Imagine you’ve just stepped out of the movie theater after having really enjoyed watching Fifty Shades of Grey. Then, you pull out your smart phone and look up the “Rotten Tomatoes” rating. It’s a lowly, splattered 25%! Does this change how you feel about this fine flick?

Look, all of us are susceptible to social influence to some degree. Sohvi Leih and I wondered how much someone’s image of a company would change when they were told what others, particularly authoritative others, said about this same company. Are we so susceptible to these outside perspectives that we would downplay other information we know about the company?

Nowadays there is no shortage of media outlets offering their views about various organizations. Magazines, newspapers, and websites rate businesses, charities, universities, and even cities and countries. We focused our study on one of the oldest and best known annual rating schemes, Fortune’s “World’s Most Admired Companies”.

We conducted an experiment in which we gave our subjects written descriptions of various characteristics of companies, covering the same categories that Fortune uses to determine its annual ratings. Half of these subjects were also given a Fortune rating for these companies; the other half were not and so relied solely on the written descriptions to assess these companies.

We found that seeing the ratings did influence how our subjects felt about the companies described in our experiment, but only in limited ways. If the description of the company was negative and the rating they saw was also negative, then our subjects lowered their assessment of the company. However, if the description of the company was positive, or if the rating was discordant with the description, then the rating had no significant effect on how our subjects assessed the company.

This suggests that if you liked Fifty Shades of Grey, then throwing “Rotten Tomatoes” at it probably wouldn’t bring it down in your eyes. But if, like most of us, you weren’t a fan of FSoG, then validation from this authoritative source only digs the hole deeper. Dirt sticks to the dirty, because we are more likely to notice negative information and less likely to accept information that challenges our views.

For companies, this may mean that the many ratings schemes that populate if not pollute modern media represent more of a threat than an opportunity. Good ratings don’t seem to matter much to folks who already have an opinion about a company. People who think a company is bad don’t seem to be swayed by a good rating, and people who already think a company is good don’t seem to think a company is a whole lot better based on seeing its goodness validated in the media. However, a negative ratings seems to magnify one’s negative view of a company, and so may kick off a downward spiral.

For scholars, this means we need to take a closer look at how the effects of feedback loops differ depending upon the firm’s established reputation. The self-reinforcing nature of reputation – where those who have a good reputation gain benefits that allow them to retain this reputation – is well-established. Despite Warren Buffet’s famous quote that, “It takes 20 years to build a reputation and five minutes to ruin it,” scholars know that reputations are not as fragile as commonly portrayed. Rather, reputations are sticky because people give highly reputed firms the benefit of the doubt. This means that good firms can more easily get away with bad behaviors, at least for a while. Once the bubble is burst, though, and a firm gains a bad reputation, this same stickiness makes it very hard to recover. Thus, the benefit that comes with a good reputation – that of being able to have some “out of character” moments without altering your reputation – becomes a liability for those with a bad reputation, as their good acts may go unnoticed. For this reason alone, you should ignore the otherwise sage advice of Joan Jett and give a damn ‘bout your bad reputation.

Michael L. Barnett, Rutgers University

For more, please see: L. Barnett & S. Leih. 2018. Sorry to (not) burst your bubble: The influence of reputation rankings on perceptions of firms. Business & Society, 57(5)