Journal of Marketing Communications

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Corporate image and reputation of large Mainland

Chinese enterprises

Roland K. Yeo , Mark Goh & Sophia Tso

To cite this article: Roland K. Yeo , Mark Goh & Sophia Tso (2011) Corporate image and
reputation of large Mainland Chinese enterprises, Journal of Marketing Communications, 17:3,
195-211, DOI: 10.1080/13527260903421466

To link to this article: https://doi.org/10.1080/13527260903421466

Published online: 24 Jun 2010.

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Journal of Marketing Communications
Vol. 17, No. 3, July 2011, 195–211

Corporate image and reputation of large Mainland Chinese

enterprises
Roland K. Yeoa*, Mark Gohb and Sophia Tsoc
a
College of Industrial Management, King Fahd University of Petroleum & Minerals, P.O. Box 5074,
Dhahran 31261, Saudi Arabia; bNational University of Singapore Business School, Singapore &
University of South Australia, Australia; cChina Unicom, Hong Kong

A favorable corporate image and reputation can provide differentiation and be a source
of sustainable competitive advantage. This research focuses on the retail investor’s
perception of the corporate image and reputation of large Mainland Chinese enterprises
listed in Hong Kong, which are generally still perceived as being less accountable and
transparent compared to the other blue chip companies listed in Hong Kong. The results
from the focus groups and mail surveys suggest that three factors significantly influence
retail perception: ‘Corporate Management and Communication’, ‘Financial Prospects’,
and ‘Market Presence’. A key implication suggests that how listed companies
communicate with retail investors is just as important as how such companies are
perceived to be managed.
Keywords: corporate image; corporate reputation; perception; Hong Kong

Introduction
Mainland Chinese enterprises listed in Hong Kong have grown in both number and
significance in the local securities market over the past two decades. According to the
Hong Kong Exchanges and Clearing Limited (HKEx), over HK$ 1 trillion (US$128.5
billion) of equity funds has been raised by Mainland Chinese enterprises since 1993,
representing 50% of the market. Since 1986, the top 10 initial public offerings in
Hong Kong have been represented by the Mainland Chinese enterprises. At the end of
April 2006, four of the 10 largest listed companies by market capitalization at the HKEx
are Mainland Chinese enterprises, accounting for 42% of the total market capitalization
and 30% of the total number of listed companies in the Hong Kong securities market,
representing a 1274% and 438% increase respectively over the past 10 years (Chow 2006),
and these figures are expected to continue to rise (Arcullis 2006).
Despite efforts to align themselves with international business practices, publicly
listed Mainland Chinese enterprises in Hong Kong are still generally perceived to be less
accountable and transparent, and have a less than favorable corporate image and
reputation as compared with other similar blue chip companies in Hong Kong. While the
Mainland Chinese enterprises are undergoing rapid reform, they are still far from meeting
global standards or challenging western or other established Asian multinationals; it is
anticipated that such Mainland Chinese firms will need at least 10 years to reach the
management standards of developed markets (Cheng 2003). Lines (2003, 237) highlights
that ‘state-owned enterprises are transformed into modern corporations responsible to

*Corresponding author. Email: yeokkr@yahoo.com

ISSN 1352-7266 print/ISSN 1466-4445 online

q 2011 Taylor & Francis
DOI: 10.1080/13527260903421466
http://www.informaworld.com
196 R.K. Yeo et al.

shareholders and needing to implement levels of accountability and communication never

before experienced’; however, ‘fairness, transparency, accountability and responsibility
need to be further realized’. Further, executives in Asia (including China) view corporate
image and reputation as increasingly important for the achievement of their business
objectives.
Listing in Hong Kong for the Mainland Chinese enterprises, is not just a matter of
raising money, it allows these enterprises to move toward international standards and
encourages them to adopt best global management practices and to operate in the best
interest of all shareholders. However, to sustain competitiveness, it is important to
understand how retail investors perceive this group of companies in terms of their
corporate image and reputation. Due to the unique characteristics of this group of
companies, a specific instrument is required to understand their corporate image and
reputation. Unlike the other large Hong Kong-listed companies, the main operations and
business units of these Mainland Chinese enterprises are not located in Hong Kong. This
implies that the local population of Hong Kong are not their main end users, and most of
their employees are not from Hong Kong.
Much of the literature on corporate image and corporate reputation suggests that
corporate image and reputation are regarded as the most critical, strategic, and enduring
intangible asset of a corporation (e.g. Bernstein 1984; Brown et al. 2006; Rhee and Valdez
2009). While no consensus exists on the measurement of the corporate image and
reputation of publicly listed companies, most agree that such a measurement is important
to a company (Sobol, Farrelly, and Taper 1992). A favorable corporate image and
reputation can serve as an effective form of differentiation and a source of competitive
advantage (Dowling 1993; Gray and Balmer 1998). This alone is enough to guarantee
greater long-run returns for better regarded companies (Fombrun 1996). This research
contributes to the literature on corporate image and reputation by focusing on how retail
investors in Hong Kong perceive publicly listed Mainland Chinese enterprises and the
implications of those perceptions. This study specifically addresses the following research
problem: How do retail investors assess the corporate image and reputation of large
Mainland Chinese enterprises listed in Hong Kong and what are the implications for
building a good corporate image and reputation among retail investors for these
enterprises?.
The literature reveals a variety of views on corporate image and reputation. To date,
the work on corporate image and reputation, as provided by Gotsi and Wilson (2001),
focuses on the notion that corporate image is: (a) the equivalent of reputation; (b) an
important component within reputation; or (c) a broader term that encompasses reputation.
There is no doubt that the two are ‘closely allied elements and one is necessary for the
other to be developed’ (Markwick and Fill 1997, 398). For example, Marziliano (1998, 5)
believes that image answers the question ‘What do we believe we are?’, while reputation
answers the question ‘What do we know about what others think we are?’. Balmer and
Greyser (2003, 4) refer to corporate image simply as ‘How are we perceived now?’, and
corporate reputation as ‘How are we perceived over time?’.
This study assumes that the overall perception of retail investors of Mainland Chinese
enterprises includes corporate image and reputation. For the purpose of this paper, we treat
corporate image and reputation as the mental picture that investors have of an
organization, and a value judgment about a firm’s attributes which evolves over time as a
result of consistent performance, established and reinforced through effective
communication.
 Journal of Marketing Communications 197

This motivation for our work stems from the need to better understand the corporate
image and reputation of large Mainland Chinese enterprises listed in Hong Kong as
perceived by the retail investor. First, the publicly listed Mainland Chinese enterprises
have an increasingly significant role in the Hong Kong securities market. Second,
according to Cornelissen’s (2004) stakeholder model of strategic management of a
company, various groups have a legitimate stake in a company, and each group perceives
the company differently because each stakeholder group looks for and is interested in
specific aspects of the company. Cornelissen (2004) believes that different stakeholder
groups lend different degrees of importance to corporate image or reputation dimensions
such that a single company may have multiple images or reputation. The first step in
managing image or reputation is to measure it since one cannot manage something that
cannot be measured (Alsop 2004). Companies must closely monitor how investors
perceive their corporate image and reputation and their main drivers. Although prior
research (e.g. Spector 1961; Dowling 1986, 1988; Fombrun 1996; Cravens, Oliver, and
Ramamoorti 2003: Lee 2004; Schwaiger 2004) have worked toward developing a scale to
measure the intangible equity of a company, that is, its corporate image and reputation,
there is still no consensus on the valid scales (Nguyen and LeBlanc 2001). This is
especially so for scientific evidence on corporate image and reputation in an Asian context
(Lee 2004). Hence, this study supports the need for empirical research on the perceptions
of corporate image and reputation in an Asian context.
The objectives of this study are two-fold: first, it seeks to develop an appropriate way
of measuring the corporate image and reputation of large Mainland Chinese enterprises
listed in Hong Kong by identifying a set of specific factors and items that contribute to the
formation of the perceptions of the local retail investors. Second, it seeks to determine the
perception of the local retail investors of the corporate image and reputation of these
companies by identifying the factors that influence these perceptions and their
implications. Through this, we hope to contribute to the body of knowledge in corporate
communications or public relations, and especially to the knowledge of corporate image
and reputation management of Mainland Chinese enterprises listed in Hong Kong.
Second, it will shed light on the retail investor’s perception of the corporate image and
reputation of these enterprises and identify the key determinants. Specifically, we develop
the following Research Questions:
RQ1: How do retail investors perceive the corporate image and reputation of large Mainland
Chinese enterprises listed in Hong Kong?
RQ2: What factors affect the retail investor’s perception of the corporate image and reputation
of large Mainland Chinese enterprises listed in Hong Kong?

Literature review
Most people are familiar with the term ‘public relations’ and believe that corporate
communication is a new term intended to reflect the enhanced role of public relations as it
has evolved from the traditional technical discipline to become more managerial and
strategic (Van der Waldt 2004; Gregory and Watson 2008). As noted by van Riel (1995,
8), ‘public relations and advertising are the oldest terms denoting particular forms of
communication’. Though some research assumes that there is no theoretical difference
between ‘corporate communication’ and ‘public relations’ (Steyn 2003), Cornelissen
(2004) believes that public relations and marketing were the dominant perspectives of
communication management that preceded corporate communication. He explains that
both functions have been gradually ‘brought together, integrated, or in any way connected
198 R.K. Yeo et al.

under the flag of a new discipline that we know as corporate communication’ (Cornelissen
2004, 36). This process can be illustrated by the fact that not all large enterprises in
Hong Kong have recognized the emerging importance of corporate communication, and
this is reflected by the lack of a corporate communication function in most of these firms.
The change in practice over time may correspond to the different stages of a country’s
economic development, which in turn affects its level of sophistication, and the approach
to public relations practice and management.
Dolphin and Fan (2000) suggest that a firm can gain and sustain competitive advantage
by communicating successfully with its key audiences. As organizations cannot give the
same degree of attention to all issues, and all stakeholders are not equally concerned about
the different issues, it is essential to manage corporate communication strategically so as
to ‘proactively identify and prioritize issues and stakeholders’ and integrate them into a
‘corporate community’ (Steyn 2003, 180).
Previous research indicates that having a favorable corporate image and reputation can
provide a company with a distinctive and credible appeal (Markwick and Fill 1997;
Greyser 1999), as well as a more effective form of differentiation and a source of
competitive advantage (Dowling 1993; Gray and Balmer 1998). It is believed that
corporate image is not just a matter of window dressing but a reliable indicator of whether
a company will survive in the future (Marziliano 1998). A strong reputation creates a
strategic competitive advantage, which alone is enough to guarantee stronger long-run
returns to better-regarded companies (Fombrun 1996). Roberts and Dowling (2003)
suggest that firms with a relatively good reputation are better able to sustain superior profit
outcomes over time. In addition, Greyser (1999) highlights three key strategic benefits for
companies with a good name: company preference; support in troubled times; and value in
the financial marketplace.

Measuring corporate image and reputation

Lewis (2001), Wartick (2002), Berens and van Riel (2004), Cornelissen (2004), and
Schwaiger (2004) have reviewed the different approaches to measuring corporate image
and reputation. Berens and van Riel (2004), in an extensive review from the 1950s to
2000s, identify three main streams of thought on the measurement of corporate reputation
from the literature. The first deals with the social expectation on companies. The second
considers the personality traits that people attribute to companies. The third uses the
reasons that enable people to trust or distrust a company. They suggest that a preference
for one or the other of the mainstreams would be determined by both theoretical and
practical considerations. For instance, the Fombrun Reputation Quotient is calculated
using 20 attributes arranged in six major categories: emotional appeal; products and
services; financial performance; social responsibility; vision and leadership; and
workplace environment (Fombrun 2003). Each dimension is then measured using three
or four scales and the total reputation quotient is calculated by combining the ratings of all
the attributes. Although this may be a direct and reliable way of measuring reputation,
some researchers have pointed out that these measurement approaches fail to consider the
views of multiple stakeholder groups and appear to be primarily relying on a firm’s
financial performance and assets (Fryxell and Wang 1994; Rose and Thomsen 2004).
In addition, Spector (1961) has identified six dimensions of corporate image, which
were empirically derived from evaluations of the personality characteristics of a
corporation; for instance, whether it was dynamic, co-operative, business-wise, of good
character, successful, or withdrawn. Davies et al. (2004) indicate that there is no general
 Journal of Marketing Communications 199

agreement on the validity of the use of personality traits in the case of organizations, but
they use the personification metaphor as a measurement approach and provide a list of
possible characteristics from the psychology literature. Importantly, Dowling (1986)
argues that corporate image is formed by the company personnel and external groups
encoding information related to both a company’s actual practices and its imaginary or
attributed qualities, namely, prior experience, interpersonal communication, and media
communication including advertising, and press releases, all of which project an image
desired by the organization. Fombrun (1996) also suggests that the elements of a
company’s image include its relationships with the stakeholders, the marketing of brands,
its financial performance, and its interaction with the public during normal business
operations and crises.
According to Dowling (2004), the attributes of corporate image and reputation give
rise to two classes of factors: one is more factual in nature including corporate capabilities
and financial performance while the other is a more emotionally driven such as social
accountability and the distinctiveness or personality of the organization. Relying on such
factors reduces the abstractness of the concepts (Bryman and Cramer 2005), and a sound
scale of measurement is important for any study attempting to evaluate corporate image
and reputation. Essentially, corporate image and reputation is a collectively constructed
identity as desired by an organization and not projected by individual experiences
(Rindova, Pollock, and Hayward 2006). As mentioned earlier, the definition of corporate
image and reputation adopted for this study implies that corporate image and reputation is
influenced by the mental picture investors have of a company as determined by the
consistent performance and effective communication of an organization.

Conceptual framework
The conceptual framework, illustrated in Figure 1, comprises four constructs. Two
constructs, ‘Corporate Management’ and ‘Financial Prospects’, are drawn from Lee’s
(2004) study while ‘Market Presence’ is taken from Dowling (2004). The remaining
construct, ‘Corporate Communication and Identity’, is derived from the literature
discussed earlier.
The first three empirically derived attributes, ‘Corporate Management’, ‘Financial
Prospects’, and ‘Market Presence’ are factual in nature and have a reliability of a above
the acceptable level of 0.7. The fourth independent construct, ‘Corporate Communication
and Identity’, is supported by relevant theories on the formation processes of corporate
image and reputation, by researchers such as Abratt (1989), Van Heerden and Puth (1995),
van Rekom (1997), Gray and Balmer (1998), and Cornelissen (2000). This factor reflects

Financial prospects

Corporate management Corporate image and reputation of

large Mainland Chinese enterprises
listed in Hong Kong
Market presence

Corporate communication & identity

Figure 1. Proposed conceptual framework.

200 R.K. Yeo et al.

how the mental picture investors have of a company and the effective communication
between a company and its investors influence investors’ perception.
The choice of these constructs is based on the unique characteristics of the Mainland
Chinese enterprises (red chip and H Share companies) listed in Hong Kong. Unlike the
other large listed companies in Hong Kong (blue chip companies such as HSBC, PCCW,
CLP), the main operations and business units of these Chinese enterprises are not located
in Hong Kong. Accordingly, these enterprises do not put as much emphasis on their
marketing and advertising activities in Hong Kong as they do in China. Thus, the common
attributes such as ‘Treatment of employees’, ‘Quality of products and services’,
‘Marketing and advertising activities’, and ‘Social responsibility’ may not be the main
considerations for retail investors in Hong Kong when assessing the corporate image and
reputation of such enterprises.

Methodology
The fieldwork was conducted in two stages. In stage one, four focus groups, each
consisting of five participants, were arranged to explore a particular set of the attributes
used to describe the corporate image and reputation of listed Mainland Chinese enterprises
in Hong Kong. The questions used in the focus group discussions were devised on the
basis of the techniques used by Lee (2004). Responses gathered from each one-hour
session were audio-taped and subsequently transcribed. The size of each focus group was
based on the consideration that larger groups might be harder for the moderator to control,
and present a greater risk of shy people being squeezed out, subgroups developing, and the
quality of the conversation deteriorating (Stewart and Shamdasani 1990). The subjects
were people who worked for Mainland Chinese enterprises listed in Hong Kong, financial
correspondents or journalists who cover the news on Mainland enterprises, or corporate
communication or public relations practitioners with fundamental knowledge of the topic.
Most questions were open-ended, allowing participants to speak freely about their
perception of the issues under discussion. We kept the discussion to an hour because of the
busy schedule of the participants as we maintained focus through the use of multiple
probes to help them stay on track.
We analyzed the qualitative data by using NVivo 2.0 to identify and confirm the various
scale items used in the questionnaire for the second stage. The findings from the focus
group discussions were rather encouraging. The four constructs, namely ‘Financial
Prospects’, ‘Corporate Management’, ‘Market Presence’, and ‘Corporate Communi-
cation’, as proposed in our conceptual framework were frequently mentioned during the
discussions. The term ‘corporate communication’ was mentioned most frequently during
the discussions but the word ‘identity’ did not surface frequently suggesting that it was not
a significant consideration for the participants. We subsequently decided to exclude
the word ‘identity’ to come up with the modified ‘Corporate Communication’ factor.
The following are several representative quotations to support our decision:
If a company can disseminate information frequently and timely, it helps its publicity and
creates positive coverage, this raises its corporate image and reputation as well.
As an investor, it [Corporate Communication] will have influence on me. It’s like a story
teller. If I don’t know much about a company, this will easily affect me.
Obviously, after the listings, these companies have improved a lot. Over the years, they have
improved their communication with the investors and increased the transparency level of the
companies.
 Journal of Marketing Communications 201

According to the qualitative data, nine new items were found to be important components
and were added to the scale for ‘Financial Prospects’, ‘Corporate Management’,
and ‘Market Presence’. The items for ‘Corporate Communication’ were also revised.
The refined questionnaire, as presented in Table 1, was then subject to a pre-test before the
actual fieldwork to ensure content and construct validity, overcoming any differences in
vocabulary which exist between the academic and professional world, and confirming
that the survey questions would be appropriately understood (De la Sabaté and de
Puente 2003).
In stage two, a mail survey was conducted using a six-point Likert scale based on the
conceptual framework and measurement items derived from the first stage. The reason for
choosing an even number of options on the scale was to reduce the chance for respondents
to provide a neutral opinion by selecting a midpoint rating. Adopting the survey approach
by Schwaiger (2004) who asked each respondent to evaluate three or four companies on
the measurement of corporate reputation and validated the results by checking for
differences between the sub-samples, our questionnaire asked the respondents to identify
and rate two companies which they were most familiar with. Consequently, two data sets
were obtained from each questionnaire. This way, the overall perceptions of the retail
investors are better reflected as, apart from providing more data, it can eliminate the risk of
most respondents focusing on only one or two companies. A paired-sample t-test analysis
was used to compare the significance of the mean ratings for the data sets of the two most
familiar companies.
Before sending the final questionnaire to the first batch of 1700 registered shareholders
randomly selected from the approximately 6000 members available in a database provided
graciously by Computershare in Hong Kong, a pre-test was conducted using a smaller
sample. We obtained 20 valid questionnaires within a week and these were used for the
pre-test analysis, representing 13% of our proposed sample size (n ¼ 150). To ensure the
validity of the questionnaire, face and content validity were tested. In this regard, only two
respondents indicated ‘no comment’ on some of the scale items and queried why a neutral
option had not been provided; even so, that was not perceived as a major issue. Hence, we
decided to keep the questionnaire as it was on a six-point Likert scale. The final
questionnaire was then sent to the random sample.
Fifty-two valid questionnaires were received within the three-week deadline. To boost
the response rate, a second batch of 1500 questionnaires was sent out, again requesting a
return within three weeks. To encourage more responses, a Chinese version was provided
alongside the English version. This further resulted in 68 valid questionnaires, yielding a
total of 120 valid questionnaires returned by mail or fax. The remaining 30 valid
questionnaires were obtained from existing retail investors via email through different
networks. A total of 150 valid questionnaires were finally obtained. The response rate was
not encouraging as people in Hong Kong were generally busy and constantly confronted
by a variety of surveys. One of the natural responses was to shy away from any possible
surveys that came their way. To test for non-response bias and ensure there was no
distortion, the ratings from the first batch of questionnaires (n1 ¼ 52) were compared with
of the second batch (n2 ¼ 68). An independent t-test was used to check for non-response
bias. The valid questionnaires received were analyzed using SPSS 12.0. Given the
exploratory nature of this study, exploratory factor analysis, using principal components
analysis and Varimax rotation, was used to determine if the retail investors have a
particular type of image of the research subject.
Table 1. Refined research instrument.
202

Cronbach’s alpha
Factor Scale items Literature source Data source
Financial prospects 1. The company’s profitability is high. 0.79 0.89
2. The company has strong earnings.
3. The company’s financial growth is very promising. Lee (2004), for items
1, 3, 4, 5
R.K. Yeo et al.

4. The company has positive financial development.

5. The company has a positive future prospect.
6. The company’s stock is stable and has good dividend payout.
7. The company is frequently recommended by
industry analysts or other experts.
Market presence 8. The company is well known and familiar to investors. 0.82 0.95
9. The company knows what they stand for. Dowling (2004),
10. The company is a leader in its field. for items 8, 9, 10
11. The company has powerful presence in the marketplace.
12. It is a big company in
terms of market capitalizations.
13. The prospect of the company’s business sector is promising.
Corporate management 14. The CEO is a good leader. 0.78 0.82
15. The CEO has strong leadership.
16. Its CEO or key public figure is high profile and well known. Lee (2004), for items
14, 15, 18, 19, 21
17. The CEO or key public figure looks capable and presentable.
18. This company is a moral company.
19. The company has a good management system.
20. The company has a strong senior management team.
21. Managers in this company are flexible.
22. The company is active in the market.
Corporate communication 23. The company disseminates sufficient information – 0.92
to the market.
24. The company has high media publicity.
25. News coverage about the company is mostly positive.
Table 1 – continued

Cronbach’s alpha
Factor Scale items Literature source Data source
26. The company’s website is informative and nicely
designed.
27. The company’s annual report is clearly presented.
28. The company has good transparency.
Overall image-reputation scale 29. The company has a clean 0.90 0.89
reputation in general.
30. The company’s overall image is favorable. Lee (2004), for items
29, 30, 31, 32
31. Investors are impressed by the company.
32. Overall, the company is evaluated
positively in the eyes of retail investors.
Note: Scale items added from focus groups are presented in italics.
Journal of Marketing Communications
203
204 R.K. Yeo et al.

Findings and discussion

In response to RQ1, the findings suggest several key determinants that have an influence
on corporate image and reputation. For instance, respondents rated the following items,
‘The company is well known and familiar to investors’ (mean ¼ 5.07), ‘It is a big
company in terms of market capitalization’ (mean ¼ 5.05), and ‘The company has
powerful presence in the marketplace’ (mean ¼ 4.89) as the top three items respectively.
Likewise, respondents rated the following items, ‘Its CEO or key public figure is high
profile and well known’ (mean ¼ 3.84), ‘the CEO or key public figure looks capable and
presentable’ (mean ¼ 3.99), and ‘Managers in this company are flexible’ (mean ¼ 3.99)
as the lowest three items. Respondents also gave a high score for the ‘overall impression of
the corporate image and reputation of the company’ (mean ¼ 4.83).
Table 2 reports the exploratory factor analysis results. As seen, factor one, is found to
include both ‘Corporate Management’ and ‘Corporate Communication and Identity’, so
they are combined under a composite label of ‘Corporate Management and
Communication’. The second and third factors are ‘Market Presence’ and ‘Financial
Prospects’ respectively. In addition, the Kaiser-Meyer-Olkin measure of sampling
adequacy is 0.900 and the measures of sampling adequacy for the individual items are all
above 0.8, which further suggest a parsimonious set. We now discuss each factor.
In response to RQ2, our findings reveal that how companies are managed and
communicate with investors is critical in influencing the retail investor’s perception of the
corporate image and reputation of these Mainland Chinese enterprises. Based on
the strength of the scale items, it appears that greater attention should be given to how the
CEOs in this group of Mainland Chinese enterprises influence the perception of corporate
image and reputation by retail investors. Our study concurs with Grunig (1993) who
highlighted that CEOs who represent their organizations can be considered as symbolic
leaders and they personify what the organization stands for in the minds of the retail
investors.
On ‘Corporate Management and Communication’, a focus on the image and
behavior of the company’s CEO is useful in influencing positively the retail investor’s
perception of the sample set. This finding agrees with Berens and van Riel (2004, 171)
who mentioned that retail investors tend to humanize companies and ‘attribute a
diversity of personality traits to companies’. Indeed, our findings suggest that
companies must communicate well with investors and provide them with adequate
transparency and sufficient dissemination of information in order to sustain a good
image. This also coincides with Marken (1990) who highlights the importance of
coordinating every channel of communication to build the desired image. This may
well be all the more important as the business and operating units of the Mainland
Chinese enterprise are not based in Hong Kong.
On ‘Market Presence’, our results indicate that corporate image and reputation are
influenced by the sense of security retail investors have of these Mainland Chinese
enterprises based on what they feel, know or hear of investment activities related to these
enterprises. The fact that Mainland Chinese enterprises are seen as large companies in
terms of market capitalization leaves a good impression on retail investors. This finding
finds support from Fombrun and Shanley (1990) who found that the larger the firm, the
better is its reputation. This is particularly so for our study as the busy retail investors in
Hong Kong would neither have the time nor knowledge to regularly scrutinize a
company’s business and development.
Table 2. Results of factor analysis.

Factor loadings Eigen

value Variance explained Cronbach’s alpha
Scale item 1 2 3
15. The CEO has strong leadership. 0.80 6.44 40.39% 0.94
16. Its CEO or key public figure is high profile and well known. 0.79
17. The CEO or key public figure looks capable and presentable. 0.84
18. This company is a moral company. 0.76
19. The company has a good management system. 0.80
20. The company has a strong senior management team. 0.85
21. Managers in this company are flexible. 0.75
23. The company disseminates sufficient information to the market. 0.70
26. The company’s website is informative and well designed. 0.62
27. The company’s annual reports in recent years are clearly presented. 0.74
28. The company has good transparency. 0.79
8. The company is well known and familiar to investors. 0.60 2.69 16.86% 0.84
10. The company is a leader in its field. 0.71
11. The company has powerful presence in the marketplace. 0.74
12. It is a big company in terms of market capitalization. 0.76
22. The company is active in the market. 0.65
1. The company’s profitability is high. 0.63 1.12 7.03% 0.83
3. The company’s financial growth is very promising. 0.82
4. The company has positive financial development. 0.76
5. The company has a positive future prospect. 0.75
13. The prospect of the company’s business sector is promising. 0.63
Journal of Marketing Communications
205
206 R.K. Yeo et al.

On ‘Financial Prospects’, our study suggests that retail investors in Hong Kong being
commercially savvy are more inclined to invest indirectly, through the securities market,
in the Mainland Chinese enterprises. These retail investors tend to identify positively with
firms that have strong financial prospects. This is contrary to Lee’s (2004) findings where
financial prospect is rated as the least significant among seven factors.

Theoretical implications
Based on the factor analysis, ‘Corporate Identity’ is subsumed under the combined factor
loading of Corporate Management. This appears to contradict the literature particularly the
theories proposed by Gray and Balmer (1998), and Cornelissen (2000), suggesting that
corporate identity and corporate communication are fundamental to the formation of
corporate image and reputation. Our study does not actually refute this thinking.
The reasons for this apparent inconsistency could be that the retail investors are either not
familiar with the term ‘Corporate Identity’ and have difficulty associating it with any
measurable items, or that the firms being surveyed already have a certain amount of
corporate identity imbedded in their branding. The retail investors could have treated the
corporate identity as a given.
Second, the identification of management capability and financial prospects as two of
the key attributes that influence the perceptions of corporate image and reputation among
retail investors is closely aligned to the work of Goldberg (1999). This reinforces the
theory that a company’s management capabilities and financial prospects are the two most
important attributes that affect investor perception of corporate image and reputation.
In short, companies should continue to work at improving internal management
capabilities through active recruitment and training. A sound balance sheet and a healthy
bottom line are natural augmenters of growth.
Third, corporate communication is also found to play an essential role in the way retail
investors perceive companies. To investors, the accessibility of information from a
company has a direct impact on whether the company is perceived as having good
transparency. In this regard, just as in Christensen (2002), the mechanism for achieving
transparency could be continuous dialogue with stakeholders by means of strategic

Corporate
management and
communication
(11 items, α = 0.94)

Corporate image and reputation

of large Mainland Chinese
Financial prospects enterprises listed in Hong Kong
(5 items, α = 0.83)

Market presence
(5 items, α = 0.84)

Figure 2. Revised research model.

 Journal of Marketing Communications 207

corporate communication as external audiences usually demand more and complex

information.
Lastly, this study differs from previous studies because it investigates investor
perception of corporate image and corporate reputation as a unitary description rather than
separate meanings, as represented in Figure 2.

Managerial insights
Our study has led to a series of practical perspectives as associated with the corporate
image and reputation of large Mainland Chinese enterprises.

How Mainland Chinese enterprises communicate with retail investors is as important as

how such companies are perceived to be managed

Communication practitioners or senior management of publicly listed Mainland Chinese

enterprises need to pay special attention to ensuring that they maintain good communication
with their retail investors. It is necessary that shareholders are informed of what the
company is doing, using attractive and representative pictures and informative text in
annual reports and on company websites (Stancill 1984). Our study confirms that two public
relations practices are particularly important for Mainland Chinese enterprises to maintain
good communication with their retail investors, namely, ‘investor relations’ and
‘media relations’. Communication is typically seen as being the same as information, and
more information helps the external audience to develop an appropriate perception of a
company’s corporate image and reputation (Christensen 2002).

Maximizing leadership driven communication

Our findings confirm that the CEOs of this group of Mainland Chinese enterprises can
help to define and improve the company’s image and reputation in the eyes of the retail
investors. The image of the CEO or top management reflects the qualities that an
organization endorses and represents. CEOs can leverage on their professional image to
give the company a distinctive competitive edge. On the role of the CEO in the
formation of corporate image and reputation, the findings of this study are aligned to
the research of Hatch and Schultz (1997, 356), suggesting that ‘the actions and
statements of top managers simultaneously affect the organizational image’. Therefore,
it is the responsibility of senior management to manage the company’s communication
systems in such a way as ‘to develop and maintain a recognizable image and a
favorable reputation’ (Gray and Balmer 1998, 701). Uppermost is the need for CEOs to
clearly understand the functioning of such institutions as the media environment, the
financial community, and the market, as well as how different stakeholders including
investors perceive the company before making presentations to the external
stakeholders. In the process, CEOs need to build their personal credibility and obtain
the trust of the investors. They should also display the right characteristics by being
presentable and of a high profile personality so as to project the right image of the
company to the retail investors.
To enable the senior management or communication practitioners of publicly listed
Mainland Chinese enterprises to have a clear understanding of strategic financial
communication, they should look at the significant changes that have taken place in
208 R.K. Yeo et al.

that field over the past few years and the implications of these changes for the company.
They should also address such issues as the relationship between strategic financial
communication and the globalization of financial communication.

Communicating clearly to retail investors the financial prospects of the company

The senior management or communicators of these enterprises need to pay close attention
to how they should communicate their company’s financial information. Our study
endorses the proposition of Atkinson (2002) that communicators or the senior
management of Mainland Chinese companies should help retail investors to understand
how their company is making money. They should explain clearly the key factors that
drive the company’s business, the significant trends that could impact the company’s
future performance, and those that affect the company’s business historically and
prospectively. Relevant financial information should be disclosed publicly, clearly and in a
timely way to retail investors whenever companies notice a significant change in one or
more of these aspects.

Communicating and impressing retail investors with ‘Market Presence’ of the company

The notion of ‘the bigger, the better’ with regard to the size of a company holds true for the
retail investor’s perceptions of the corporate image and perception of Mainland Chinese
companies. This offers unique opportunities for communication practitioners to undertake
a variety of public relations activities. For example, they could arrange for media tours and
invite journalists to visit the company’s operations in Mainland China. In addition, they
could produce a short corporate video annually to update and highlight their business
achievements, and distribute this to registered retail investors together with the company’s
annual report (Gregory and Watson 2008). These initiatives can help to secure a
‘reputation bonus’ (Schwaiger 2004, 55) among investors.

Conclusions
In sum, communication practitioners and the senior management of Mainland Chinese
enterprises should adopt a proactive strategic approach to better communicate with
retail investors to improve long-term corporate image and reputation. As in all studies,
we acknowledge the potential methodological limitations that confront our study.
For instance, in seeking the help from the focus groups to help define the variables
needed for the survey, the pool of candidates drawn from a restricted network of
potential participants could have limited the generalization of the results to a wider
population. Another limitation of the study is the sample size of the 150 valid
questionnaires returned for the survey. Of the 1.36 million stock investors in Hong
Kong, only about 3500 were approached for this study. Further research could extend
the sample size to cover a wider spectrum of investors. Finally, as the survey questions
were not open-ended, this could have set certain limits on the scope of the information
gathered.
For future research, the study could be further widened. For instance, factors such as
‘Corporate Governance’ and ‘Social Responsibility’ could be avenues for exploration
given the growing importance of corporate governance and social responsibility in Asia
among the more environmentally conscious retail investors.
 Journal of Marketing Communications 209

Acknowledgements
The paper greatly benefited from the constructive comments of two anonymous reviewers. The first
author would like to acknowledge the support given by King Fahd University of Petroleum &
Minerals in the preparation of this paper.

Notes on contributors
Roland K. Yeo is Assistant Professor of Management at the College of Industrial Management in
King Fahd University of Petroleum & Minerals in Saudi Arabia. His research interests are in the
individual and social aspects of learning in organizational contexts and their impact on team
performance.
Mark Goh is Director of Industry Research with the Logistics Institute and an Associate Professor at
the NUS Business School. His main area of research interest lies in supply chain management and its
practices in Asia. He has published widely in international refereed journals and is currently an
adjunct faculty with the University of South Australia.
Sophia Tso is Corporate Communication Director at China Unicom in Hong Kong. She holds a
doctoral degree in Business Administration from the University of South Australia and is interested
in communication management research in the Asian context. She is also involved in graduate
teaching at the Hong Kong Baptist University.

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