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Introduction
A study of the controversies surrounding the fusion between corporate giants German Bayer (leader in agrochemicals and pharmaceuticals) and American Monsanto (leader in genetically modified organisms, genetic-modification technologies and reputed for its flagship product Roundup, the world’s most used pesticide), offers new perspectives on research into reputation. Little is known about the internal and external drivers and circumstances that diminish the importance of reputation, rendering it capable of being circumvented, even more so in the context of a fusion.
To answer the question how two companies with historically caustic reputations faced and surpassed significant obstacles, such as political, public, economic, social and legal opposition to their proposed merger for increased market power, we use a reputational stakeholder perception (“sense-making”) framework (Basu and Palazzo, 2008) in combination with an in-depth qualitative timeline analysis (Table I). Adopting an intra-organizational perspective (Rühli and Sachs, 1999), this article traces the genesis and timeline of Bayer and Monsanto’s tumultuous reputations (involving Zyklon B, Agent Orange, Baycol, Roundup, neonicotinoids and genetic-modification) and the influence of micro- and macro-economic drivers for and against their fusion. We find novel managerial perception-molding insights and compare and contrast them with established practices in reputation management.
Reputation antecedents and consequences
Reputation is important not only as a driver to ensure key outcomes, such as return to investors, lower cost of capital and market value but also intangibles that the firm can draw upon in the future, including the goodwill of clients as well as the likelihood of successful alliances with better partner firms (Saxton, 1998). Reputation depends heavily on stakeholder perception, as the same firm can have positive and negative reputations in the eyes of different perceivers. Firm managers attempt to influence stakeholder assessments through signals in a process of sense-giving. Stakeholders, in turn, evaluate the firm and construct reputational impressions by making sense of sometimes ambiguous signals from firms, the media and other monitors (Fombrun and Shanley, 1990).
Reputation: stakeholder perception-molding model
Sense-making is the perceptual process by which individuals develop cognitive maps of their environment. Perception-molding harnesses the tripartite model of sense-making, integrating three essential elements: cognitive (the firm’s thinking about its identity and relationship with stakeholders), linguistic (the words the firm’s uses to express its identity and its activities) and conative (the...