They say that a company’s reputation is its most valued asset. But how many of these companies will suffer any serious damage after even successive misdemeanours? After all, newspapers that sell their news columns for cash continue to have millions of readers, the big accounting firms continue to build associated businesses despite in-your-face conflicts of interest, and de Beers, despite its history with “blood diamonds”, is still dominant. Occasionally an Enron goes bust when exposed as a house of cards, but McKinsey stalwarts were involved with several scandal-hit companies and it is still viewed as the gold standard in the consulting business.
Corporate misdeeds have a history of beginning as scandal and ending up as folklore, from the activities of the American robber barons (one bought up the majority of Pennsylvania state legislators, to get a railway line through) to Dhirubhai Ambani’s early exploits and now Gautam Adani’s unshrouded clout. In India there have been books on the gas pricing wars and the telecom heist. But our scandals usually have no culprits — similar to how none of the chieftains of the American financial giants went to jail for criminal acts of deliberate mis-selling and for engineering financial collapse. Mid-level bond traders did, though, in New York and elsewhere.
If one were to look for a typology, it might run as follows: If you are known to be a sharp businessman, being exposed for sharp practices does you no harm — just as a party known for pushing Hindutva risks little if it is rude about another religion. But if your firm stands tall in the public mind, a scandal can cause damage — though usually repairable at some cost, as Volkswagen, Toyota, and others have found. And if your firm was on shaky ground to begin with, a scandal can spell finis. The key question would appear to be: Does the scandal fundamentally change the way a company’s, an individual’s, or a political party’s “public” views it/him? If not, you get the longevity of Donald Trump and Boris Johnson.
There are of course many publics, so “reputation” is actually a many-splendoured thing. Investors, consumers, employees, vendors, distributors--stakeholders of every sort — see the different faces of a company. Is it a good employer? Does it pay its bills on time? Is its store located conveniently close by? Does it fund your university department’s research programme? Does it have the best crossword? “Reputation” therefore is a more complex thing than what crumpled when Ralph Nader said cars were “unsafe at any speed” or Rachel Carson’s Silent Spring damned the pesticide industry, or when news was put on sale.
From a utilitarian viewpoint, whether a company cheated on taxes or destroyed the lives of tribals is for someone else to worry about. Which is why the brief fashion of investing on the basis of ESG (environmental, social, governance) considerations is now under question. In such a practical age, whether a country offends your religious sensibilities can be overlooked if it is a key customer for your gas or oil.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →
Quarterly Starter
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app