Reputational component of the organizational development management system of socially oriented business enterprises

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Reputational component of the organizational development management system of socially oriented business enterprises

Svitlana V. Filyppova, DEcon, Professor

Odesa Polytechnic National University, Odesa, Ukraine

Ruslana V. Levkina, DEcon, Professor

Odesa Polytechnic National University, Odesa, Ukraine

Yana M. Kotko, PhD in Economics State Biotechnology University, Kharkiv, Ukraine

Репутаційна складова системи управління організаційним розвитком підприємств соціально орієнтованого бізнесу

Метою статті є аналіз результатів дослідження відповідності елементів репутації складовим системи управління; і організаційним розвитком підприємств соціально орієнтованого бізнесу у контексті їх зв'язку із визначеними етапами; І розвитку й криз. Встановлено, що позитивна репутація створює сприятливі умови для організаційного розвитку і! ; ефективного функціонування підприємств у ринковому середовищі. Система репутаційного менеджменту у цілому й; І кожен окремий елемент репутації залежить і безпосередньо впливає на прийняття управлінських рішень щодо! подальшого реагування на зміни у зовнішньому середовищі та введення відповідних змін у організаційній структурі; ;підприємства. Серед елементів репутації підприємств соціально орієнтованого бізнесу найбільший вплив мають:; ;зовнішня бізнес-репутація підприємства, якість продукції (послуг), соціальна та екологічна відповідальність. На; ; кожному етапі розвитку відбувається еволюційний перехід на якісно новий рівень за умови успішного проходження; І кризових періодів і формування певного елемента репутації. j

Ключові слова: репутація, імідж, соціально орієнтований бізнес, управління організаційним розвитком, гудвіл, органічна; ; продукція, аграрне підприємство. reputation management business

Abstract

Analysis of recent researches and publications

The issues of development of organic producers as agricultural business entities have been in the field of research for a long time, and the results of the study have been published in domestic and foreign publications. However, most often the attention of researchers is drawn to measures to improve the financial and economic performance of enterprises, to determine the methods of pricing organic products, etc. Thus, among domestic publications, it is worth noting the works of such scientists as: V. Dudar [1], S. Ya. Bersutska and T.O. Kozycheva [2], O. Hvozd [3]. O.B. Bulyk [4] and others. The analysis of publications shows that the issues are limited and can be grouped as follows: features and problems of labeling organic products [4, 5], legal aspects of regulation of organic production in Ukraine [6, 7], trends in the development of domestic and world markets for organic agricultural products [8], etc. At one time, we also dealt with theoretical and methodological issues of pricing for organic products, strategic management of production and sales activities and the formation of a motivational mechanism [9-11]. The works of foreign authors are characterized by a greater emphasis on the development of models of market interaction between producers and consumers, dependence on the influence of internal and external environment factors and forecasting development under conditions of uncertainty and risk: J. Maloney & others, (Jennifer Maloney & others, 2014 [12], Xin Liu & others (Xin Liu & others, 2022) [13].

There is a limited number of researchers specializing in organizational development, building models for overcoming crisis periods and searching for internal reserves to adapt to changing external conditions. For example, M.M. Shueva studies theoretical issues of organizational development of an enterprise and, summarizing existing approaches, offers her own classification of organizational and social changes [14]. N.M. Shmatko considers the organizational development of large-scale economic and production systems in the context of maintaining their sustainability and interaction with the institutional environment [15, 16]. L.V. Koreniuk and M.V. Cherniavsky propose to use an architectural approach to enterprise management, and the TOGAF methodology for designing, planning, implementing and managing organizational development. Their conclusion about the expediency of managing organizational development at all levels of enterprise architecture is interesting [17]. V.M. Kurepin draws attention to the connection between managerial changes in innovation and security issues and changes in the development of the enterprise, its organizational culture [18]. However, the issues of the place and role of reputation in the system of managing the organizational development of enterprises specializing in the production of organic agricultural products were left out. At the same time, the results of the study can be generalized and extended to all enterprises of socially oriented business with minimal clarification.

Unsolved aspects of the problem

The results of our study of the formation and use of the advantages of the positive image of agricultural enterprises in the organic market as part of the management decision-making system were first published in 2014-2016 [19]. In our publications, we emphasized that for the development of vegetable growing in Ukraine and maintaining the level of competitiveness of domestic products compared to foreign production, it is the image of environmentally friendly or organic vegetable products that has a positive impact and builds consumer confidence. The analysis of the peculiarities of forming the image of vegetable growing enterprises for their sustainable position in the market and improving the efficiency of their functioning in modern conditions, unfortunately, does not cover all aspects of enterprise management and its development. The issues of the impact of a positive reputation as an intermediate tactical stage of enterprise management and a component of the organizational development of socially oriented enterprises, taking into account their industry specifics, the level of innovation of technologies, and the consumer segment, remain unresolved.

Formulation of the objectives of the article (task statement).

The aim of the article is to analyze the results of a study of the correspondence of reputation elements to the components of the system for managing the organizational development of socially oriented business enterprises in the context of their connection with certain stages of development and crises.

The main part

In the context of COVID-19 quarantine restrictions, and eventually military actions, occupation and destruction, agricultural enterprises are actually operating under constant force majeure. This affects not only production and sales processes but also the ability to make any management decisions aimed at organizational development. Hoping for an improvement in the external business environment, the management's task is to develop and implement a strategy for further development, taking into account the challenges of the post-war period and with minimal financial costs. In such conditions, creative and skillfully predictable management decisions based on the use of the acquired business experience are of great importance. One of such effective management decisions is to create a certain reputation and image that "work" for the future.

First, it is necessary to clearly define and distinguish between the concepts of image and reputation, outline their main characteristics, and analyze their interrelationships. As you know, the term "image" in English means "image" and can be applied to a public figure, a leader, a product, a trademark or a manufacturing company. In other words, an image does not characterize the professionalism of a particular specialist or the quality of products, but rather creates an artificial image that is purposefully maintained in society or in the individual mind by the media through agitation, propaganda, advertising, neuro-linguistic programming, etc. When creating an image, non-existent characteristics of objects are added alongside the real ones, which in the subconscious mind have a psychological impact on society, skillfully combining real and non-existent characteristics. Instead, reputation is a set of evaluative perceptions of society and individuals about a certain object. That is, unlike an image, a reputation is a long-term opinion about something or someone. As a competitive tool, reputation is an opinion formed by consumers, while image is a "proprietary product" of an enterprise that is purposefully created by specialists. Reputation is a response to image promotion, it is built over years and can suffer irreparable losses, ultimately financial, as a result of even single missteps by management.

In the context of widespread digitalization of society and the introduction of information and analytical activities in all sectors of the economy, reputation management is becoming an increasingly important factor for successful business. The shift of commerce to the virtual realm is changing the behavior of consumers, who make different decisions about choosing products that can meet their needs. In the process of studying a product and its characteristics, the first positions are taken by reviews of the product, the manufacturer, the integrity of doing business and the fulfillment of agreements by management and sales staff. Most scientific publications on the development and conduct of business, reputation management in the direction of its improvement, as a rule, recommend that managers pay attention to their main components [20]. First of all, attention should be paid to creating the emotional appeal of the manufacturer and its product, because this concept is based on positive feelings in a person's memory. The quality of products, their ability to solve certain problems and meet physiological, psychological, intellectual and other needs is also important. The positive reputation of the management and those professionals directly involved in customer relations, their responsibility, and promptness in delivering goods increases the trust of customers and investors, saves time and money on advertising, and stimulates the company's attractiveness in the market in the face of fierce competition in the eyes of its employees and business partners. Therefore, the introduction of reputation management at an enterprise is an appropriate and effective management solution for promoting business, and especially socially oriented business with excessively high additional costs for socially significant technological, marketing, and information activities.

The importance of reputation for business is proved in scientific publications by A.S. Ostapenko and T.M. Holovchenko, who propose the introduction of the concept of "business reputation" to separate its business component and substantiate the impact on the financial development of business entities. They consider business reputation to be "an economic category expressed in the form of goodwill, which is an intangible asset with a monetary value" [21] and propose to use cost, market and economic methods of assessing the value of business reputation. While agreeing with scholars on the classification of components of a firm's business reputation, we consider its list to be rather limited and propose to expand it by introducing additional elements, which are fully presented in Table 1.

Reputation is a consequence of the use of image technologies and creates the basis for organizational development and effective functioning of enterprises in market conditions. The reputation management system as a whole and each individual element of a positive reputation depends on and directly affects the adoption of management decisions on further response to changes in the external environment and the introduction of appropriate changes in the organizational structure of the enterprise.

Table 1 shows the characteristics of the influence of reputation elements in accordance with the components of the system of management of organizational development of socially oriented business enterprises. We have found that the following elements have the greatest impact on the overall reputation of agrarian organic enterprises: external business reputation, social responsibility to employees and consumers of products, and product quality (Fig. 1). The level of influence of these elements of reputation is the highest, it makes up the maximum number of points on a 10-point scale.

It should be noted that external business reputation actually means the company's business reputation in the commodity market, the ability to solve tactical problems and follow a common strategy, while the reputation of a socially responsible business forms a high level of trust in the company and its products due to active participation in solving social problems of consumers and the locality where it is located.

The quality of products (services) has always been a factor of high competitiveness of any enterprise and traditionally influences the decision to purchase goods. Therefore, a consistently high reputation in the market can be identified with the quality of consumer characteristics of a product, in the case of agricultural products - its physiological, biological and nutritional value.

Table 1. Correspondence of reputation elements to the components of the organizational development management system of socially oriented business enterprises

Source: authors' own development

Thus, based on the results of our own research, we have proposed and substantiated the links between the reputation of an agrarian enterprise with a socially oriented business (more precisely, individual elements of reputation) and the components of the system of management of its organizational development.

The study of scientific publications on the theoretical and methodological foundations of organizational development [22] and the conduct of own research on the functioning of agricultural enterprises over the past 10 years [23] allowed further development of the provisions of conceptual models of organizational development of enterprises by introducing additional characteristics of the processes that accompany them. The conceptual model, based on the assumption that it is impossible for any enterprise to achieve sustainable growth of indicators over a long period, indicates that at each stage of development it goes through its own stages of growth, stabilization, stagnation and crisis, which in itself is interesting and fair in certain conditions, but does not allow us to achieve the goal of this publication.

We believe that the well-known conceptual model of organizational development through the sequence of crisis points is more interesting. It allows to reconcile the external conditions of the enterprise's functioning with the internal ones and determine the points of transition to a new level of organization [24, 25].

Figure 1. The level of influence of elements on the overall reputation of a socially oriented business enterprise

Source: authors' own development

According to this concept, the highest level of inconsistency between internal and external conditions provokes crisis periods when management must decide to introduce fundamental organizational changes. It is these changes that allow to reconcile the discrepancy over time and move to a new stage, which, in fact, symbolizes a new level of development. Thus, L. Greiner (Larry E. Greiner, 1989) identifies 5 stages or 5 levels of organizational development of an enterprise, which it goes through as it grows in size and simultaneously passes through the stages of the life cycle: from the birth of a business to its maturity. The transition from one level to another occurs only after the company has successfully passed through crisis periods in the business organization. To prove the conclusion about the important place of reputation in the organizational development management system, let us consider the interaction of its individual elements at the stages of organizational development of an enterprise.

Fig. 2 shows the process of managing the reputation of an enterprise that has chosen a socially oriented business at the stages of its organizational development. The formation of an enterprise's reputation occurs in the course of its operation and, as we noted earlier, may change over time, acquiring new characteristics and changing in the eyes of consumers and partners. The elements of reputation of such an enterprise proposed by us (Table 1) are placed according to the stages of its organizational development and life cycle. Thus, each stage is characterized by the formation of one or another element of reputation, which at the highest stage of development allows determining the market value, which differs significantly from the physical value. The difference in value may be higher or lower than the market value, so we choose one of the options to illustrate the relationship model. In Fig. 2 suggests an optimistic scenario and an evolutionary transition from one stage to another through the successful passage of crisis periods, which L. Greiner (Larry E. Greiner, 1989) characterizes as revolutionary. However, in fact, enterprises can stay at a certain stage for a long time because they avoid solving problematic situations that accumulate their impact on business processes and further deepen the crisis.

So, let us consider in more detail the relevant elements of reputation at each stage of organizational development. Given that the stage of creativity begins from the moment of establishment of the enterprise until the first organizational crisis - the crisis of leadership (life cycle stage - inception), the main tasks of the enterprise are related to preparation for production, introduction of innovative technologies, and marketing. Management focuses on market positioning as a manufacturer of quality products that are competitive and unique. Therefore, the formation of reputation begins with the first impression of consumers made by such products and their quality characteristics.

The stage of organizational growth requires management to pay more attention to the performance of managerial and production and sales functions, which leads to a crisis of autonomy that is a consequence of centralization in management. Thus, certain official and unofficial rules and regulations are being established in the style of management, preparation and adoption of decisions, and their implementation, which is subjective for a particular enterprise. An organizational culture is gradually being formed, which later acts as an important element of reputation and requires an open declaration of its attitude to social, environmental, economic and contractual responsibility. The growth of the company's size, the opening of new divisions, including separate subdivisions, increases its potential and requires additional control, which is difficult for the management to organize, and therefore it gradually loses control over the company as a whole. The way out of the crisis, according to L. Greiner's conceptual model, is to introduce a procedure for coordinating the functioning of the enterprise's units, including on the basis of internal business contracts and internal business responsibility.

Figure 2. Reputation management at the stages of organizational development of socially oriented enterprises

Source: compiled by the authors on materials [24, 25]

This takes reputation management to a new level, while contractual responsibility and financial stability increase the trust of suppliers and buyers/consumers. At the stage of coordination, the company's structure is divided into units that have a higher level of independence and responsibility in production and sales activities, have their own development program, motivational mechanism and even budget. They are gradually becoming strategic units with a high level of autonomy, but remain subordinate to the company's management, which often does not understand their internal problems. Thus, the company goes through successive stages of development, from creativity to cooperation, increasing the market value of the company several times over its physical value. However, it is the red line crisis or psychological crisis in management that requires management to have a tolerant attitude and understanding of objective processes within a highly developed enterprise with self- organized and highly motivated employees for highly productive entrepreneurial, research and development activities. Thus, goodwill is in fact an element of the company's reputation that is formed at the highest stages of development, but it is based on organizational processes at the previous stages and other elements of reputation.

Despite the simplicity of the proposed model of relationships, reputation building requires management to constantly evaluate and revise the reputation strategy and its components, often using the services of reputational audit companies. This is especially true when moving to a new stage of development and the emergence of reputational threats and requires the introduction of preventive measures [26]. The author even proposes to use the term "reputational capital" and substantiates the increase in the market and shareholder value of the enterprise.

Conclusions