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Roszaini Haniffa and

ranging from the tangible to intangible, and from the tactical to strategic (see Allessandri, 2001; Melewar and Jenkins, 2002 for a compilation of the various definitions). However, there is some agreement among researchers that the term is related to answering the questions ‘‘what are we? and ‘‘who are we? (Balmer and Greyser, 2003) or ‘‘what the firm is (Hawn, 1998; Portugal and Halloran, 1986), hence referring to the distinct attributes of the organisation. Birkigt and Stadler (1986, as cited in Balmer, 2001) suggest four elements of corporate identity: personality, behaviour, communication and symbolism, while van Rekom (1997) identifies three elements: essence features of the firm, features that set it apart from others and continuity of the features over time. According to Balmer and Soenen (1999), corporate identity encompasses three elements: the

  • mind’ (the expressed organisational ethos, vision,

strategy and product performance), the soul’ (dis- tinctive corporate values of the firm) and the voice(the various ways of communicating to key stake- holder groups). In short, corporate identity is the bonding of strategy, structure, communication and culture, embracing both tangible (e.g. name, logo, colour) and intangible (e.g. firm’s behaviour and reputation) elements that make it distinctive (Balmer, 2001, p. 280).

Balmer and Soenen (1999) further operationalised four distinctive features of corporate identity using the mnemonic ACID’, each letter representing a distinct identity type: actual, communicated, ideal and desired. Actual identity encompasses the business strategy, values and philosophy, corporate culture and structure (Gray and Balmer, 1998) while com- municated identity is closely linked to image and reputation, which in turn leads to the realisation of desired (what corporate management wants it to be) and ideal identities (what stakeholders see as optimal). Since there exists an explicit covenant or a promise’ (Johansson and Hirano, 1999; Mitchell, 1999) be- tween an organisation and its key stakeholders, corporate identity must be managed so as to ensure alignment between the various identities suggested by Balmer and Soenen (1999). This entails com- municating and behaving in a manner that leaves a pleasant impression with key stakeholders (Cornel- lisson and Elving, 2003).

One of the avenues through which information about corporate identity (e.g. its ideology, manage-

Mohammad Hudaib

ment philosophy, products, commitments to society, etc.) is communicated is the corporate annual report. Hence, managing information disclosure in corpo- rate annual reports in a consistent and pleasing manner will produce a positive corporate image and over time will produce a positive corporate reputa- tion (Allesandri, 2001). In other words, through proper communication management’, companies can build their reputation, which may lead to competitive advantage (see the operational model for managing corporate identity by Gray and Balmer, 1998) and will pay off in both operational and financial ways (Dowling, 2001), as well as ensure business survival (Balmer and Stotvig, 1997; van Riel and Balmer, 1997).

Islamic banks are representative of a new wave of corporations whose social goals are at least (if not more) as important as making profit. Based on the definition by Gray and Balmer (2001), such corpo- rations fit what they described as having ethical identity’. They studied two such corporations – Migros and Patagonia – to find commonalities that exist between them. Berrone et al. (2005) assessed the impact of corporate ethical identity on the firm’s financial performance and their results indicate that

  • revealed ethics’ (aspects of communication of the

ethical identity) have informational worth and en- hance shareholder value, while applied ethics’ (all actions and policies considered as ethical and beyond communication of ethical values) have a positive impact through the improvement of stakeholder satisfaction. Since commonalities already exist be- tween Islamic banks, as they are based on the Islamic ethical business framework drawn from the Shari’ah (Islamic law, often referred to as ethics in action’), it would be interesting to assess whether an ethical- identity gap’ exists and its implications on corporate branding and corporate image and reputation.

Hence, in this article, we attempt to assess the degree of variation of communicated ethical identity (as disclosed in the corporate annual report) against a benchmark of ideal ethical identity (checklist con- structed based on Islamic precepts) for the Islamic banking sector where trust is vital.1 Specifically, we measure the degree of ethical identity of seven Isla- mic banks in the Arabian Gulf region based on their corporate annual reports for the years 2002–2004 inclusive, using what we term an Ethical Identity Index (EII). The reason for confining our scope to Islamic

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