In Barron’s magazine’s annual “Most Respected Companies” survey of institutional investors, the attributes that contribute to a company’s reputation have changed since the financial crisis, as demonstrated by the following statistics (% who chose each factor as most important):

• Strong Management: 27% in 2009 v. 32% in 2007

• Sound Business Strategy: 27% in 2009 v. 25% in 2007

• Ethical Business Practices: 20% in 2009 v. 21% in 2007

• A Competitive Edge: 10% in 2009 v. 9% in 2007

• Consistent Revenue/Profit Growth: 0% in 2009 v. 6% in 2007

The numbers reflect the credibility business has lost with institutional investors (who typically own 70% of the outstanding shares of any public company) since the beginning of the financial crisis. Each factor suggests a loss of confidence in executives and the financial statements they have produced; the Strong Management decline raises doubts about management’s perceived worth to investors and their credibility after such a colossal collapse in values. It also raises further doubts about the “Iconic CEO” model, which was personified by Jack Welch of GE and has been popular for much of the last two decades, but is increasingly of dubious value.

Conversely, the increase in Sound Business Strategy as a reputation driver alludes to the growing conviction that organizational effectiveness and strategy execution are the most important keys to sustainable business success. In a recessionary environment, talent is abundant, strategic vision is rare.

Ethical Business Practices is statistically unchanged as a factor, but realized a one point decline. One might well wonder why more investors did not consider ethics more important given the ethical breaches uncovered in the various examinations of the causes of the financial meltdown. There are two possible explanations:

1. Due to compensation and competitive issues, particularly in financial services, ethical practices are relatively insignificant.
2. Most people are ethical, but the “perfect storm” of behavioral and regulatory problems, had more to do with the crisis than did personal values.

A Competitive Edge increased one point in real terms, again, statistically insignificant, but suggesting that organic (e.g., factors unique to the company in question) or growth prospects related to strategy are now viewed by investors as more convincing than theoretical themes like synergy or other alleged potential future benefits.

Finally, Consistent Revenue and Profit Growth disappears from the survey because investors simply do not believe the numbers being provided them. This is, perhaps, the most damning indictment of management credibility in these survey results.

A similar effort from Fortune magazine’s annual Most Admired Companies survey displays different results in comparing the primary factors driving selection for the list, as chosen by survey respondents.

2009 factors:

1. Strong, Stable Strategy
2. Global Talent
3. Leadership

2008 factors:

1. Innovation
2. Leadership
3. Financial Strength

In the Fortune survey, there are several notable changes: Innovation, deemed the leading reputational factor in 2008, disappears in 2009. Among the likely reasons for this is a growing fatigue with innovation as a differentiator since virtually every company in the world claims to be innovative, frequently with little or no evidence to support the assertion.

Furthermore, in the post financial crisis environment, survivability tied to existing strengths is viewed as more significant than innovation. “Innovations” in the design and adaptation of new financial instruments are credited with much of the wealth destruction that occurred, so innovation suffers from that association as well.

For Fortune’s survey participants in 2009, as was the case for Barron’s, a strong, stable strategy once again takes the forefront. In second place, leadership is supplanted by global talent, suggesting that leadership attributes are tarnished by the unfortunate example set by financial services, automotive and, perhaps, by concern about excessive compensation packages. Global talent, by contrast, while more of a commodity than in the late 90s heyday of the over-hyped “War for Talent,” is seen as crucial to executing a good strategy.

Finally, financial strength is eliminated from the Fortune list because participants do not believe the numbers—and cannot count on that in a global financial meltdown in any event. Leadership does appear on this list, though in a lower position due to all the reasons cited above.

While businesses in Europe and North America have suffered reputational damage, trust in business has increased in two countries which are perhaps two of the three global economies most likely to pose a threat to established patterns of growth and wealth creation. Those two are China and Brazil (the third, not mentioned here, is India). Brazilian trust in business increased from 61% in 2008 to 69% in 2009 of those surveyed, while in China, it went from 54% to 71% during the same period. This reflects rising incomes despite recessionary affects on employment, stable inflation and, more importantly, optimism about future prospects.

These two countries are demonstrating their importance to the global economy. China’s overall strength has been clear for a decade, though individual Chinese companies are not well known. By contrast, the recent performance of Brazilian companies like Petrobras in energy, Rio do Vale Doce in mining and metals, and Ambev in consumer beverages has attracted positive global notice. Thus, contrary to the example of their business brethren in established economies, Brazilian and Chinese companies have brought credit and pride to their countries.

The significance of this for companies in Europe, North America and other parts of Asia is unmistakable; local competition is going to be fierce both in terms of consumer preference and competence. And not just in manufacturing: Services already contribute a majority of Brazilian GDP, while China’s service component is at the 40%+ level.

Part 3 of this series will address the changing fundamentals of corporate reputations in a post-recession era, along with emerging trends of transparency and corporate disclosure.

Jon Low is a partner in Predictiv, a consulting firm that measures the financial impact of reputation, brand, communications, intellectual capital, sustainability and other intangibles. He can be reached at jon.low@predictiv.net.