USD President's Report 2004

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Starbucks has it. N ordstrom definitely has it. Even Wal- Mart has it. Enron doesn 't have it.

model, brand new and had equitable shipping prices. The only variable was the reputations of th e sellers - based on feedback given by their customers. " It was no surprise that sellers with better reputatio ns got higher bid prices," Standifird says, "but what was interesting was that sellers lost more with a bad reputation than they gained with a good reputation." So, to answer Standifird's original question, what does a good repu- tati on buy you? His data showed that sellers with 10 or more positive comments saw a 3.4 percent increase in bid price, while a seller w ith at least 10 negative comments lost 10 percent in bid price. The eBay study, published in 2001 in the ] 011rnal of Management, became the fo undation fo r a number of additional studies by Standifird on o ther aspects of reputatio n. "Being a good teacher isn't just about the dissemination of knowledge, but also about th e creati on of knowledge," Standifird says. "To be good at either, it helps to be good at both. I do this research because I love it."

The "it" factor for each of th ese companies is a good reputatio n. Starbucks and N ordstrom have reputations for grea t customer service. Wal-Mart, although it's been criticized for other problems, maintains an undisputed reputation for low prices. And Enron, well, Enron just doesn' t have a good reputation . Peri od. Stephen Standifird, a professor in the School of Business Adm..in.istration, has dedicated years of research to various aspects of corporate repu- tatio ns - a hot topic since the savings and loan scandals of the '80s, the pump-and-dump do t.com stock fra ud of the '90s and , of course, the Enron debacle that made headlines in the early part of this decade. "What I look at is what a good reputati on can buy you," Standifi rd says. "You ca n use a good reputati on to give yourself an economi c advantage. If compani es can figure out th e value of a positive reputation - and know that it pays to preserve it over the lo ng term - then maybe things like th e Enron debacle won't happen as often." Standifi rd , who came to USD two years ago, started looking into th e economic impac t of a good reputation in 2000, while trolling eBay fo r used camera equipment. H e realized , while bidding on two identi cal pi eces of equipment, that he was bidding more with o ne seller who , accordin g to comments from previo us buyers, had a better reputation.

Another of his o ngoing studies zeros in on fac tors that affect ran kin gs in U.S. News & f;Jlor/d Report's annual list of the nation's top colleges and uni versiti es. Standifird , who hopes to publish his findin gs in Co1porate R ep11tatio11 Re1iew in 2005, says one of the

biggest fa ctors affec ting the ranki ngs is peer ratings - which account fo r 25 percent o f a university's score.

"There's uncertainty with th e quali ty of used equipment," he says, "and th e sell ers' reputations became key."

"When it comes to peer ratings, I fo und that size does matter," Standi fi rd says. "The bigger you are, the higher you rate w ith your peers. It's th e same for any type of business. Look at IBM or GE - th ere may be smaller companies out th ere who are doing j ust as good of a j ob, but th ey' re not bi g so we don't always know abo ut th em . It's all part of reputation. And reputati on is every thi ng."

The experi ence led Standifird to launch an eBay study. In 2000, he studied th e sale of Palm Pil ots and the how th e seller's reputati ons affected th e fi nal bid price. Th e Palm Pilo ts were th e same