Purpose – The purpose of this paper is to develop and validate a reliable and valid alternative scale to measure customer-based corporate reputation (CBCR) specific to the banking industry only, where high risks and uncertainties of choosing a service provider exist. Design/methodology/approach – Both qualitative and quantitative methods were employed to develop and validate an alternative scale to measure CBCR in the banking industry. Following Churchill’s (1979) paradigm and other prominent scale development studies, a scale development procedure was generated, which consists of three main stages: scale generation and initial purification, scale refinement and scale validation. Findings – As a consequence of the current study, a reliable and valid multidimensional scale was obtained, consisting of 20 items and four dimensions to measure CBCR in banking industry: financial performance and financially strong company, customer orientation, social and environmental responsibility and trust. Practical implications – This study provides insight to managers to comprehend and manage their CBCR. Since this study has empirically demonstrated that the four dimensions of the CBCR are associated with the five important customer outcome variables, the study provides further support toward the importance of corporate reputation in strategic marketing decisions in the banking industry. Originality/value – Numerous different disciplines have focused on corporate reputation measurement by adapting different perspectives and approaches. However, a reliable and valid measurement tool has been proposed here to evaluate corporate reputation from customers’ perspective specific to banking industry.

Introduction

Corporate reputation is a highly popular multidisciplinary research area examined by various disciplines including accountancy, economics, marketing, organizational behavior, sociology and strategy (Fombrun and van Riel, 1997). Indeed, the concept of corporate reputation has attracted widespread attention throughout the world (Groenland, 2002), since it provides sustainable competitive advantage in the marketplace by means of being a rare, inimitable and valuable soft asset (Boyd et al., 2010; Keh and Xie, 2009) and makes great contributions to the profitability of firms (Gardberg and Fombrun, 2002; Gotsi and Wilson, 2001; Whetten and Mackey, 2002; Yoon et al., 1993). Some researchers conceptualize corporate reputation as an aggregate evaluation of both internal and external stakeholders. As such, they measure corporate reputation by utilizing generic measurement tools which can be used across all stakeholder groups (e.g. Fombrun et al., 2000; Davies et al., 2001, 2004). However, Mahon (2002) and Walker (2010) point out that the reputation of a firm might differentiate relying on the considered contexts, issues and stakeholders. Additionally, Wartick (2002) stated that each different stakeholder group might hold different assessments toward the corporate reputation of the firm with a different set of attributes. In other words, since the reputation is an issue and a stakeholder-specific phenomenon, different stakeholder groups may have different evaluations of corporate reputation and each stakeholder group’s reputation may have different dimensions. Therefore, it is possible to argue that dimensions of corporate reputation might vary among different industries and stakeholder groups and so should be measured in terms of a single industry and stakeholder group. In fact, there are some studies, which demonstrate that different stakeholder groups may have a different reputation perception or underlying reputation dimensions may have different importance for each stakeholder group (e.g. Helm, 2005, 2007; Puncheva-Michelotti and Michelotti, 2010). Therefore, there are numerous views related to which stakeholder groups should be considered when corporate reputation is being examined. Employee-based reputation, public-based reputation, investor-based reputation and customer-based reputation appear in these different views (Shamma, 2012, p. 159). Still, there is little empirical research on measuring corporate reputation by focusing on customers which are the most important stakeholder group of a firm (Walsh, Beatty and Shiu, 2009, p. 924; Walsh, Mitchell, Jackson and Beatty, 2009). Actually, the first multidimensional scale to measure customer-based corporate reputation (CBCR) was developed and validated by Walsh and Beatty (2007) in the service context. Yet, this scale was criticized by Boshoff (2009) and Sarstedt et al. (2013) in terms of content and construct validity. Besides, Terblanche (2014) stated that most of the marketing scales in use today were developed in high-income industrialized countries and therefore he suggests that researchers should be careful when applying these scales in emerging markets. Likewise, Groenland (2002) called attention to the importance of the consideration of cultural differences when measuring corporate reputation in different cultures.