Name: Wout Gijsbers ID#: 1169286 Assignment Title: Individual Written Literature Review 2 Date: October 28, 2011

Course Title: Global Sustainability Issues for Public Relations Course Code: MCOM584 Lecturer: Dr. Juliet Roper

Individual Written Literature Review 2 MCOM584 INTRODUCTION You cant build a reputation on what youre going to do. - Henry Ford -

November 4th, 2008: a man of Kenyan and American descent by the name of Barack Hussein Obama II becomes the 44th president-elect, and the 1st black president-elect of the United States of America. In the weeks and months preceding this day, he built up a reputation worldwide as a symbol for hope and change for the United States and, as many including myself believed, for the entire world. In 2009, Obama was awarded the Nobel Peace Prize for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples (The Nobel Foundation, 2011). Now, almost 3 years later, 56% percent of the U.S. population disapproves of Obamas job performance (Rasmussen Reports, 2011) and the U.S. finds itself in the worst economic crisis since the 1930s. A recent Internet meme sums it up nicely in my opinion: Thirty years ago, we had Steve Jobs, Johnny Cash and Bob Hope. Now we have no jobs, no cash and no hope (Anonymous, 2011). As the opening quote of this introduction indicates, a reputation cannot be built on promises. Obamas reputation is unfortunately no exception. In the current literature review, I will discuss legitimacy and reputation in todays globalized, fast-paced, and highly complex world. In contrast to the example above, I will not focus on politics but on the corporate sphere and the role of public relations in it. In particular, I will employ Unilevers approach to corporate responsibility as discussed by Lingard (2006) to analyze the ways and extents to which corporations can construct, protect, sustain and ameliorate their legitimacy and reputation.

Individual Written Literature Review 2 MCOM584 GLOBAL PANOPTICON

It takes 20 years to build a good reputation and five minutes to ruin it. If you think about that, youll do things differently. - Warren Buffet Nike, Apple, Coca Cola, McDonalds, Shell, BP, Enron, Citibank, Lehman Brothers; merely a small selection of corporations who have suffered considerable reputational damage during the last decade. Be it because of unsustainable worker conditions (in the case of Nike (e.g., Knight, 2007) and Apple (e.g., Chamberlain, 2011)), environmental pollution (in the case of Coca Cola (e.g., Kumar, 2011), Shell (e.g., Vidal, 2011) and BP), corporate misconduct (in the case of Enron), health issues (in the case of McDonalds (e.g., Spurlock, 2004)) or as pundits in the banking and housing crises (in the case of Citibank and Lehman Brothers), the sources underlying the reputational damage are widely diverse in origin, nature and impact. They seem to have become even more diverse with the increasing globalization and digitalization of todays world, thereby creating a number of interrelated problems. Firstly, criticism can come in many forms. It can come in the form of state government legislation, as was for instance the case with Obamas intended moratorium on deep-sea drilling after the Deepwater Horizon disaster in April 2010 (Diemer, 2010), or with the EUs current bank recapitalization plan in the ongoing economic and political crisis (ODonnell, 2011). It can also come in the form of NGO campaigns, who, unlike state governments, can put strong pressure on corporations at both national and international levels, for instance by creating inducements and penalties to reward and punish deviant or positive social practice (Newell, 2000, p. 484). They can for instance do so through green marketing (Cox, 2006) in the form of international quality standards such as the Forest Stewardship Council (FSC) certificate for sustainable forestry, the 1% percent for the planet quality mark for products made by companies that donate at least one percent of their annual revenues to environmental NGOs (ENGOs), or the RED trademark for products of which 50% of profits go to The Global Fund, an organization aiming to eliminate AIDS in Africa. Moreover, campaigns and events such as Live 8 and a vast amount of print ads, television commercials have helped to increase public awareness of various local, national, and global problems. Apart from NGOs and corporations however, there is one more force that is becoming increasingly powerful on both a local and a global scale. Aided and largely catalyzed by the increasing speed and presence of new media, citizens themselves are

Individual Written Literature Review 2 MCOM584

becoming increasingly able to blur boundaries, be they between countries, religions and social classes. Moreover, they are increasingly able to open up the world, as grassroots organizations such as Occupy Wall Street, Anonymous and WikiLeaks have shown. A second problem is formed by the fact that the power of criticism is no longer linearly correlated to the economical and political power of the organization or individual voicing it. Together with the globalization and digitalization of societies, there seems to have been, as several authors (e.g., Jones, 2002; Knight, 2007; McKie, 2010; Newell, 2000) argue, a crumbling trust in the legitimacy of state governments, corporations, and even political and economic systems in recent years. These factors, among others, have led to the emergence of the so-called risk society, described by Jones (2002) as a society that is increasingly turning in on itself () critically, questioning the very principles upon which society is founded (p. 50). This has laid the foundation for a redefinition of the political arena through the addition of what has been termed sub-politics (e.g., Jones, 2002; Knight, 2007). Unlike conventional politics, sub-politics allows for the inclusion of new (i.e., non-governmental, non-corporatist) players, does not require an adherence to conventional discourses and allows for the emergence of so-called discourse communities (Jones, 2002). The latter consists of individuals, as well as groups of individuals, with a shared understanding (and therefore often a shared language) concerning a particular issue, be it primarily political (e.g., the movements sparking the Arab Spring), social (e.g., organizations striving for gender and race equality), technological (e.g., associations for and against the use of nuclear energy), economical (e.g., the Occupy movement) or ecological (e.g., organizations and associations against deforestation in the Amazon rain forest). Any individual can be a member of various discourse communities, for instance through membership in or through support of certain issue-based organizations. Consequently, individuals construct their identities through the discourse communities with which they engage and the publics of which these communities consist. Aided by the combined forces of globalization and digitalization, the political arena (and its newfound sub-political dimension) now acts on a global, (relatively) open and transparent playing field. Furthermore, this playing field is magnified in two major respects. Firstly, unlike conventional, one-directional broadcasting media such as television and newspapers, new media (e.g., YouTube, Twitter and the blogosphere) can also be bidirectional and narrow casted (i.e., geared towards specific interest groups). Media (both conventional and new) therefore becomes more and more intermeshed with the cultural circuit, as Hulme (2009) terms it, describable as the interplay between widely variable thought frames. Secondly, unlike old media such as television and newspapers, new media

Individual Written Literature Review 2 MCOM584

channels are not restricted to the voices of corporations, governments and large NGOs, but are (increasingly) equally accessible to members of the general public. Given the fact that new media channels are often much faster at reporting events than old media, as virtually anyone can report through them, recent years have seen an increasing amalgamation between the two media types (Bunz, 2010). The resulting circuit is, in my opinion, a modern version of Benthams panopticon: everyone can be observed by roughly anyone but no one knows when they are being observed. Moreover, anyone (at least in theory) has the ability to communicate his or her observations globally; all that is required is a relatively small group of people to support and spread their views, be it in the form of a picture, a video or a blog post. In this way, what is visible to a small number of people can easily become a microtrend, as Penn and Zalesne (2007) term it; a small, under-the-radar forces [sic] that can involve as little as 1 percent of the population, but [that is] powerfully shaping our society (p. xiii). In the fast-moving, globalized and digitalized panopticon constitute todays world, multinational corporations (MNCs) are constantly walking on an increasingly thinner knife edge. Undoubtedly, they still wield enormous political and economic power, a power that can (willingly or unwillingly) hardly be tempered by national governments and NGOs, as several authors (e.g., Collins & Roper, 2005; Jagers, Paterson, & Stripple, 2005; Kuttner, 2000; Newell, 2000) argue. However, as Lingard (2006) states, in the twenty-first century it is not enough for a business to be successful and to operate to the legal minimum standards society expects more (p. 230). Just as much as legitimacy gaps can be exposed and catalyzed into issues ever easier, the legitimacy gap (and subsequent reputational damage) of one corporation can easily spill over to other corporations within the same industry (oil companies being the clearest example), thereby creating a reputation commons problem (Collins & Roper, 2005). Moreover, as Seitel (2009) argues, similar spillover effect can occur between corporations and organizations with the same country of origin. Warren Buffets statement at the beginning of this section therefore seems to ring more true than ever before.

Individual Written Literature Review 2 MCOM584 WALKING THE TALK & TALKING THE WALK

The way to gain a good reputation is to endeavor to be what you desire to appear. - Socrates In the previous section, I discussed the environment in which MNCs, as well as other organizations are currently finding themselves. I discussed the redefinition of the political sphere and the transformation of the cultural (media) circuit. In this section, I will focus on how MNCs can adapt to, and thrive in the current global environment, using Unilever UKs approach Corporate Responsibility, as discussed by Lingard (2006), as a baseline measure. A good starting point in this baseline measure is a realization that, in my opinion, must lie at the heart of any MNCs approach to economic, ecological and social sustainability. It is the realization that, as Lingard states, companies dont make decisions people, individuals acting in the name of the company do (2006, p. 218). It is painfully simple: without employees, there would be no corporations. Consequently, without creative, efficient, socially concerned, and sustainability-oriented employees, a corporations ability to be creative, efficient, socially-concerned and sustainability-oriented is seriously hampered. As a result, it is paramount for corporations to enable, stimulate and maintain the values and norms that it hopes to live up to in its employee base. In the case of corporate responsibility, this entails a number of requirements. Firstly, and most generally, it requires an organizational culture that underscores and emphasizes a corporations corporate responsibility efforts. This organizational culture can come in many forms, ranging from mission statements and codes of conduct, to sustainability reports and balanced scorecards. Moreover and more importantly, it comes in the form of the words chosen to communicate the culture, as well as the words not chosen; the framing of the corporate culture (Hulme, 2009). A good example of the effect of framing can be found in Unilevers Code of Business principles, in which, under the heading Business Partners, the following is stated: Unilever is committed to establishing mutually beneficial relations with our suppliers, customers and business partners. In our business dealings we expect our partners to adhere to business principles consistent with our own (Lingard, 2006, p. 223). Given the fact that Unilever, like any MNC is reliant on a vast amount of business partners across the world, it is heavily dependent on outsourcing and subcontracting. This, as Knight (2007) notes, creates tremendously complex and extended supply chains. As the Nike sweatshop controversy for instance showed, benevolent corporate values may not be

Individual Written Literature Review 2 MCOM584

replicated throughout the full supply chain. The expectation, as the quote above includes, that a corporations business partners will adhere to business principles that are similar to those of the corporation itself may therefore not be sufficient. Furthermore, concerns over coinciding business principles may soon become deprioritized in an attempt to maximize profits. This might be an indication that the economic growth paradigm, which, as many authors (e.g., Cox, 2006; Porritt, 2004; Roper, Collins, & Toledano, 2004) argue, still pervades many of todays corporations and other organizations, still dominates the corporations culture. Moreover, it might indicate that concepts such as CSR and TBL are merely empty shells as opposed to concepts that are deeply engrained in the organizational culture. In my opinion, concepts such as corporate responsibility, CSR, TBL, cradle-tocradle and upcycling cannot simply be added to a corporations cultural portfolio. They often require, as Quinn (in Dunphy, Griffits & Benn, 2007) terms it, deep change, defined as change that is major in scope, discontinuous with the past and generally irreversible [; that] distorts existing patterns of action and involves taking risks (p. 264). At first sight, this may sound rather vague and risky to say the least. Regarding the latter however, Dunphy et al. (2007) assert that not doing anything can be a greater risk than initiating transformational change (p. 265); an assertion with which I, given the discussion in the previous section, certainly agree. However, despite a ten-step program towards transformative change, Dunphy et al. provide an, in my opinion, rather theoretical and simplistic view of what transformational change entails. Not only do the authors provide no practical examples whatsoever, they also seem to severely underestimate the extent to which corporations are linked to and embedded in societies. They seem to overlook that a MNC such as Unilever consists of more than merely its products and their packaging; it includes supply chains, distribution chains, selection procedures, training programs, marketing and PR campaigns, financial experts, R&D experts, outsourcing contracts and even the behavior of its top figures. For instance, if TBL is not part of the active vocabulary of a corporations finance experts, it is unlikely that they will look beyond cost efficiency and profit maximization. Similarly, problems might arise if other organizations or members of the public spot a marked discrepancy between the corporations talk and its top figures walk, as BPs thenCEO Tony Hayward found out when he decided to go on a sailing trip in the midst of the 2010 Deepwater Horizon disaster, leading to strong criticism from various sources including the White House (e.g., Kennedy, 2010; Leake, 2010). It is therefore paramount for companies to embed the corporate responsibility culture deep in the organizational fibers, as Unilever for instance does by stating that the Board of Unilever will not criticize management for any

Individual Written Literature Review 2 MCOM584

loss of business resulting from adherence to these principles and other mandatory policies and restrictions (Lingard, 2006, p. 224) in its Code of Business Principles, and by making this code of conduct part of its general employee training programs and formal company policies. In this way, basic compliance is ensured and managers will not be punished if their behavior in accordance with corporate responsibility culture affects the financial bottom-line. However, general codes of conduct and their incorporation in general training programs are not nearly sufficient. As Lingard states, while these general introductory programs are helpful in raising awareness, most corporate responsibility issues are function-specific (2006, p. 227). Therefore, function-specific training programs are essential to bring corporate responsibility to the shop floor; by directly relating it to the issues that are relevant for each employee individually, corporate responsibility is brought down from a theoretical to a practical plain, thereby making it much more strongly integrated in employees discourse and activities. In this way, the corporation can walk the corporate responsibility talk. Secondly, apart from walking the talk, MNCs must talk the corporate responsibility walk as well. In my opinion, the latter can help to amplify the effects of adopting a corporate responsibility approach for both the MNC itself and its stakeholders. An important first reason for talking the walk is the fact that a profound focus on corporate responsibility can create a competitive advantage, and consequently enhance profits (e.g., Cox, 2006; Roper et al., 2004). However, a competitive advantage can only be created if external stakeholders perceive the corporations efforts towards corporate responsibility to be unique. This is where PR, in combination with marketing, as advised by for instance Fiur (1984), comes into play. Be it through green marketing (Cox, 2006), discursive repositioning of competitors (Roper, 2005) or through a deep-running stakeholder commitment (e.g., Freeman & Velamuri, 2006; Hayes, 2008; Morsing & Oswald, 2006); PR and marketing are responsible for a major portion of the organizations image. Given the breadth and depth of most MNCs external connections (e.g., throughout supply and distribution chains), it is crucial that the corporate responsibility culture is not muddled by the goal of profit maximization and cost efficiency. It is therefore highly doubtable that a sole emphasis on any one of the approaches mentioned above will be successful, as consumers and other external stakeholders are increasingly skeptical of corporate behavior, often labeling corporate behavior regarding sustainability green-washing (e.g., Cox, 2006; Hayes, 2008; Morsing & Oswald, 2006). Consistent, transparent, open, honest and clearly visible communication to both internal and external stakeholders is therefore essential, as Lingard (2006) also argues in stating that consistent communications are a vital element in reinforcing a companys commitment to corporate

Individual Written Literature Review 2 MCOM584

responsibility (p. 217). Interestingly however, Lingard seems to focus almost exclusively on Unilevers internal stakeholders in his paper. In my opinion however, consistent communication concerning corporate responsibility is just as vital for the maintenance of legitimacy and reputation through the eyes of the corporations external stakeholders. In my opinion, Unilever is one of the MNCs that form an easy target for NGOs and other critics, as Newell (2000) terms it. Firstly, due to the strong competition in the Fast-Moving Consumer Goods (FMCG) sector, Unilever is strongly dependent on consumer preference. Secondly and relatedly, Unilevers brands are well-known; possibly even more well-known than the corporate brand itself. This combination of factors, which also pertains to well-known oil companies such as BP and Shell, technology companies such as HP and Apple, and restaurant chains such as Kentucky Fried Chicken and McDonalds, makes it crucial for companies such as Unilever to leave no stone unturned in communicating their commitment to corporate responsibility. CONCLUSION In the current literature review, I discussed corporate legitimacy and reputation in todays globalized, fast-paced and interconnected world. In the first section, I started out by discussing the forms of criticism modern-day Multinational Companies (MNCs) are likely to come across. I discussed the transformation of the political arena due to the rise of subpolitics, the changing face of the cultural circuit and the formation of what I termed the global panopticon. In the second section, I continued by discussing the ways in which MNCs such as Unilever can, and in my opinion should adapt to the global panopticon. I argued that, apart from walking the talk by creating and sustaining a corporate responsibility culture, it is essential for organizations to also talk the walk. I argued that Public Relations, possibly in combination with marketing, particularly played a role in striving towards the latter goal. Despite the fact that walking the talk and talking the walk with regards to corporate responsibility may seem a relatively easy task, I stressed that, unless a commitment to corporate responsibility runs through all of the corporations fibers, it is unlikely that MNCs (as well as other organizations for that matter) will be able to maintain their legitimacy and reputation, both in the eyes of their internal stakeholders and their external stakeholders.

Individual Written Literature Review 2 MCOM584

10

BIBLIOGRAPHY Anonymous. (2011, October 7). No jobs, no cash, no hope. Retrieved October 24, 2011, from 9GAG: http://9gag.com/gag/327689 Bunz, M. (2010, January 10). Old Media or New Media - Who Breaks the News Today? Retrieved October 25, 2011, from The Guardian: http://www.guardian.co.uk/media/pda/2010/jan/12/digital-media-hyperlocal-mediabaltimore-pew-study Chamberlain, G. (2011, April 30). Apple's Chinese Workers Treated 'Inhumanely, Like Machines'. Retrieved October 24, 2011, from The Guardian | The Observer: http://www.guardian.co.uk/technology/2011/apr/30/apple-chinese-workers-treatedinhumanely Collins, E., & Roper, J. (2005). Strategic Schizophrenia: The Strategic Use of Trade Associations in New Zealand. Journal of Communication Management , 9 (3), 256266. Cox, R. (2006). Environmental Communication and the Public Sphere. Thousand Oaks, CA: Sage. Diemer, T. (2010, May 27). Obama to Extend Ban on Offshore Drilling Through End of Year. Retrieved October 24, 2011, from Politics Daily: http://www.politicsdaily.com/2010/05/27/obama-to-extend-ban-on-offshore-drillingthrough-end-of-year/ Dunphy, D., Griffiths, A., & Benn, S. (2007). Organizational Change for Corporate Sustainability (2nd ed.). London and New York: Routledge. Fiur, M. (1984). Public Relations in the 21st Century. In B. Cantor, & C. Burger (Eds.), Experts in Action: Inside Public Relations (pp. 381-400). New York: Longman. Freeman, R., & Velamuri, S. (2006). A New Approach to CSR: Company Stakeholder Responsibility. In M. Kakabadse (Ed.), Corporate Social Responsibility: Reconciling Aspiration with Application (pp. 9-23).

Individual Written Literature Review 2 MCOM584

11

Hayes. (2008). Public Relations and Collaboration: The Role of Public Relations and Communications Supporting Collaboration in a Complex, Converging World. Hulme, M. (2009). Why We Disagree About Climate Change. Cambridge: Cambridge University Press. Jagers, S., Paterson, M., & Stripple, J. (2005). Privatizing Governance, Practicing Triage: Securitization of Insurance Risks and the Politics of Global Warming. In D. Levy, & P. Newell (Eds.), The Business of Global Environmental Governance. Cambridge / London: MIT Press. Jones, R. (2002). Challenges to the Notion of Publics in Public Relations: Implications of the Risk Society for the Discipline. Public Relations Review , 31, 479-485. Kennedy, M. (2010, June 20). BP Chief's Weekend Sailing Trip Stokes Anger at Oil Company. Retrieved October 26, 2011, from The Guardian: http://www.guardian.co.uk/business/2010/jun/20/tony-hayward-bp Knight, G. (2007). Activism, Risk and Communicational Politics: Nike and the Sweatshop Problem. In S. May, G. Cheney, & J. Roper (Eds.), The Debate over Corporate Responsibility (pp. 305-318). New York: Oxford University Press. Kumar, H. (2011, March 2010). India: Pollution Fine Sought Against Coca-Cola. Retrieved October 2011, 2011, from The New York Times: http://www.nytimes.com/2010/03/24/world/asia/24briefs-Indiabrf.html Leake, C. (2010, June 20). There's no oil slicks here, Tony: White House Blasts BP Boss As He Watches Yacht Race 4,500 Miles Away From Gulf Disaster. Retrieved October 26, 2011, from MailOnline: http://www.dailymail.co.uk/news/article-1287925/BP-oil-spillboss-Tony-Hayward-takes-time-enjoy-Cowes-Week-despite-ongoing-Gulf-Mexicodisaster.html Lingard, T. (2006). Creating a Corporate Responsiblity Culture: the Approach of Unilever UK. In A. Kakabadse, & M. Morsing (Eds.), Corporate Social Responsibility: Reconciling Aspiration with Application (pp. 217-230). Basingstoke: Palgrave MacMillan.

Individual Written Literature Review 2 MCOM584

12

McKie, D. (2010). Signs of the Times: Economic Sciences, Futures, and Public Relations. In R. Heath (Ed.), SAGE Hanbook of Public Relations (2nd ed., pp. 85-97). Thousand Oaks, CA: Sage. Morsing, M., & Oswald, D. (2006). Novo Nordisk A/S: Integration Sustainability into Business Practice. In A. Kakabase, & M. Morsing (Eds.), Corporate Social Responsibility: Reconciling Aspiration with Application (pp. 183-216). Basingstoke: Palgrave MacMillan. Newell, P. (2000). Environmental NGOs and Globalization: The Governance of TNCs. In R. Cohen, & S. Rai (Eds.), Global Social Movements (pp. 117-133). London: The Athlone Press. O'Donnell, J. (2011, October 23). EU Bank Plan May Include Aid Pledged to Bailout States: Sources . Retrieved October 24, 2011, from Reuters: http://www.reuters.com/article/2011/10/23/us-eu-bank-planidUSTRE79M3CX20111023 Penn, M., & Zalesne, E. (2007). Microtrends: The Small Forces Behind Tomorrow's Big Changes. New York: Twelve. Porrit, J. (2004). Locating the Government's Bottom Line. In A. Henriques, & J. Richardson (Eds.), The Triple Bottom Line: Does It All Add Up? Assessing the Sustainability of Business and CSR (pp. 59-59). London: Earthscan. Rasmussen Reports. (2011, October 23). Dialy Presidential Tracking Poll. Retrieved October 24, 2011, from Rasmussen Reports: http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_ presidential_tracking_poll Roper, J. (2005). Organisational Identities, Identification and Positioning: Learning from Political Fields. Public Relations Review , 31, 139-148. Roper, J., Collins, E., & Toledano, M. (2004). Risk, Issues and Precaution: Seeking Legitimacy in Responses to Climate Change. Australian Journal of Communication , 31 (3), 41-52.

Individual Written Literature Review 2 MCOM584 Spurlock, M. (Director). (2004). Super Size Me [Motion Picture].

13

The Nobel Foundation. (2011, October 24). The Nobel Peace Prize 2009: Barack H. Obama. Retrieved October 24, 2011, from Nobelprize.org: http://www.nobelprize.org/nobel_prizes/peace/laureates/2009/ Vidal, J. (2011, August). Niger Delta Oil Spills Clean-up Will Take 30 Years, Says UN. Retrieved October 6, 2011, from The Guardian: http://www.guardian.co.uk/environment/2011/aug/04/niger-delta-oil-spill-clean-up-un