
cases as in the original sample.
The R2 value is obtained because the case values of the latent variables (LV) are
determined by the weight relations (Chin 1998), and the interpretation is identical to
that of traditional regression. The changes in R2 are explored to see whether the
impact of a particular independent LV on a dependent LV has substantial impact.
According to Chin (1998), an R2 value > 0.67 is “substantial”, 0.33 is “moderate”
and 0.19 is a “weak” value. According to Fassott (2003), a value of 0.586 can be
regarded as “very satisfactory”. R2 for the endogenous variable “reputation” varies
Table 6.10 R2 and Q2 values of different countries and stakeholder groups

R2 threshold >0.19, Reputation WOM R2 Q2 Reputation Perceived fit Media.
Q2 threshold >0 R2 Q2 transfer R2 Q2 R2 Q2 DM, all
All 0.445 0.277 0.174 0.140 0.630 0.497 0.056 0.062 R2
Australia 0.515 0.027 0.169 0.112 0.797 0.632 0.314 0.349 0.207
Germany 0.551 0.137 0.533 0.469 0.465 0.259 0.049 0.046 Q2
Finland 0.661 0.449 0.275 0.212 0.929 0.836 0.230 0.209 0.072
Russia 0.422 0.114 0.411 0.367 0.891 0.879 0.294 0.294
Spain 0.511 0.137 0.152 0.119 0.697 0.584 0.070 0.048
Purchaser 0.546 0.297 0.101 0.101 0.873 0.672 0.098 0.088
Pharmacist 0.568 0.257 0.101 0.073 0.649 0.481 0.386 0.284
Docs & nurses 0.461 0.266 0.388 0.321 0.510 0.310 0.068 0.035
between 0.431 for Russia and 0.661 for Finland, and therefore explains between
43% and 66% of the variance of this construct. Most of the R2 values related to
“reputation” can be regarded as very satisfactory.
The R2 values for the endogenous variable of “reputation transfer” are even more
substantial and vary between 0.510 for the stakeholder group of doctors and nurses
and 0.929 for Finland, which explains more than 92% of the variance of this
construct. Most of the R2 values can be qualified as “substantial” (see Table 6.10).
The call for a significantly high squared correlation of endogenous variables can
be regarded as reasonable if the scientific objective comprises explaining the
respective endogenous variable completely (Homburg and Baumgartner 1995). In
the case where the scientific objective is focused on the explanation of the causal
relationship between the constructs, the retention of a given threshold value of the
variance explained is not mandatory (Homburg and Baumgartner 1995). This is true
for the R2 values of WOM and perceived fit. Only the causal relationships between
the endogenous constructs of WOM and perceived fit vis-à-vis the constructs
reputation and reputation transfer is in the focus of this research work. This study
does not aim to explain the variables of WOM and perceived fit completely. Falling
below the threshold value of 0.19 is therefore acceptable for the constructs of WOM
and perceived fit.
The above indicated Q2 value refers to the quality of each structural equation and
is measured by the cross-validation redundancy index (i.e., Stone-Geisser’s Q2).
This results from the predictive sample reuse technique as developed by Stone
(1974) and Geisser (1975). It represents a synthesis of cross-validation and function
fitting with the perspective that “the prediction of observables or potential obser-
vables is of much greater relevance than the estimation of what are often artificial
construct parameters” (Geisser 1975, p. 320). This technique is based on R2, but
without losses in the degrees of freedom. The idea behind the test of Stone and
Geisser is to omit, or “blindfold”, one case at a time, to re-estimate the model
parameters on the basis of the remaining cases, and to reconstruct or predict omitted
case values on the basis of re-estimated parameters.
The value of Q2 needs to be >0. A negative value in this context means that the
model is misleading, as the trivial prediction in terms of sample means is superior to
the prediction derived from the tested model relation (Wold 1982; Seltin and
Keeves 1994). As all Q2 values exceed the threshold value and are not negative,
all variables have fulfilled the Q2 cross-validation test of Stone and Geisser (see
Table 6.10).
In addition, with regard to the datasets of all countries and stakeholder groups,
all effect sizes f 2 exceed the threshold value of >0. To avoid double presentation of
measurement data, the effect sizes f 2 can be found together with the significant path
coefficients in the evaluation of hypotheses data (see Sect. 6.3).
6.2.7 Cross Loadings
According to Chin (1998), another test of discriminant validity can be obtained by

calculating the correlations between latent variable (LV) component scores and
other indicators besides its own block.
If an indicator loads higher with other LVs than the one it is intended to measure,
the researcher may wish to reconsider its appropriateness because it is unclear
which construct or constructs it is actually reflecting (Chin 1998). Furthermore, the
loading of each block of indicators is expected to load higher for its respective LV
than indicators for other LVs (Table 6.11 and 6.12).
Table 6.11 Cross-loadings of reflective constructs: All countries

Cross-loadings: all Perceived Reputation Reputation Word of
countries innovativeness transfer mouth
Innovative products 0.8897 0.1612 0.4648 0.2027
Cares for cust. opinions 0.4161 0.2407 0.8194 0.2382
Shares expertise 0.4232 0.1170 0.8139 0.1646
Trust in products 0.4069 0.2375 0.8093 0.3345
Leading products 0.8864 0.1880 0.4406 0.2143
Recommend Med. Dev. 0.2463 0.4630 0.3113 0.9287
Recommend pharma 0.1865 0.5242 0.2534 0.9210
Would purchase it 0.2536 0.9147 0.2422 0.5666
Expect same quality 0.0783 0.8650 0.1923 0.3625
Table 6.12 Cross-loadings of reflective constructs: Australia

Cross-loadings: Australia Perceived Reputation Reputation Word of mouth
innovativeness transfer
With reference to the loadings listed above, all items load significantly on their
respective factors, with no cross-loadings and no correlated measurement errors.
Discriminant validity for reflective constructs perceived innovativeness, reputation,
reputation transfer and WOM can be assumed (Bollen and Lennox 1991; Diaman-
topoulos and Siguaw 2006) for the datasets of all countries and Australia.
Table 6.14 refers to the Finnish dataset and reveals a weak value for the second
indicator of the construct “perceived innovativeness”. Nevertheless, no other indi-
cator loaded higher on this construct than the two that were intended to be
measured. Therefore, this test of discriminant validity is also fulfilled for Finland
(Table 6.13).
Table 6.14 (Germany) indicates that loadings on the construct of reputation and
reputation transfer were weaker in comparison to other countries. As for the
construct of reputation transfer, no other indicator loaded higher on this construct
than the two that were intended to be measured. This is not the case regarding the
construct of reputation: Haphazardly, one indicator related to the construct of
WOM (recommend Medical Devices.) load higher with the construct of reputation
than any of the other three indicators (shares expertise). As this only occurs with the
German dataset, this matter will not be further followed up.
Table 6.13 Cross-loadings of reflective constructs: Finland

Cross-loadings: Finland Perceived Reputation Reputation Word of
innovativeness transfer mouth
Table 6.14 Cross-loadings of reflective constructs: Germany

Cross-loadings: Germany Perceived Reputation Reputation Word of
Table 6.15 Cross-loadings of reflective constructs: Russia

Cross-loadings: Russia Perceived Reputation Reputation Word of
Recommend Pharma 0.4468 0.4276 0.3525 0.9790
Table 6.16 Cross-loadings of reflective constructs: Spain

Crossloadings Spain Perceived Reputation Reputation Word of
As far as the cross-loadings of the Russian and Spanish dataset are concerned, all
indicators loaded highest with the construct that was intended to be measured
(Table 6.15).
Interestingly the cross-loadings of Russia regarding “perceived innovativeness”
are much weaker compared to the cross-loadings of Spain, Germany and Australia.
On the other hand, the cross-loadings of the indicators of “Word of Mouth” are
much higher than the cross-loadings of all other countries. Also, with regard to the
cross-loadings, the data-sets of the single countries differ substantially (Table 6.16).
Generally, in this study, the calculation of the correlations between LV compo-
nent scores and other indicators besides its own block, show that the indicators
reflect the construct they are intended to measure. The additional cross-loadings of
purchasers, pharmacists and users can be found in Annex 1.
6.2.8 Fornell–Larcker Criterion
To analyze the validity and to exclude measurement errors of structural equation

models with unobserved variables, the Fornell–Larcker criterion is used (Fornell
and Larcker 1981). This testing system is based on measures of shared variances
within the structural model, measurement model, and overall model. First of all, the
tables below show that the average variance extracted (AVE) is above the threshold
value of 0.5 (Diamantopoulos and Siguaw 2002). The AVE is sensitive to a lack of
convergent validity and can therefore be used to assess discriminant validity
(Fornell and Larcker 1981): If the shared variance is not large enough to warrant
interpretation in terms of operational significance, the model is rejected, regardless
of its statistical significance.
AVE scores greater than 0.50 indicate that a higher amount of variance in the
indicators is captured by the construct compared to that accounted for by measure-
ment error (Fornell and Larcker 1981; Diamantopoulos and Siguaw 2006). The
tables show that, as required, each of the squared measures of the SmartPLS
correlation matrix does not exceed the AVE-values. Following the definitions of
the Fornell–Larcker criterion, it is fulfilled for all observed countries and stake-
holder groups (Table 6.17and 6.18).
With reference to the dataset of “all countries” and “Australia”, Tables 6.19 and
6.20 show that the AVE-values exceed the threshold value of 0.5. Furthermore,
none of the squared measures of the SmartPLS correlation matrix exceeds the AVE-
value. The Fornell–Larcker criterion is fulfilled for these countries.
Table 6.17 Fornell–Larcker criterion, data of all countries

All countries Perceived Reputation Reputation Word of
Perc. innovativeness 1.0000 0,0386 0,2600 0,0551
Reputation transfer 0,0386 1.0000 0,0607 0,2839
Reputation 0,2600 0,0607 1.0000 0,0936
Word of mouth 0,0551 0,2839 0,0936 1.0000
AVE 0.7887 0.7924 0.6629 0.8554
Table. 6.18 Fornell–Larcker criterion, data of Australia

Australia Perceived Reputation Reputation Word of
Innovativeness Transfer Mouth
Perc. innovativeness 1.0000 0,0508 0.0813 0.0508
Reputation transfer 0.0508 1.0000 0.0910 0.3201
Reputation 0.0813 0.0910 1.0000 0.1595
Word of mouth 0.0508 0.3201 0.1595 1.0000
AVE 0.8390 0.7713 0.6950 0.8628
Table 6.19 Fornell–Larcker criterion, data of Finland

Finland Perceived Reputation Reputation Word of
Perc. innovativeness 1.0000 0.2029 0.5771 0.2188
Reputation 0.5771 0.1552 1.0000 0.1816
Word of mouth 0.2188 0.3045 0.1816 1.0000
AVE 0.6553 0.9247 0.7719 0.7585
Table 6.20 Fornell–Larcker Criterion, data of Germany

Germany Perceived Reputation Reputation Word of
Reputation 0.0147 0.1861 1.0000 0.4114
Word of mouth 0.1318 0.3427 0.4114 1.0000
AVE 0.7979 0.6203 0.5543 0.8961
Table 6.21 Fornell–Larcker criterion, data of Spain

Spain Perceived Reputation Reputation Word of
Reputation 0.0215 0.0208 1.0000 0.0663
Word of mouth 0.0333 0.0981 0,0663 1.0000
AVE 0.8634 0.8499 0.5279 0.8472
Table 6.22 Fornell–Larcker criterion, data of Russia

Russia Perceived Reputation Reputation Word of
Reputation 0.3602 0.1132 1.0000 0,1154
Word of mouth 0.1916 0.2047 0.1153 1.0000
AVE 0.6730 0.9776 0.5890 0.9563
The datasets of Finland and Germany also exhibit AVE-values exceeding 0.5.
Nevertheless, regarding the German, Russian, and Spanish datasets, the construct of
reputation exhibits only a relatively low AVE-value (0.52–0.58) compared to other
country values. While exceeding 0.9, the Finnish AVE-value of reputation transfer
score is extremely high.
The Russian dataset shows that the AVE-values exceed the threshold value of
0.5; very high AVE-values can be found with the constructs of WOM and reputa-
tion transfer. The overview of the Fornell–Larcker criteria of the different stake-
holder groups can be found in Annex 2 (Table 6.21 and 6.22).
6.2.9 Reliability and Content Validity of Formative Constructs
According to Bollen and Ting (2000), it is difficult to establish the causal priority
between a latent variable and its indicators. Formative scales are used when
a construct is viewed as an explanatory combination of its indicators (e.g., Fornell
and Bookstein 1982; Diamantopoulos and Winklhofer 2001). In this case, the
construct is defined as a total weighted score across all the items, where each item
represents an independent dimension in its own. An increase in the value of one
indicator results in a higher score for the overall scale, regardless of the value on the
other indicators (Fassott and Eggert 2005). The final score for the construct is the
sum of the weighted scores on all items. A good formative scale exhausts the entire
domain of the construct. The items should collectively represent all the relevant
aspects of the related construct: “scale development and index construction as
alternative approaches to deriving multi-item measures can produce substantially
different operationalization of the same construct,” (Diamantopoulos and Siguaw
2006). Formative constructs do not need to correlate or have an internal consistency
(Diamantopoulos and Winklhofer 2001; Chin 1998).
Typically, in marketing studies, formative indicators are tested for their validity
using a theoretical rationale and expert opinion (e.g., Rossiter 2002). In this study,
formative indicators have been presented and discussed with 13 regional heads and
five members of the strategic marketing department, responsible for the marketing
of hospital care products of the company involved in the empirical research. This
pre-test was not limited to the five countries included in the survey, but covered all
regional heads globally.
Criterion validity of formative constructs can be measured using the content
validity to test multicollinearity.
6.2.10 Multicollinearity
As discussed before, criterion validity of formative constructs is difficult to

measure. One measurement method is to use content validity to test multicolli-
nearity. High levels of multicollinearity in a formative measure can be problem-
atic because the influence of each indicator on the latent construct cannot be
distinctly determined (Bollen 1989; Diamantopoulos and Siguaw 2006). This
chapter examines the possible multicollinearity of the formative measures used
in this survey.
As shown in the above table, related to the data of “all countries”, the variance
inflation factor (VIF)-value of one indicator, which is part of the formative construct
of purchase decision involvement indicates a VIF-value exceeding the threshold
value of 10. The evaluation of the structural model based on the “all countries” data
reveals that there are no significant path correlations influencing this construct.
As shown in the following Table 6.23, related to the data of “Germany”, the VIF-
value of one indicator, which is part of the formative construct of media-enabled
direct marketing, indicates a VIF exceeding the threshold value of 10. The evalua-
tion of the structural model based on the German dataset reveals that there are
significant path correlations in the structural model influencing this construct.
Therefore, the problem of multicollinearity in this construct needs to be taken
into consideration (Table 6.24).
Table 6.23 Quality criteria of formative constructs: evaluation of data, “all countries”
All countries Indicators Weights Std. Error t-values VIF <10
>1.660
Purchase decision Same features 0.879 0.000 1.320 110.0
involvement Brand imp. 0.037 0.092 2.590 1.008
Purch. dec. 0.535 0.098 0.085 1.020
Relationship Value for 0.5020 0.112 2.267 1.879
quality money
Concerns 0.3845 0.087 2.479 1.876
Satisfied 0.4555 0.053 2.177 1.289
Personal DM Fairs 1.1107 0.000 0.722 1,000
Symposia 0.4303 0.026 0.1567 0.998
Visits SR 0.4236 0.018 0.820 1.004
Media-enabled Brochures 1.0239 0.020 1.796 1.002
DM Internet 0.1250 0.210 0.231 1.047
Mailings 0.0614 0.488 0.114 1.025
Table 6.24 Quality criteria of formative constructs: evaluation of data “Germany”

Germany Indicators Weights Std. error t-values VIF <10
Purchase decision involvement Same features 0.911 0.000 4.081 korr. R2¼ 1
Brand imp. 0.153 1.094 0.581 1.001
Purch. dec. 0.514 0.667 2.045 0.980
Relationship quality Value for money 0.026 2.872 0.202 3.508
Concerns 0.649 0.132 4.996 2.625
Satisfied 0.584 0.158 4.874 1.347
Personal DM Fairs 0.852 0.018 1.745 8.772
Symposia 0.037 1.169 0.112 0.991
Visits SR 0.470 0.052 1.037 1.165
Media-enabled DM Brochures 0.542 0.017 1.448 125,0
Internet 0.328 0.342 1.098 1.101
Mailings 0.639 1.032 3.929 0.992
As indicated in the above Table 6.25 related to the Spanish dataset, the VIF-
value of one indicator, which is part of the formative construct of personal direct
marketing, indicates a VIF-value exceeding the threshold value of 10. The evalua-
tion of the structural model based on the Spanish dataset reveals that there are
significant path correlations in the structural model influencing this construct.
Therefore, the problem of multicollinearity in this construct needs to be taken
into consideration. No evaluations can be made regarding the use of the direct
marketing medium “visits of sales representatives” in the Spanish market.
The following Table 6.26, related to the Finnish dataset, indicates two VIF-
values exceeding the threshold value of 10. One indicator is part of the formative
construct of media-enabled direct marketing, and the other refers to the construct of
purchase decision involvement. The evaluation of the structural model based on the
Finnish dataset reveals that there are significant path correlations in the structural
model influencing both constructs.
Table 6.25 Quality criteria of formative constructs: evaluation of data “Spain”

Spain Indicators Weights Std. error t-values VIF <10
Purchase decision involvement Same features 0.802 0.000 4.712 korr. R2= 1
Brand imp. 0.375 0.818 1.859 0.980
Purch. dec. 0.815 1.936 1.361 1.001
Relationship quality Valuefor money 0.607 0.131 4.834 3.861
Concerns 0.430 0.209 2.947 2.155
Satisfied 0.514 0.185 4.229 2.028
Symposia 0.743 0.177 1.041 1.110
Visits SR 0.709 0.025 1.752 30.30
Media-enabled DM Brochures 0.353 0.133 0.479 1.179
Internet 1.000 0.001 1.382 1.000
Mailings 0.770 0.080 0.982 0.990
Table 6.26 Quality criteria of formative constructs: evaluation of data “Finland”

Finland Indicators Weights Std. error t-values VIF <10
Purchase decision involvement Same features 0.784 0.062 1.480 20.40
Brand imp. 0.648 0.347 1.426 1.213
Purch. dec. 0.689 0.830 1.430 0.981
Satisfied 0.637 0.068 4.828 4.166
Concerns 0.098 0.725 0.504 1.623
Personal DM Symposia 1.076 0.088 1.419 1.032
Fairs 0.987 0.068 1.111 1.610
Visits SR 0.846 0.037 1.444 4.348
Internet 0.529 0.207 1.785 1.054
Mailings 0.837 0.028 3.526 35.71
Considering the problem of multicollinearity, no evaluations will later be made

regarding the use of the direct marketing medium “mailings” and the indicator
“same features” in the Finnish market.
The above Table 6.27 refers to the Australian dataset and indicates no VIF-
values exceeding the threshold value of 10. Regarding the dataset of Australia, the
levels of multicollinearity do not exceed the threshold value.
The next Table 6.28 is related to the Russian dataset and indicates three VIF-
values exceeding the threshold value of 10. The evaluation reveals multicollinear-
ity, but no significant path correlations in the structural model influencing the
construct of purchase decision involvement. Another indicator is part of the forma-
tive construct of media-enabled direct marketing, while the other refers to the
construct of personal direct marketing. The evaluation of the structural model
based on the Russian dataset reveals that there is no significant path correlations
in the structural model influencing the latter construct.
Nevertheless, a significant path correlation was found influencing the construct
of media-enabled direct marketing, where the levels of multicollinearity exceed the
threshold value regarding the direct marketing medium of the “Internet”.
Table 6.27 Quality criteria of formative constructs: evaluation of data “Australia”

Australia Indicators Weights Std. error t-values VIF <10
Brand imp. 0.051 0.295 0.340 1.032
Purch. dec. 0.797 0.672 1.152 3.436
Satisfied 0.884 1.211 1.113 1.972
Concerns 0.110 0.075 2.852 2.132
Personal DM Symposia 0.493 0.163 1.675 2.105
Fairs 0.320 5.411 1.083 1.023
Visits SR 0.588 0.103 5.644 2.083
Internet 0.846 0.018 1.943 1.996
Mailings 0.129 0.166 0.503 1.669
Table 6.28 Quality criteria of formative constructs: evaluation of data “Russia”

Russia Indicators Weights Std. error t-values VIF <10
Brand imp. 0.636 0.212 1.367 1.102
Purch. dec. 0.785 1.768 1.939 1.029
Satisfied 0.547 0.184 3.594 1.968
Concerns 0.102 1.265 1.006 1.131
Symposia 0.350 0.347 0.576 1.002
Visits SR 0.432 0.186 1.277 1.020
Internet 0.514 0.019 1.892 22.22
Mailings 0.600 0.126 2.048 0.989
Unfortunately, only the Australian dataset does not reveal certain indicators
causing multicollinearity problems. Six indicators exceed the VIF threshold
value, the influence of these indicators on the respective formative construct cannot
be accurately judged. Anyway, in half of the cases, no significant path correlations
related to the said constructs were found. About 92% of all indicator values do not
exceed the VIF threshold value of 10 and fulfill the measurement criterion.
6.2.11 Summary of Content Adequacy of Formative Constructs
Content adequacy provides evidence about the construct validity. Construct validity
is the degree to which an assessment instrument measures the targeted construct
(Diamantopoulos et al. 2008).
According to Diamantopoulos and Siguaw (2006, p. 276), for formative measures
“no hard and fast rules can be offered”. Thus, one has to reconcile the theory-driven
conceptualization of the measure. As already discussed in Sect. 4.1 (C-OAR-SE
procedure), interviews with two marketing research experts about the classification
of objects and attributes were carried out. Based on these discussions, one object was
defined to be concrete singular. Other objects were defined to be formative (purchase
decision involvement, both direct marketing constructs, as well as relationship
quality). Following the recommendations of Diamantopoulos and Winklhofer
(2001), to specify “the nature and the direction of the relationship between con-
structs and measures” (Edwards and Bagozzi 2000, p. 156) and to support this
empirically ensures the nomologic validity of constructs-although always making
the right choice is “far from simple” (Diamantopoulos and Siguaw 2006, p. 265).
Content validation of formative constructs involves the refinement of the
targeted construct to avoid multi-collinearity. In this survey, the problem of multi-
collinearity partially occurs with single countries or stakeholder groups. For exam-
ple, no multi-collinearity occurs within the Australian data-set, once within the
Spanish, German and all countries data-set, while Russia shows three indicators
exceeding the recommended threshold value. Nevertheless, as a concession to keep
comparable constructs across all countries, this refinement of indicators has not been
carried out. The problem of multi-collinearity each time occurs with different
indicators, constructs and countries.
Additionally, the weights, standard errors and t-values of the formative constructs
have been evaluated (see Sect. 6.2.10). Unfortunately, t-values do only exceed the
value of 1.66 for half of all indicators evaluated in five countries and stakeholder
groups, and outer weights also sometimes were low- but this always refers to
different indicators, constructs, countries and stakeholder groups. Therefore, elim-
inating weak significant indicators in one country limits the comparability of data.
6.2.12 Structural Model, Evaluated by Country

and Stakeholder Groups
In this chapter, the final structural model including path coefficients, related
t-values, as well as the effect sizes R2 and Q2 are vizualized by countries and
stakeholder groups. Significant differences are presented.
As already discussed in Sect. 6.2.6, the call for a significantly high squared
correlation of endogenous variables can be regarded as reasonable, if the scientific
objective comprises to explain the respective endogenous variable completely
(Homburg and Baumgartner 1995). In this study, the scientific objective is focused
on the explanation of the causal relationship between the constructs, the retention of
a given threshold value of the variance explained is therefore not mandatory
(Homburg and Baumgartner 1995). This refers to the R2 values of WOM and
perceived fit, as only the causal relationships between the endogenous constructs
of WOM and perceived fit toward the constructs reputation and reputation transfer
should be explained. With reference to the following data-sets, to fall below the
threshold value of 0.19 is therefore acceptable for the constructs of WOM and
perceived fit.
The following results on country- and stakeholder group indicate that the use of
direct marketing media differs substantially within these groups. This is due to the
fact that in the “all country” data relationships regarding paths and t-values of both
types of direct marketing media are very inconsistent. Nontheless, the construct of
media-enabled direct marketing shows a significant R2 value (0.207) of 20% of the
variance explained. Different e-readiness scores form this construct, indicating the
use of electronic media in the five countries included in the survey.
6.2.12.1 All Countries
The following Table 6.29 and Fig. 6.3 are related to the data of “all countries” and
displays considerable predictive power: More than 60% of the variance of reputa-
tion transfer was explained (R2 of 0.630) through WOM and perceived fit. Similar-
ly, about 45% of the variance of reputation (R2 of 0.445) was explained.
Interestingly, this was exclusively achieved by the constructs relationship quality
and perceived innovativeness. Two other endogenous variables-WOM and per-
ceived fit-show only low R2-values.
There is a strong positive relationship between reputation and the perceived fit of
brand or product. Relationship quality shows positive paths towards reputation and
WOM. In this data-set, no direct marketing media show significant paths and
t-values regarding the constructs reputation, reputation transfer, and perceived fit.
6.2.12.2 Australia
The data set of Australia shows displays considerable predictive power: regarding
the construct of reputation transfer: More than 79% of the variance of reputation
transfer was explained (R2 of 0.797) exclusively through personal direct marketing
media and perceived fit. Media-enabled direct marketing activities show no signifi-
cant correlations towards reputation and reputation transfer, but there is a positive
relationship between media-enabled direct marketing and perceived fit of new
brand or product. No moderating effects reveal significant paths, but 98.3% of the
effect of media-enabled direct marketing on reputation transfer are based on
mediator perceived fit (see Sect. 6.2.4). Indirectly, media-enabled marketing activ-
ities are positively influencing reputation transfer through perceived fit. 31% of the
Table 6.29 All countries, significant paths

All Countries t-values Path coefficients
E-readiness ! Media-enabled direct marketing 2.290 0.454
Perceived Fit ! Reputation transfer 7.277 0.644
Perceived Innovativeness ! Reputation 2.994 0.337
Relationship Quality ! Reputation 3.963 0.439
Relationship Quality ! Word of mouth 2.951 0.370
Reputation ! Perceived fit 2.056 0.236
Word of Mouth ! Reputation transfer 2.553 0.248
Purchase Decision all countries

Involvement
0.439 Relationship Quality
t=3.963
Personal DM
0.370
t=2.951
R2=0.445
Q2=0.277
Reputation
R2=0.184
R2=0.207 Q2=0.147
53
Q2=0.072 2.
5 Word of Mouth
Media-enabled DM t=
0.236 8
24 0.
t=2.056 0. 33
7,
0. 454 t=
2.
t=2.290 99
4,
R2=0.630
E-Readiness Q2=0.497 Perceived
Reputation Transfer Innovativeness
R2=0.056 0.644
Q2=0.062 t=7.277
Perceived Fit
All Countries t-values path coefficients

E-readiness-> Media-enabled Direct Marketing 2.290 0.454
Perceived Fit -> Reputation Transfer 7.277 0.644
Perceived Innovativeness -> Reputation 2.994 0.337
Relationship Quality -> Reputation 3.963 0.439
Relationship Quality -> Word of Mouth 2.951 0.370
Reputation -> Perceived Fit 2.056 0.236
Word of Mouth -> Reputation Transfer 2.553 0.248
Fig. 6.3 All countries, significant paths
variance of perceived fit (R2 of 0.314) is explained by media-enabled direct market-

ing activities. Similarly, about 51% of the variance of reputation (R2 of 0.515) is
explained exclusively through the construct of relationship quality. Interestingly, in
Australia this is the only significant path on reputation. There is also no significant
relationship between reputation and reputation transfer (Fig. 6.4 and Table 6.30).
Perceived innovativeness exclusively shows one significant path related to WOM,
but no impact on reputation and reputation transfer. Although WOM is strongly
influenced by the constructs of relationship quality, perceived innovativeness and
purchase decision involvement, this explains only 21% of the variance of WOM.
The weak explanatory power of WOM in the Australian data set does not lead to
positive or negative significant paths towards reputation or reputation transfer.
Australia
Purchase Decision
Involvement 0.310
t=2.337 0.634 Relationship Quality
t=2.377
Personal DM
0.350
t=2.384
R2=0.515
Q2=0.027
Reputation
R2=0.217
0.159 Q2=0.120
Media-enabled DM Word of Mouth
t=2.038
0.161
t=1.959
0.486 R2=0.797
t=2.481 Q2=0.632 Perceived
R2=0.314 0.716
Q2=0.349 t=8.705
Perceived Fit
path coefficients
Australia t-values path coefficients

Innovativeness -> WOM 1.959 0.161
Media-enabled Direct Marketing -> Perceived Fit 2.481 0.486
Personal Direct Marketing -> Reputation Transfer 2.038 0.159
Purchase Decision Involvement -> WOM 2.337 0.310
Relationship quality -> WOM 2.384 0.350
Relationship quality -> Reputation 2.377 0.634
Fig. 6.4 Australia, significant paths
Table 6.30 Australia, significant paths

Australia t-values Path coefficients
Innovativeness ! WOM 1.959 0.161
Media-enabled direct marketing ! Perceived fit 2.481 0.486
Personal Direct Marketing ! Reputation transfer 2.038 0.159
Purchase decision involvement ! WOM 2.337 0.310
Relationship quality ! WOM 2.384 0.350
Relationship quality ! Reputation 2.377 0.634
6.2.12.3 Finland
In comparison to the other data evaluations, Finland shows the highest rate of
significant paths (Fig. 6.5 and Table 6.31).
In comparison to the other data evaluations, Finland shows the highest rate of
significant paths. The Finish structural model displays considerable predictive
power regarding the construct of reputation transfer: More than 92% of the variance
Finland
Purchase Decision
Involvement 0.267
t=3.133
t=2.750
Personal DM
0.273
t=1.963
R2=0.661
Q2=0.449
Reputation
R2=0.344
Q2=0.248
4
9
.52
.54
Media-enabled DM −0.169 3 Word of Mouth

t=
=2
t=3.435
, t
0.
5 54
42
21 0 0.297
0.
0.2
t= t=2.625
5.2
53
0.347
2
t=1.915 R =0.929
Q2=0.839 Perceived
Reputation Transfer 0.209 Innovativeness
t=3.521
R2=0.230 0.864
Q2=0.209 t=12.899
Perceived Fit
Finland t-values path coefficients

Innovativeness -> Reputation Transfer 3.521 0.209
Innovativeness -> Reputation 5.353 0.540
WOM -> Reputation Transfer 3.529 0.215
Media-enabled Direct Marketing -> Perceived Fit 1.915 0.347
Media-enabled Direct Marketing -> Rep. Transfer 3.435 −0.169
Purchase Decision Involvement -> WOM 3.133 0.267
Fig. 6.5 Finland, significant paths

Table 6.31 Finland, significant paths

Finland t-values Path coefficients
Innovativeness ! Reputation transfer 3.521 0.209
Innovativeness ! Reputation 5.353 0.540
WOM ! Reputation Transfer 3.529 0.215
Media-enabled Direct Marketing ! Perceived fit 1.915 0.347
Media-enabled Direct Marketing ! Rep. transfer 3.435 0.169
Purchase Decision Involvement ! WOM 3.133 0.267
of reputation transfer was explained (R2 of 0.929) through WOM, perceived

innovativeness, perceived fit, and media-enabled direct marketing.
Similarly, about 66% of the variance of reputation (R2 of 0.661) was explained.
Interestingly, this was exclusively achieved by relationship quality and perceived
innovativeness. On the other hand, reputation only shows significant impact on
perceived fit. In comparison to all other countries and stakeholder groups and related
to both above constructs, the Finnish data set shows the highest explanatory power.
There is no significant relationship between reputation and reputation transfer.
About 34% of the variance of WOM was explained (R2 of 0.344) through signi-
ficant paths from relationship quality, perceived innovativeness and purchase deci-
sion involvement. WOM exclusively shows significant paths to reputation transfer.
Relationship quality shows a strong positive relationship towards reputation
and also towards WOM. In the data-set output “Finland”, only media-enabled direct
marketing media show significant paths and t-values. There is a negative relationship
between media-enabled direct marketing and reputation transfer, but a positive rela-
tionship between media-enabled direct marketing and perceived fit. The evaluation
of mediating effects shows positive effects of media-enabled direct marketing through
perceived fit on reputation transfer, unfortunately, statistical suppressor effects due
to multi-collinearity in construct “media-enabled DM” led to interpretation problems.
Personal direct marketing shows no significant paths at all. The R2 value of perceived
fit (0.230) indicates a moderate impact value of 23%. This percentage of the variance
is explained by reputation and media-enabled direct marketing.
6.2.12.4 Germany
In comparison to other countries, the German data set shows the weakest highest
explanatory power regarding reputation and reputation transfer-but the strongest
explanatory power of WOM: Only 46.5% of the variance of reputation transfer is
explained (R2 of 0.465) through WOM and media-enabled direct marketing
(Fig. 6.6 and Table 6.32).
Germany
Purchase Decision
Involvement

t=1.931
Personal DM
0.649
t=7.885
R2=0.551 0.432
0.244 t=2.9
Q2=0.137 13
t=2.358 Reputation R2=0.534
Q2=0.471
0.217
0.496 t=2.866
0.236 t=3.205
t=2.623
R2=0.465
Q2=0.259 Perceived
R2=0.049
Q2=0.046
Perceived Fit
Germany t-values path coefficients

WOM -> Reputationr 2.913 0.432
Media-enabled Direct Marketing -> Reputation 2.358 0.244
Media-enabled Direct Marketing -> Reputation Transfer 2.623 0.236
Fig. 6.6 Germany, significant paths
Table 6.32 Germany, significant paths

Germany t-values Path coefficients
WOM ! Reputation transfer 3.205 0.496
WOM ! Reputationr 2.913 0.432
Media-enabled Direct Marketing ! Reputation 2.358 0.244
Media-enabled Direct Marketing ! Reputation transfer 2.623 0.236
Similarly, about 55% of the variance of reputation (R2 of 0.551) is explained.

This is exclusively achieved by relationship quality and WOM. Interestingly, just
like the Australian data set, the German data shows no significant relationships
between reputation and perceived fit or reputation and reputation transfer.
Like with all other countries and stakeholder groups included in this survey,
relationship quality shows a significant path towards reputation. About 53% of
the variance of WOM was explained (R2 of 0.534) exclusively through significant
paths from relationship quality and perceived innovativeness. Additionally, the
relatedness between relationship quality and WOM is much stronger in comparison
to all other countries and stakeholder groups. With regard to significant path coeffi-
cients, the German data-set differs substantially from all other country data: Only in
this structural model WOM indicates a strong positive relationship towards both
constructs, reputation transfer and reputation. Moreover, Germany is the only coun-
try, where perceived fit does not show a significant relationship towards reputation
transfer. Additionally, the construct of perceived innovativeness shows no impact on
reputation and reputation transfer, but on WOM. Interestingly, Germany is the only
country, where media-enabled direct marketing activities have significant impact on
both constructs, reputation and reputation transfer. On the other hand, purchase
decision involvement shows no impact on reputation or on WOM.
6.2.12.5 Spain
The following model displays strong predictive power regarding the construct of
reputation transfer: More than 69% of the variance of reputation transfer is
explained (R2 of 0.697) through reputation, perceived fit, and personal direct mar-
keting. Similarly, about 51% of the variance of reputation (R2 of 0.511) is achieved by
significant paths of relationship quality, perceived innovativeness, and personal direct
marketing. In comparison to other countries, Spain shows the strongest relationship
between relationship quality and reputation (Fig. 6.7 and Table 6.33).
In comparison to all other countries and stakeholder groups, the Spanish data
set shows the strongest relationship between reputation and reputation transfer-
interesting to see that the latter is a negative one. Spain is the only country, where
innovativeness as well as WOM show no relationship towards reputation and
reputation transfer at all. About 26% of the variance of WOM was explained
(R2 of 0.260) through significant paths from relationship quality and purchase
decision involvement.
Relationship quality shows a strong positive relationship towards reputation and
also towards WOM. With regard to the Spanish data-set output, only personal direct
marketing media show significant paths and t-values towards reputation and repu-
tation transfer. Media-enabled direct marketing shows not significant paths towards
any of the constructs included in the structural model. Compared to all other
countries and stakeholder groups, the Spanish R2 value of perceived fit (0.070) is
the lowest value of all, no variance can be explained, although there is a strong
positive relationship between reputation and perceived fit.
Spain
Purchase Decision 0.382
Involvement t=3.184
t=6.140
0.190
Personal DM , t=1.9
92
0.349
t=4.088
R²=0.511
Q²=0.137
0.
Reputation R²=0.260
19
2
t= Q²=0.189
Media-enabled DM 2. Word of Mouth
29
5
−0.189
0.2
t=2.020 80
t=3
.13
6
0.238 R²=0.697
t=2.882 Q²=0.584 Perceived
R²=0.070 0.829
Q²=0.048 t=11.703
Perceived Fit
Fig. 6.7 Spain, significant paths
Table 6.33 Spain, significant paths

Spain t-values Path coefficients
Personal Direct Marketing ! Reputation 1.992 0.190
Personal Direct Marketing ! Reputation transfer 2.295 0.192
Reputation ! Reputation transfer 2.020 0.189
Purchase Decision Involvement ! WOM 3.182 0.382
6.2.12.6 Russia
The Russian structural model displays strong predictive power regarding the con-
struct of reputation transfer. The relationship between two other constructs and
reputation transfer explains more than 89% of the variance (R2 of 0.891): perceived
fit and WOM. Only about 42% of the variance of reputation (R2 of 0.422) was
explained, achieved by relationship quality and perceived innovativeness.
Compared to the other country data, Russia shows the strongest relationship
between reputation and perceived fit, but the weakest R2 value of variance of
reputation explained. In line with all other countries in this survey, in Russia
relationship quality shows a strong positive relationship towards reputation as
well as towards WOM. Regarding the use of direct marketing media, only media-
enabled direct marketing show one significant path and t-value, related to perceived
fit. Additionally, this relationship is negative. This relationship as well as a positive
relationship between reputation and perceived fit leads to an R2 value of perceived
fit (0.294) amounting a moderate variance explained of 29% (Fig. 6.8 and
Table 6.34).
Russia
Purchase Decision
Involvement
t=1.994
Personal DM
0.494
t=4.553
R2=0.422
Q2=0.114
Reputation R2=0.412
Q2=0.359
980 0.
0.302 1. 57
t= 2, 0.282
t=3.430 10, t=
4.
−0.410 0.1 53 t=2.153
t=2.907 0
R2=0.891
Q2=0.879 Perceived
R2=0.294
Q2=0.294 0.920
Perceived Fit t=15.570
Russia t-values path coefficients

Media-enabled Direct Marketing -> Perceived Fit 2.907 −0.410
Fig. 6.8 Russia, significant paths

Table 6.34 Russia, significant paths

Russia t-values Path coefficients
Media-enabled Direct Marketing ! Perceived fit 2.907 0.410
Perceived innovativeness shows strong positive correlations towards WOM and

reputation. About 41% of the variance of WOM was explained (R2 of 0.412)
through significant paths of constructs relationship quality and perceived innova-
tiveness. In Russia, no significant relationship exist between purchase decision
involvement and WOM.
6.2.12.7 Stakeholder Groups
All three stakeholder groups reveal the following identical findings:

l No significant relationships can be found between both direct marketing media
and perceived fit, reputation and reputation transfer.
l There is no impact of purchase decision involvement on WOM or on reputation.
6.2.12.8 Purchasers
Although in this structural model related to the data of 58 purchasers of five

different countries displays there are existing only four significant paths, the
variances explained of reputation and reputation transfer are substantial: The
relationship between two other constructs and reputation transfer explains more
than 87% of the variance (R2 of 0.873): perceived fit and reputation (Fig. 6.9 and
Table 6.35).
About 54% of the variance of reputation (R2 of 0.546) is explained by relation-
ship quality and perceived innovativeness. Here, compared to all other countries
and stakeholder groups, purchasers show the strongest correlation between per-
ceived innovativeness and reputation. As no significant path coefficients are related
to WOM and perceived fit at all, the R2 values are weak.
6.2.12.9 Pharmacists
Evaluating the data of the structural model related to 65 pharmacists of all five
countries, significant impact of relationship quality on reputation, reputation
Purchasers
Purchase Decision
Involvement
Relationship Quality
0.300
t=2.290
Personal DM
R2=0.546
Q2=0.297
Reputation R2=0.128
Q2=0.126
0.155 0.5
01
t=2.197
t=
4.4
55
R2=0.873
Q2=0.672 Perceived
R2=0.098 0.838
Q2=0.088 t=17.901
Perceived Fit
Purchasers t-values path coefficients

Reputation -> Reputation Transfer 2.197 0.155
Fig. 6.9 Purchasers, significant paths
Table 6.35 Purchasers, significant paths

Purchasers t-values Path coefficients
Reputation ! Reputation transfer 2.197 0.155
transfer and WOM was found. The relationship between two other constructs and
reputation explains more than 56% of the variance (R2 of 0.568): relationship
quality and perceived innovativeness (Fig.6.10 and Table 6.36).
Additionally, in comparison to all other countries and stakeholder groups, the
pharmacist-data shows the only significant path between relationship quality and
Pharmacists
Purchase Decision
Involvement
0.561, t=6.552 Relationship Quality
Personal DM
3
0.351 t=3.170
.59
R2=0.568
t=2
Q2=0.257
Reputation
63,
R2=0.118
0.2
433 Q2=0.068
Media-enabled DM 2.
t= Word of Mouth
3 27 0.
0. 30
1,
0.414 t=4.415 t=
4.
30
1
R2=0.649
Q2=0.481 Perceived
R2=0.386 0.470
Q2=0.284 t=3.832
Perceived Fit
Pharmacists t-values path coefficients

Relationship quality -> Reputation Transfer 2.593 0.263
Fig. 6.10 Pharmacists, significant paths
Table 6.36 Pharmacists, significant paths

Pharmacists t-values Path coefficients
WOM ! Reputation Transfer 2.433 0.327
Perceived Fit ! Reputation Transfer 3.832 0.470
Reputation ! Perceived Fit 4.415 0.414
Relationship quality ! Reputation Transfer 2.593 0.263
6.3 Assessment of Research Hypotheses 151
This structural model displays strong predictive power regarding the construct of
reputation transfer. More than 64% of the variance (R2 of 0.649) was explained by
the impact of WOM, relationship quality and perceived fit. As only one significant
path coefficient of relationship quality is related to WOM, the R2 value of 0.118 is
weak and can be neglected. Nevertheless, there is a positive relationship between
the constructs of WOM and reputation transfer.
In line with the output of data of purchasers, doctors and nurses, no significant
relationships can be found between direct marketing media and perceived fit,
reputation and reputation transfer. Also, there is no impact of purchase decision
involvement on WOM or on reputation. On the first glance there does not seem to
be a relationship between reputation and reputation transfer, the path coefficient is
not significant. Nevertheless, there is a strong relationship between reputation and
perceived fit, which explains more than 38% of the variance of the latter (R2 of
0.386) and additionally leads to a significant path between perceived fit and
reputation transfer. A test of moderating effects (moderator variable: reputation,
predictor variable: perceived fit) did not indicate significant results.
6.2.12.10 Doctors and Nurses
The following model is related to the data of 110 product users of all five countries.
Although only four significant relationships exist, it displays considerable predic-
tive power: More than 50% of the variance of reputation transfer was explained (R2
of 0.510) through WOM and perceived fit. Similarly, about 46% of the variance of
reputation (R2 of 0.461) was explained. Interestingly, this was exclusively achieved
by relationship quality.
One other endogenous variables, perceived fit, shows only weak R2-values (0.068),
but, on the other hand, indicates a strong relationship towards reputation transfer.
Additionally, there is a strong positive relationship between relationship quality
and WOM, which leads to a variance explained of 39% (Fig. 6.11 and Table 6.37).
In the data-set output of “doctors and nurses”, no direct marketing media show
significant paths and t-values. Interestingly, the construct of perceived innovative-
ness in this important stakeholder group does no show significant relationships,
neither to WOM, nor to reputation and reputation transfer.
6.3 Assessment of Research Hypotheses
To test the hypotheses, path analysis with observed (manifest) variables using
SmartPLS 2.0 was carried out. Additionally, the effect size f 2 (Chin, 1998) was
calculated.
Hypothesis H1 predicted that the perceived innovativeness of a company has a
strong positive effect on company reputation. As obvious from Table 6.38, this
hypothesis is supported by a significant positive relationship between innovativeness
Doctors and Nurses

Purchase Decision
Involvement
t=3.664
Personal DM
R2=0.461 0.563
t=5.296
Q2=0.266
Reputation
R2=0.392
Q2=0.326
0.260
t=2.877
R2=0.510
Q2=0.310 Perceived
R2=0.068 0.672
Q2=0.035 t=6.647
Perceived Fit
Pharmacists t-values path coefficients

Fig. 6.11 Doctors and nurses, significant paths
Table 6.37 Doctors and nurses, significant paths

Pharmacists t-values Path coefficients
and reputation in six out of nine tested countries or stakeholder groups. All six paths
were significant at the p<0.05 level, the perceived innovativeness of a company is
theorized to be important for CR in the B-to-B setting.
Table 6.38 Direct impact of innovativeness on reputation

H1. Direct impact of innovativeness Path t-value f 2 value
on reputation coefficient
Threshold values >0.1 > 1,96 >0.02 weak,
>0.15
moderate
>0.35
substantial
All 0.337 2.994 0.164
Australia n.s. n.s. n.a.
Germany n.s. n.s. n.a.
Finland 0.540 5.253 0.457
Russia 0.572 4.530 0.399
Spain 0.280 3.136 0.140
Purchaser 0.501 4.455 0.454
Pharmacists 0.301 4.301 0.155
Doctors and Nurses n.s. n.s. n.a.
In comparison to other countries, Finland shows the strongest t-values and the
most significant effect size. This fact may be traced back to the findings of Hofstede
(2001) regarding its very low scores in PDI: the strong need for technology fosters
openness towards innovations and changes. Disregarding the cultural impact,
openness towards innovations may explain the important impact of innovativeness
on reputation within the stakeholder group of purchaser and pharmacists.
Regarding the strength of relationship, a weaker path correlation and a weak
effect size f 2 is found in the Spanish data-set. This supports hypothesis H1a,
predicting that in cultures scoring high in UAI and low in IDV, the relationship
between perceived innovativeness and reputation is weaker. On the other hand,
findings referring to the Russian data-set do not support this claim: t-values of
Russia are the second strongest, also regarding the effect size f 2, the value is
substantially.
Hypothesis H1b predicted that in cultures scoring high in MAS and IDV and low
in UAI, (in this survey: Germany, Australia) the relationship of perceived innova-
tiveness on reputation is stronger. This hypotheses can not be supported. The
German and Australian data-set shows not path correlation between innovativeness
and reputation. In both cultures scoring high in IDV, perceived innovativeness of a
company does not have an impact on CR. Therefore, no cultural impact related to
Hofstede’s dimensions of IDV and UAI can be confirmed regarding the relationship
between perceived innovativeness and reputation.
Hypothesis H2 predicted that there is a strong positive relationship between
perceived innovativeness and reputation transfer in cultures scoring very low in PDI
and UAI (Finland). Except for Finland, no significant correlation was found
between innovativeness and reputation transfer. Hypothesis H2 is therefore accept-
ed: The perceived innovativeness of a company is no antecedent of reputation
transfer of a new product or product range in a cross-national context-except for
cultures which are as open towards changes and foster innovations. This result may
therefore also be true for other Scandinavian countries sharing the same cultural
dimensions as Finland (Table 6.39).
Hypothesis H3 predicted that there is a strong positive relationship between
perceived innovativeness of a company and WOM. This hypothesis is supported by
a significant positive relationship between innovativeness and WOM in four out of
nine tested countries or stakeholder groups. Only four paths were significant at the
p<0.05 level, effect sizes were weak. Interestingly, no stakeholder group shows
significant relationships between innovativeness and WOM,but-except for Spain-
this effect exists regarding the other countries included in the survey. The perceived
innovativeness of a company is theorized to have an important impact on WOM on
a country level (Table 6.40).
Hypothesis H4 predicts that in cultures scoring low in UAI there is a positive
relationship between purchase decision involvement and WOM. This hypothesis is
partially supported with reference to the countries involved in the survey: three out
of five countries show positive significant paths between purchase decision involve-
ment and WOM: Australia and Finland-scoring low in UAI- and Spain. Moreover,
Spain shows the strongest relationship between the above constructs. In Germany,
there is no relationship between purchase decision involvement and WOM,
although this culture is scoring low in UAI.
Table 6.39 Direct impact of H2. Direct impact of Path t-value f 2 value
innovativeness on reputation innovativeness on rep. coefficient
transfer transfer
All n.s. n.s. n.a.
Finland 0.209 3.521 0.239
Russia n.s. n.s. n.s.
Spain n.s. n.s. n.a.
Purchaser n.s. n.s. n.a.
Pharmacists n.s. n.s. n.a.
Table 6.40 Significant paths H3. Direct impact of Path t-value f 2 value
of innovativeness on WOM innovativeness on WOM coefficient
All n.s. n.s. n.s.
Australia 0.161 1.959 0.028
Germany 0.217 2.866 0.099
Finland 0.297 2.625 0.077
Russia 0.282 2.153 0.120
of purchase decision purchase decision inv. on coefficient
involvement on WOM WOM
All n.s. n.s. n.a.
Australia 0.310 2.337 0.061
Finland 0.267 3.133 0.105
Russia n.s. n.s. n.a.
Spain 0.382 3.184 0.442
of relationship quality on relationship quality on coefficient
reputation reputation
All 0.439 3.963 0.253
Australia 0.634 2.377 0.371
Germany 0.260 1.931 0.077
Finland 0.342 2.750 0.118
Russia. 0.290 1.994 0.062
Spain 0.529 6.140 0.400
Purchaser 0.300 2.920 0.141
Pharmacists 0.561 6.552 0.449
Doctors and Nurses 0.480 3.664 0.170
Additionally, no stakeholder groups show significant relationships between

these constructs. In Australia, Finland and Spain, purchase decision involvement
is theorized to possibly have an impact on reputation in the B-to-B setting.
To the author’s best knowledge, up to 2008, the impact of purchase decision
involvement on WOM has not been evaluated in a cross-cultural context, but on
stakeholder’s level in Germany (von Wangenheim 2003). So, the German results of
this study are in line with the findings of von Wangenheim (2003): No relationship
between stakeholder and WOM as well as no relationship in Germany between
purchase decision involvement and WOM (Table 6.41).
Hypothesis H5 suggests that there is a positive relationship between relationship
quality and reputation. This hypothesis is supported, all countries and stakeholder
groups show positive significant paths between relationship quality and reputation.
Path coefficients as well as effect sizes were stronger in Australia and Spain and
weaker in Germany and Russia. Pharmacists, doctors and nurses show more
substantial paths coefficients than purchasers. Thus, relationship quality is theo-
rized to have an impact on reputation in the B-to-B setting (Table 6.42).
Hypothesis H6 predicted that there is a positive relationship between relation-
ship quality and reputation transfer. This hypothesis is not supported, all countries
and two stakeholder groups show no significant paths between relationship quality
and reputation transfer. Except for the stakeholder group of pharmacists, relation-
ship quality is theorized not to have an impact on reputation transfer in the B-to-B
setting (Table 6.43).
of relationship quality on relationship quality on coefficient
reputation transfer reputation transfer
All n.s. n.s. n.a.
Finland n.s. n.s. n.a.
Pharmacists 0.263 2.593 0.131
Table 6.44 Significant H7. Direct impact of Path coefficient t-value f 2 value
Paths of Relationship relationship quality
Quality on WOM on WOM
All 0.370 2.951 0.144
Australia 0.350 2.384 0.140
Germany 0.649 7.885 0.859
Finland 0.273 1.963 0.073
Russia 0.494 4.553 0.372
Spain 0.349 4.088 0.139
Pharmacists 0.315 3.170 0.103
Hypothesis H7 suggested that there is a strong relationship between relationship

quality and WOM. This hypothesis is supported, eight out of nine countries and
stakeholder groups show positive significant paths between relationship quality and
reputation. The strongest paths coefficients as well as substantial effect sizes can be
found in the German and Russian data-set. Interestingly, doctors and nurses show
strong significant paths and effect sizes-whereas purchasers do not show no signifi-
cant impact at all between relationship quality and reputation. Nevertheless, rela-
tionship quality is theorized to have an impact on WOM in the B-to-B setting (see
Table 6.44).
Hypothesis H8 suggests that in market leader countries like Germany, Spain and
Finland, there is a strong positive relationship between WOM and reputation. This
Hypothesis is not supported (see Table 6.45). Only the German data-set shows a
positive significant path between WOM and reputation. Therefore, WOM is not
considered to have an impact on reputation-no matter, if the countries are market
leader or follower countries.
Hypothesis H9 suggests that there is a strong relationship between WOM
and reputation transfer. This hypothesis is supported by a significant positive
relationship between WOM and reputation transfer in six out of nine tested
countries or stakeholder groups. All six paths were significant at the p < 0.05
level, therefore WOM is theorized to be important for reputation transfer in the
B-to-B setting.
Table 6.45 Significant paths H8. Direct impact of WOM on Path t-value f 2 value
of WOM on reputation Reputation coefficient
All n.s. n.s. n.s.
Australia n.s. n.s. n.s.
Germany 0.432 2.913 0.226
Table 6.46 Significant paths H9. Direct impact of WOM on path t-value f 2 value
of wom on reputation transfer reputation transfer coefficient
All 0.248 2.553 0.121
Germany 0.496 3.205 0.187
Finland 0.215 3.529 0.422
Russia 0.110 1.980 0.074
Pharmacists 0.327 2.433 0.273
This effect was predicted to be stronger H9a for the future product users of the new
product range. With reference to Table 6.46, the future users of pharmaceuticals-
pharmacists as well as doctors and nurses-show significant positive relationship
between the constructs of WOM and reputation transfer. On the other hand, the
stakeholder group of purchasers show no significant paths between these constructs.
This hypothesis is supported.
Hypothesis H9b suggested that in comparison to follower countries, in market
leadership countries there is a strong relationship between WOM and reputation
transfer. In this study, market leader countries are Germany, Spain and Finland.
A significant positive relationship between WOM and reputation transfer can be
found in Germany and Finland, especially the latter shows substantial effect sizes
whereas Germany shows the highest path coefficient. No significant path coefficient
can be found with regard to the Spanish data-set. Therefore, this hypothesis is only
partially supported.
Hypothesis H10 predicts a positive relationship between the perceived fit of the
new product range and reputation transfer. This hypothesis is supported by a
significant positive relationship between perceived fit and reputation transfer in
eight out of nine tested countries or stakeholder groups. All eight paths were
significant at the p<0.05 level, therefore perceived fit is theorized to be very
important for reputation transfer in the B-to-B setting. The f 2 and t-values found
in the relationship between perceived fit and reputation transfer were the highest
effect sizes and values of all evaluated relationships. Surprisingly, market leader
country Germany does not show a significant relationship between these both
constructs. In Germany, the perceived fit of a new product to the existing product
range is unimportant for the transfer of reputation.
H10a. This effect is expected to be stronger in cultures scoring low in IDV and
high in UAI (Spain and Russia) and H10b. weaker for cultures scoring high in IDV
and low in UAI (Australia and Germany). With reference to Table 6.47, Spain and
Russia show much higher t-values and path coefficients than Australia. Germany
shows no relationship at all between perceived fit and reputation transfer. There-
fore, H10a and H10 b both are supported. Hypothesis H10c suggests that the
stakeholder group of purchasers has the best knowledge regarding the existing
product portfolio of its suppliers. Therefore the effect of perceived fit on reputation
transfer is predicted to be stronger for purchaser in comparison to pharmacists and
doctors and nurses. Path coefficient as well as t-value and f 2 value was much higher
for purchasers than for pharmacists and doctors and nurses. This hypothesis is also
supported.
Hypothesis H11 suggested that the use of direct marketing media varies signifi-
cantly among the countries and stakeholder groups.
This hypothesis is supported for all countries and stakeholder-groups: Above
Table 6.48 indicates the percentages mentioned by the participants. Answers refer
to “media is of most importance” or “important” to be informed about new
products. As hypothesized, the use of direct marketing media varies significantly
among the different countries.
of perceived fit on reputation perceived fit on reputation coefficient
transfer transfer
All 0.664 7.277 0.867
Australia 0.716 8.705 1.083
Finland 0.864 12.899 7.535
Russia 0.920 15.570 4.962
Spain 0.829 11.703 1.683
Purchaser 0.838 17.901 3.118
Pharmacists 0.470 3.832 0.424
Table 6.48 Use of direct marketing media

Direct marketing media Australia Germany Finland Russia Spain
Fairs 38% 40% 44% 43% 12%
Symposia 30% 46% 44% 37% 14%
Internet 42% 16% 50% 41% 26%
Brochures 26% 48% 72% 41% 6%
Mailings 44% 40% 72% 10% 10%
Visits of Sales Reps. 38% 48% 58% 45% 18%
Goodness-of-fit tests from grouped data constitute a classical problem in infer-

ence. Thus, Pearson’s (1900) chi-squares test-the most commonly used test statistic
for testing goodness-of-fit as well as the calculation of the j-coefficient to derive a
measure of association between the countries and the direct marketing media was
carried out.
With reference to a null hypothesis assuming that there is no relationship
between the different countries and the use of direct marketing media, the chi-
square test prooves the likelyhood that the above variations were due just to random
chance alone. The results in annexe 9.6 show that there exists a relationship, which
generally is exceeding the requested j-coefficient threshold value of 0.3. Addition-
ally, allmost all chi-square values are significant on a predetermined alpha level of
significance (5% error level).
Evaluating the data-set of different stakeholder groups, 66% of all pharmacists
claim that the Internet is the most important media used for information on new
products-this is only true for 46% of doctors and nurses and 52% of the purchasers.
On the other hand, users like doctors and nurses show strong interest in symposia
and fairs: 60% of all user claim that this medium is important/most important to
them. Only 32% of all pharmacists and 28% of the purchasers judge fairs and
symposia as important or most important. Due to the substantial difference in the
user habits, no significant path correlations are expected related to the direct
marketing media use of the stakeholder groups (see Table 6.48). To evaluate the
data regarding hypotheses H11a and H11b, the results have been split up in
relationships between reputation, reputation transfer and both kinds of direct
marketing media (media-enabled and personal) to focus on detailed differences in
the country results.
Hypotheses H11a and H11b suggested that the impact of direct marketing media
on reputation and reputation transfer is expected to be stronger in cultures scoring
low in PDI and UAI and high in IDV. This hypothesis is not supported, except for
Germany, all countries and stakeholder-groups show no significant paths between
media-enabled direct marketing and reputation. Therefore, media-enabled direct
marketing is theorized not to have an important impact on reputation in the B-to-B
setting.
As obvious from Table 6.49, except for Germany, no significant paths between
media-enabled direct marketing and reputation were found. As listed in Table 6.50,
Spain is the only country showing a significant correlation between personal direct
marketing media and reputation. This result is in line with the findings of Hofstede
(2001) that networks and personal contact in business relationships is more impor-
tant in cultures scoring high in UAI. Remarkably, while comparing the general
results on the use of direct marketing media, Spanish participants show the lowest
percentages regarding “visits of sales representatives” (18 %). Taking into consid-
eration that com-pared to the other countries, all Spanish percentages are low and
just ranging between 10 and 26 %, this result is nevertheless acceptably high.
On the other hand, Russia shows no significant correlations between personal direct
marketing media and reputation at all, although 45 % of all participants list the
Table 6.49 Significant paths H11. Direct impact of media- Path t-value f 2 value
of media-enabled direct enabled DM on reputation coefficient
marketing on reputation
All n.s. n.s. n.s.
Australia n.s. n.s. n.s.
Germany 0.244 2.358 0.136
Finland n.s. n.s. n.s.
Russia n.s. n.s. n.s.
Spain n.s. n.s. n.s.
Purchaser n.s. n.s. n.s.
Pharmacists n.s. n.s. n.s.
Doctors and Nurses n.s. n.s. n.s.
Table 6.50 Significant paths H11. Direct impact of personal Path t-value f 2 value
of personal direct marketing DM on reputation coefficient
on reputation
All n.s. n.s. n.a.
Spain 0.190 1.992 0.067
importance of “visits of sales representatives” as a source to be informed about new

products.
Hypothesis H11c predicts that the impact of direct marketing media on reputa-
tion and reputation transfer is stronger in cultures scoring low in PDI and UAI and
high in IDV (e.g., Australia, Germany and Finland). This hypothesis is supported.
Germany and Finland show significant paths between media-enabled direct mar-
keting and reputation transfer, whereas the Australia data-set reveals a positive
relationship between personal direct marketing media and reputation transfer,
although the effect size is weak. Germany additionally positively correlates
between media-enabled direct marketing media and reputation. Direct marketing
media are theorized to have an important impact on reputation and reputation
transfer in cultures low in PDI and UAI and high in IDV (Table 6.51).
Due to a higher level of decision-making authority (Hofstede 2001), the impact
of media-enabled direct marketing media on reputation transfer is expected to be
stronger in cultures scoring low in PDI (Germany and Finland). Media-enabled
direct marketing therefore is theorized to have an impact on reputation transfer
in cultures with low scores in Hofstede’s dimension PDI. Surprisingly, with regard
to the Finnish data-set, the relationship between media-enabled direct marketing
and reputation transfer is negative. In Finland, media-enabled direct marketing
Table 6.51 Significant paths H11. Direct impact of personal Path t-value f 2 value
of personal direct marketing DM on reputation transfer Coefficient
on reputation transfer
All n.s. n.s. n.a.
Australia 0.159 2.038 0.059
Spain 0.192 2.295 0.099
Purchaser n.s. n.s.
Pharmacists ns n.s.
Doctors and Nurses n.s. n.s.
Table 6.52 Significant paths H11. Direct impact of media- Path t-value f 2 value
of media-enabled direct enabled DM on rep. transfer coefficient
marketing on reputation
All n.s. n.s. n.a.
transfer
Germany 0.236 2.623 0.115
Finland 0.169 3.435 0.366
activities have a strong negative impact on reputation transfer, effect size is

substantial (Table 6.52).
Hypothesis H11 d suggested that the impact of direct marketing media on
reputation and reputation transfer is weaker in cultures scoring high in UAI and
PDI and low in IDV (e.g., Russia and Spain). This hypothesis is partially supported:
Russia shows no significant relationships between media-enabled direct marketing
and reputation or reputation transfer. Spain shows no relationship between direct
marketing media and reputation transfer, but a weak significant path correlation
with low effect sizes between personal direct marketing and reputation as well as
Hypothesis H12 suggests that in feminine cultures like Russia and Finland there
is a strong relationship between reputation and reputation transfer. This hypothesis
is not supported. Both countries show no relevant path correlation at all.
Nevertheless, with reference to Finland, the impact of CR on reputation transfer
is moderated positively through WOM.
As far as the stakeholder groups are concerned purchasers show a positive
relationship between reputation and reputation transfer. Reputation is theorized to
have a impact on reputation transfer in the B-to-B setting.
With reference to hypothesis H 14, the impact of reputation on reputation
transfer can either be positive or negative-but in this study no cultural impact can
be confirmed. Surprisingly, having a look at countries who value CR more than trust
(Spain and Russia) only Spain shows correlations between reputation and reputa-
tion transfer-negative relationships, though (Table 6.53). This fact will later be
discussed.
Hypothesis H13 suggests that there is a strong positive relationship between
E-readiness of different cultures and media-enabled direct marketing activities.
This hypothesis was developed on the one hand to verify the media-enabled
direct marketing data-set. On the other hand, the impact of different levels of
e-readiness in the five countries is supposed to influence the use of electronic
media like mailings and the Internet.
With reference to the following significant path correlation in the following
table, E-readiness is theorized to have a impact on media-enabled direct marketing
in the B-to-B setting (Table 6.54).
Hypothesis H15 predicts that there is a positive relationship between reputation
and the perceived fit of the new product to the existing product range. This
hypothesis is supported by a significant positive relationship between reputation
and perceived fit in five out of nine tested countries or stakeholder groups. All five
paths were significant at the p<0.05 level, reputation is theorized to be important
for the fit perception of new products in the B-to-B setting.
As the effect is stronger in cultures with high scores in UAI and PDI (Russia and
Spain) and weaker in cultures scoring low in UAI and PDI (Australia and Finland),
hypothesis 15a is supported, too (Table 6.55).
As already discussed (see Sect. 3.3.4 and 4.6.5), Eberl (2006) has also carried out
an empirical research on the relationship between reputation and perceived fit. In
his study he uses a reputation measure consisting of two separate constructs:
sympathy and competence. His survey was carried out on the German B-to-C
market and this hypothesis was not supported. In this study, Germany also showed
no significant relationship between both constructs. Nevertheless, the impact of
reputation on reputation transfer is significantly high in some other countries.
Table 6.53 Significant path H14. Direct impact of reputation Path t-value f 2 value
of reputation on reputation on reputation transfer coefficient
transfer
All n.s. n.s. n.a.
Spain 0.189 2.020 0.145
Purchaser 0.155 2.197 0.212
Table 6.54 Significant path Direct impact of E-readiness on media- path t-value
of E-readiness on media- enabled DM coefficient
enabled DM
All countries 0.454 2.290
Table 6.55 Significant path H15. Direct impact of Path coefficient t-value f2
of reputation on perceived fit reputation on perceived fit
All 0.236 2.058 0.055
Finland 0.242 2.544 0.063
Russia 0.302 3.430 0.101
Spain 0.238 2.882 0.062
Pharmacists 0.414 4.415 0.423
Doctors, Nurses n.s. n.s. n.a.
This again shows, how decisive a cross-cultural evaluation of datasets on CR is

regarding the definition of its impact factors.
In line with Hofstede (2001) hypothesis H 16 predicts that trust in sales repre-
sentatives and supplier is more important in cultures scoring low in UAI and PDI
(Australia, Finland) and less important in cultures scoring high in UAI and PDI
(Russia, Spain).
For all countries, a test of inference (Pearson’s (1900) chi-square (w2) test of
independence) as well as the calculation of the j-coefficient to derive a measure of
association between the variables “countries” as well as trust and reputation was
carried out. With reference to a null hypothesis assuming that there is no relation-
ship between the different countries, trust and reputation, the chi-square test
prooves the likelyhood that the variations evaluated in hypotheses H16 and H17
were due just to random chance alone. The results in annexe 9.6 show that there
exists a relationship, which generally is exceeding the requested j-coefficient
threshold value of 0.3. Additionally, allmost all chi-square values are significant
on a predetermined alpha level of significance (5% error level).
Huff and Kelley (2003) claimed that external trust that individuals within an
organization have for external partners will be higher for organizations from
individual societies than for collective societies.
This study supports all findings. Asked for the importance of a trustful relation-
ship with their supplier, 83.3% of the German participants, as well as 67.7% of the
Finnish and 73.3% of the Australian participants, argue that trust is decisive to
them. On the other hand, only 13.7% of the Russian and 36% of the Spanish
organizational stakeholders think that a trustful relationship is decisive (Fig. 6.12).
According to Hofstede (2001), Australia (index of 93), Germany (index value
73) and Finland (index of 68) score high in IDV. Referring to an index value of 39,
Russia scores extremely low in IDV and Spain shows an average IDV index of 53.
Also, in the context of this cross-cultural study, trust for external partners is more
substantial in organizations from individual societies scoring low in UAI like
Australia, Germany and Finland, than for collective societies scoring high in UAI
like Spain and Russia. Although there are market-leader (Finland, Germany, Spain)
and follower countries (Russia, Australia), it is clear that the above results are not
influenced by the market situation in hospital care. The importance of trust and
%
90
80
70
60
50
40
30
20
10 73.3 % 67.7 % 83.3 % 36.0% 13.7 %
Australia Finland Germany Spain Russia Countries
Fig. 6.12 Decisiveness of a trustful relationship to the supplier
70
60
50
40
30
20
10 60.0 % 64.0 % 44.0 % 46.0% 34.0 %
Australia Finland Germany Spain Russia Countries
Fig. 6.13 Importance of trust in the recommendations of sales representatives
positive reputations of a supplier is clearly related to the cultural impact of the

respective countries (Fig. 6.13).
Regarding the importance of trust in the recommendations of sales representa-
tives of certain suppliers, Finland and Australia (scoring low in UAI) show much
higher rates of importance than Russia and Spain (scoring high in UAI). For the
German participants of this survey-scoring average in UAI-trust in the recommen-
dations of sales representatives is not as important as it is for Australian or Finnish
purchasers and users. Hypothesis 16 is supported by a significant positive relation-
ship between the importance of trust and Hofstede’s cultural dimensions.
Hypotheses H17 suggests that with reference to organizational buying behavior,
reputation is more important in cultures scoring high in UAI and PDI (Russia,
Spain) and less important in cultures scoring low in UAI and PDI (Australia,
Finland, Germany).
Interestingly, significant cultural differences were found: Only 41 % of the
German participants agree that CR is somewhat important (25%) or decisive
(16%) while deciding about new supplier or products, whereas 72,8 % of the
Russian and 90.0 % of the Spanish organizational buyers think that CR is a
somewhat important or decisive factor on their buying decision.
Unfortunately, Hofstede’s (2001) dimensions offer no insights regarding the
importance of CR in different cultures. Figure 6.14 lists the results of the general
importance of a supplier’s positive reputation. For 74.2% (43.7% + 30.5%) of the
purchasers, pharmacist, doctors and nurses involved in the organizational buying
process, a good CR is somewhat important or decisive with regard to purchasing
decisions. Only about 5% of the survey participants had no opinion on that subject.
This shows that even in the B-to-B context, characterized by tender businesses,
comparable products and a general lower level of involvement (von Wangenheim
2003; Backhaus and Voeth 2007), the intangible asset of CR is a valuable one.
Nevertheless, to learn about possible cultural differences, the data needed to be
further evaluated by country.
The above results lead to the conclusion that a positive reputation of the supplier
is more important in collective societies scoring high in UAI like Russia and Spain
and less important in individual societies scoring low in UAI like Australia,
50
40
30
20
10
6.6 % 14.2 % 43.7 % 30.5 % 5.1 %

absolutely not somewhat somewhat decisive don’t know
important unimportant important
Fig. 6.14 Importance of a suppliers’ positive reputation

40
30
20
10
14.0 16.0 16.0 38.0 35.3 19.0 21.5 29.1
Australia Finland Germany Spain Russia Purchasers Pharmacists Doctors/Nurses
Fig. 6.15 Decisiveness of a good reputation of the supplier
Germany and Finland. This is an important issue-bearing in mind that most of the
actual research on CR is focused on the individual US society. Hypothesis H17 is
supported by a significant positive relationship between reputation and Hofstede’s
cultural dimension of UAI. Disregarding the possible cultural impact, the users of
the products (in this survey: doctors and nurses) care more for a suppliers reputation
than purchasers and pharmacists. Interestingly, 60% of all pharmacists additionally
claim a good reputation to be “somewhat important” to them, as quoted above,
additionally 21.5% think it is decisive. This leads to the conclusion-although not
directly visible in above Fig. 6.15, a good reputation of a supplier is generally
important for the stakeholder group of pharmacists.
6.4 Findings related to Countries and Stakeholder Groups
Before the highlights and particularities of the single countries and stakeholder
groups are discussed, first of all, an overview on the fulfillment of the construct-
related hypotheses is given. Derived from theory and actual literature, 17 hypoth-
eses and eleven sub-hypotheses were developed. All in all, 20 of them are now
judged to be fulfilled (Table 6.56).
To the author’s best knowledge, the construct of reputation has never been
before designed based exclusively on relationship- and knowledge resources-and
has never before tested-implemented in one study-in five countries and three
stakeholder groups. Additionally, the cultural impact on reputation, perceived fit
and reputation transfer has been evaluated in detail in a B-to-B context. Several
findings are in line with the study of Hofstede (2001), whose dimensions still can be
regarded as a useful tool to compare cultural effects across countries.
In this study, most conclusions on reputational impact factors could only be
drawn by splitting up customer-related research data by countries. While compar-
ing the results of the aggregated data-set with the country results and the outcomes
of the three stakeholder groups, certain influencing factors remain invisible and
therefore unconsidered. This especially refers to the differences in use of direct
6.4 Findings related to Countries and Stakeholder Groups 167
Table 6.56 Overview on the fulfillment of hypotheses

No. Construct-related hypotheses Fulfilled
H1. The perceived innovativeness of a company has a strong positive effect on +
corporate reputation
H1a. This impact of perceived innovativeness on corporate reputation is weaker -/+
in cultures scoring high in UAI and low in IDV and MAS (e.g., Russia and
Spain)
H1b. The impact of perceived innovativeness on corporate reputation is stronger -
in cultures scoring high in MAS and IDV and low in UAI (Australia and
Germany)
H2. There is a strong positive relationship between perceived innovativeness and +
reputation transfer in cultures scoring very low in PDI and UAI (Finland)
H3. There is a strong positive relationship between perceived innovativeness and -/+
WOM
H4. In cultures scoring low in UAI (Australia, Finland and Germany) there is a -/+
positive relationship between purchase decision involvement and WOM
H5. There is a positive relationship between relationship quality and reputation +
H6. There is a positive relationship between relationship quality reputation transfer -
H7. There is a strong positive relationship between relationship quality and WOM +
H8. There is a strong positive relationship between WOM and reputation in market -/+
leader countries like Germany, Spain and Finland
H9. There is a strong positive relationship between WOM and reputation transfer +
H9a.This effect is expected to be stronger for the future product users of the new +
product range
H9b. This effect is expected to be stronger in market leadership countries -/+
H10. There is a strong positive relationship between the perceived fit of the new +
product range and reputation transfer.
H10a. This effect is expected to be stronger in cultures scoring low in IDV and +
high in UAI (Russia and Spain)
H10b. This effect is expected to be weaker in cultures scoring high in IDV and +
low in UAI (Australia, Finland and Germany).
H10c. As purchasers know best about the existing product portfolio of their +
supplier, the effect of perceived fit on reputation transfer is expected to be
stronger for purchaser and weaker for pharmacists, doctors and nurses
H11. The use of direct marketing media varies significantly among the countries and +
stakeholder groups
H11a. There is a strong positive relationship between direct marketing media and +
reputation
H11b. There is a strong positive relationship between direct marketing media and
reputation transfer
H11c. The impact of direct marketing media on reputation and reputation transfer
is expected to be stronger in cultures scoring low in PDI and UAI and high in
IDV (Australia, Germany, and Finland)
H11d. The impact of direct marketing media on reputation and reputation transfer -/+
is expected to be weaker in cultures scoring high in UAI and PDI and low in
IDV (Russia and Spain)
H12 A culture characterized by a high femininity index (Russia and Finland) provides, -/+
relative to a culture with a high masculinity index (Australia and Germany),
an environment more conducive to the successful transfer of reputation
H13 There is a strong positive relationship between E-readiness of different cultures +
and media-enabled direct marketing activities
H14 There is a strong positive relationship between reputation and reputation transfer -/+
in market-leader countries (like Germany, Finland and Spain)
(continued)
Table 6.56 (continued)

No. Construct-related hypotheses Fulfilled
H15 There is a positive relationship between reputation and the perceived fit of the +
new product to the existing product range
H15a. The effect is stronger in cultures with high scores in UAI and PDI (Russia +
and Spain) and weaker in cultures scoring low in UAI and PDI (Australia and
Finland)
H16 Trust in sales representatives and supplier plays a more important role in cultures +
scoring low in UAI and PDI (Australia, Finland) and a less important role in
cultures scoring high in UAI and PDI (Russia, Spain)
H17 A company’s reputation plays a more important role in cultures scoring high in +
UAI and PDI (Russia, Spain) and a less important role in cultures scoring low
in UAI and PDI (Australia, Finland, Germany)
marketing media and to the construct of purchase decision involvement. Regarding

the above mentioned constructs, no significant path correlation was found with
reference to the data-sets of all countries, purchasers, pharmacists as well as doctors
and nurses.
Referring to the Theory of Commitment and Trust (Morgan and Hunt 1994),
both factors impact on reputation and reputation transfer in different ways. In some
cultures, social networks and trust in the company and in the recommendations of
sales representatives are more important than reputation. On the other hand,
reputation also does play a more important role in cultures scoring low in UAI-
and a less important role in those cultures relying on trust-and scoring high in UAI.
Following the results of this study and in line with Hofstede’s (2001) findings, a
cultural impact on the use of and the trust in direct marketing media is confirmed.
Commitment towards the company and suppliers is weak in cultures scoring high in
IDV (Australia, Germany). In collectivist cultures, commitment and trust is more
important within social networks (Russia, Spain). These “social networks” may
also include sales representatives of certain suppliers and are (together with WOM)
replacing the influence of direct marketing media on information about new
products.
As discussed before, resources, representing what can be done by the company and
the competitive environment, representing what should be done to compete effectively
in satisfying customer needs, are both essential in the strategy-development process
(Priem and Butler 2001). Following the findings of this study, CR can be consid-
ered as a superior resources in cultures scoring high in UAI, like Russia and Spain.
Also, with regard to the knowledge-based view, customers in the B-to-B setting
appreciate that the supplier shares expertise as a partner. This indicator is more
important in Finland and Russia (feminine cultures) and less important in Australia,
Germany and Spain (masculine cultures).
Interestingly, the importance of trust and reputation on relationship behavior
varies between countries and stakeholder groups: Opposite to trust, reputation is
more important in uncertainty avoiding countries scoring high in power distance.
Possibly, due to similar cultural scores, this result can be extended on all Latin
countries (e.g., South America, Portugal). In these countries, Hofstede’s (2001)

dimension of UAI score high, indicating the society’s low level of tolerance for
uncertainty. All these societies do not readily accept changes and are very risk
adverse. To purchase products from a company having a positive CR may reduce
risks. Also, taking into consideration the effect of not accepting changes and risks,
long-term buyer-seller relationships as well as customer commitment are impor-
tant. Additionally, users like doctors and nurses rely on a good reputation of the
supplier.
The impact of innovativeness on reputation is strong across all countries
and stakeholder groups, no cultural influence can be confirmed. Only Australia,
Germany and-surprisingly-the stakeholder group of doctors and nurses do not show
significant impact of innovativeness on reputation. On the other hand, the relation-
ship between innovativeness and reputation transfer is practically non-existent and
only visible in Finland.
Regarding the construct of purchase decision involvement, a cultural impact
could not be confirmed-although its impact on WOM is remarkably strong in some
countries. Then again, no relationship was found between the constructs of purchase
decision involvement and reputation. In line with Hofstede (2001), a cultural impact
on the use of and the trust in direct marketing media is confirmed.
The following subsections focus on different findings referring to the five
countries and three stakeholder groups. Scientific and managerial implications are
provided.
6.4.1 Findings Related to all Countries
In comparison to the single-country data-sets, probably caused by the cultural

differences between the countries, several constructs do not show significant
relationships towards other constructs. This especially refers to the use of direct
marketing media, but also to purchase decision involvement. By only evaluating the
disaggregated analysis, several conclusions resulting from this study could not be
drawn. Surprisingly, the outer loadings of all reflective constructs are higher with
reference to the complete data-set. Nevertheless, this does not lead to sufficient
significant path correlations. Regarding the data-set of all countries, only two paths
are influencing reputation:
l Relationship quality and
l Innovativeness
l Reputation transfer is influenced by perceived fit in eight out of nine groups and
by WOM in six out of nine groups
Finally, the author concludes that paths significant across all countries are valid at
least in all Western-type countries and not influenced by cultural differences. This
especially refers to the construct of relationship quality, which positively influences
reputation and WOM, and the construct of perceived fit.
6.4.1.1 Cross-Cultural Managerial Implications
Only little managerial recommendations can be given based on the aggregated data-
set. It is useful to invest in the enhancement of relationship quality as being the
cross-culturally important impact factor on reputation. This leads to the conclusion
that-no matter in which country new products or product ranges shall be introduced,
l Relationship quality as well as
l Perceived fit (and WOM in a limited way) are decisive
l Generally, in line with Keller (2003), the fit perception is important
l It can not be recommended to rely on the use of “one global direct marketing
medium” cross-culturally: in some countries social networks as well as WOM
are even more important than any other direct marketing media
l In some countries, trust is more essential than CR- and vice versa
As already discussed before, it is indispensable to have information on the use of
direct marketing media, before launching the product in certain countries.
6.4.2 Australia
The cultural dimensions of Australia are characterized by a high level of individu-

ality, loosely knit social frameworks, and a focus on privacy. Although trust is
easier developed in lower-UAI societies like Australia (Hofstede 2001) and com-
panies from this cultural type engage in relationships, they also tend to restrain
themselves from fully trusting in partners, to whom they are not strongly tied by
cultural norms to group goals (Griffith et al. 2006). Full commitment to its interor-
ganizational partners is difficult to achieve (Hofstede 2001).
6.4.2.1 Scientific Implications for Australia
As far as the Australian data-set is concerned, all outer loading are scoring high.
Australia is the only country, where both types of direct marketing media have
impact on other constructs included in the structural model.
l In Australia, the perceived fit of the new product has a strong positive impact on
reputation transfer success.
l Although direct marketing media do not impact directly on reputation, they are
influencing reputation transfer as well as the fit perception.
Additionally, the construct of perceived fit serves as a mediator of media-enabled
direct marketing on reputation transfer. Reputation is exclusively influenced by
relationship quality. Together with perceived innovativeness and purchase decision
involvement, the latter has also a positive impact on WOM. Surprisingly, the
Australian research results indicate that WOM does not have a positive influence
either on reputation or on reputation transfer.
6.4.2.2 Managerial Implications for Australia
Australia is much less price-sensitive as the other Western-type cultures included in

this survey. To inform about new products,
l Australian customers rely on direct marketing media and on fit perceptions than
on personal recommendations, WOM has no impact on reputation or or reputa-
tion transfer.
l With regard to Australian customer relations in the B-to-B setting, direct mar-
keting media are judged to be the key influencing factor on reputation, reputation
transfer and perceived fit.
Additionally, in this country, the strong influencing factor of relationship quality
needs to be taken under consideration, reputation in Australia is exclusively influ-
enced by this construct. Reputation has no direct impact on reputation transfer, in
Australia trust in the supplier is more important than a positive CR. As personal
direct marketing media are directly influencing reputation transfer, a trustful rela-
tionship between the sales representatives and the customers is key to success. The
fit perception of the new product can nevertheless been influenced using brochures,
the Internet or mailing: facts count more than WOM.
6.4.3 Finland
According to Hofstede (2001) Finland is a very feminine country with low hierar-
chy levels. Characterized by openness towards changes and innovations as well as
decentralized decision structures, the Finnish research results reveal the importance
of relationship quality, innovativeness as well as WOM on a company’s reputation
and on reputation transfer.
6.4.3.1 Scientific Implications on Finland
In Finland not only WOM, but additionally innovativeness impacts positively

on reputation transfer. Interestingly, with reference to the construct of “per-
ceived innovativeness” this country distinguishes explicitely between “leading”
and “innovative” products. Furthermore, the impacts of the constructs relation-
ship quality and reputation have an indirect impact on reputation transfer-
moderated through WOM. Finnish customers positively discuss and recommend
products. WOM is therefore judged to be the key influencing factor on reputa-
tion transfer.
Unlike the findings of von Wangenheim (2003) as well as Feick and Price
(1987), concluding that buying behavior of industrial purchasers as well as
WOM is not determinated by purchase decision involvement, the results of this
cross-cultural study for Finland (as well as for Australia and Spain) indicate a
strong positive relationship between purchase decision involvement and WOM.
6.4.3.2 Managerial Implications for Finland
Reviewing the use of direct marketing media,

l The Finnish B-to-B customers prefer to rely on media-enabled direct marketing
sources, such as the Internet, brochures and mailings. These media are have a
strong positive impact on the perceived fit of new products.
l Study results show that the impact of media-enabled direct marketing media on
reputation transfer is negative and that Finnish customers rely on trust in the
recommendations of sales representatives. Therefore, to transfer the positive
reputation of a company on new products, the trustful relationship between sales
representatives and customers is essential.
l Results of a second study based on the same data-set also reveal a positive
impact of media-enabled direct marketing on relationship quality.
l Personal direct marketing is of minor importance
Thus, if a company wants to extent their product range in Nordic countries like
Finland by using its good reputation, this company should rely on media-enabled
direct marketing actions. Additionally, in this country, the strong influencing factor
of WOM needs to be taken under consideration.
6.4.4 Germany
According to Hofstede (2001), Germany is a very masculine culture with low

hierarchy levels, focused on individual benefits. Advertising is seen as a useful
source of new product information.
The German research results reveal the importance of relationship quality on
reputation and WOM. WOM is also influenced by the perceived innovativeness of
the company involved, no significant correlations is found between purchase
decision involvement and WOM. On the other hand, the construct of perceived
innovativeness neither influences reputation nor reputation transfer directly. Addi-
tionally, Germany is the only country where WOM impacts on both, reputation and
reputation transfer. The impact of relationship quality on reputation transfer is
existing indirectly, moderated through WOM.
6.4.4.1 Scientific Implications for Germany
Following the research question referring to a to successful transfer of a company’s

reputation on a new product range, this may not be possible on the German market:
l The fit perception of the new product range is lacking and, additionally, can not
be influenced either by a company’s reputation, or by any direct marketing
media (although Germany is “home market” and market leader country of the
company involved in this survey).
l In Germany, reputation is generally considered to be of minor importance and
has no direct impact on reputation transfer.
l Although reputation transfer is positively influenced by WOM and media-
enabled direct marketing, the customers do not agree that the new product
range fits to the existing portfolio.
Evaluating the outer loadings of the construct of reputation transfer, the quality
perception of the new product range is lacking: German customers are the only ones
who do not expect the same high product quality standard compared to the already
existing core products (0.5895 compared to the outer loadings of the other
countries, which are scoring much higher: between 0.8715–0.9885).
Coming back to the differences in a customer’s view of CR, in Germany trust is
much more important than reputation:
l A trustful relationship to the supplier is very important to the German B-to-B
customers, more than 83% of all survey participants agree to that.
l In line with above findings and with reference to the construct of reputation, the
outer loading referring to the indicator of “I trust in the products of this
company” scores much higher (0.9050) compared to the other two indicators
of this construct (0.6858 and 0.6084, see Table 6.5).
6.4.4.2 Managerial Implications for Germany
Reviewing the use of direct marketing media, the German B-to-B customers prefer
to rely on media-enabled direct marketing sources, such as the Internet, brochures
and mailings. Also note that Germany is the only country where media-enabled
direct marketing is able to influence both, reputation and reputation transfer. No
path is significant related to the constructs of personal direct marketing media.
Results of a second study based on the same data-set also reveals a positive impact
of media-enabled direct marketing on relationship quality.
Thus, if a company wants to extent their product range in masculine countries
with low hierarchy levels and the disposition to take over risks by using its good
reputation, this company should bear in mind the problem of the fit perception.
Possibly, countries with these cultural dimensions are more critical and only
influenceable through direct marketing media and WOM. Therefore, in Germany,
the strong influencing factor of WOM needs to be taken under consideration.
As in Germany (as well as in Australia and Finland) trust in the supplier and in
the recommendation of its sales representatives is more important than CR, trust-
enhancing activities may positively influence a customer’s relationship. This may
be one reason, why reputation is not related at all to the construct of reputation
transfer in these countries.
6.4.5 Russia
Following the findings of Hofstede (2001), Russia is a feminine, very hierarchical

and centralized country. Russian people are said to dislike decisions based on
uncertainty and are characterized by high uniformity, high conservatism, high
secrecy (Salter and Niswander 1995) and stronger interpersonal and interorganiza-
tional ties (Money et al. 1998).
6.4.5.1 Scientific Implications for Russia
Evaluating the Russian data-set, one of the outer loadings of the indicators forming
the construct of reputation scores low: Russia is not much of the opinion that the
company involved in this survey really cares for customers opinions. On the other
hand, Russia scores highest with regard to the indicators of reputation transfer
(0.9890 and 0.9885).
Although perceived innovativeness of a company is an important feature, new
products-like all innovations placed on the Russian market-need to be supported
from upper hierarchy levels to be successful.
l Social networks are important: Instead of direct marketing media, WOM is
directly influencing reputation transfer, but does not show any impact on repu-
tation.
l In line with the findings of Hofstede (2001), in Russia the impact of any direct
marketing media is weak
l No significant path correlations were found between reputation and reputation
transfer
l Perceived fit of the new product is positively influenced by reputation as well as
by media-enabled direct marketing´
l The Internet as well as brochures and mailings can be used to influence the fit
perception. Thus, these media need to include padding information instead of
focusing exclusively on facts and figures (Hofstede, 2001)
In Russia, brand names and a company’s positive reputation value more than trust
in the suppliers, the outer loadings for “I trust in products of this supplier” are
relatively weak. Relationship quality as well as perceived innovativeness have a
positive impact on reputation.
6.4.5.2 Managerial Implications for Russia
If a company wants to extent its product range in feminine countries with strong
hierarchy levels and no disposition to take over risks, it is possible to use its good
reputation. Although CR is influencing reputation transfer through the construct of
perceived fit, WOM and CR are the essential factors with reference to the successful
transfer of reputation.
The use of direct marketing media is limited, moreover, media enabled direct
marketing sources like the Internet, brochures and mailings are even able to
influence the fit perception of the new product in a negative way.
As in Russia (as well as in Spain) CR is much more important than trust in the
supplier and sales representatives, a customer’s relationship relies on a company’s
CR while deciding on purchasing products in the B-to-B context. Relationship
quality as well as the perceived innovativeness of a company are positively
influencing CR. Russian customers want have the feeling that a company is offering
value for money and take their concerns seriously. To enhance a company’s
reputation in Russia is more important than focus on direct marketing media, if
reputation transfer shall be successful.
6.4.6 Spain
According to Hofstede (2001) Spain is an average society regarding the dimension

of MAS and dislikes decisions based on uncertainty. Hierarchy levels are relatively
strong, commitment of employees towards the organization is low, as personal
relationships prevail over task and company. Findings of Hofstede (2001) claim
that persons in low IDV societies do not believe in advertising, innovations are less
important.
6.4.6.1 Scientific Implications for Spain
In line with Hofstede’s (2001) findings and especially in comparison to the Finnish
results,
l Perceived innovativeness does not play an important role. Spain is the only
country, where this construct has no impact on WOM.
l The impact of perceived innovativeness on reputation is weak and non-existent
with reference to reputation transfer, although the outer loadings of the construct
“perceived innovativeness” are higher (0.9019 and 0.9554) than in any other
country included in this survey.
l In Spain CR is generally more important than trust, in this survey the reputation
of the company involved is not as high compared to the other countries.
Evaluating the outer loadings of the construct of reputation, values related to the
indicators of “I trust in the products of this company” (0.6620) as well as “this
company shares expertise as a partner” (0.6867) are much lower compared to other
countries. These low scores on two out of three indicators show that the reputation
of the company involved in the research is inferior compared to the other countries.
This also influences the relationship between reputation and reputation transfer in a
negative way and leads to the conclusion that
l Reputation transfer can just be carried out successfully, if the company in

general owns a positive reputation
l And is possible only in cultures, where reputation is more important than trust.
6.4.6.2 Managerial Implications for Spain
With reference to the results of the study,

l Media-enabled direct marketing sources do neither influence reputation, reputa-
tion transfer nor the perceived fit of the new products to the existing product
range.
l Personal direct marketing media like fairs, symposia or visits of sales represen-
tatives have a significant influence on both, reputation and reputation transfer.
l It can not be recommended to refer to the “perceived innovativeness”, if a
company wants to positively enhance their reputation on the Spanish market
Compared to other countries, the impact of relationship quality is very strong, not
only regarding a company’s CR, but also with reference to WOM. Interestingly,
although influenced by relationship quality and purchase decision involvement,
WOM does not show any significant impact on any of the constructs involved in the
structural model. If a company wants to extent its product range in Spain,
l Personal direct marketing media should be used,
l Activities like the participation in fairs and symposia as well as visits of sales
representatives have a positive impact on reputation and reputation transfer.
l In Spain CR is much more important than trust in the supplier and its sales
representatives.
l Relationship quality as well as the perceived innovativeness of a company are
positively influencing CR. There is a strong positive relationship between
reputation and the perceived fit of the new product range, although-surprisingly-
the direct impact of reputation on reputation transfer is negative.
6.4.7 Purchasers
Although only very little path correlations in this stakeholder group are significant,
the results are very interesting:
l Organizational purchasers are the only group in this survey, where reputation
directly positive impacts on reputation transfer.
l With reference to this stakeholder group, a transfer of reputation is a very good
opportunity, even without the round-about-way via perceived fit.
This is a very interesting result, taking into consideration that except for this
stakeholder group, the direct link between reputation and reputation transfer is
non-existent (all countries, Australia, Germany, Finland, Russia, pharmacists, doc-

tors and nurses) or-even worse-negative (Spain). So,
l If a company is focused on extending its product range and organizational
purchasers are its target group, using a company’s positive reputation is very
well possible.
l Thus, as far as the direct marketing media are concerned, the country results
additionally need to be taken under consideration.
l As already discussed before, relationship quality as well as innovativeness has a
positive impact on reputation, and
l The fit perception additionally is positively influencing reputation transfer
success.
6.4.8 Pharmacists
Hospital pharmacists are involved in the prescription of drugs; their advisory role is
becoming more dominant regarding the choices of treatments and desire for
information of doctors and nurses (Wright and Fill 2001). The results of this
study show that for this stakeholder group,
l Relationship quality is the most important influencing factor and that
l This construct has a very strong impact on reputation, reputation transfer and
WOM
These findings are in line with the results of the UK study of Wright and Fill (2001,
p. 102), claiming that pharmacists quote their relationship towards sales represen-
tatives and the attribute “company offers value for money” as important and “key to
the contribution of the overall image of a pharmaceutical company”. According to
the results of Wright and Fill (2001), sales representatives are the main source of
marketing communications with the companies. As the use of direct marketing
media varies significantly among the countries, no significant paths were found
regarding the use of personal direct marketing. Nevertheless, Hofstede’s cultural
dimensions of the UK are similar to the Australian data-set regarding the dimen-
sions of IDV, PDI and MAS. The Australian data-set indicates the impact of
personal direct marketing media on reputation transfer (personal direct marketing
media also include visits of sales representatives). Additionally, in Australia the
importance of trust in the recommendations of sales representatives of certain
suppliers show much high rates of importance. Therefore, a transfer of the findings
of Wright and Fill (2001) regarding the importance of personal direct marketing
in countries having the same cultural dimensions like Australia and the UK, is
quite likely.
The construct of reputation is also influenced by a company’s perceived innova-
tiveness. This is also in line with the study of Wright and Fill (2001) discussing the
importance of a high level of research and development investments, which is also
closely linked to the perceived innovativeness of a company.
Therefore, to strengthen a company’s reputation in the relationship towards

pharmacists, the author recommends
l To invest in activities impacting relationship quality (“this company offers value
for money” or “takes my concerned seriously”) and
l The perceived innovativeness of the company (“this company offers leading/
innovative products”)
As far as reputation transfer is concerned, WOM and perceived fit are strongly
influencing this construct. As stated above, WOM is influenced by relationship
quality. Therefore, putting the focus on the latter, seems to be the one decisive link
to reputation transfer success. As far as the direct marketing media are concerned,
the related country results need to be referred to.
6.4.9 Doctors and Nurses
The stakeholder group of doctors and nurses is the one with the smallest number of
significant paths. Interestingly,
l The perceived innovativeness of a company does not have an impact either on
reputation and WOM, or on reputation transfer.
l For the user group of doctors and nurses, to focus on innovativeness in direct
marketing media is not a way to success.
On the other hand, relationship quality impacts directly on WOM as well as on
reputation:
l The products of a company seem to be often recommended directly by other
users having a positive attitude towards the company.
l A good reputation of the supplier is cross-culturally important (see Fig. 6.15,
indicating the high scores of doctors and nurses on the importance of a good
reputation of the supplier)
l Perceived fit of the new products range impacts positively on reputation transfer
and thus is an important feature in this stakeholder group
Regarding all other constructs, no recommendations can be given, due to a lack of
significant relationship between the constructs.
6.5 Discussion of Research Questions
The hypotheses listed in Table 6.56 were developed to answer on certain research
questions presented in Sect. 4.6. Thus, based on the evaluation of research data and
hypotheses, the following statements shall be made:
6.5 Discussion of Research Questions 179
1. Is reputation transfer influenced by reputation? Is this relationship between

reputation and reputation transfer significant across all countries and stakeholder
groups or related to market leadership?
An impact of reputation on reputation transfer was found. This effect turned out to
be twofold: negative and positive. While evaluating the moderating effects, regard-
ing the Finnish data-set the impact of reputation on reputation transfer was posi-
tively moderated through WOM, although there was no direct impact. The Spanish
data-set shows a negative relationship between reputation and reputation transfer.
Interestingly, the most important stakeholder group involved in the buying decision
process-the organizational purchasers-indicates the only direct positive path corre-
lation between reputation and reputation transfer. Obviously, in this study, market
leadership does not have an impact on the link between reputation and reputation
transfer.
2. In B-to-B relationships, what factors further influence reputation and reputation
transfer? Are the factors identical across countries and stakeholder groups?
A very strong influencing factor on reputation is WOM, this construct is also
serving as a moderator variable. Additionally, relationship quality is the only
construct which indicates strong positive impact on reputation throughout all
countries and stakeholder groups. Suprisingly, except for the stakeholder group of
pharmacists, relationship quality shows no impact at all on the construct of reputa-
tion transfer.
The same pattern holds for the construct of innovativeness: Strong impact on
reputation,and-except for Finland-no impact on reputation transfer. Impact factors
on reputation transfer are differ significantly across countries and stakeholder
groups. Except for the use of direct marketing media, impact factors on reputation
are more similar across the countries and stakeholder groups.
3. What role do the media play with regard to CR, reputation transfer and perceived
fit of the new product or product range? Is there a difference regarding countries
and stakeholder groups in use of personal direct marketing media and media-
enabled direct marketing?
Except for Australia (which uses both types of direct marketing media) and Spain
(which prefers personal direct marketing media), all countries prefer media-enabled
direct marketing like the Internet, brochures and mailings to inform themselves
about new products.
Due to the significant differences in the use of direct marketing media, no
significant paths are achieved, before splitting up the data-set by countries. This
finally led to the conclusion that, based on the results of this study, the use of direct
marketing media is strongyl influenced by different cultural values. This result
corresponds to the findings of Hofstede (2001), claiming that cultures scoring low
in uncertainty avoidance (in this survey: Australia, Finland and Germany) rely more
on advertisements than others, which score high in uncertainty avoidance (Russia
and Spain).
4. The use of media varies across the countries. Is there a relationship between the
e-readiness score of the different countries and media-enabled direct marketing?
A positive relationship can be confirmed in all countries under consideration. The
use of media-enabled direct marketing in different countries and across stakeholder
groups is influenced by the criteria evaluated in the e-readiness construct.
5. Is it really true that purchase decision involvement plays no role in B-to-B
buying behavior? Is there a relationship between purchase decision involvement
and WOM in cultures with low scores in PDI?
The study results show that purchase decision involvement is not influencing a
company’s reputation, although, referring to the German data-set, the positive
impact of purchase decision involvement on reputation is moderated through
WOM.
In Australia, Finland, and Spain purchase decision involvement has a positive
impact on WOM. Findings of this study lead to the conclusion that purchase
decision involvement plays a role in B-to-B buying behavior-but the impact is
only visible, if the data is split-up by countries. It is not visible, if the data-set is split
up by stakeholder groups. Therefore, this impact is also influenced by cultural
differences.
Nevertheless, in line with the conclusions of von Wangenheim (2003) no impact
of purchase decision involvement on B-to-B buying behavior can be confirmed for
Germany. Therefore, before generally denying an impact of one certain construct
on another, a possible cultural influence can strongly be recommended.
6. What kind of impact does WOM have on reputation and reputation transfer?
Which factors influence WOM across countries and stakeholder groups?
A direct impact of WOM on reputation was exclusively found in the German data-
set, this cross-cultural relationship seems to be only weak. Except for Australia,
Spain and the stakeholder group of purchasers, WOM has a strong positive impact
on reputation transfer. Except for organizational purchasers, all countries and
stakeholder groups show a strong influence between relationship quality and
WOM. Relationship quality therefore is considered to be an important influencing
factor on WOM.
7. In the B-to-B context, does the perceived innovativeness have an impact on
both, reputation and reputation transfer? Can new products take advantage of the
perceived brand characteristics of the parent brand? What about the relationship
between perceived innovativeness and WOM?
Perceived innovativeness is an important factor on reputation, but has hardly no direct
influence on reputation transfer success. Thus, perceived innovativeness indirectly
impacts reputation transfer through WOM: Except for Spain, all countries show a
strong relationship between perceived innovativeness and WOM. As no stakeholder
group shows any significant correlation, the influence of innovativeness within this
structural model is only visible while separating the main data-set by country.
6.5 Discussion of Research Questions 181
New products may take advantage of the brand characteristics of the parent
brand-strongly influenced directly by WOM and indirectly influenced by relation-
ship quality.
8. How important is the perceived fit of the new product or product range with
regard to reputation transfer success? Does CR influence this fit across all
countries and stakeholder groups? Is perceived fit also influenced in all countries
by both direct marketing media?
According to the results of this study, the perceived fit is a key influencing variable
on reputation transfer. This enhances the findings of Keller (2003), who claims that
the perceived fit is important with brand extension projects. Except for market-
leader country Germany, all countries and stakeholder groups confirm a strong
positive relationship between both constructs, the perceived fit and reputation
transfer. Also, besides Australia, all countries show significant impact of reputation
on perceived fit. With reference to the different stakeholder groups, this impact is
also very strong towards pharmacists. This leads to the conclusion that CR has a
strong impact on the perceived fit of new products.
In Australia, Finland and Russia, media-enabled direct marketing is able to
influence the perceived fit of the new product, although this relationship is negative
in Russia. This result is in line with the findings of Hofstede (2001), arguing that
cultures scoring high in UAI do not trust in advertisements.
9. Is there a positive relationship between relationship quality and reputation?
Does the attitude towards the company also influence reputation transfer?
Study results show that relationship quality by far is the most substantial impact
factor on reputation. All countries and stakeholder groups show significant path
correlations between both constructs, additionally, relationship quality is also
strongly influencing WOM in most of the countries. Thus, the author suggests
that within this survey relationship quality as well as the perceived fit are the
only constructs which are obviously not influenced by the national culture of
buyers.
The findings of this research work also confirm that, surprisingly, relationship
quality influences reputation transfer only indirectly though WOM. The attitude
towards the company influences reputation transfer success in an indirect way.
10. What about the impact of the national culture of buyers on the factors influen-
cing reputation and reputation transfer? Does national culture influence the
impact of a company’s reputation on organizational buying decisions?
Some of the constructs are considered to be more related to cultural impacts
than others.
l Relationship quality, the perceived fit, perceived innovativeness and WOM
mostly play an important role in almost all countries and stakeholder groups.
These constructs strongly correlate with reputation or reputation transfer.
l The use and the importance of direct marketing media as well as the impact of
purchase decision involvement on WOM varies significantly from country to
country and is not visible at all regarding the stakeholder groups.
l Data evaluation leads to the result that reputation, perceived fit and reputation
transfer matter more in uncertainty avoiding cultures scoring high in PDI. In
these countries, reputation is more important than trust in the supplier and will
surely impact organizational buying decisions: A positive reputation may reduce
the risk of chosing the wrong supplier (uncertainty avoiding cultures have great
fear of failure).
Results of this study show that perceived fit of new products generally has a strong
impact on reputation transfer success. Uncertainty avoiding cultures like Russia and
Spain show much stronger coefficients than cultures scoring low in this dimension
(Australia, Finland).
Chapter 7
Conclusions, Implications and Research
Suggestions
This empirical study is motivated by the research question of whether and how
national culture influences the way organizational buyers of different countries
perceive a company’s reputation and whether the impact factors on CR and
reputation transfer are identical to all stakeholders and countries.
The relevance of the findings of this study is both theoretical and practical:
l Theoretically, this study increases our understanding of distinctions in impact
factors on CR and reputation transfer among stakeholders of different countries
in the B-to-B context.
l It also provides further empirical support to the idea that different cultures base
their evaluations on different subsets of dimensions of a company’s reputation
or, in other words, on different subsets of perceived corporate actions and
features.
l In practical terms, the findings of this study provide communication managers
and marketing managers with general indications about the drivers of CR, and
information on the use of direct marketing media by organizational stakeholders.
l This study also indicates that there are countries where it is possible to enter new
markets by transferring a company’s (positive) reputation on new products.
l Remarkably, for the German market, study results show that there is no signifi-
cant correlation between the constructs of reputation, perceived fit and reputa-
tion transfer. A more exact examination of the survey data indicated that the
German customers do not believe that the new transfer product of generic
pharmaceuticals will offer the same high quality standard than the core product
range of medical devices. Thus, for this certain company in the field of medical
devices and in this certain country (Germany), a transfer of reputation core
values on generic pharmaceuticals will possibly not be a success.
Referring to the resource-based view, this study confirms that a company’s reputa-
tion is a very important intangible asset. Nevertheless, it is literally nothing more
than how the organization is perceived by its stakeholders. Scientists, as well as
managers, need to bear in mind that stakeholders’ perceptions vary cross-culturally.
Moreover, referring to the knowledge-based view, in the B-to-B setting, the results

184 7 Conclusions, Implications and Research Suggestions
of this study show that organizational customers cross-culturally value the fact that
a supplier takes their concerns and requests seriously and shares expertise as a
partner. Surprisingly, this is applicable cross-culturally and important not only in
countries which are said to be relationship-oriented.
To compose “one valid construct of reputation” is a daunting challenge. As
suggested by Gatewood et al. (1993), inconsistent perceptions across stakeholder
groups might be attributed to different correlates of reputation, whereas consistent
perceptions indicate that reputation is a general construct. The findings of this study
prove that reputation is influenced by inconsistent perceptions across stakeholder
groups and countries, which leads to the conclusion that reputation is NOT a
general construct. Helm (2006) claims that if not all stakeholder groups are repre-
sented among the respondents, the study results are biased and do not validly
represent the collective construct of a company’s reputation.
The author wishes to add that an “overall reputation” encompassing several
different stakeholder group perceptions (investors, customers, suppliers, employ-
ees, general public) does not yet exist, and in the light of the different reputations
of countries and stakeholders, is not scientifically reasonable. Taking into con-
sideration the different impact factors on CR, one construct including all stakeholder-
specific features is hard to analyze, and to compare the results of different
stakeholder groups and countries, the datasets need to be separated.
The above comments surely include some of the reasons why up to now
neither researchers nor practitioners have yet found a cross-nationally validated
instrument to measure reputation (Fombrun and Wiedmann 2001; Fombrun
and Gardberg 2002; Helm 2007; Eberl 2006; Money and Hillenbrand 2006).
This work has tried a completely different approach. It focuses on the develop-
ment and cross-cultural testing of a construct of reputation rooted in resource-
based theories. With regard to the strong cultural impact on reputation, future
reputational research approaches should bear in mind the following: Before
composing the construct of reputation by using indicators related to trust, one
should take into consideration the fact that the importance of trust and reputation
are discussed controversially in different cultures (see evaluation of Hypotheses
16 and 17). As already concluded by Hofstede (2001), we can confirm the
following:
l This study shows that trust is significantly more important in countries where
people have low hierarchy levels, fewer laws and regulations and relationship
orientation is stronger. According to Hofstede (2001), these countries score low
in UAI and PDI (in this study: Australia and Finland).
l On the other hand, trust is less important in cultures where people have more fear
of failing, believe in specialists and expertise, and have high hierarchy levels.
Following the results of Hofstede (2001), these countries score high in UAI and
PDI (in this study: Russia and Spain).
Up to now, no study has ever asked organizational customers to rate the impor-
tance of a supplier’s positive reputation on their buying decision. CR is said to be
important for a company’s success (Fombrun et al. 2000; Eberl 2006, MacMillan
7 Conclusions, Implications and Research Suggestions 185
et al. 2005; Helm 2007), although the importance of CR clearly differs across the
countries.
In addition, this study is able to extend Hofstede’s (2001) findings by presenting
the empirical proof of the cultural influence on reputation.
l CR is significantly more important in cultures where company loyalty is a virtue
and where people prefer clarity and structure and are afraid of wrong decisions
and failure. This refers to countries scoring high in UAI and PDI (in this study:
Russia and Spain).
l CR is less important in cultures where people are open to changes and innova-
tions and are willing to take unknown risks. These professional characteristics
refer to countries scoring low in UAI and PDI (in this study: Australia and
Finland).
This study shows that a company’s reputation in the B-to-B context is influenced by
different factors. Nevertheless, some criteria are also influence CR positively across
all countries and stakeholder groups. Coming back to the research objectives in
Chap. 1, the following conclusions can be made:
l No doubt, companies have many reputations, simply due to the fact that just one
stakeholder group will evaluate its reputation cross-culturally and therefore see
it in various ways. In general terms, this study shows that reputation may also be
negative. This may be a serious issue in those countries where reputation is more
important than trust.
l Stakeholder groups use different criteria to evaluate a company. Across all
countries and stakeholder groups, relationship quality and perceived innovative-
ness impact positively on CR.
l Stakeholder groups also use the same criteria to evaluate a company. In
Germany, WOM and media-enabled direct marketing activities have a strong
influence on CR. In contrast, in Australia, both constructs have no impact at all
on CR.
l Also, with reference to the indicators forming the construct of reputation,
different outer loadings indicate different evaluations of a company’s reputation.
Thus, these differences are only obvious while splitting the dataset: Referring to
the complete dataset of 250 respondents, the outer loading, of all three indicators
are virtually identical.
l In line with the findings of Gardberg (2006), the dimension “vision and
leadership” has not been included in the measurement model of CR in this
study. B-to-B customers, especially organizational buyers, have only very
limited knowledge about their suppliers’ “vision and leadership”. Similarly,
for B-to-C customers, the international adaptability of the dimensions “vision
and leadership” and “financial performance” is discussed controversially
(Gardberg 2006; Fombrun et al. 2000; Helm 2006; Waldman et al. 2004).
One of the reasons why these features are difficult to adapt globally can be found
in the results of Hofstede (2001), claiming that the way leadership is conducted
within a nation is also strongly influenced by culture.
This, again, is one indicator of the strong cultural impact on a company’s

reputation. Also, by transferring the American-based measurement concept of
Fombrun’s RQ cross-culturally, these differences were obvious and discussed by
Gardberg (2006), Walsh and Wiedmann (2004), Dunbar and Schwalbach (2000)
and Aperia, et al. (2004), but none of these authors traced the problems of transfer-
ring the RQ measures back to cultural differences across the countries.
7.1 Scientific Implications
This research is the first to highlight the cross-link between reputation, reputation
transfer and culture, and argues that to develop one cross-culturally valid construct
of reputation, which can be used in both B-to-B and B-to-C contexts is neither
useful nor appropriate.
However, the chosen set of variables and moderators do not exhaust the list of
possible determinants. Although the structural model suggests several important
determinants, mediators and moderaors, other variables were omitted. Some deter-
minants, such as “financial performance”, “vision and leadership” and “social
responsibility”, were omitted as the impact of these determinants on reputation is
not clearly verifiable in the B-to-B context. Others, like “customers” attitude toward
sales representatives”, “propensity to leave”, “service quality” and “years of expe-
rience with product or company” were left out to avoid an overburdening of the
existing structural model.
This research addresses the important issue of whether or not purchasing behav-
ior in B-to-B relationships differs across countries. However, purchasing decisions
in the B-to-B domain are highly complex and often involve multiple decision
makers.
The results of this study are not in line with the conclusions of Helm (2007), who
claims that reputation and trust interact and that reputation is a consequence of trust,
and that trust may only develop based on a positive reputation. Although it is
generally assumed that a positive CR is an important asset, up to now, the signifi-
cance of reputation in different countries has not yet been empirically investigated.
This research highlights several cross-cultural differences in customers’ percep-
tion of reputation and in the feasibility of reputation transfer. In the light of these
cross-cultural differences, we make the following scientific propositions:
l Generally, a company’s reputation is influenced by national culture and may
differ by stakeholder groups.
l In cultures scoring high in uncertainty avoidance, a company’s positive CR is a
valuable asset, as the transfer of reputation is possible.
l Surprisingly, CR is not as important as trust in countries scoring low in uncer-
tainty avoidance. These countries value a trustful relationship with a supplier
over a company’s reputation, and therefore reputation transfer is virtually
impossible.
7.2 Managerial Implications 187
l The influencing factors on CR differ significantly. Thus, this study argues for a
broader perspective on reputation and reputational resources.
l Negative reputations impact negatively on reputation transfer. Only positive
reputations offer the feasibility of reputation transfer success.
l Regarding reputation transfer, the fit perception of the new product or product
range is essential. Furthermore, different reputations in different cultures impact
on perceived fit.
This research was limited to fifty participants of five different countries. Neverthe-
less, it was obvious how much the single country datasets varied in almost
every aspect. Therefore, regarding the theory of commitment and trust and bearing
in mind the global relationship-enhancing activities of international companies,
recommendations on the treatment of certain stakeholder groups may not be given
without evaluating the country-related data.
In this study, the findings regarding media-enabled and personal direct market-
ing activities differ impressively. Consequently, it is impossible to recommend one
direct marketing tool, cross-culturally, to influence CR.
7.2 Managerial Implications
In practice, the definitions of reputation and brand identity are still closely related or
mixed up, this until today leads to serious problems in comparing research results
on CR. Corresponding to this, Harris and Chernatony (2001, p. 445) adopt their
definition of “brand reputation” as “a collective representation of a brand’s past
actions and results that describes the brand’s ability to deliver valued outcomes to
multiple stakeholders.” From a managerial point of view, this work provides
several important insights:
l Suppliers may use their customers’ nationality as a customer segmentation
element, analyze their customer structure carefully and identify cross-cultural
differences.
l Possessing knowledge about the media used in certain cultures increases direct
marketing effectiveness. This knowledge helps suppliers in B-to-B markets to
position their products exactly in the media most frequently used by their target
groups.
l It is often suggested that companies should strive for one consistent reputation
among stakeholder groups (e.g., Nguyen and Leblanc 2001). This goal may be
reached more easily by extending knowledge on the user habits of direct
marketing media as reputation-influencing tools.
l With respect to relationship commitment, positive links have been found
between relationship quality, WOM, perceived innovativeness and reputation.
l If a company is planning to introduce new products by transferring its positive
reputation, countries should be selected where reputation is more important than
relationship commitment, and where people are afraid of wrong decisions and
failure. This refers to countries scoring high in UAI and PDI (in this study:
Russia and Spain) In addition, all Latin American countries fall into this
category.
l To improve customer relationships in the B-to-B context, trust enhancing actions
are recommended in countries having low hierarchy levels, and fewer laws and
regulations. In these countries, relationship orientation is stronger. This refers to
countries scoring low in UAI like the US, Australia and Finland.
A discussion is currently gaining ground concerning the impact of Internet network
communities on CR, not only in the B-to-C setting, but also regarding supplier
rankings in B-to-B. Therefore, to learn about the direct marketing communication
tools in certain countries and to use them properly will surely be more important in
the future. Also, the impact of customer Internet clubs and consumer magazines on
CR in countries valuing media-enabled direct marketing can clearly be recom-
mended without restriction.
Two of the constructs, WOM and innovativeness, have been identified in earlier
studies carried out on the general population (Fombrun et al. 2000; Fombrun and
van Riel 2004). Unlike what was observed for the general population, however,
these dimensions, as well as relationship quality, seem central in affecting the
overall disposition of the stakeholders in the B-to-B setting. Therefore, all measures
enhancing a company’s perceptions regarding “It offers value for money”, “It takes
my concerns seriously” can be recommended cross-culturally. In line with the
findings of Morgan and Hunt (1994), this leads neatly to the following conclusion:
Relationship commitment and relationship quality are still a very important global
issue. Their impact on CR is significant.
7.3 Conclusions and Outlook
In general, the most important contribution of this study is that it improves our basic
understanding of how differently the same company’s reputation is evaluated by its
cross-cultural customers. Consistent with the findings of Hofstede (2001), this work
confirms that the use of direct marketing media is influenced by national culture and
varies significantly.
The construct of reputation transfer has never been observed empirically before,
and seems to be more relevant in some cultures or within certain stakeholder
groups. The influence of purchase decision involvement on reputation has never
been investigated either. Cross-culturally, does not seem to have an impact on this
construct. Nevertheless, the author is able to confirm the relationship between
purchase decision involvement and WOM in the B-to-B context. This impact is
denied in the literature (e.g., von Wangenheim 2003; Feick and Price 1987).
In general, the results of this study are in line with the findings of Gabbioneta
et al. (2007) and Meffert and Bierwind (2002), who suggest that while some
7.3 Conclusions and Outlook 189
dimensions of CR tend to overlap across different countries and groups of stake-

holders, different stakeholders may focus their evaluation on different sets of
attributes. The results of cross-cultural testing in five countries indicate that a
unique cultural influence on reputation and reputation transfer exists: The impact
of all constructs integrated in the structural model on reputation and reputation
transfer differs significantly across the countries.
Thus, the findings of this study do not support the conclusions of Newman and
Nollen (1996), who argue that UAI may not be a useful dimension for comparative
research, and Denison and Mishra (1995), who generally deny the impact of culture
on the perceptions of policies and good management practices.
Inconsistent perceptions across stakeholder groups might be attributed to differ-
ent correlates of reputation (Gatewood et al. 1993). Reputational analysis, there-
fore, should be limited to specific roles of a company:
The findings of Homburg et al. (2004) indicate that countries scoring high in
UAI care more for tangible relationship resources, whereas intangibles play a more
important role in cultures scoring low in UAI. Trust as well as CR are intangible
relationship resources, and cross-culturally important. Thus, this study argues that it
is not possible to separate cultures based on the importance of tangible or intangible
relationship resources, but to distinguish between the importance of trust (in
cultures scoring low in UAI) and the importance of reputation (related to cultures
scoring high in UAI) in relationships.
To the author, general reputation can only exist as well as the specific role-
confined reputations, as long as the company is known to the general public, i.e.,
with B-to-C companies. To date, cross-cultural studies located in the B-to-B setting
of different stakeholder groups’ perceptions of reputation have rarely been pub-
lished. They are, of course, necessary to gain further insights into stakeholder-
specificity or country-specificity of reputational perceptions.
This research approach is limited to five countries. With regard to the Russian
context, further research should focus on a larger number of Russian participants,
and by geographical regions. This fast-growing economy comprises a diversity of
Western and Eastern cultural areas. Also, to investigate the “Asian view of CR”
will surely enhance our knowledge of important impact factors on CR and the
possibility of reputation transfer in this region.
In addition, to compare the impact factors on CR in a B-to-B and B-to-C setting
directly, a replication of this research may be focused on some “most visible
companies” in the five countries included in this survey.
A company’s reputation may still be one of the key drivers of corporate
competitiveness and profitability, provided that the company is aware of the various
impact factors on its CR and uses the suitable direct marketing media to influence it.
Bearing in mind the economic importance of companies in the B-to-B context and
the changes taking place in Russia and China, to repeat this study after a period of
10 years could offer additional insights into the importance of media-enabled direct
marketing activities in global expansion and possible changes regarding the impact
factors on corporate reputation.
Annex
Outer loadings of reflective constructs: Referring

to Sect. 6.2.5
Table A1 Outer loadings of reflective constructs
Constructs Indicators Purchasers Pharmacists Users
Innovativenes Innovative prod. 0.8824 0.9359 0.9283
Leading prod. 0.8970 0.7897 0.9035
Reputation Cares for cust. opinion 0.8557 0.7539 0.8306
Shares expertise 0.8381 0.8144 0.8311
I trust in products 0.8365 0.7088 0.8393
WOM Would recommend medical dev. 0.9150 0.9545 0.9382
Would recommend Pharma 0.8879 0.9790 0.9195
RepTransfer Would purchase it 0.9018 0.9006 0.9239
Expect same quality 0.8717 0.8149 0.8300
Fornell–Larcker Criterion, Data of Stakeholders:

Referring to Sect. 6.2.8, Fornell–Larcker Criterion,
Data of Stakeholders
Table A2 Fornell–Larcker criterion, data of purchasers

Purchasers Perceived Reputation Reputation Word of mouth
Perc. 1.0000 0.0203 0.4107 0.0529
innovativeness
Reputation 0.4108 0.0409 1.0000 0.2283
Word of mouth 0.0529 0.3845 0.2283 1.0000
AVE 0.7915 0.7376 0.5779 0.9349
191
192 Annex
Table A3 Fornell–Larcker criterion, data of pharmacists

Pharmacists Perceived Reputation Reputation Word of mouth
Perc. 1.0000 0.2900 0.4554 0.0882
innovativeness
Reputation 0.4554 0.4128 1.0000 0.2656
Word of mouth 0.0882 0.5941 0.2656 1.0000
AVE 0.7498 0.7376 0.5779 0.9349
Table A4 Fornell–Larcker criterion, data of doctors and nurses

Doctors and nurses Perceived Reputation Reputation Word of mouth
Perc. 1.0000 0.2622 0.2481 0.3494
innovativeness
Reputation 0.4281 0.2978 1.0000 0.4520
Word of mouth 0.3494 0.3928 0.4520 1.0000
AVE 0.8390 0.7713 0.6950 0.8628
Cross-Loadings of Reflective Constructs of Stakeholders:

Referring to Sect. 6.2.7 Cross-Loadings of Reflective Constructs
of Stakeholders)
Table A5 Cross-loadings of reflective constructs: purchasers
Crossloadings Perceived Reputation Reputation Word of mouth
purchasers innovativeness transfer
innovative products 0,8820 0,1136 0,5581 0,1843
cares for cust. opinions 0,4851 0,2087 0,8546 0,1651
shares expertise 0,5370 0,0763 0,8346 0,1041
trust in products 0,5902 0,2179 0,8404 0,2910
leading products 0,8973 0,1398 0,5817 0,2240
recommend Med. Dev. 0,2607 0,5150 0,3086 0,9219
recommend Pharma 0,1428 0,6150 0,0805 0,8799
would purchase it 0,2102 0,9018 0,0936 0,6221
expect same quality 0,0323 0,8717 0,2770 0,4691
Table A6 Cross-loadings of reflective constructs: pharmacists

Crossloadings Pharmacists Perceived Rep Reputation Word of mouth
innovative products 0,9359 0,3345 0,4520 0,1060
cares for cust. opinions 0,4725 0,2994 0,7517 0,2661
shares expertise 0,3543 0,3710 0,8146 0,1212
trust in products 0,2080 0,2581 0,7108 0,2471
leading products 0,7897 0,1191 0,3123 0,0287
recommend Med. Dev. 0,0441 0,4956 0,1763 0,9549
recommend Pharma 0,1140 0,6310 0,3132 0,9788
would purchase it 0,3340 0,9007 0,4033 0,5992
expect same quality 0,1393 0,8149 0,2943 0,3987
Annex 193
Table A7 Cross-loadings of reflective constructs: doctors and nurses

Crossloadings Doctors, Perceived Reputation Reputation Word
Nurses innovativeness transfer of mouth
Innovative products 0,9283 0,2323 0,4064 0,3724
Cares for cust. opinions 0,3331 0,3207 0,8305 0,3047
Shares expertise 0,3777 0,1068 0,8308 0,3250
Trust in products 0,3640 0,2819 0,8396 0,4810
Leading products 0,9035 0,2468 0,3766 0,2602
Recommend med. dev. 0,3268 0,3830 0,4285 0,9386
Recommend pharma 0,3223 0,3409 0,4103 0,9191
Would purchase it 0,3268 0,9214 0,3472 0,4761
Expect same quality 0,0944 0,8336 0,1408 0,1610
Tables of Multicollinearity, Stakeholders: Tables referring

to Sect. 6.2.10 Multicollinearity
Table A8 Mulitcollinearity of formative constructs: purchasers

Purchasers formative Indicators Weights, Std. t-values VIF < 10
unstandardized Error
Purchase decision Same features 0.090 0.226
involvement Brand imp. 1.014 2.011
Purc dec, 0.183 0.505
Relationship quality Value money 0.386 1.249
Concerns 0.599 1.981
Satisfied 0.387 1.102
Personal DM Fairs 0.386 0.627
Symposia 1.228 1.992
Visits sr 0.042 0.138
Media-enabled DM Brochures 0.639 1.033
Internet 0.910 1.088
Mailings 0.215 0.495
Table A9 Mulitcollinearity of formative constructs: pharmacists

Pharmacists formative Indicators Weights, Std. t-values VIF < 10
unstandardized Error
Purchase Same features 0.116 0.476
Decision Involvement Brand imp. 0.607 3.072
Purc dec, 0.639 3.099
Relationship Quality Value money 0.657 4.879
Visits sr 0.760 1.168
194 Annex
Table A10 Mulitcollinearity of formative constructs: doctors and nurses

Doctors, Nurses Indicators Weights, Std. t-values VIF < 10
formative unstandardized Error
Purchase decision Same features 0.780 1.150
involvement Brand imp. 0.572 1.010
Purc dec, 0.074 0.235
Relationship quality Value money 0.294 2.763
Visits sr 0.441 0.845
Data Bonferroni–Holm’s Procedure: Data Related to Sect. 4.4

Table A11 Bonferroni–Holm’s procedure, related path: Rel. quality – WOM
Paths significant on t-value p-value, in ascending order, Values based on
a p = 0.05 level: p-value must be < values Bonferroni–Holms
Rel.Quality – WOM of Bonferroni–Holm’s procedure
Doctors, Nurses 5.296 0.0 0.00625
Russia 4.553 0.0 0.00714
Germany 7.885 0.0 0.00833
Spain 4.088 0.001 0.01
Pharmacists 3.170 0.0013 0.0125
All countries 2.915 0.0017 0.01666
Australia 2.384 0.0105 0.025
Finland 1.963 0.0276 0.05
Table A12 Bonferroni–Holm’s procedure, path: Innovativeness– reputation

a p = 0.05 level: p-value must be < values Bonferroni–Holms
Innovativeness– reputation of Bonferroni–Holm’s procedure
Fin 5.253 0.0 0.00833
Russia 4.530 0.0 0.01
Purchaser 4.455 0.0 0.0125
Pharmacists 4.301 0.0 0.01666
Spain 3.136 0.0014 0.025
All 2.994 0.0015 0.05
Table A13 Bonferroni–Holm’s procedure, related path: Rel. quality – WOM

Paths significant on a p = 0.05 t-value p-value, in ascending order, Values based on
level: Innovativeness-Rep. p-value must be < values of Bonferroni–Holms
Transfer Bonferroni–Holm’s procedure
Finland 3.521 0.0005 0.05
Annex 195
Table A14 Bonferroni–Holm’s procedure, related path: Innovativeness – WOM

Paths significant on a t-value p-value, in ascending order, Values based on
p = 0.05 level: p-value must be < result of Bonferroni–Holms
Innovativeness – WOM Bonferroni–Holms procedure procedure
Ger 2.866 0.003 0.0125
Fin 2.625 0.0057 0.01666
Russia 2.153 0.0181 0.025
Aus 1.959 0.0279 0.05
Table A15 Bonferroni–Holm’s procedure, related path: Purch. dec. inv. – WOM
p = 0.05 level: Purch. p-value must be < values of Bonferroni–Holms
dec. inv. – WOM Bonferroni–Holm’s procedure
Spain 3.184 0.0013 0.01666
Fin 3.133 0.0014 0.025
Aus 2.337 0.0117 0.05
Table A16 Bonferroni–Holm’s procedure, related path: Rel. Qual.– Reputation

p = 0.05 level: Rel. p-value must be < values Bonferroni–Holms
Quality– Reputation of Bonferroni–Holm’s procedure
Pharmacists 6.552 0.0 0.00555
Spain 6.140 0.0 0.00625
All 3.963 0.0 0.00714
Doctors, Nurses 3.664 0.0003 0.00833
Purchaser 2.920 0.0023 0.01
Fin 2.750 0.0041 0.0125
Aus 2.377 0.0107 0.01666
Russia. 1.994 0.0258 0.025
Ger 1.931 0.0296 0.05
Table A17 Bonferroni–Holm’s procedure, related path: Rel. Qual.– Rep. transfer
Paths significant on a t-value p-value, in ascending order, Value based on
p = 0.05 level: Rel. p-value must be < values of Bonferroni–Holms
Quality– Rep. Transfer Bonferroni–Holm’s procedure
Pharmacists 2.593 0.0057 0.05
Table A18 Bonferroni–Holm’s procedure, related path: Rel. Qual.– Rep. transfer
Paths significant on a t-value p-value, in ascending order, Value based on
p = 0.05 level: WOM- p-value must be < values of Bonferroni–Holms
Reputation Bonferroni–Holm’s procedure
Ger 2.913 0.0027 0.05
196 Annex
Table A19 Bonferroni–Holm’s procedure, path: WOM-Rep. transfer

a p = 0.05 level: p-value must be < values Bonferroni–Holm’s
WOM-Rep. Transfer of Bonferroni–Holm’s procedure
Fin 3.529 0.0005 0.00833
Ger 3.205 0.0012 0.01
Doctors, Nurses 2.877 0.0028 0.0125
All 2.553 0.0056 0.01666
Pharmacists 2.433 0.0086 0.025
Russia 1.980 0.0266 0.05
Table A20 Bonferroni–Holm’s procedure, path: Perc. Fit-Rep. Transfer

Paths significant on a t-value p-value, in ascending order, Result based on
p = 0.05 level: Perc. p-value must be < values of Bonferroni–Holms
Fit-Rep. Transfer Bonferroni–Holm’s procedure
Aus 8.705 0.0 0.00625
All 7.277 0.0 0.00714
Doctors, Nurses 6.647 0.0 0.00833
Pharmacists 3.832 0.0 0.01
Purchaser 17.901 0.0 0.0125
Russia 15.570 0.0 0.01666
Fin 12.899 0.0 0.025
Spain 11.703 0.0 0.05
Table A21 Bonferroni–Holm’s procedure, path: Reputation-Perc. Fit

Paths significant on a t-value p-value, in ascending order, Result based on
p = 0.05 level: p-value must be < values Bonferroni–Holms
Reputation-Perc. Fit of Bonferroni–Holm’s procedure
Pharmacists 4.415 0.0 0.00833
Russia 3.430 0.0006 0.01
Spain 2.882 0.0029 0.0125
Fin 2.544 0.007 0.01666
All 2.058 0.0203 0.025
Ger 1.916 0.0305 0.05
Data of Pearson’s Chi-Square test
Table A22 Chi-Square test on trustful relationship and reputation, data set “All
Countries”
All country data-set, n = 250 Trustful relationship Reputation
Chi-square 92.997 108.812
5% error level 7.814 9.488
5% error level exceeded Yes Yes
Degrees of freedom 3 4
Asymptotic significance 0.001 0.001
j-coefficient 0.6089 0.6597
Annex 197
Table A23 Chi-Square test on direct marketing media, data set “All Countries”
All country data-set, Fairs Symposia Internet Brochures Mailings Visits
n = 250 of SR’s
Chi-square 7.048 11.957 35.986 45.728 31.664 82.145
5% error level 11.070 9.488 9.488 9.488 9.488 9.488
5% error level exceeded No Yes Yes Yes Yes Yes
Degrees of freedom 5 4 4 4 4 4
Asymptotic significance 0.217 0.018 0.001 0.001 0.001 0.001
j-coefficient 0.1670 0.2186 0.3793 0.4276 0.3558 0.5732
Table A24 Chi-square test on trustful relationship and reputation, data set
“Germany”
German data-set, n = 50 Trustful relationship Reputation
Chi-square 10.667 5.542
5% error level 3.841 9.487
5% error level exceeded Yes No
Table A25 Chi-square test on direct marketing media, data set “Germany”
German data-set, Fairs Symposia Internet Brochures Mailings Visits
n = 50 of SR’s
Chi-square 24.160 9.760 59.760 31.120 14.560 32.400
5% error level 11.070 11.070 7.814 11.070 11.070 7.814
5% error level exceeded Yes No Yes Yes Yes Yes
j-coefficient 0.695 0.4418 1.093 0.7889 0.5396 0.8498
“Russia”
Russian data-set, n = 50 Trustful relationship Reputation
Chi-square 3.053 25.872
5% error level 7.814 9.487
5% error level exceeded No Yes
198 Annex
Table A27 Chi-square test on direct marketing media, data set “Russia”
Russian data-set, Fairs Symposia Internet Brochures Mailings Visits
n = 50 of SR’s
Chi-square 9.118 7.837 9.491 6.683 30.471 18.167
5% error level 11.070 9.487 9.487 9.487 9.487 9.487
5% error level exceeded No No Yes No Yes Yes
j-coefficient 0.4270 0.3959 0.4345 0.3656 0.7806 0.6028
“Finland”
Finnish data-set, n = 50 Trustful relationship Reputation
Chi-square 19.613 19.806
5% error level 5.991 9.487
Table A29 Chi-square test on direct marketing media, data set “Finland”
Finnish data-set, Fairs Symposia Internet Brochures Mailings Visits
n = 50 of SR’s
Chi-square 34.600 18.800 48.857 33.108 89.238 26.600
5% error level 9.487 7.815 7.815 3.841 7.815 5.991
5% error level exceeded Yes Yes Yes Yes Yes Yes
j-coefficient 0.6028 0.8318 0.6131 0.8137 1.3359 0.7294
“Spain”
Spanish data-set, n = 50 Trustful relationship Reputation
Chi-square 15.500 34.320
5% error level 5.991 7.815
Annex 199
Table A31 Chi-square test on direct marketing media, data set “Finland”
Spanish data-set, Fairs Symposia Internet Brochures Mailings Visits
n = 50 of SR’s
Chi-square 39.600 36.600 1.172 38.667 37.800 4.818
5% error level 9.487 9.487 9.487 9.487 9.487 9.487
5% error level exceeded Yes Yes No Yes Yes Yes
j-coefficient 0.8899 0.8555 0.1531 0.8793 0.8695 0.3104
“Spain”
Australian data-set, n = 50 Trustful relationship Reputation
Chi-square 6.533 23.000
5% error level 3.841 7.814
Table A33 Chi-square test on direct marketing media, data set “Australia”
Australian data-set, Fairs Symposia Internet Brochures Mailings Visits
n = 50 of SR’s
Chi-square 15.520 19.105 28.312 9.296 26.571 12.304
5% error level 11.070 9.487 9.487 7.814 9.487 7.814
5% error level exceeded Yes Yes Yes Yes Yes Yes
j-coefficient 0.5571 0.6181 0.7524 0.4312 0.7290 0.4961
Original Questionnaire in English Language
According to Hofstede (2001), organizations are

200
Questionnaire to Customers
Country: _________________________
(AUS=1, ; GER=3; FIN=2, SP=4;RUS=5)
Town: _________________________
Name of Hospital: _________________________ Part of Purchasing Group yes (1) no (2)
1. Public hospital
2. Private hospital
3. University Hospital
4. Military Hospital
1. What is your exact position?

1. Person in Charge, Purchasing Department
2. Head of Purchasing Dept.
3. Head Pharmacist
4. Anesthetist
5. Head Nurse
6. ICU Doctor
7. Expert Group Member (Devices)
8. ICU Nurse
9. Others, please specify _____________________
US= 6, Austria= 7, Turkish= 8
2. Your nationality is _____________________ Asian Countries= 9,
Male (1) Female (2)
others= 0, please specify
Annex
Annex
Questionnaire to customers on product perception and positioning

3a. In which kind of product purchase are you involved?
5. In your opinion – how would you score the
Medical Devices =1 importance of a trustful relationship with your
Pharmaceuticals= 2 suppliers for your work.
Pumps= 3 1= up to two
others= 4 Please use a scale from 1 to 5 (1 meaning
2= three or four not important, 5 meaning of most
3= five or six importance).
b) Since how many years? 4= seven or eight
c) How many people are part of your purchasing dept? 5= more than eight
4. When looking at your purchasing decision, different features can 6. Suppose you have two suppliers. Supplier A is your
current supplier, supplier B is an unkown supplier
be taken into account. I am now going to read out some of these
offering products at a lower price. How likely is it that
features. Could you please tell me whether these features are to you
you will shift from your current supplier A to the
unknown supplier B ... Certainly Likely Unlikely Certainly
decisive 4
not
important 3
less important 2 4 3 2 1
not important 1 a) if it offers comparable features
b) if other incentives are offered (stock
replenishment, return of goods after shelf
a) Safety features
life expiry, training ...)
b) Environmental friendliness of products
c) if the quality is absolutely the same
c) Personal relationship to sales reps.
d) there is no time left to get informed about
d) Reliability of delivery terms new suppliers or products
e) Prompt problem solving by suppliers staff
f ) Known name of supplier
g) The offer of useful benefits beyond the basic product needs
201
202
Questions on features influencing customers to change

12. In your opinion, what are the most important facts to buy pharmaceutical generics instead of original
products. I will now read out a list of six features. Please rate their importance on a 1 to 4 scale (1 is
absolutely not important, 4 is decisive) :
OPEN COMMENTS
a) Bio-equivalent (similar to the original product)
b) better unit price
d) supplier with a good reputation on the market
e) better safety features
f ) handling of the medicine has not changed
g) volume discount at the end of the year
k) Is an important feature missing from the list that I just

mentioned?
not applicable= 0
Annex
Annex
Questionnaire Products and Positioning

Explanations concerning Company X is involved in this survey, short second introduction
12.a Do you know Company X? 15 . According to your personal opinion: To what extend is
Company X related to the following product ranges?
(yes= 1, no = 2)
4 3 2 1 never thought
disagree agree disagree about this
13. Do you agree or disagree to the following agree
4 3 2 1 don‘t a) Pumps
statements on Company X... know
b) Standard Infusion Solutions
a) is known for innovative products
c) Generic Injectable Medicine
b) cares about customer opinions
d) Regional Anesthesia
c) shares expertise as a partner
e) Clinical Nutrition
d) I trust in products of Company X
f) Disposable Medical Devices
e) is known for leading products
g) Proprietary Drugs
f) I am satisfied with this company
14. Which of the Company X product ranges do you 16. In your opinion which of the following products would
fit in the future product range of Company X? (please
rank form 5= very important to be included to 1= of little
1: know/purchase: 2 I don’t know them 0 importance) Note: Compounding Services: patient tailored
a) Clinical Nutrition nutrition, antibiotic admixture, chemotherapy
b) Generic Injectable Drugs
c) Regional Anesthesia
d) IV Sets
e) Small Volume Infusion Solutions
f) Large Volume Infusion Solutions h) others
1. General Compounding Services
g) Infusion Pumps 2. IT Consulting Hospital Services
3. Oncology Drugs
i ) How much experience do you have in Company 4. Enteral Nutrition
X products? Rank 1 to 5, 1 is not having long 5. Prefilled Syringes
experience) 6. Pediatric Products
j ) From which year on have you started using Company X
7. others, like
products?__________
________________________
203
204
Questionnaire Trust/Reliability/Recommendation
17. To what extent do you agree that Company X is 18. In your opinion, to which extend do you agree or disagree
offering value for money. with the following statements on Company X
4 somehow somehow Don’t know

a) Company X takes my concerns and requests seriously
4 somehow somehow 1 Don’t know
agree disagree disagree agree agree disagree disagree
b) Even if competitors offer the same features as Company X, I

would prefer to buy Company X products
4 somehow somehow 1 Don’t know
agree agree disagree disagree
19. To which extend would you recommend Company X medical

devices/ products? Note examples are pumps, IV sets…
4 1
1= I don’t recommend
not applicable 0
4= I will surely recommend
20. To which extend would you recommend Company X

pharmaceutical products? Note: examples are clinical nutrition,
large volume infusion solutions, generic injectable
4 1
1= I don’t recommend
not applicable 0 4= I will surely recommend
Annex
Annex
Questions on Direct Marketing, Sales & Services

21. Company X is also supplying injectable drugs to more than 80 23. In your opinion, who would you recommend to present Company
countries. Knowing that, what is your opinion on purchasing X products to a) in terms of medical devices and b) in terms of
these injectable drugs? pharmaceuticals. Please rank the following potential contact
persons from five (first to contact) to one (less decisive).
4 somehow 1
dis-
agree agree
agree Medical devices Pharmaceuticals
a) You would purchase them because you trust in the a) Pharmacists f)
products of Company X
b) You would expect the same high product quality standard b) Purchasing Organizations g)
as with other Company X products c) Physicians h)
c) You think that this fits to the Company X product range d) Nurses i)
e) Management & Administration j)
24. Is there something you want Company X to know? Some

22. What is your opinion on Company X sales reps.? Please
additional remarks?
indicate on which extend you agree or disagree on the following
statements
4 somehow 1
agree agree disagree
a) He or she visits me too often
b) He or she is always friendly and helpful
c) He or she is not a product specialist
d) Sales reps. of competitors are much better

trained on products
205
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Index
B formative, 42, 46, 69, 77, 134, 135, 137

Brand, 3, 5, 12, 25, 26, 31, 32, 39, 46, 49, reflective, 67, 68
54, 79, 81, 86, 88, 89, 91, 95, 96, 98, single item indicator, 85
100, 103, 139, 140, 174, 180, 181, 187 validity, 137
associations, 34, 35, 108 Corporate communication (CC), 35, 54, 90
awareness, 34, 35, 49 Culture, 1, 4, 6, 8, 10, 16–18, 21, 32, 33,
equity, 34–36 40, 42–44, 55–64, 71, 76, 87, 88,
extension, 2, 50–53, 85, 97, 107, 181 91–95, 97–103, 110, 111, 121,
fit, 51, 84, 97 153–155, 158–163, 165, 168, 171,
imagery, 34–36 172, 176, 179–189
parent brand, 33, 49–52, 84, 93, 97, 180 definition, 55–57
strategies, 43 differences, 2, 7, 28, 45, 59, 62, 105,
165, 169, 186
dimensions, 57–61, 101, 109, 165, 170,
C 173, 177
C-OAR-SE procedure, 5, 65–67, 138 frameworks, 5, 23, 57–59, 170
Cognitive differentiation, 26, 85 societal, 60, 101
Commitment, 4, 5, 9–13, 16–19, 25, Customers’ nationality, 187
27–29, 32, 34, 44–46, 56, 58, 60–64,
82, 89, 90, 101, 168–170, 175, 187, 188 D
affective, 12, 13, 29, 90 Direct marketing, 4, 5, 7, 8, 17, 21, 25, 27,
continuance, 13, 29 33, 53–56, 64
normative, 13 Direct marketing media, 5, 7, 8, 25, 33,
Conceptual framework, 7, 103 53, 54, 56, 64, 79, 87, 88, 90–93, 98,
Construct, 4–7, 11, 12, 15, 21, 24, 25, 30, 99, 103, 105, 111, 122, 139, 147, 148,
36–48, 65–105, 107, 111, 113–118, 120, 151, 158–161, 168–179, 181–183,
121, 124–133, 136–141, 143, 145, 146, 188, 189
148, 149, 151, 154, 155, 157, 158, 162,
166, 168–181, 183–186, 188, 189,
191–193 E
attitudinal, 81, 83, 84 e-readiness, 92, 93, 99–100, 104, 105, 111,
criteria for reflective and formative 121, 139, 169, 180
construct, 67–72 Ex post competition, 14
227
228 Index
F Mediating effects, 65, 72–75, 123–124, 143

Fornell-Larcker criterion, 118, 131–133, Moderating effects, 73, 74, 89, 121–123,
191, 192 140, 151, 179
G
O
Goodness-of-fit test, 97, 120, 127, 159
Organizational identity, 32, 37, 46, 76
H
Hofstede’s cultural dimensions, 101, 165 P
individualism (IDV), 59, 61 Partial least squares (PLS) approach, 73, 74,
masculinity (MAS), 58–61 112, 116, 120, 122, 127, 132, 133, 155
power distance (PDI), 61 measurement tests, 118
uncertainty avoidance (UAI), 59–61 PLS model, 113, 117
PLS model validation, 117
Perceived fit, 84–85, 96–97
I
Image, 2, 3, 30–36, 48, 49, 51, 52, 54, 81,
97, 108, 177 R
Image vs. reputation, 34–36 Relationship marketing, 3, 9, 10, 12, 23–29,
Innovativeness, 1, 7, 8, 31, 38, 40, 57, 62, 48, 53, 56
78, 79, 83, 88, 93–94, 104, 105, 111, 121, Relationship marketing approaches, 24, 25
124, 126, 130, 131, 139, 141, 143, 145, Relationship quality, 7, 57, 62, 78, 88–90,
147–149, 151–154, 167, 169–172, 93, 95–96, 103–105, 111, 122, 124,
174–181, 187, 188 138–141, 143–145, 147–149, 151, 155,
Intangible asset, 1, 17, 18, 29–31, 43, 44, 47, 156, 169–174, 176–181, 185, 187, 188
110, 165, 183 Reputation, 1, 11, 21, 65, 107, 121, 183, 195
Involvement, 12, 28, 44, 55, 79, 100, 138, categorization of reputation, 23
141, 143, 165, 182 construct of reputation, 7, 21, 36–48, 83,
product, 49, 85, 86, 94–96, 104 84, 88, 126, 130, 139, 143, 166,
purchase decision, 7, 8, 78, 79, 85, 86, 89, 173–175, 177, 184, 185, 188
93–96, 104, 105, 121–123, 134–136, measurement concepts, 2, 23, 32, 36, 37,
138, 141, 145, 148, 151, 154, 155, 40, 45–47, 186
168–172, 176, 180, 182, 188 organizational reputation, 1
reputational analysis, 37, 189
K reputational impact factors, 7, 8, 88, 96,
Knowledge, 2, 4, 5, 7, 11, 13–19, 22–25, 28, 103, 104, 166, 170, 179, 183, 184
31, 32, 34, 42, 44, 46, 48, 53–57, 62, 77, reputation quotient (RQ), 3, 37, 39
82, 87, 97, 98, 100, 108–110, 155, 158, reputation transfer, 1, 21, 65, 103, 133,
166, 168, 183, 185, 187, 189 183
stakeholder-specific concept of
reputation, 77–79
M structural model, 4, 5, 8, 42, 45, 48, 65,
Marketing 71, 74, 79, 91, 93, 98, 103–105, 112,
industrial, 24, 27, 34 114–116, 118–122, 124, 127–129,
relationship, 3, 9, 12, 23–25, 27, 48, 132, 134–136, 138–139, 143, 145,
53, 56 146, 148, 151, 170, 176, 180,
Measurement model evaluation criteria, 84, 186, 189
86, 114–116, 120 transference patterns, 53
Index 229
Reputation measurement concepts T

league tables, 37–39, 42, 45 Theories
relationshipdriven approaches, 38, 44–45 cognitive attribution, 21
reputation quotient (RQ), 3, 37, 39 commitment-trust, 4, 11–13
Stakeholder Performance Indicator and game theory, 11
Relationship Improvement Tool general theory of marketing, 9
(SPIRIT) approach, 44, 48 knowledge-based view, 4, 5, 11, 13–17,
Resource, 2–5, 7, 9–11, 13–19, 25, 32, 48, 25, 98, 168, 183
56–58, 81, 83, 87, 95, 166, 168, 183, resource-based view, 11, 13,
184, 187 17, 183
intangible relationship, 5, 14, 19, 189 social exchange theory (SET), 10
relationship resource, 16, 18, 19, 62, 82, stakeholder theory, 22
189 stimulus-object-response (S-O-R)
Rokeach value survey (RVS), 57 theory, 11
Trust, 4, 9, 22, 76, 119, 186
S
Sales force, 35, 91 W
Schwartz value survey, 58 Word of mouth (WOM), 4, 7, 33, 44, 54, 62,
Stone-Geisser’s test, 127, 128 78, 88–89, 108, 131
Index
B formative, 42, 46, 69, 77, 134, 135, 137

Brand, 3, 5, 12, 25, 26, 31, 32, 39, 46, 49, reflective, 67, 68
54, 79, 81, 86, 88, 89, 91, 95, 96, 98, single item indicator, 85
100, 103, 139, 140, 174, 180, 181, 187 validity, 137
associations, 34, 35, 108 Corporate communication (CC), 35, 54, 90
awareness, 34, 35, 49 Culture, 1, 4, 6, 8, 10, 16–18, 21, 32, 33,
equity, 34–36 40, 42–44, 55–64, 71, 76, 87, 88,
extension, 2, 50–53, 85, 97, 107, 181 91–95, 97–103, 110, 111, 121,
fit, 51, 84, 97 153–155, 158–163, 165, 168, 171,
imagery, 34–36 172, 176, 179–189
parent brand, 33, 49–52, 84, 93, 97, 180 definition, 55–57
strategies, 43 differences, 2, 7, 28, 45, 59, 62, 105,
165, 169, 186
dimensions, 57–61, 101, 109, 165, 170,
C 173, 177
C-OAR-SE procedure, 5, 65–67, 138 frameworks, 5, 23, 57–59, 170
Cognitive differentiation, 26, 85 societal, 60, 101
Commitment, 4, 5, 9–13, 16–19, 25, Customers’ nationality, 187
27–29, 32, 34, 44–46, 56, 58, 60–64,
82, 89, 90, 101, 168–170, 175, 187, 188 D
affective, 12, 13, 29, 90 Direct marketing, 4, 5, 7, 8, 17, 21, 25, 27,
continuance, 13, 29 33, 53–56, 64
normative, 13 Direct marketing media, 5, 7, 8, 25, 33,
Conceptual framework, 7, 103 53, 54, 56, 64, 79, 87, 88, 90–93, 98,
Construct, 4–7, 11, 12, 15, 21, 24, 25, 30, 99, 103, 105, 111, 122, 139, 147, 148,
36–48, 65–105, 107, 111, 113–118, 120, 151, 158–161, 168–179, 181–183,
121, 124–133, 136–141, 143, 145, 146, 188, 189
148, 149, 151, 154, 155, 157, 158, 162,
166, 168–181, 183–186, 188, 189,
191–193 E
attitudinal, 81, 83, 84 e-readiness, 92, 93, 99–100, 104, 105, 111,
criteria for reflective and formative 121, 139, 169, 180
construct, 67–72 Ex post competition, 14
227
228 Index
F Mediating effects, 65, 72–75, 123–124, 143

Fornell-Larcker criterion, 118, 131–133, Moderating effects, 73, 74, 89, 121–123,
191, 192 140, 151, 179
G
O
Goodness-of-fit test, 97, 120, 127, 159
Organizational identity, 32, 37, 46, 76
H
Hofstede’s cultural dimensions, 101, 165 P
individualism (IDV), 59, 61 Partial least squares (PLS) approach, 73, 74,
masculinity (MAS), 58–61 112, 116, 120, 122, 127, 132, 133, 155
power distance (PDI), 61 measurement tests, 118
uncertainty avoidance (UAI), 59–61 PLS model, 113, 117
PLS model validation, 117
Perceived fit, 84–85, 96–97
I
Image, 2, 3, 30–36, 48, 49, 51, 52, 54, 81,
97, 108, 177 R
Image vs. reputation, 34–36 Relationship marketing, 3, 9, 10, 12, 23–29,
Innovativeness, 1, 7, 8, 31, 38, 40, 57, 62, 48, 53, 56
78, 79, 83, 88, 93–94, 104, 105, 111, 121, Relationship marketing approaches, 24, 25
124, 126, 130, 131, 139, 141, 143, 145, Relationship quality, 7, 57, 62, 78, 88–90,
147–149, 151–154, 167, 169–172, 93, 95–96, 103–105, 111, 122, 124,
174–181, 187, 188 138–141, 143–145, 147–149, 151, 155,
Intangible asset, 1, 17, 18, 29–31, 43, 44, 47, 156, 169–174, 176–181, 185, 187, 188
110, 165, 183 Reputation, 1, 11, 21, 65, 107, 121, 183, 195
Involvement, 12, 28, 44, 55, 79, 100, 138, categorization of reputation, 23
141, 143, 165, 182 construct of reputation, 7, 21, 36–48, 83,
product, 49, 85, 86, 94–96, 104 84, 88, 126, 130, 139, 143, 166,
purchase decision, 7, 8, 78, 79, 85, 86, 89, 173–175, 177, 184, 185, 188
93–96, 104, 105, 121–123, 134–136, measurement concepts, 2, 23, 32, 36, 37,
138, 141, 145, 148, 151, 154, 155, 40, 45–47, 186
168–172, 176, 180, 182, 188 organizational reputation, 1
reputational analysis, 37, 189
K reputational impact factors, 7, 8, 88, 96,
Knowledge, 2, 4, 5, 7, 11, 13–19, 22–25, 28, 103, 104, 166, 170, 179, 183, 184
31, 32, 34, 42, 44, 46, 48, 53–57, 62, 77, reputation quotient (RQ), 3, 37, 39
82, 87, 97, 98, 100, 108–110, 155, 158, reputation transfer, 1, 21, 65, 103, 133,
166, 168, 183, 185, 187, 189 183
stakeholder-specific concept of
reputation, 77–79
M structural model, 4, 5, 8, 42, 45, 48, 65,
Marketing 71, 74, 79, 91, 93, 98, 103–105, 112,
industrial, 24, 27, 34 114–116, 118–122, 124, 127–129,
relationship, 3, 9, 12, 23–25, 27, 48, 132, 134–136, 138–139, 143, 145,
53, 56 146, 148, 151, 170, 176, 180,
Measurement model evaluation criteria, 84, 186, 189
86, 114–116, 120 transference patterns, 53
Index 229
Reputation measurement concepts T

league tables, 37–39, 42, 45 Theories
relationshipdriven approaches, 38, 44–45 cognitive attribution, 21
reputation quotient (RQ), 3, 37, 39 commitment-trust, 4, 11–13
Stakeholder Performance Indicator and game theory, 11
Relationship Improvement Tool general theory of marketing, 9
(SPIRIT) approach, 44, 48 knowledge-based view, 4, 5, 11, 13–17,
Resource, 2–5, 7, 9–11, 13–19, 25, 32, 48, 25, 98, 168, 183
56–58, 81, 83, 87, 95, 166, 168, 183, resource-based view, 11, 13,
184, 187 17, 183
intangible relationship, 5, 14, 19, 189 social exchange theory (SET), 10
relationship resource, 16, 18, 19, 62, 82, stakeholder theory, 22
189 stimulus-object-response (S-O-R)
Rokeach value survey (RVS), 57 theory, 11
Trust, 4, 9, 22, 76, 119, 186
S
Sales force, 35, 91 W
Schwartz value survey, 58 Word of mouth (WOM), 4, 7, 33, 44, 54, 62,
Stone-Geisser’s test, 127, 128 78, 88–89, 108, 131

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Contributions to Management Science

For further volumes:

Reputation Transfer to Enter

Measuring and Modelling Approaches

Dissertation ‘‘Impact on Reputation and Reputation Transfer in International Direct Marketing -

Library of Congress Control Number: 2009932424

# Springer-Verlag Berlin Heidelberg 2010

Cover design: SPi Publishing Services

Printed on acid-free paper

An increasing number of products and services are not differentiated by inherent

Bielefeld, 17 May 2009 Ralf Wagner

1 Definition of Research Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3 Perspectives on Corporate Reputation and Reputation Transfer . . . . . . . 21

3.4 The Concept of Reputation Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

4 Development of Constructs and Related Hypotheses . . . . . . . . . . . . . . . . . . . . 65

4.6.10 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

5 Empirical Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

6 Results and Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

7 Conclusions, Implications and Research Suggestions . . . . . . . . . . . . . . . . . . 183

AMAC America’s most admired companies

Z Vector of the dependent (endogenous) latent variables

Figure 1.1 Structure of work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 4.7 Modeling moderating effects in PLS, using formative constructs

Table 2.1 Social exchange theory vs. commitment trust theory . . . . . . . . . . . . . . . . 10

Table 6.1 Evaluation criteria of reflective and formative constructs

Table 6.26 Quality criteria of formative constructs: evaluation of data

Table 6.52 Significant paths of media-enabled direct marketing

This quotation of Alan Greenspan (1999) summarizes the importance today of

Researchers recognize organizational reputation as a valuable intangible asset that

C. Falkenreck, Reputation Transfer to Enter New B-to-B Markets, 1

differences in B-to-B marketing management have largely been neglected (Homburg

visibility in the media. Even charitable contribution (Fombrun 1996) is difficult to

l The network approach focuses on the interactive character of relationships in the

1.2 Structure of Work

Part II Part III

Fig. 1.1 Structure of work

Therefore, one main objective of part IV is to discuss formative versus reflective

1.3 Objective Targets of Thesis

1.3.1 Scientific Objectives

In recent publications, CR has been interpreted as a stakeholder-related construct

Theoretical foundations of CR, as well as the empirical examination of the impact

1.3.2 Managerial Objectives

It is frequently assumed that CR has a positive effect on a variety of business-

involvement, WOM, perceived fit and perceived innovativeness on reputation and

C. Falkenreck, Reputation Transfer to Enter New B-to-B Markets, 9

Table 2.1 Social exchange theory vs. commitment trust theory

There has been growing interest in possible additional factors contributing to a

2.1 Commitment-Trust Theory and the Nature

number of variables such as quality, shared values, communication and trust on a

Continuance commitment refers to dependence and switching costs (Allen and

2.2 Resource-Based and Knowledge-Based View

competition, imperfect resource mobility, and ex ante limits to competition. Two

Relationship Resources Knowledge Resources

resource is created that is valuable and unique to the inter-organizational partners,

2.3 Reputation as a Resource, an Intangible Asset

In today’s markets, marketers are faced with environmental turbulence stemming

competitors. Interestingly, in 1991, Barney lists some examples of social complex

legal intangibles competitive intangibles

Relationship Resource Knowledge Resource