Accounting for Company Reputation: Variations on the Gold Standard

Abstract

A recent paper by Gold (2003) presents a system-dynamic-based approach to the design of business simulations. In it, he argues that the focus of simulation design efforts have mostly been carried out at the subsystem level, developing independent algorithms that follow inconsistent logic, and therefore do not lend themselves to integration into a single, dynamically interactive model. To address this, he draws on the economic theory of the firm to develop and test a system of interacting algorithms that gives equal emphasis to both demand and supply factors. Most important, it provides a common, theoretically anchored platform for integrating potentially conflicting functional algorithms. This paper tests the robustness of this approach by using Gold’s model as a vehicle for simulating the effects of company reputation, a phenomenon that has emerged from a totally different (management and marketing) research tradition.