The Role of Formal Third-Party Endorsements and Informal Self-Proclaiming Signals in Nonprofit Reputation Building

Abstract

In this study, we experimentally test the impact of a formal signal (a third-party certificate) and an informal signal (self-proclaimed management quality with respect to social entrepreneurship) on stakeholder supportive intentions and perceived organizational effectiveness. Our study confirms the social entrepreneurship advantage, but we find no proof of a convincing effect from the formal signal. However, complementary analyses and additional testing of control variables add new perspectives on the relative importance of the social entrepreneurship advantage and on potential moderators that could better explain in future studies the varying effects and specific contextual elements that influence formal and informal reputation-building signals.