A Study on the Signaling Mechanism of Corporate Reputation

The asymmetric Information universally exists in the market, especially for consumers' complex purchase behavior, the difficulty of comprehending the intrinsic attributes of the product would induce "adverse select" behavior. As the accumulative asset of a company, the formation of reputation is path-dependent, so reputation can represent the consistent quality of the product, and help consumers make right decision on product quality with lower searching costs under information asymmetry condition. Based on an empirical investigation in the notebook market, this paper would analyze the signaling mechanism and the impact on consumer's behavior of corporate reputation, and then provide advice to corporate reputation management. In the end the paper would summarize the future research.