Responsive Change: Agency Output Response to Reputational Threats

How do reputational threats affect agency outputs? We undertake quantitative and qualitative analyses of reputation and outputs data regarding the fight against welfare fraud by the main service delivery agency for the Australian government in the field of social policy. We find that an agency's response to reputational threats is endogenously differential both within the set of agency outputs and between agency outputs and other activities (a pattern we termed responsive change). For the former, we find that when an agency output is below average, negative media coverage leads to an increase in output in the following year. However, this relationship is nullified for agency outputs that are about average and is reversed for outputs that are above average, that is, these outputs tend to decrease following negative media coverage. For the latter, we find that when a reputational threat is joined by a general above average level of outputs, the agency's drive for change is likely to be channeled into activities other than the number of units of service delivered (e.g., public relations, community engagements, stakeholder consultations, etc.).