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The rise of digital reputation as a key asset for business
In the old economy, reputation was considered an important but somewhat underestimated intangible asset. Commonly, it was a matter of public relations and the mantra was that “any publicity is good publicity”. In the digital economy, the significance of reputation is expanded in scope. The diffusion of feedback, ranking, and rating systems, powered by digital media, caught the attention of marketing and business executives, bearing the promise of an objective, user-driven, tangible form of assessment of the social value of products, brands, and services. Concomitantly with the rise of social network sites and the proliferation of metrics and analytics of all kinds, the era of the “reputation economy” has dawned. The story of the Shed at Dulwich (Box 1) shows the permeability of feedback, rankings, and rating systems, and the possibility of living in a reputational “bubble”. Yet, it also highlights how powerful reputation and the platforms that provide this information can be, and shows that word-of-mouth is now inextricably entangled with digital forms of social interaction. The fact that the story was a prank also shows that the reputation economy is less of a promised land than what businesses and consumers had hoped for. Let´s take a closer look at the role reputation plays in the digital economy and how businesses can become adequately equipped to survive the digital reputation jungle.

Digital reputation enables trust among strangers
In the digital economy, reputation represents cultural value. It enables the building of trust among “quasi-strangers” who engage in an economic transaction. Reputation scores, usually in the form of feedback, ranking, and rating systems, facilitate the building of trust in the absence of a direct relationship between sellers and buyers. In particular, my work on the so-called “sharing economy” illustrates this process well. Digital reputation is the result of a loop of digital traces (see Figure 1). When booking an accommodation on the platform Airbnb, for instance, the most relevant piece of information for a consumer is the presence of a set of reviews that recount the experiences of other guests who stayed at that room or flat. Consumers use this information to establish a bond of trust with the unknown host, who offers a service on the other side of their screen that they cannot otherwise see or evaluate. What’s more, in this context, reviews represent socially produced value.

Having no reputation is as critical as having a bad reputation
Moreover, a key aspect that consumers look at is the absence of a digital reputation. It is highly unlikely that anyone will book an Airbnb accommodation – or reserve a restaurant, or a hotel, or purchase any product or service, for that matter – in the absence of any digital reputational trace.

Put differently, the presence of a digital reputation is instrumental to creating the conditions for the building of a bond of trust between consumers and businesses. This, in turn, configures a competitive and unequal environment: following the example of Airbnb, those who have a reputation – obviously, a good reputation! – are in a position of competitive advantage against those who don’t. Good reputation brings good reputation. Bad reputation can be a longstanding setback for a business. No reputation means “you don’t exist” in the eyes of consumers.

Digital traces affect careers
The same principle applies to individuals as workers. In my research, I also show that one’s digital reputation influences one’s chances to be hired, particularly in the knowledge sector. Recruiters pay remarkable attention to digital reputational traces when evaluating a candidate for a job opening. This allows them to get a sense of prospective colleagues in terms of their personality and values, both personal and in relation to work. Recruiters also look at relevant social relations as they appear on LinkedIn connections and other information that candidates put on their CV and determine whether the available information online matches what they showcase in their application or highlight as their strengths. In turn, companies also must be increasingly attentive to their digital reputation: platforms such as Glassdoor host a plethora of opinions, ratings, and reviews by employees who rate the companies they work for or have worked for, the working conditions, their bosses and colleagues, the adequacy of economic compensation, and internal policies.