Reputation's Effect on Pricing Power: The Importance of Strategy
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- Jarmon, R. Corp Reputation Rev (2009) 12: 281. doi:10.1057/crr.2009.22
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The proposition that good corporate reputation is associated with favorable economic outcomes has enjoyed considerable theoretical and empirical support. Such empirical studies generally have tested reputation's impact on economic performance without regard to strategy. This study controls for strategy while using comparison Web site data to examine online retailer reputation's effect upon pricing power. This study finds good reputation positively associated with pricing power only under a focused, differentiation strategy. Thus to benefit from reputation's effect on pricing power, an online retailer first had to pick the right strategy.