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Corporate identity: Concept, components and contribution

Article  in  Journal of General Management · September 2005


DOI: 10.1177/030630700503100104

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Corporate identity: concept,
components and contribution
T. C. Melewar
Lecturer, Marketing and Stratetic Management Group, Warwick Business School,
University of Warwick

Elif Karaosmanoglu
Researcher, Marketing Department, The Middlesex University Business School, London

Douglas Paterson
(Formerly) Warwick Business School, University of Warwick

The purpose of this paper is to provide an overview of the corporate identity concept. This
investigation initially provides a brief review of the literature and clari®cation of the various
components of the corporate identity concept. Then, through a series of in-depth interviews
with 32 individuals from twenty di€erent organisations in di€erent industries, it aims to develop
an understanding of the bene®ts organisations believe can be derived from a strong identity. The
study shows that many practitioners and academics believe that a virtuous corporate identity is
pivotal to their success. Many interviewees stated that the bene®ts of a strong and positive
corporate identity could boost employee motivation, increase the ability of the organisation to
recruit and retain high quality employees, provide a strong base for organisational culture in the
event of mergers and acquisitions, increase transparency of business practices, bring com-
petitive advantage, help to develop better relationships with other businesses and aid
investment into the company. The study recommends that businesses should try to develop
systematic methods of measuring and managing their corporate identity.

Introduction
Interest in corporate identity has increased in both academic and business
circles in recent years. Corporate identity is now widely recognised as an
e€ective strategic instrument and a means to achieve competitive advantage
(Gray and Smeltzer, 1985; Schmidt, 1995). It can be used to gain competitive
advantage as customers identify with all aspects of a business, including its
social, cultural and ethical policies and not just with the company's products
and services. Furthermore, when making purchase and investment decisions
and evaluating employment opportunities, all stakeholders are increasingly
concerned with corporate reputation, which is based on the stakeholders'
elaboration of corporate identity over time.

Journal of General Management Vol. 31 No. 1 Autumn 2005 59


59±81
T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

Despite the increase in academic and corporate interest in the topic, a


universally accepted de®nition of corporate identity remains elusive (Wilk-
inson and Balmer, 1996). It is not only because corporate identity manage-
ment incorporates a multi-disciplinary approach (Balmer, 1998; Bick et al.,
2003) but also corporate identity as a concept often has di€erent connotations
for di€erent stakeholders. In consequence, misunderstandings between
`brand, corporate brand, employee brand and corporate identity' (Auton,
2000)1 are common. This is a result of the fact that corporate identity is
associated with a wide range of functions including business strategy, phil-
osophy of key executives, corporate culture, behaviour and corporate design,
which are both interdependent and unique to each organisation (Melewar and
Jenkins, 2002). The `Strathclyde Statement' provides a useful perspective on
the concept's multi-disciplinary nature (Balmer, 1998).
Not only is the de®nition of the concept not fully formulated, but also the
precise bene®ts that some organisations seek to gain from a strong identity are
unclear. This lack of clarity in the academic world is re¯ected by a 1992 MORI
survey, which concluded that corporate identity was a fundamental concern of
CEOs. However, many executives confessed to having little knowledge of how
to manage, control or even explicitly de®ne the concept (Olins, 1995). This fact
becomes very crucial for the companies especially when the cost is concerned.
Fellmann (1998) states that companies spend between $5 million and $50
million only for development of a new corporate visual identity (CVI).
In this article, we explore the topic further by providing a base for the
discussion in the corporate identity ®eld engendered by the question `what
does this concept mean?'. We ®rst review the literature in corporate identity
and related disciplines and then describe our methodology. We then compare
and contrast the alternative conceptualisation in the literature with the view
that emerges from the ®eld interviews and integrate the major ®ndings from
the ®eldwork with the literature, to reach a conceptualisation of corporate
identity regarding its core components, as well as to illustrate the motives of
organisations to pursue identity management. Lastly, we present a conclusion
comprising a synthesis of viewpoints from the literature and ®eldwork and
give recommendations concerning the management of corporate identity and
future research directions.

Review of literature
Corporate identity: the concept
In some studies of identity, corporate identity has been ascribed to the design
elements of organisations (e.g. Jenkins, 1991; Pilditch, 1970; Selame and
Selame, 1975). These studies have focused on the evolution of a company's

1
The terms corporate identity, corporate brand, corporate reputation as well as corporate
image are being used interchangeably. However, the discussion and delineation of the borders
of these terms are not within the scope of this paper. For de®nitions of these terms the readers
could refer to Balmer (2001), Dutton and Dukerich (1991), Gioia, Schultz and Corley (2000),
Melewar (2003), Stern, et al. (2001), Whetten and Mackey (2002).

60 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

identity through the changes in the visual expressions of the organisation.


Simultaneously, another stream was introduced to the ®eld, which claims that
members of organisations are the sources of corporate identity cultivation
(Kennedy, 1977). Studies from the organisational behaviour perspective
provided articulation about how employees identify themselves with their
organisations (e.g. Bergami and Bagozzi, 2000; Dutton et al., 1994; Hatch and
Shultz, 1997; Mael and Ashfort, 1989; Whetten and Godfrey, 1998).
Recently, it has been suggested that employees' own interpretations of how
their organisations are perceived by outsiders a€ects the organisations' actual
identities (Christensen and Askegaard, 2001; Dutton and Dukerich, 1991).
Bernstein (1984) emphasised that every organisation has a personality based
on its corporate philosophy, culture and core values re¯ected in its mission
and vision statements (Abratt, 1989), thereby linking visual identity to
strategy (Olins, 1989). Ind (1990) and Gray and Smeltzer (1985) regarded
corporate identity as an expression and an integral part of strategy.
After the evolution through visual expressions and corporate personality
focus (Balmer, 1997; Cornelissen and Harris, 2001), corporate identity has
recently been seen as the composite of all expressions of an organisation (Birkigt
and Stadler, 1986, cited in van Riel, 1995; Balmer and Gray, 1999; Steidl and
Emery, 1997; van Riel, 1995; van Riel and Balmer, 1997). This argument has
added corporate communication to the ®eld of corporate identity research.
Finally, Wilson (2001) states that the external industrial environment of an
organisation in¯uences its culture, thus its identity. In relation to this, we
consider whether an organisation's identi®cation with its industry's identity
determines its position in the market (Peteraf and Shanley, 1997).
The management of corporate identity means having a core business
philosophy which is embedded in the mission and vision statements of an
organisation and disseminating the values asserted by them to its employees
via management communication as well as to its external stakeholders via
expression of its visual systems, behaviour and communication activities (van
Riel, 1995). In other words, corporate identity is managed by two main steps:
1. The endorsement and dissemination of a company's mission, vision and
philosophy internally and externally.
2. The planning, implementation and maintenance of corporate visual
identity systems, marketing communication activities and behavioural
forms in order to externalise company values.
In essence, corporate identity reveals `what the organisation is', `what it
stands for', `what it does', `how it does it' and `where it is going' (Bernstein,
1984; Melewar and Jenkins, 2002). The company must be seen as a holistic
organism in which there is interdependency between all functions and
activities. In consequence, corporate identity is constructed from the cohe-
sively interconnected physical, operational and human elements of an organ-
isation.
The expression of identity is also an inherently dynamic process (Gioia,
Shultz and Corley, 2000) that tends to evolve over time as the organisational
context changes (Gioia, 1998). It appears reasonable to conclude from the
literature that an organisation managing its identity is one in which the

Journal of General Management Vol. 31 No. 1 Autumn 2005 61


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

Figure 1: Corporate identity components

following core components of corporate identity are manifested: corporate


design, corporate communication, corporate culture, corporate behaviour,
corporate structure, industry identity and corporate strategy (Melewar,
2003)2. These components are summarised in Figure 1 and discussed in detail
in the following sections.

Core components of corporate identity


Corporate communication
Corporate communication is a complex issue associated with the manner in
which the organisation communicates with its various stakeholders. In
essence, it is argued that every activity that an organisation is involved in
and everything that it produces and all of the messages it conveys will have
an impact on stakeholders' perceptions (Steidl and Emery, 1997; van Riel,

2
Melewar (2003) has termed these elements as the Corporate Identity Taxonomy in his article.

62 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

1995). Corporate communication can be both controlled and uncontrolled


in nature (Balmer and Gray, 1999; Bhattacharya and Sen, 2003; Cornelissen,
2001). Communication intentionally instigated by management with the
aim of improving stakeholder relationships is classi®ed as controlled
corporate communication. Conversely, uncontrolled communication takes
place when organisations unintentionally in¯uence stakeholders' percep-
tions.
A distinction can be made between three main types of controlled com-
munication i.e. management, marketing and organisational communication
(van Riel, 1995; van Riel, 1997). Management communication applies to
attempts to `communicate the vision and mission of the company in order to
establish a favourable image and ultimately a good reputation amongst its
internal and external stakeholders' (Olins, 1989). Management communi-
cation is perceived as being the most important of these three methods as it
involves the expression of organisational goals directly to internal stake-
holders (Melewar and Wooldridge, 2001). Furthermore, through communi-
cation directed at the external stakeholder management, communication
plays a fundamental role in developing the desired corporate image and
creating a strong competitive advantage (Gray and Smeltzer, 1985; Kirikiadou
and Millward, 2000; Schmidt, 1995).
Marketing communication is associated with promotional communication
aimed at creating a favourable image for products and services, which in turn
contributes to the overall image of organisations (Barich and Kotler, 1991; van
Riel, 1995). Constituents of marketing communication include advertising,
personal selling, public relations and sales promotion. Organisational com-
munication can be de®ned as the communication that takes place between the
organisation and all interdependent stakeholders (van Riel, 1995; van Riel,
1997).

Corporate design (visual identity)


Corporate visual identity is an array of visual cues designed by the organ-
isation for the purpose of di€erentiating it from other organisations and
projecting quality and stature to stakeholders. Most commentators concur
that visual identity is composed of ®ve main elements: the organisation's
name, slogan, logotype/symbol, colour and typography (Melewar and Saun-
ders, 2000a, 2000b; Topalian, 1984). It is the most frequently discussed aspect
of corporate identity and, in consequence, one of the most commonly used
methods to indicate a transition in identity by organisations, for example, a
name change along with alterations to the corporate image that organisations
want their stakeholders to identify with (Selame and Selame, 1975).
Visual identity can be conveyed in other ways. For example, the location
and architecture of buildings is often used as a means of imparting identity
(Schmitt et al., 1995). This is also often seen at the level of interior oce
design, which may symbolise many aspects of the corporate culture. Melewar
and Saunders (2000a) also highlight the fact that other applications of visual
identity include advertising, clothing, packaging and promotion and give-
aways.

Journal of General Management Vol. 31 No. 1 Autumn 2005 63


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

Corporate culture
The organisation's core values, behaviour and beliefs are re¯ected in its
corporate culture (Albert and Whetten, 1985). Corporate culture and corpo-
rate identity are closely related and intertwined with each other (Hatch and
Schultz, 1997). Hence, Ambler and Barrow (1996) state that corporate culture
is associated with the values that support the organisational strategy or
corporate identity (Abratt, 1989). There are a number of di€erent views as
to what constitutes corporate culture and unsurprisingly, no concrete de®ni-
tion of the concept exists.
Furthermore, there is a contentious debate concerning the extent to which
corporate culture can be created by organisational leaders, as opposed to being
something far less controllable emerging from social interaction (Smircich,
1983). However, many commentators (e.g. Abratt, 1989; Balmer, 1998;
Balmer and Soenen, 1999) agree that the following elements are contained
within corporate culture: corporate philosophy, corporate values, corporate
principles, corporate guidelines, corporate history, founder of the company,
country-of-origin and subculture.
Corporate philosophy is associated with the core values and assumptions of
a company created by senior management. Corporate values are concerned
with the moral principles and beliefs that guide the company's culture (Gray
and Balmer, 1997). The corporate mission pertains to the reason for the
existence of the company and is thus seen by many as the most important
element of corporate philosophy (Abratt, 1989; Ind, 1992). Furthermore, the
corporate mission guides the strategic management of the business and is an
important source of di€erentiation from other organisations.
Corporate principles are fundamental in the formation of corporate actions
such as targets, values and the mission of an organisation. Corporate guide-
lines are vital in explaining the signi®cance of corporate principles to all levels
of the hierarchy within the organisation. Corporate history has an impact on
corporate identity as organisational culture develops and evolves over long
periods of time and is shaped by the events that take place (Ind, 1992). Many
authors also state that the founder of the company plays a crucial role in
driving and shaping organisational culture (e.g. van Riel and Balmer, 1997).
Similarly there is often a country-of-origin e€ect whereby characteristics of
national identity are a strong in¯uence on company culture (Balmer, 1998).
Finally, the issue of subcultures must be dealt with. The unitary perspective
assumes that culture is monolithic and a re¯ection of the founder's beliefs
(Peters and Waterman, 1982) and in consequence organisational members
share a sense of loyalty and commitment to the organisation (Dutton et al.,
1994; Whetten and Godfrey, 1998). However, this view is a little misleading.
Hence, many commentators have embraced a di€erentiation perspective,
viewing the organisation as an amalgamation of subcultures (Melewar, 2003).

Corporate behaviour
Dutton and Dukerich (1991) and Dutton et al. (1994) highlight that organ-
isational identity is driven by the degree of cohesion between the organisation

64 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

and the employees, i.e. the level of their commitment and enthusiasm towards
running and sustaining the organisation's long term development. There are a
number of elements associated with behaviour including corporate behaviour
(Balmer, 1997), employee behaviour (Kennedy, 1977; Dowling, 1986; Kir-
iakidou and Millward, 2000) and management behaviour (van Riel, 1995).
Corporate behaviour stems from corporate actions in their entirety, both
those that are planned and congruent with corporate culture and those that
occur spontaneously.
A clear distinction can be made between corporate behaviour and employee
behaviour. Corporate behaviour is associated with senior management's task
of instigating the clear communication of the corporate vision and strategy.
Whilst employee behaviour is associated with the process by which employees
relate to the organisation (Dutton and Dukerich, 1991; Dutton et al., 1994).
Finally, senior management, through their actions and statements, exert a
substantial in¯uence over management behaviour.

Corporate structure
Corporate structure consists of organisational structure and branding
structure and is a fundamental component of corporate identity. Organ-
isations engage in branding strategies in order to positively di€erentiate
themselves from competitors (Aaker, 1996; Balmer, 1995, 2001; Ind, 1996).
Three varieties of corporate identity structures have been put forward by
Olins (1989).
Firstly, the monolithic structure is one where the organisation uses a
consistent name and visual style and in consequence the corporate identity
of the company is the brand to the consumer. Secondly, there is the endorsed
structure, in which corporate identity is associated with the name of the
subsidiaries. Finally, the branded structure is one where products are
di€erentiated through di€erent brand names. The organisational structure
is associated with the degree of centralisation and decentralisation, in terms of
both geography and across products (Ind, 1992).

Industry identity
This refers to fundamental industry features such as competitiveness, size and
rates of change, which in¯uence the corporate identity of a company. The
industry identity can have a profound e€ect on a company's ability to project
its individual corporate identity. The corporate strategy of certain organ-
isations will be strongly in¯uenced by the industry that they compete in
(Melewar and Wooldridge, 2001; Peteraf and Shanley, 1997). For example,
during the 1970s the public took a fairly negative view of the oil industry, and
hence of the individual companies in the sector, like Chevron in the USA
(Winters, 1986, 1988).
It appears that these companies have experienced some diculty in
changing their identities, owing to criticism of their environmental prac-
tices. This criticism comes from sources of uncontrollable communication
such as environmental groups, and they a€ect not only individual ®rms but

Journal of General Management Vol. 31 No. 1 Autumn 2005 65


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

also the entire petroleum industry, which in turn harms an organisation's


image further.

Corporate strategy
Corporate strategy is the blueprint of the ®rms' fundamental objectives and
strategies for competing in their given market. It determines what the
company produces, the level of pro®t made and stakeholder perceptions
about the company. As corporate strategy lies within the personality of the
organisation and corporate identity is an expression of this personality
(Abratt, 1989), corporate strategy is thus a component of corporate identity
(Gray and Balmer, 1998; Gray and Smeltzer, 1985; Ind, 1992; Kiriakidou and
Millward 2000).
Simoes (2001) conducted research into the relationship between business
level strategy and corporate identity management. She found that companies
which focus on brand consistency tend to use corporate identity management
to di€erentiate themselves from other organisations. Indeed, corporate
identity is seen as a basis for di€erentiation and positioning (e.g. Abratt,
1989, Gray and Smeltzer, 1987, Riel and Balmer, 1997). Additionally, Simoes
(2001) found that cost-oriented ®rms focus on visual aspects of corporate
identity management, simply because they prioritise lower-cost advantage,
rather than investing more on di€erentiation. These ®ndings show that
companies with di€erent strategy orientations have di€erent levels of corpo-
rate identity management.

Methodology
This article is an exploratory study, which aims to gain from practice new
insights into the corporate identity concept and its management. The
espoused values of those leading the organisations, as expressed through
corporate identity and their actual impact in practice are the main focus of the
study. Thus, the investigation aims to compare the rhetoric surrounding
corporate identity with the reality of its practice. In particular, it seeks:
 To determine the extent to which organisations follow a systematic
approach in constructing their corporate identity.
 To determine the implementation of corporate identity by organisations
in diverse sectors and of different sizes.
 To evaluate the benefits of corporate identity as perceived by the managers
interviewed.
Since the identity ®eld is a relatively new area of interest and its de®nition
and linkage to related concepts remain vague (Melewar and Wooldridge,
2001), the researchers adopted a qualitative methodology as an initial step
(Bryman, 2001), which helps to clarify concepts and to show new directions
for further investigation (Churchill, 1991). It relies on in-depth interviews to
increase the possibility of obtaining rich data from the views of interviewees
(Bryman, 2001). Like many exploratory studies, the companies were chosen

66 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

based on a convenience criterion (Churchill, 1991; Tull and Hawkins, 1990).


Ultimately, the motive of the researchers has been to expand the under-
standing of the subject under investigation rather than to ®nd a representative
sample.
However, a purposive approach (Glaser and Strauss, 1967) has been used to
ensure that the sample includes organisations from a range of sizes and sectors.
The grounded theory approach of Strauss and Corbin (1990) was applied in
the qualitative data analysis. The grounds for choosing this approach are
centred on the fact that the data is qualitative in nature, and that this approach
allows an in-depth analysis of the area under investigation. Owing to the
complexity of the concept secondary sources of information were also used
such as company literature, information from their respective websites and
relevant press releases about each company in order to overcome the
limitations of interview environment.

Field interviews
The goal of the investigation was to ascertain individuals' perceptions and
experiences of corporate identity. In consequence, the study was qualitative,
based upon extensive interviews with 32 individuals from twenty companies
and concerning the implementation of corporate identity within their respect-
ive organisations. The study was orientated towards theory construction (i.e.
elicitation of constructs and propositions) and so the interviews aimed to
examine a wide range of experiences and perspectives.
The companies were from a broad spectrum of industries including two
multinational banks, two multinational accountancy ®rms, two multinational
oil companies, two multinational engineering companies, two multinational
IT companies, four multinational conglomerates, two internet insurance
companies, two toy companies and two marketing consultancies. Of the 32
individuals interviewed, ten held positions in the ®eld of marketing, four held
human resources positions and fourteen were senior managers or directors
and four were on graduate training schemes. Multiple individuals were
interviewed in certain organisations.

Table 1: Nature of business


Nature of business Number of companies
Bank 2
Accountancy 2
Oil 2
Engineering 2
Conglomerates 2
Insurance (internet) 2
Toy 2
Marketing consultancy 2

Journal of General Management Vol. 31 No. 1 Autumn 2005 67


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

Table 2: Job titles of interviewees


Job title Number of interviewees
Marketing Director 10
Human Resources Director 4
Managing Director/Senior Manager 14
Graduate Trainee 4

A broad cross-section of companies was chosen because part of the


investigation aimed to analyse why certain components of corporate identity
might be perceived as more important than others by particular ®rms. For
example, whether this was related to the size of the ®rm, the industry in which
it operates or any other ®rm-speci®c in¯uence. The sample thus re¯ects a
diverse set of organisations, functional areas and positions.
A standard interview guide (Bryman, 2001) which is based on the current
literature was followed for the interviews. This enabled us to delineate within-
case patterns as well as to draw a comprehensive picture of cross-case patterns
(Eisenhardt, 1989). Following the approach adopted by Kohli and Jaworski
(1990), after a brief introduction to outline the research interest, each
interviewee was asked about three issues along the following lines which
cover the main objectives of this research.
1. What do the terms `corporate identity' and `corporate identity manage-
ment' mean to your organisation?
2. How do you manage your company's identity? How does the management
of your company's identity relate to corporate communication, corporate
design, corporate culture, corporate behaviour, corporate structure, in-
dustry identity and corporate strategy?
3. What are the bene®ts of corporate identity management? How do the
bene®ts di€er according to the various stakeholders i.e. employees,
customers, investors and suppliers?
These questions aimed to obtain novel insights into the meaning of
corporate identity, corporate identity management process in relation to
theme areas mentioned in question two and possible consequences of better
identity management for companies. The personal interviews usually lasted
about 90 minutes and were recorded.

Findings and discussion


Contribution of a strong corporate identity
Both practitioners and academics are increasingly advocating the virtues of a
strong identity. There has been a profound realisation that stakeholders now
place considerable importance on the existence of a distinct corporate identity
which they can relate to. This view is re¯ected by Downey (1986) who states that
corporate identity is now seen as an e€ective tool for developing strong
and trusting relationships between corporations and their stakeholders.

68 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

Thus, corporate identity is an e€ective means for a company to di€erentiate


itself from other organisations in this increasingly competitive business
environment. As Dowling (1994) and Gray and Smeltzer (1985) highlight,
the cultivation of corporate identity is a strategic management technique that
allows organisations to e€ectively and exclusively di€erentiate themselves
from competitors. Furthermore (unlike some other marketing tools), this
strategic concept is highly adept at establishing a long term source of com-
petitive advantage (Gray and Smeltzer, 1985; Schmidt, 1995).
Corporate identity is widely regarded as a valuable means of increasing the
company's sales of products or services (Dowling, 1994). These ideas are
further supported by Marken (1990) who states that corporate identity can be
used to extend product life cycles, which has obvious bene®cial implications
regarding sales and consumer perceptions of the company.
Furthermore, there is also considerable support for the contention that a
solid corporate identity allows companies to charge premium prices (Fom-
brun and Shanley, 1990). From a ®nance perspective, a veritable corporate
identity is an extremely valuable device in attracting ®nancial investment into
a company. Similarly, as Kiriakidou and Millward (2000) highlights, a strong
corporate identity is often vital in attracting and retaining employees.
There was a clear consensus amongst all interviewees that corporate identity
was a key concern in their organisations and that its importance had
dramatically increased over the last ®ve to ten years. They stressed that recent
developments in business environment such as the emergence of unionised or
newly opened markets, increasing number of mergers and acquisitions,
establishment of many more companies and their numerous and various
products/services, more demanding consumers with higher awareness of
ethical and social issues have started to force companies to focus on di€erent
ways of creating competitive advantage.
Furthermore, the majority believed that it was likely to become an even
greater strategic concern in the future. As stated in the literature review, there
are extensive bene®ts that can be derived from a strong corporate identity
which are associated with a wide range of stakeholder groups. In order to
understand which of them are the most important consequences of identity
management, the interviewees were asked to discuss the perceived bene®ts
that a strong corporate identity could bring to their company. On the basis of
the main theme areas which emerged during the interviews, the analyses and
the ®ndings are presented under the following headings.
1. Motivation, recruitment and retention of high quality employees.
2. The need for co-ordination and the development of a consistent identity in
the event of a merger.
3. The escalating requirements from stakeholders for transparency and
ethical business practices.
4. The use of corporate identity as a tool to achieve competitive advantage by
in¯uencing customer perceptions of the company.
5. The use of corporate identity in cultivating good relationships with
interdependent businesses such as suppliers.
6. The extent to which corporate identity can be used to secure ®nance.

Journal of General Management Vol. 31 No. 1 Autumn 2005 69


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

Motivation, recruitment and retention of high quality employees


One of the foremost values of systems of corporate identity is the development
of a strong and unitary corporate culture, which perpetuates employee
motivation and commitment towards the values that are perceived as being
fundamental to organisational success (Tichy, 1983). Thus, corporate identity
can result in positive outcomes such as high labour productivity and low
labour turnover.
All of the companies under investigation have experienced similar pressures
induced by factors such as the increase in international competition as a result
of globalisation, deregulation, the removal of barriers to competition and
numerous other competitive forces (Gardberg and Fombrun, 2002). This has
resulted in a need for restructuring in order to achieve cost cuts that has to a
certain degree in each industry had a detrimental impact on employee morale.
As a wide spectrum of organisations was chosen with respect to industry and
size, these organisations have experienced these pressures at di€erent levels of
intensities.
An interviewee from the engineering company suggested that the corporate
identity is of fundamental importance to employees because many employees
perceive their company's identity has some re¯ection on their own individual
identity: `. . . employees generally want to feel proud of the company that they
are working for. I think you might even say that the corporate identity of the
employee's company in¯uences his individual identity because work is a big
part of most peoples' own lives.'
An interviewee from the oil company also spoke of the importance of a strong
corporate identity when trying to attract the best employees: `Corporate image
is essential to our recruitment strategy. We must show potential recruits thatthe
working environment and culture within (company name) . . . is one based on
teamwork and co-operation. Also, we are increasingly trying to make clear to
potential candidates that we are a company with strong ethics and principles.'
The quest for a virtuous corporate identity has arguably been coveted more
by this oil company than by any other organisation studied in this investiga-
tion. This is partly because of the criticism this company has received for its
environmental practices and operations in Third World countries. The bad
press the organisation has su€ered from has possibly put potential job
applicants o€ applying for jobs at this company. Thus a rigorous corporate
branding campaign has been instigated.
The owner of an internet insurance company mentions: `I only have ®ve
core sta€ working for me, so it is easy to communicate and discuss the values
of the company with all of them. I have no set procedures solely designed for
the development of corporate identity, but I do stress the importance of the
underlying principles of the concept with my sta€. Fortunately, I've not had to
make any cutbacks and healthy working relationships have been relatively easy
to cultivate. From the discussions we have, I aim to inform them of the
direction the company and the industry as a whole and how we must align the
company with the market to ensure we are competitive. I try to get as much
feedback from them as possible and morale is certainly aided by maintaining
these channels of communication.'

70 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

The small size of this company appears to be an advantage as the owner


is in close contact with his sta€ and is thus able to discuss issues such as
the mission statement, corporate values and other aspects of corporate
identity directly with them. It was also interesting that he did not mention
any systematic planning of activities or procedures to reinforce corporate
identity and its management. Instead he mentioned that simply speaking
to employees at times when necessary is how they handled identity
building within his company. This could be due to the fact that the
small size of the company means formally developed procedures are not
necessary.
In conclusion, many businesses are acutely aware of the fact that a strong
corporate identity can provide an e€ective basis for recruitment and motiva-
tional purposes. Furthermore, many interviewees also hinted that labour
¯exibility could be improved through the development of a strong company
culture, which reinforces corporate identity.

The need for co-ordination and development of a consistent


identity in the event of a merger
Globalisation and increased competition in the market place have meant that
many organisations have sought eciency gains through growth via mergers
and acquisitions (Trautwein, 1990; Bower, 2001). However, this process can
have some detrimental consequences for organisations because of both the
disruption to the internal culture (Swystun, 2001) and the likelihood that
other stakeholders may become confused about the new identity of the
organisation. Corporate identity can be an e€ective tool in alleviating these
problems, as it allows companies to communicate a clear and consistent
message to all of their stakeholders in the event of a merger.
An interviewee from one of the accountancy ®rms made it clear that the
development of a consistent corporate identity was vital to achieving a
successful merger: `It's sometimes quite dicult to merge two di€erent
companies with their own individual styles and you have to put these together
so that you don't alienate any of the stakeholder groups from employees to
consumers. So you have to put it together in such a way that you form a new
branding or consolidated branding.'
Similarly, the interviewee from the food and domestic products conglom-
erate stated that integration between merged companies could be aided by a
clear and consistent identity for the overall company: `You've got to take the
best elements of the old company and develop the new company identity from
this; the identity must be clearly communicated to the sta€ and you have to get
their input for it to be accepted.'
The engineering company is the most obvious example of a company
transformed by the forces of globalisation. The company experienced a
fairly traumatic takeover in February 2000. The takeover had a cataclysmic
e€ect on the organisational culture and many other aspects of the
company's identity. The two national cultures, the acquirer being German
and doing business in the distinct European fashion and the engineering

Journal of General Management Vol. 31 No. 1 Autumn 2005 71


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

company operating under the Anglo-Saxon norms has led to many situ-
ations of con¯ict and misunderstanding.
A former senior director from the engineering company stated: `The merger
changed many aspects concerning the way in which we did business. We had
previously operated under a system in which there had been a strong ethos on
loyalty and teamwork, which was dramatically undermined once the new
management was brought in. This meant that successful working relation-
ships that had been in place for years were massively disrupted.'
The new values espoused once the merger had taken place were incongruent
with values that had been evolved over many years at the engineering
company. This highlights that corporate identity may not always be helpful
in bringing about integration between two companies in the event of a merger.
This was probably because of apparent massive di€erences between each
corporate culture.
In conclusion, the establishment of a clear and consistent corporate identity
in the event of a merger can be seen as a way of aiding integration and reducing
confusion amongst the new workforce. Similarly, it can signify to other
stakeholders such as investors and customers the strategy of the new company
and any changes in strategy that are to take place.

The escalating requirements from stakeholders for transparency


and ethical business practices
Demand for corporate transparency from all stakeholders has been increas-
ingly resilient for a number of years, with companies in both Europe and the
US increasingly being held accountable on the subject of corporate govern-
ance. The impact that this has had on corporations has been ampli®ed by the
ease with which stakeholders can access information on companies through
the new media, particularly the internet.
This response from an interviewee from the accountancy ®rm highlighted
the increasing importance of the need for transparency: `De®nitely, because
there is so much concern in the auditing business at the moment. (Company
name) . . . have managed to avoid most negative publicity due to practices
within the company, and the fact that we communicate with the outside world
with a clear and consistent voice.'
There is a trend placing great importance on corporate reputations when
making investment decisions. One interviewee from the marketing consul-
tancy enthuses: `I am aware that many investment decisions are based on
written assumptions, but in the end the decisions are based on 90 per cent
emotions and that can only come from really the sense of the identity of the
company. I mean, three weeks ago I bought some ethical investments and this
was a decision based more on emotional than ®nancial appeal.'
As Pruzan (2001) highlights, consumers are the primary source of corpo-
rate income and are increasingly concerned with the environmental, social
and ethical responsibility of business. There has been a clear rise in what has
been termed `ethical consumerism'. Ethical consumers can thus have a
massive impact on organisations by basing their purchases of products and

72 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

services on their perceptions of whether or not the companies are acting in an


ethical or unethical way.
One interviewee from the insurance ®rm re¯ects this development:
`. . . consumers are far more conscious about the reputations and behaviour of
the companies they purchase from. This is probably largely a result of the
increased amount of information that is available to them, but also it is
associated with the fact that the market place is highly competitive now and
service prices are fairly standardised. So corporate reputation is a means a
company can use to di€erentiate itself.'
Corporate identity allows companies a means of communicating the core
values of their business and can be used to guide behaviour. Many companies
have been a€ected by campaigns against them by various groups of non-
governmental organisations (NGOs) and a strategic approach to corporate
identity has allowed them to defend themselves and work with these groups.

The use of corporate identity as a tool to achieve competitive


advantage by in¯uencing consumer perceptions of the company
As stressed in the introduction, recent changes in the business environment
have meant that organisations increasingly need to ®nd new sources of
competitive advantage (Balmer and Gray, 1999; Gray and Balmer, 1998;
Schmidt, 1995). Furthermore, consumers are increasingly taking a holistic
perspective on organisations when making purchase decisions (Le Blanc and
Nguyen, 1996) and product evaluations (Brown and Dacin, 1997). Hence, the
organisation's activities and image are important factors as well as the services
and products they produce (Brown and Dacin, 1997).
The interviewee from the engineering company stressed the importance of
corporate identity in terms of sales of products and services: `Many of the
consumers I did business with were in fact other companies purchasing our
products. Our source of competitive advantage came from long term relation-
ships with these companies, which was certainly related to our reputation as a
company. We developed a good understanding of the needs of these businesses
and they understood what we were capable of delivering to the relationship.'
Clearly, at this company the corporate reputation was a strong source of
competitive advantage. The manager suggested that this was built on the
reputation and track record that the company had for business rather than
corporate communication such as advertising and other promotional mater-
ials. This is evidence of the fact that although promotion and advertising can
undoubtedly be a source of competitive advantage, they must be backed up
with the provision of high quality products and services.
An interviewee from the oil company also stated that corporate identity
could have a bene®cial impact on sales: `I would say that corporate identity is
de®nitely a source for competitive advantage for the company. After all, one of
our major products is the sale of petrol to household consumers and it is
dicult to ®nd ways of di€erentiating our petrol from the petrol of
competitors. One of the successful ways of doing this is to di€erentiate our
company as a whole from our competitors. For example, we stress our

Journal of General Management Vol. 31 No. 1 Autumn 2005 73


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

environmental and ethical policies so that consumers can see that we are an
organisation operating with integrity and solid principles.'
This company has intensively marketed their `green policy' over the last
decade. This is partly a result of the bad publicity the company had received as
a consequence of some of its activities in Third World countries and its
environmental record. Furthermore, it is now easier for NGOs like Green-
peace to publicise poor environmental practices by use of new technologies,
such as the internet.
The development of a positive corporate identity has therefore clearly
provided them with a tool to counteract negative consumer perceptions. This
corporate identity has been cultivated via extensive marketing and discussion
with environmental groups as to how they can conduct their operations with
minimal damage to the environment. The company has become proactive in
trying to achieve the `triple bottom line' as opposed to simply pro®t
maximisation. The term `triple bottom line' is used to capture the whole set
of values, issues and processes that companies must address in order to
minimise any harm resulting from their activities and to create economic,
social and environmental value. This quest for the triple bottom line has
become engraved in this company's corporate identity.
The manager of a marketing consultancy stated that: `Our company is
recognised in the industry as one that develops and provides customised
marketing solutions to the exact speci®cation of our customers; this is our
source of competitive advantage. This recognition has been achieved through
the results we have delivered. Our corporate identity has contributed to these
results as it has instilled an ethos of service quality in all our employees, which
is what our company culture is really all about.'
Further dialogue with this manager revealed that this company culture had
been `instilled' through a variety of means such as training days, recognition
systems and communication from the top of the hierarchy. These appear to
have been successful in developing the aspired company culture and in
consequence have contributed to providing a competitive advantage via
corporate identity.
Thus, one of the primary reasons why companies are placing so much
importance on the issue of corporate identity is because identity can play an
important role in cementing consumer loyalty and the strength of brands and
this will obviously have a bene®cial impact on sales.

The use of corporate identity in cultivating good relationships


with interdependent businesses such as suppliers
Similarly, a strong identity can be instrumental in the development of long
term trusting relationships with other companies as explained by this
interviewee from the toy company: `Well, yes, as I've already stated, . . .
(company name) success was strongly in¯uenced by the relationships we
developed with other companies. Without question, our reputation in the
industry was key to the strength of these relationships. Senior management
wholeheartedly endorsed the development of strong relationships with all
associates as well as stressing the social values of the company.'

74 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

This company appears to have developed strong links with the organ-
isations that it does business with. Again these relationships have been actively
encouraged by senior management, who have used elements of corporate
identity (such as communication with employees) to stress the importance of
building partnerships in business. Similarly, an interviewee from the oil
company stated that: `The size of our organisation means that healthy links
with other businesses are a necessity. A lot of time and e€ort goes into our
business to business operations and extensive marketing in this area also takes
place.'
Thus, at this company marketing is aimed at other organisations in order to
promote the corporate image. Business-to-business links are clearly import-
ant to the company and therefore (company name) must try to ensure that
they are perceived positively by other businesses.

The use of corporate identity to attract investment


Favourable reputation of a company based on the ®nancial aspect of its
identity generates excess returns for companies. It brings better access to
capital markets and attracts investors (Dowling, 1986; Fombrun and Shanley,
1990). The research done by Fombrun and Shanley (1990) has shown that
favourable perception of pro®tability, risk and dividend yield to investors are
the major factors of company assessment by stakeholders, especially investors.
The following quotations show how much the companies contacted are
concerned about that aspect of corporate identity: `The perception our
shareholders have of the company is very important to us, not only from a
monetary perspective but also from a moral perspective. Thus, we aim to of
course make a pro®t, but also to run the business so that it has a positive
impact in society.'
This company may have su€ered in terms of investment in the past because
of its poor environmental record. Hence, the company has been given another
reason for adopting `best practice' and acting with `corporate responsibility'.
Similarly, the owner of an internet insurance company stated that: `The
company certainly attempts to create a positive image in the eyes of potential
investors. The accounts of the company and our future pro®tability are
probably the most important factor in gaining investment. These factors are,
however, certainly linked to our corporate culture and identity, as this
certainly has an impact on our performance and hence pro®tability.' Here
is a useful illustration of how corporate identity has an impact on the ®nancial
performance of a company. It is evidence of the fact that corporate identity can
play a fundamental role in creating a strong competitive advantage.
The manager of a small marketing consultancy also provided evidence that
a strong identity was important to investment: `I certainly believe in the
importance of marketing ourselves to investors and I believe most companies
also do. A strong corporate image is vital in attracting investment, which is
particularly important for smaller companies like us. We place a lot of
importance in communicating our company image.'
This suggests that corporate communication is used as an important tool
when trying to secure ®nance from investors. The interview also provides

Journal of General Management Vol. 31 No. 1 Autumn 2005 75


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

evidence that companies aim to market themselves to a number of stake-


holders and not just potential customers.

Conclusion
The study shows that there is considerable divergence in opinions concerning
the fundamental components of corporate identity. At one end of the
spectrum, some interviewees perceived it largely as being a marketing tool
and associated it with the external conception of the ®rm, developed through
advertising and public relations. Conversely, others saw it as a more inclusive
term, which includes virtually every aspect of the ®rm from strategy to culture
and argued that it was the very essence of the company.
In summary, the investigation found that all respondents believed that
corporate design, behaviour, communication and strategy were components
of identity. There was no unanimous agreement concerning the inclusion of
corporate culture and corporate structure. Some respondents felt that both
were integral to identity whilst others argued that they were aliated to
identity but not components. There was no clear distinction between the views
of employees at di€erent levels of the hierarchy, although there was a general
perception amongst some that a gap existed between the rhetoric and practice
of some elements of corporate identity systems.
Despite the lack of consensus on `what' corporate identity is, there was
considerable agreement about the bene®ts of a strong, positive corporate
identity. All interviewees stated that these include the areas of employee
motivation, recruitment and retention, maintaining consistency during
mergers and acquisitions, consumer attractiveness via transparent and ethical
business practices and improvement in supplier and investor relationships
and competitive advantage.
It has also been mentioned that in order to have positive results in these
areas corporate identity should be managed by thorough implementation of
plans established for each component (See Figure 2).

Lessons for practitioners


All of the interviewees believed that corporate identity is important to their
success, but in di€erent ways and for di€erent reasons. Corporate identity has

Figure 2: Corporate identity ± concept, components and contribution

76 Journal of General Management Vol. 31 No. 1 Autumn 2005


Corporate identity: concept, components and contribution

been wholeheartedly embraced at all of the multinational ®rms and is seen as


an important strategic tool. The larger companies tended to have a more
systematic approach to creating and managing corporate identity than the
smaller companies. For example, the information gathered does suggest that
the oil company is one of the most successful companies in this investigation
at managing its corporate identity.
The interviewees from this company stated that the company has a
corporate strategy which addresses societal and environmental issues. It also
has a role for employee motivation; all the interviewees asserted that this is
why they feel proud and committed to the organisation. An analysis of sources
of uncontrolled communication, such as statements from NGOs, press and
government releases about the ®rm suggest that these groups' perceptions of
the company are also improving. Thus, the issue of corporate identity has had
a far-reaching impact within these companies and throughout the entire oil
industry.
This may simply be because economies of scale and greater turnover allow
them to spend more on managing corporate identity and that in smaller
companies the owner or person in charge was able to keep a closer personal
control on issues surrounding corporate identity. It could also be a conse-
quence of the fact that the public is becoming increasingly critical of big
business and thus organisations are attempting to establish virtuous identities
in order to counteract this problem.
Mostly, the interviewees mentioned that the employees of the companies
had been educated, for example, through training days and company liter-
ature about the characteristics of their company's identity. Therefore, they
were very familiar with the concept and shared a fairly consistent view of the
characteristics of their corporate identity. For instance in the case of one of the
oil companies, the systematic approach taken by senior management to
maintain and perpetuate this identity appears to have had a strong and
bene®cial impact on the corporate culture at this company.
Improvements in morale and motivation are not the only reason why this
company has taken the issue of corporate identity and `corporate citizenship'
so seriously. It is also a consequence of the criticism the company and the oil
industry in general has received for its behaviour, particularly in respect to
pollution and exploiting developing nations. Therefore, establishing a vener-
able corporate identity is seen as an e€ective way to reverse negative
perceptions of the company, which should have a positive impact on sales.
Furthermore, the company is producing a product that is notoriously dicult
to di€erentiate; by di€erentiating the entire company, the organisation
believes it can create a sustainable competitive advantage.
Similarly, all of the interviewees from the accountancy ®rms and banks were
very aware of the term corporate identity. All of the respondents in these two
companies had received some education pertaining to the essential character-
istics of the ®rm, particularly elements such as corporate philosophy, mission
and culture in general. They all believed that their company did have a strong
corporate identity and that this was important to the success of their business.
All of the respondents felt that the corporate structure at their company was
of particular importance. In the accountancy ®rms the partnership system

Journal of General Management Vol. 31 No. 1 Autumn 2005 77


T. C. Melewar, Elif Karaosmanoglu and Douglas Paterson

meant that most employees genuinely felt that the organisation `belongs to the
people who work at it.' Many spoke of how signi®cant events such as the recent
accountancy scandals had a€ected corporate identity.
The food and domestic products conglomerate also appeared to adopt a
thorough approach to the management of identity but the interviewee stated
that it placed far more importance on marketing itself to the consumer than any
other stakeholder group. Similarly, the trading conglomerate heavily invests
in managing its corporate identity; however, it is primarily concerned with
its identity in the eyes of investors, rather than the other stakeholder groups.

Future research and recommendations


The study does show that the importance of corporate identity is recognised in
a number of industries. However, the impact of industry identity on corporate
identity was not analysed in depth ± a more wide-reaching study would be
required to do this. Further work on this investigation might include inter-
views with more individuals in the same company and a cross section of the
hierarchy.
For example, it would be interesting to get a better perspective about
whether or not opinions about corporate identity di€ered within di€erent
departments or at di€erent levels of the hierarchy. Similarly, an analysis
focusing on one particular industry might yield some interesting results. The
impact of corporate structure on corporate identity would have been a further
interesting avenue for investigation.
The impact of recent changes in corporate structure, for example delayering
and downsizing, on corporate identity is another area which requires further
investigation. Similarly, a more in-depth analysis of the area of corporate
design is necessary, particularly the relationship between the di€erent aspects
of design and the reasons why certain aspects of design are perceived as more
important than others.
The development of an approach to measure corporate identity would be
very useful for both academic and business purposes. Any system could only
conceivably operate by assigning numerical values to attributes using empiri-
cal data. Unfortunately, problems that have already been highlighted in this
report, such as the ambiguity of the corporate identity concept and its ®rm-
speci®c nature that make measurement particularly problematic ± hence, the
development of a reliable and valid means of measurement is therefore a tough
proposition.

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T.C. Melewar received a PhD in International Corporate Visual Identity. Formerly a lecturer at
MARA Institute of Technology, Malaysia and Senior Lecturer at De Montfort University,
Leicester, Dr. Melewar has links with a number of companies including Corus, Sony and
Safeway. Current research interests include corporate identity, marketing communications
and international marketing strategy. In addition to all these roles, Dr. Melewar is Visiting
Professor in International Marketing at Groupe ESC Grenoble, France.
Elif Karaosmanoglu is a research fellow at the Middlesex University Business School and
doctoral researcher at the Warwick Business School. She received a BSc in Management
Engineering from Istanbul Technical University and an MBA from the Marmara University
Institute of Social Sciences. She has published widely, following leading conferences' proceed-
ings: recently she published her research in conjunction with the European Marketing Academy
Conference and with the International Conference on Corporate Identity, Reputation and
Competitiveness. With Dr. T.C. Melewar she has also co-authored a chapter in Communicating
with Customers: Trends and Development, edited by Cleopatra Veloutsou.
Douglas Paterson was a former Master's student, supervised by Dr. Melewar, studying at
Warwick Business School.

Journal of General Management Vol. 31 No. 1 Autumn 2005 81


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