The function of a company's moral reputation

The day before yesterday, I mainly talked about how companies build their reputations to differentiate themselves from their competitors. Such reputation is a general reputation but still more about quality reputation rather than moral reputation. Some companies are building moral reputations, such as they only use recyclable materials to produce their products or they use solar energy for their energy use. These changes do not necessarily improve the qualities of their products or change the consumers' actual utilities gained from consuming their products. Why would companies still build such reputations?

Firstly, producing environmentally friendly products usually increases the cost of production, so the prices of such products are also higher than ordinary products, which do not use environmentally friendly materials. However, producers are likely to increase the prices higher than the actual increases in costs of production. Secondly, being morally correct sometimes can help companies to gain more social support and gain more customers as well. It could make companies gain more popularity. It almost gives companies free advertise to some extent. Thirdly, nowadays, some people very care about environmental issues and moral issues. If companies can first establish their environmentally friendly reputations or other moral reputations. They could first gain such customers, earlier than their competitors. Fourthly, some company leaders and founders have their social responsibilities. They have more power to operate their companies in the way they want; therefore, they may shift some of their profits to be socially friendly.

Overall, companies' moral reputations are not only about profit matters, sometimes they can be social responsibility issues as well.