Striking findings from a joint study by Pressinform and Portfolio (2023 survey)
Corporate reputation can increase – or destroy – the market capitalization of Hungary’s four blue-chip listed companies by an estimated HUF 4,000 billion, roughly 7 percent of Hungary’s GDP, according to a new online study conducted jointly by communications agency Pressinform and Portfolio.
While these figures are, by definition, estimated averages based on executive perceptions, there is growing agreement with Warren Buffett’s oft-quoted observation: ‘Without a reputation, you have nothing.” Corporate reputation is increasingly viewed as an asset that outweighs all other forms of corporate capital in importance
Among the 147 senior executives surveyed, reputation accounts, on average, for around 60 percent of a company’s market value. Nearly one-third of respondents believe this share exceeds 76 percent, underscoring just how central reputation has become to corporate valuation.
Two-thirds of Hungarian senior executives regard corporate reputation as a strategic capital asset, one that exerts a decisive influence on market value. Yet despite this recognition, 85 percent of Hungarian companies lack a unified system for measuring, evaluating, and managing this critical asset – even though nearly three-quarters of executives believe reputation is measurable.
At the same time, close to two-thirds of senior executives do not consider it a top priority to assess the reputational risks and impacts of their decisions in advance. This contradiction is striking, particularly given that 48 percent of respondents rate their company’s reputation as strong, and an additional 16 percent as very strong.
NOT A BEAUTY CONTEST – A HARD MARKET REALITY
Consistent with international research, the Hungarian findings confirm that corporate reputation exerts a significant influence on performance and competitiveness.
According to top executives, the greatest benefits of a strong reputation are increased customer loyalty and stronger relationships with suppliers and business partners.
More than two-thirds of respondents say a favorable reputation plays a strong or very strong role in
- market expansion
- higher corporate valuation
- greater shareholder satisfaction
- stronger investor interest
- improved pricing power
- talent attraction and retention
- lower employee turnover
When asked which factors most strongly influence corporate reputation, respondents overwhelmingly ranked product and service quality first. Financial performance and stability, management quality, innovation potential, and competitiveness received high marks as well, though responses were more evenly distributed. Notably, corporate social and environmental responsibility (CSR/ESG)ranked lowest among reputation drivers.
One of the study’s most important findings is that 63.2 percent of Hungarian senior executives explicitly regard corporate reputation as a strategic capital asset, while an additional 25.2 percent view it as moderately important. Only 11.6 percentpartially or fully reject the idea of reputation as a strategic asset.
THE NEGLECTED STEPCHILD OF CORPORATE LEADERSHIP
Despite these insights, senior executives display a striking ambivalence toward reputation management. 53.1 percent of respondents say corporate reputation is clearly measurable and another 23.8 percent say it is at least partially measurable. Still, 85 percent of companies operate without a coherent reputation measurement system. This gap persists even as management teams rigorously track almost every other dimension of corporate performance.
The picture is no more reassuring when it comes to decision-making. Sixty percent of surveyed executives say reputational risks and impacts are not considered a top priority when leadership decisions are made.
This aligns with a widespread belief – shared by 90 percent of respondents – that corporate reputation is most at risk due to poor product or service quality. International research, however, increasingly shows this to be a misconception. In an era of advanced quality assurance, modern technology, and stricter regulation, crises are far more often caused by irresponsible leadership decisions rooted in flawed business cultures.
Another telling contradiction emerges from the data: while 76 percent of executives believe marketing and communications are the most important tools for building and protecting reputation, 77 percent also believe reputation management is not the responsibility of marketing or communications leaders.
WE DON’T MEASURE IT; WE DON’T MANAGE IT – YET WE’RE SATISFIED WITH IT
Overall, the findings make it difficult to identify who, if anyone, is clearly accountable for managing this strategic asset – and within what governance framework. It is revealing that 65 percent of senior executives say their company’s Chief Communications Officer is not part of the organization’s core strategic leadership team.
Despite this, most Hungarian executives express satisfaction with their company’s reputation: 48 percent rate it as strong, 16 percent as very strong, while 35 percent give a moderate or negative assessment. These self-assessments fall well below the results of a 2020 global study, in which 42 percent of 2,227 executives across five continents rated their company’s reputation as strong, and 45 percent as very strong.
The full results of Hungary’s first national reputation study are available on Portfolio.hu.
The research was conducted by Pressinform and Portfolio using online questionnaires. Over a three-week period, 271 respondents completed the survey, including 147 senior executives and 71 mid-level managers. Among senior executives, 80 percent reported more than ten years of leadership experience; 26 percent led companies with annual revenues exceeding HUF 10 billion; 73 percent represented Hungarian-owned firms, 23 percent foreign-owned firms, and 3 percent publicly listed companies. Respondents represented a broad range of industries, with the highest participation from energy, industry and manufacturing (21%), financial services (13%), and trade (12%).
The original article was published on Portfolio.hu. All rights reserved.