The Role Of Trust, Social Media And Its Effect On Organizational Reputation

2562 words - 11 pages

Reputational risk as asserted by (Poppo and Schepker, 2010) is the risk arising from negative perception from investors, customers, shareholders and other important parties that can harmfully affect an organisations capability of maintaining or establishing a new business relationship as well as obtaining a continued access to funding from sources. A good reputation may be the most important asset an organisation has and may also be the easiest to lose and the most challenging to maintain (Bente et al., 2012). Nonetheless, in the event where organisations are expected to make profits and also contribute to the economic welfare of the society as well as build and maintain reputation, a lot of persistence and trust is needed amongst its stakeholders and shareholders(Colquitt et al.2012).
The extractive industry is faced with environmental concerns thus causing local communities to no longer rely on the legal channels of their communities to address such challenges as social and environmental impacts (Mosoti and Masheka 2010). Nonetheless, as part of the effective strategy to curtail such grievances of the communities, trust needs to be built with stakeholders, to enhance the way they manage projects as well as maintain good community relations to earn their trust as well as attract investors for the organisation (Hwee Hoon Tan et al.2009)
The use of social media such as news, blogs, social networks and online communities, not only communicates information, share opinions, raise awareness and facilitates the constructive way forward but they also have an influence on the public as to if they can trust an organisation (Suh, and Houston, 2010). Organisations no longer have much control on their corporate reputation since it is mostly controlled by media, and the reports made directly impacts on how the organisation is perceived by the public(Williams and Chinn, 2010).
The following discussion outlines the understanding of trust, social media and how it affects the organisational reputation in the extractive industry. Thus, the study provides answers to the following research questions;
• Does trust affect an organisations reputation?
• Do media have an impact on an organisational reputation?

2.0 THE ROLE OF TRUST IN ORGANISATIONAL REPUTATION

Trust as asserted by (Rousseau et al., 1998) is ‘‘a psychological state composing of the intention to accept vulnerability based on positive expectations of the intentions or behaviour of another’’. It is developed as a result of an organisations belief that a trustee is dependable, sincere and compassionate (Kramer, 1999). Furthermore, trust is needed to support corporation between large organisations where investors rarely interact with their stakeholders. For example, in an extractive industry where there are different departments it is important for the leaders of the team to trust each other. This will enhance communication and ensure that the set goals and objectives of the company will be carried...

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