Corporate Reputation and Shareholder Engagement Impact on Companies' Success in Croatia

Abstract

In a business community shareholder activists are
often perceived as a group with hidden agenda, whether it is
social, economical, environmental, value based or any other, that
could have impact on companies’ reputation. On the other hand
this type of activism is becoming an increasingly sophisticated
strategy of engagement, which exploits shareholders rights to
engage companies on particular issues that are important to
them. Although activism can take many forms, shareholders in
transitional economies such as Croatia are still showing high
level of passivity and inertia. On parallel basis corporate
responsibility as an integrative model directly reflecting
corporate reputation is gaining exponential attraction since it is
more widely perceived as a new strategic source of competitive
advantage. In that sense this paper explores reputational
interaction between corporations and one of their most powerful
stakeholders, its shareholders. The research within this paper is
focused on Croatian companies and is covering several aspects of
shareholder activism. In this paper authors are trying to describe
reasons behind passive investors' community and why they
should act as a more vibrant corrective factor for possibly poor
corporate governance.