The performance of organizations depends partly on the reputations of their industries. Such reputations are "intangible commons." Interest in protecting mutual welfare motivates members of an industry to engage in self-regulation. However, the current literature tends to have a pessimistic view of the efficacy of self-regulation in solving the problem of reputational commons. We argue that the obstacles forecasted by such pessimistic reasoning are context-bound and can be overcome if industry self-regulation includes effective sanctions and exclusion strategies. We investigate the case of the New York Clearing House Association, a community-based self-regulatory program, which, by promoting prudence among members, successfully ameliorated the negative spillover effect on market confidence during bank panics. We then identify five conditions that account for the efficacy of this self-regulation. We conclude by showing how research on institutional solutions to the problem of reputation commons can be extended.
Yue, Lori Qingyuan, and Paul Ingram. "Industry Self-Regulation as a Solution of Reputation Commons: The Case of the New York Clearing House Association." In The Oxford Handbook of Corporate Reputation, 279-296. Ed. Michael L. Barnett and Timothy G. Pollock. Oxford: Oxford University Press, 2012.
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