How Credibility Influences Business Success
The paper reviews relevant literature on the impact of credibility on the performance of business ventures. According to Belonax, Newell, & Plank, (2007), credibility refers to a person’s perception of the trustworthiness, plausibility, believability or the reliability of an entity, an individual or a product. Business literature recognizes two types of credibility—corporate and individual credibility. Corporate credibility is concerned with perceptions about a business enterprise and its products while individual credibility pertains to perceptions held about a company’s representative, manager or spokesperson (Belonax, Newell, & Plank, 2007). The purpose of this review is to investigate the influence of corporate and individual credibility on business success.
Some studies indicate that credibility increases a company’s prospects for success by eliciting the trust of customers, investors, venders and employees (Belonax, Newell, & Plank, 2007; Stone, 2009; Jin & Yeo, 2011). According to Belonax et al. (2007), trust-based relationships between firms and their customers have sustainability advantages such as cushioning the firm against competition, providing a stable source of revenue and reducing the costs associated with acquiring new customers to make up for lost market share. Stone (2009) argued that trust is a tangible, actionable and pragmatic asset that influences business outcomes on a daily basis. Businesses that lack credibility are unable to win the trust of their employees, customers, investors and other relevant stakeholders and thus miss the opportunity to influence the quality of their work relationships. Jin & Yeo (2011) emphasized the role of corporate credibility in business success by arguing that credibility is an intangible asset that influences customer satisfaction and loyalty to a firm. The study also showed that good reputation enables leaders and companies to have direct control over their business outcomes. Acarlar & Bilgic (2013) demonstrated that an organization’s credibility affects its ability to attract employees. The study indicated that potential employees learn about an organization’s credibility by assessing the accuracy of information it provides in job advertisements and other information outlets such as websites.
The credibility of company representatives and leaders may affect the company’s performance by influencing employee attitudes and behavior (Jin & Yeo, 2011; Kim et al., 2009; Khan, 2014). According to Jin & Yeo (2011), the credibility of a Chief Executive Officer (CEO) is an important determinant of a company’s success. The study further showed that CEOs with a positive image established through good customer relations and/or positive media coverage command greater customer loyalty than those with negative or hidden reputation. Kim et al. (2009) found that the competence and trustworthiness of top management officials directly influences employee cynicism, which in turn affects job performance. The study indicated that low competence and trustworthiness of top management is associated with high levels of employee cynicism. Similarly, Khan (2014) found that employee cynicism negatively affects emotional attachment to an organization, commitment to organizational goals and employee motivation. Cynicism can lead to poor organizational performance by increasing the cost of managing negative emotions such as aggravation and irritation, increasing employee turnover and generating negative beliefs about the organization (Khan, 2014).
Several studies indicate that the credibility of sales persons is important for the establishment of trust-based buyer-seller relationships (Belonax et al., 2007; Tsai, Chin & Chen, 2010). Buyers are likely to purchase from suppliers and salespersons whom they perceive as competent, honest, likable and dependable (Belonax et al., 2007). According to Tsai, Chin & Chen (2010), expertise is an important aspect of salesperson and supplier trust. When buyers perceive their supplier or sales person to be an expert, they also show higher levels of trust for the salesperson and the supplier and are more likely to make important purchases. The expertise of the salesperson becomes more important in determinant the likelihood of purchase in cases where the buyer has limited knowledge about the product (Belonax et al., 2007). For example, Tsai, Chin & Chen (2010) showed that consumers who perceived their salespersons as having sound knowledge of nutraceuticals were most likely to order the products or express interest in buying.
Numerous studies have investigated the relationship between brand credibility and business success (Erdem & Swait, 2004; Wang et al., 2006; Balmer, 2012). In their study of the relationship between brand credibility and customer behavior, Erdem & Swait (2004) found that trustworthiness and expertise, the definitive components of brand credibility, determine brand choice and consideration in various ways. For instance, customers that have high uncertainty about a product tend to rely more on trustworthiness than expertise in making brand choices while perceptions of expertise influence brand choice in cases of high familiarity and low uncertainty. Wang et al. (2006) found that brand credibility is a core element of customer relations management and a good brand reputation is associated with positive customer relations outcomes. The study also found that brand credibility and corporate credibility are interdependent since both affect customer loyalty. According to Balmer (2012), brand credibility reflects the company’s image and thus influences customers’ perception of the company and its products.
Employee expertise and level of commitment to their organization can promote or undermine brand credibility (Gelb & Rangarajan, 2014; Wilden, Gudergan & Lings, 2010). Gelb & Rangarajan (2014) argued that employees promote the success of a brand by behaving in ways that are consistent with customer expectations such as designing products according to customers’ needs and communicating with customers effectively. The authors further showed that some brands are heavily dependent on expertise for differentiation and thus the input of their technical and professional teams is the key to achieving credibility. When recruiting employees, employers should provide adequate credibility signals to win the trust of their employees and cultivate commitment to organizational values (Wilden, Gudergan & Lings, 2010). For high-tech products and service providers, expertise is the key to achieving brand credibility and customer loyalty, which implies that high-tech companies must hire competent employees to win customer trust (He & Li, 2011).
The review indicates that the credibility of a business organization including that of the CEO, top management team, customer relations staff and products affects business performance mainly by influencing customer and employee loyalty and trust. Customers who believe their suppliers are credible are likely to engage in long-term business relations with the suppliers and make important purchases even when they are uncertain or unfamiliar with the product. Employees who trust their leaders and company tend to remain in the company for longer and demonstrate higher levels of motivation and commitment to the company’s goals compared to those who question their employer’s credibility. However, no study has attempted to measure the direct impact of credibility on business success. The existing studies on credibility only focus on its impact on some aspect of organizational behavior but not its direct implications for business performance.
Acarlar, G., & Bilgiç, R. (2013). Factors influencing applicant willingness to apply for the advertised job opening: The mediational role of credibility, satisfaction and attraction. International Journal of Human Resource Management, 24(1), 50-77. doi:10.1080/09585192.2012.667427
Balmer, J. T. (2012). Corporate brand management imperatives: Custodianship, credibility, and calibration. California Management Review, 54(3), 6-33. doi:10.1525/cmr.2012.54.3.6
Belonax, J. J., Newell, S. J., & Plank, R. E. (2007).The role of purchase importance on buyer perceptions of the trust and expertise components of supplier and salesperson credibility in business-to-business relationships. Journal of Personal Selling & Sales Management, 27(3), 247-258.
DuBois Gelb, B., & Rangarajan, D. (2014). Employee contributions to brand equity. California Management Review, 56(2), 95-112. doi:10.1525/cmr.2014.56.2.95
Erdem, T., & Swait, J. (2004). Brand credibility, brand consideration, and choice. Journal of Consumer Research, 31(1), 191-198.
He, H., & Li, Y. (2011). Key service drivers for high-tech service brand equity: The mediating role of overall service quality and perceived value. Journal of Marketing Management, 27(1/2), 77-99. doi:10.1080/0267257X.2010.495276
Jin, C., & Yeo, H. (2011). Satisfaction, corporate credibility, CEO reputation and leadership effects on public relationships. Journal of Targeting, Measurement and Analysis for Marketing, 19(2), 127-140. doi:http://dx.doi.org/10.1057/jt.2011.10
Khan, M. A. (2014). Organizational cynicism and employee turnover intention: Evidence from banking sector in pakistan.Pakistan Journal of Commerce and Social Sciences, 8(1), 30-41.
Kim, T-Y, Bateman, T. S., Gilbreath, B. & Andersson, L. M. (2009). Top management credibility and employee cynicism: A comprehensive model. Human Relations, 62(10), 1435-1458.
Stone, F. (2009). Refocusing on credibility as a key to success. Employment Relations Today (Wiley), 35(4), 11-15.
Tsai, M-T., Chin, C-W., & Chen, C-C. (2010). The effect of trust belief and salesperson’s expertise on consumer’s intention to purchase nutraceuticals: Applying the theory of reasoned action. Social Behavior and Personality, 38(2), 273-288.
Wang, Y., Kandampully, J. A., Lo, H., & Shi, G. (2006). The roles of brand equity and corporate reputation in CRM: A Chinese study. Corporate Reputation Review, 9(3), 179-197. doi:10.1057/palgrave.crr.1550027
Wilden, R., Gudergan, S., & Lings, I. (2010). Employer branding: strategic implications for staff recruitment. Journal of Marketing Management, 26(1/2), 56-73. doi:10.1080/02672570903577091
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