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The subject matter of paper is the way that identity and the related concepts of image and reputation act as means of communication. Two views are presented through the medium of three narratives:

1. A limited behavioural approach that includes game theory models. Concern is with a subset of identity, narrowly embodied in prices that signal potential costs and benefits associated with transactions between the organization's stakeholders.
2. A broader view of identity, seeing it as a pastiche, distinguishing and presenting an organization to the public.

The problems are discussed in terms of three narratives summarized above: the Hermes myth, Kafka's doorman and the Picture of Dorian Gray.

In a formal sense organizations are considered as a series of complex games in which stakeholders, employees, managers, customers, suppliers, and competitors, generate and distribute corporate payoffs. Identity is defined as the way the organization presents itself to its audiences (Olins, 1995). It articulates what the organisation is, what it does, and how it is distinctive (Topalian, 1984). The definitions hint at its importance, although this has only recently been recognised explicitly. Identity not only signals to stakeholders what an organization is capable of, but to some extent, determines their responses. It is implicit in economic, and especially in game theoretic models of the firm, but there it is linked almost exclusively to pricing and product strategy. The literature on identity as such is more comprehensive, and appears disassociated from narrower viewpoints. One task is to link the two.

Consider a financial services company Aleph, that historically has had a strong emphasis on retail banking. The treasury and capital markets section (the Aleph Group) developed in the 1990's has gained increasing importance in terms of profitability, but since this is a recent diversification, the Aleph Group is rated low in experience, compared to rivals. So customers associate the operation with relatively higher risk. At the same time competitive pressures are intensifying. The question arises as to whether identity, and related concepts of image and reputation, can be used to enhance competitive advantage. In turn we are led to a more general issue. Are modern organizations like theme parks encountered by stakeholders in a dream? Is it the case that there is no irreducible reality in terms of competitive advantage, core competencies, or attributes of goods and services, and qualities of the firms that produce them, but instead have images, media, and virtual reality become the essential spheres of experience?

Every society is concerned to some extent with use, exchange, and symbolic values. The three interdependent aspects determine the way that a product or a process is perceived, and what it signifies. Viewing an organization as the sum total of its products (including services), and processes, and the way they are combined, the three aspects determine an organization's identity, and provoke the following questions. What is it able to do? What it is worth? What does it signify? How does it stand in relation to others? All these questions are associated with identity, which is a relational concept, a sign, and implies difference.

Increasing emphasis seems to be placed on the production and consumption symbols and signs, as physical needs and wants are largely catered for in mature economies, whilst at the same time, high levels of demand are required to sustain capitalist growth. If society is becoming more and more concerned with symbols, establishing a firm's identity may be a matter not just of representing what the firm does, but of creating an idealised representation, a corporate imago. The Aleph Group for example has a multitude of products and processes; each is more or less homogenous between firms. Market entry is easy. The existence of a core capability that rivals cannot copy is unlikely. So creating an individualised identity that differentiates the firm from others may be a solution to the problem sustaining competitive advantage. If so, the question arises as to how closely identity must be rooted in use and exchange values, and how much it can be pure symbolism or ideological manipulation. Can the construction of identity act like a one way communication process, in which the sender, the firm, determines the responses of the receiver, in this case, the customer?

Three issues arise from the last paragraph; the nature of communication, the realisation of payoffs, and the code of success. Communication is a two way process between sender and receiver. The sender may organise the message according to his own codes, but the receiver is not passive, and may fill the intended message with all kinds of aberrant meanings (Eco, 1977). Any model of identity must take account of this, whether or not we admit, that the hyper real has transcended the real in a modern mass media culture. Secondly, the realisation of payoffs is determined by the interactions between stakeholder groups, who have divergent interests. So identity must contain a degree of ambiguity and ambivalence, which in turn may dilute the message.

However success has come to be interpreted according to a particular code. The way it is measured is part of a language game. Strategic thinking and policy focuses on the surplus expressed as competitive advantage. It is created out of a subset of the organization's identity, the scarce factors it possesses that enable it to perform better than others. Competitive advantage is itself an exchange relation, the performance of one company compared to another, a relative surplus. Before considering whether identity a general characteristic, can be used to create competitive advantage, a capacity that is a subset of the firm's identity, it is useful to look at the signification of the question itself.

In a public company, if markets are efficient, outperformance of corporate stock signals competitive advantage. Increasingly in the USA and UK executive pay is tied to the value of corporate stock through reward of options, in order to link the interests of managers closely to those of stockholders. Stock market performance is chosen as an index of success rather than, say, ethical stance, aesthetics of the product, or working conditions. It may be just a manner of speaking, but it acts powerfully to govern the strategy of corporations, and the assessment of them.

Yet stock prices are not uniformly considered as efficient indicators. The Chairman of the Federal Reserve spoke of irrational exuberance in 1996. Warren Buffett attributes his success to the fact that ‘market prices are frequently nonsensical’. The rise in stock prices has been largely driven by rising corporate profits, and other improvements, such as falling inflation and interest rates. Anticipations of future growth must be added to this. Profits have grown in the USA at 6% per year between 1982 and 1996, but stocks have risen even faster, so that their price relative to a dollar of earnings has risen since 1982 from 8 times to 24 times – about 50% above its long term average. If we associate earnings or profits loosely with use and exchange values, then share prices have risen much faster than the surplus measured in those terms so they are also symbols of success in raising expectations and confidence: symbols that are rooted in a kind of infinite regress rather than some irreducible concept, success. As Keynes (1936) put it, likening stock prices to competitions in which faced with picking the prettiest, ‘each competitor has to pick not those which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view’.

We can take the deconstructionist view, (for example Baudrillard, Barthes, or Derrida,) and see competitive advantage, as it is expressed in the performance of the firm's equity as an endless play of signifiers. This is nicely encapsulated by the quotation from Keynes. Alternatively we may seek an underlying code. Superficially this is a question of the advantage of one firm over another. The deeper aspect is that success, irrespective of whether it is based on an endless trail of reflections, is identified with the interests of stockholders, and the identity of the firm, as perceived by that particular stakeholder group, is paramount. The choice of a financial services example is significant in that their products are, on one interpretation, signifiers of the value of firms; that is, the market value of equity plus debt.

The underlying theoretical concept is that of complex systems. Complex systems are sometimes described as non-linear adaptive networks. Alongside global businesses and their environment, the central nervous system, ecologies, the immune system, evolutionary genetics, are examples of adaptive non-linear networks. They are characterized by intense interactions among large numbers of variables and agents (decision makers) limited rationality, uncertainty and limited information, learning and adaptation, increasing returns, and anticipation. The latter aspect is important; players anticipate each others reactions and outcomes ant this in turn determines attitudes towards co-operation and realization of potential payoffs. The essential aspect of complex systems is their ambiguity and their capacity to sustain contradictory elements within the same framework. Such is the nature of organizations. Narratives provide a way of capturing their ambiguity and their complexity.

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