Download - A Cross-cultural Study of Corporate Response
-
8/14/2019 A Cross-cultural Study of Corporate Response
1/239
A CROSS-CULTURAL STUDY OF CORPORATE RESPONSE AND THEIR IMPACT IN TIMES OF CRISIS
by
SHU-HUI SOPHY CHENG
DISSERTATION
Submitted to the Graduate School
of Wayne State University,
Detroit, Michigan
in partial fulfillment of the requirements
for the degree of
DOCTOR OF PHILOSOPHY
2009
MAJOR: COMMUNICATION
Approved by:
Advisor Date
-
8/14/2019 A Cross-cultural Study of Corporate Response
2/239
3344308
3344308
2009
-
8/14/2019 A Cross-cultural Study of Corporate Response
3/239
COPYRIGHT BY
SHU-HUI SOPHY CHENG
2009
All Rights Reserved
-
8/14/2019 A Cross-cultural Study of Corporate Response
4/239
ii
ACKNOWLEDGMENTS
This journey has been full of uncertainties but turned out to be joyful and fruitful.
After postponing my enrollment for three years, I was eventually able to start my PhD
study in the fall of 2006 at Wayne State University. However, one week before my flight, I
was diagnosed with thyroid cancer. At that time, I felt frustrated and pondered whether I
would ever have a chance to complete my PhD. After discussion with my doctor, I chose
to take the risk of postponing the surgery to start my academic program as scheduled.
During the first winter break, I returned to Taiwan for surgery. Fortunately, the surgery
went well and the cancer has not seriously affected my study and life. All in all, I thank
God.
Here, I wish to acknowledge the people without whom I may never have completed
this educational journey. I first wish to thank my advisor, Dr. Matthew Seeger. I could
never have finished this project without his guidance, patience and support during this
seemingly endless process. It has been a true privilege to work with him. In addition, I
thank members of my dissertation committee, Dr. Donyale Griffin, Dr. Julie Novak, and
Dr. Attila Yaprak whose time and feedback to my research are so greatly appreciated.
I thank all my friends and colleagues for their encouragement and help. My thanks
also go to Hin and Ann for helping me edit the drafts. I would also like to thank the
Graduate School and the Department of Communication of Wayne State University for
helping fund part of this research.
Finally, I want to thank my family and especially my parents, Wei-yuan Cheng and
Yu-yen Hsieh, who raised me to be hard working. I appreciate them more than they will
-
8/14/2019 A Cross-cultural Study of Corporate Response
5/239
iii
ever know. I would also like to thank my sisters, Shu-chuan and Meng-ju, and brother,
Ching-sheng, for their support.
I dedicate this dissertation to my family and also in memory of my little sister,
Shu-ping, who died too young to complete her dream.
-
8/14/2019 A Cross-cultural Study of Corporate Response
6/239
iv
TABLE OF CONTENTS
ACKNOWLEDGMENTS.ii
LIST OF TABLES v
LIST OF FIGURES..vi
CHAPTERS
CHAPTER 1 Introduction.1
CHAPTER 2 Literature Review8
CHAPTER 3 Method...36
CHAPTER 4 Case of Martha Stewart..49
CHAPTER 5 Case of BenQ81
CHAPTER 6 Case of HIH.115
CHAPTER 7 Similarities and Cultural Differences in Crisis Communication...146
CHAPTER 8 Conclusion......173REFERENCES.207
ABSTRACT...229
AUTOBIOGRAPHICAL STATEMENT..231
-
8/14/2019 A Cross-cultural Study of Corporate Response
7/239
v
LIST OF TABLES
Table 1 Benoits Image Restoration Strategies..14
Table 2 Coombss Crisis Response Strategies..20
Table 3 Characteristics of High and Low Context Cultures..24
Table 4 Hofstedes and Trompenaars and Hampden-Turners Dimensions.28
Table 5 Key Events in Stewart Case...54
Table 6 Martha Stewarts Crisis Response Strategy...................74
Table 7 Key Events in BenQ Case...84
Table 8 BenQs Crisis Response Strateg.....110
Table 9 Key Events in HIH Case....119
Table 10 HIHs Crisis Response Strategy....140
-
8/14/2019 A Cross-cultural Study of Corporate Response
8/239
vi
LIST OF FIGURES
Figure 1 Coombss Continuum of Crisis Strategies...18
Figure 2 Research Design.46
Figure 3 The Stock Price of MSO............78
Figure 4 Revenue and Net Income of MSO...........78
Figure 5 The Stock Price of BenQ.........112
Figure 6 Revenue and Net Income of BenQ........112
Figure 7 Comparison of Three Countries.........157
Figure 8 Situated Cultural Crisis Communication Model....199
-
8/14/2019 A Cross-cultural Study of Corporate Response
9/239
1
CHAPTER 1
INTRODUCTION
Overview
The personalities of strong business leaders can help shape the image of their
companies. In some cases, the leaders become the virtual icon of the corporate brand,
lending their personal prestige to the brand and personifying the company. They can
also threaten the company when they are involved in a scandal. In this situation, the
consequences for the company can be dire as in the Martha Stewart case in 2002. A
similar event occurred in 2007 when Taiwanese chairman, K. Y. Lee of BenQ was
charged with insider trading after BenQ officially made an announcement it would stop
investing in Siemens mobile phone and file for bankruptcy protection in Germany. In
another case, the HIH Insurance went into provisional liquidation on March 15, 2001,
representing the largest collapse ever in Australian corporate history. The unethical
behavior of the founder and CEO, Ray Williams, and the non-executive director Rodney
Adler is believed to have contributed to the failure of HIH. This corporate disaster raised
the concerns of risk management and corporate governance in Australia well before the
Enron and WorldCom scandals in the U.S.
Much of the literature in crisis public relations focuses on the technical role of
planning, managing and responding (Borda & Mackey-Kallis, 2004; Coombs, 2007a).
For example, organizations need to establish a crisis command center, designate a
management team, develop a crisis plan, choose a single spokesperson with one voice,
tell the truth and respond quickly when crisis encounters. However, very few studies on
crisis communication focus on the role of cultural influences during a crisis (Marra, 1998;
-
8/14/2019 A Cross-cultural Study of Corporate Response
10/239
2
Lee, 2005). Thus, the aim of this study is to conduct a cross-cultural comparison of U.S.,
Taiwan and Australia to examine whether these different cultural contexts are related to
different crisis communication approaches.
This study explores how the three companies Martha Stewart, BenQ and HIH
responded when confronted with an organizational crisis that threatened existence.
Allegations of insider trading against Martha Stewart led to her imprisonment. Her
strategic plan in response to the insider trading accusations and the media attention
surrounding this crisis left Stewart trying to take action to restore her image. Although the
verdict of BenQs case has not been rendered, negative media stories have caused
BenQs stock to decline rapidly and sales to drop sharply. Shortly after, BenQ
restructured and renamed the company to stop the financial bleeding and to try to
increase profits. HIH was unable to salvage its legitimacy, and business ceased less
than a year after the media first reported concern for the companys future. Its share
price fell steadily from more than A$1 in August, 2000 to its terminal price of A$0.175 on
February 27, 2001. Not surprisingly, HIH collapse came as a shock to thousands of
stakeholders.
It is important to understand how these executives responded to their
wrongdoings. More specifically, the strategies they used to address their corporate
disasters drew widespread public criticism. To be more precise, this study seeks to
investigate: 1) How did Martha Stewart, BenQ and HIH manage their communication
during the corporate crisis? 2) How were these communication strategies received and
interpreted by the stakeholders? 3) How did their communication strategies reflect
different cultural factors?
-
8/14/2019 A Cross-cultural Study of Corporate Response
11/239
3
This study collects two major types of data: documents and archival records. The
actions and communication strategies used by Martha Stewart, BenQ and HIH are
reviewed with information from their corporate websites, press releases and media
coverage. The organizational archival records, such as stock prices, sales and annual
reports help explain the extent in which the crises had an impact on these three
companies financial performance and stakeholders. The official government archival
information, such as court records and commission reports has added additional
insights.
Coombs (2007a) has synthesized Benoits image restoration theory (1995a) and
other works, and suggested a dynamic typology of crisis response strategies. Thus,
Coombss situational crisis communication theory (SCCT) is used to provide a
framework to interpret and analyze the crisis response strategies that Martha Stewart,
BenQ and HIH employed. It consists of four major crisis response strategies: denying
strategies (attack the accuser, denial, scapegoat); diminishing strategies (excuse,
justification), rebuilding strategies (compensation, apology); and reinforcing strategies
(bolstering, ingratiation).
Crisis communication studies are predominantly based on Western theories
(mostly American) but there is a growing awareness of the need to address cultural
differences in this area. Filling the gap left in current literature, the purpose of this study
seeks to explore cultural differences in crisis communication. Drawing upon Halls
context (1976), Hofstedes dimensions of culture (1980) and Trompenaars and
Hampden-Turners cultural factors (1998), this study utilizes these guidelines as a
framework to compare the different communication approaches in these cases from
-
8/14/2019 A Cross-cultural Study of Corporate Response
12/239
4
three different countries. Through the cross-case analysis, this study aims to contribute
to the body of crisis communication research in the context of cultural differences and its
future direction.
In short, when a crisis strikes, communication is critical for protecting the
organizations image and reputation. An effective response might even prevent an
escalating crisis. Specifically, what an organization says is a key element in managing
the uncertainties during and in the post crisis situation. Three cases namely, Martha
Stewart, BenQ and HIH are employed to examine their corporate messages in their
corporate crises. I will take a closer look at the stakeholders perception of these
communication strategies. This study also attempts to identify the similarities and
differences in communication styles and strategies. The following section provides a
brief overview of these cases.
Background of Cases
Martha Stewarts Insider Trading
Beginning with the 1982 publication of her book Entertaining , Martha Stewart
made a name for herself as a homemaking diva with an emphasis on do-it-yourself
ingenuity. As the chief of Martha Stewart Living Omnimedia (MSO), Stewart used her
name and face to make connections with various businesses including a line of
housewares, television shows, radio channels, magazines and a series of books on
entertaining. On December 27, 2001, Stewart sold 3,928 shares of her ImClone stock
worth $228,000 the day before the U.S. Food and Drug Administration (FDA) rejected
approval of Erbitux, ImClones anti-cancer drug. Stewart had denied any wrongdoing,
insisting she did not receive any advance knowledge from Sam Waksal, the founder and
-
8/14/2019 A Cross-cultural Study of Corporate Response
13/239
5
CEO of ImClone about the decision on Erbitux (Pollack, 2002). Instead, her sale of
ImClone stock was part of a predetermined plan to sell if shares fell below $60.
Later, Stewart was officially indicted on charges of obstructing justice and
securities fraud related to her sale of ImClone stock on March 5, 2004. Judge
Cedarbaum dismissed the securities fraud charge against Stewart, saying prosecutors
had failed to present enough evidence on the issue. Charges of conspiracy, obstruction
of justice and making false statements remained (Masters & White, 2004). Stewart was
sentenced to five months in prison as well as a $30,000 fine, five months of home
confinement and two years of supervised probation after her release. On October 8,
2004, Stewart reported to Alderson Federal Prison Camp in West Virginia (Newman,
2004) and was released on March 4, 2005 (Glater, 2005).
BenQs Insider Trading
BenQ, a Taiwanese based company, was established in 1984, initially known as
Acer Peripherals Inc., and later rebranded as BenQ in December 2001. BenQ is a
multi-faceted company with interests in mobile communications, visual display and
network convergence technologies. Its principal products include LCD monitors, LCD
TVs, MP3 players, digital projectors, mobile phones, and other gadgets. The company
name reflects its vision: Bringing Enjoyment a Nd Quality to life. On October 1, 2005,
BenQ acquired the ailing mobile devices division of Germanys Siemens. The new
business group and new brand, BenQ-Siemens became the 4th largest mobile phone
company in terms of its market share (BenQ Press Release, 2005a). After BenQ bought
Siemenss handset unit, it began accumulating losses of US$781 million in only one
year. In late September 2006, BenQ decided to stop investing in the money-losing
-
8/14/2019 A Cross-cultural Study of Corporate Response
14/239
6
operation and filed for bankruptcy protection in Germany (Wang, 2006a).
Before BenQ made the losses public, chairman K. Y. Lee, president Sheaffer Lee,
vice president Eric Yu instructed a group of financial employees to sell 6,769
undistributed bonus shares for NT$230 million (US$7 million) and put the money into the
BenQ branch in Malaysia, Creo Ventures. Later they moved the money back to Taiwan
and, when the plunge of BenQ share prices slowed down, used the money to buy back
BenQ shares to boost the stock market (Pao, 2007). On May 8, 2007, chairman K. Y.
Lee, president Sheaffer Lee, chief financial officer Eric Yu, financial officer Wei-yu Liu
were charged with insider trading. The accounting section chief Ta-wen Liu who knew
the companys financial situation but still helped transfer money to Malaysia, was
charged with violating securities laws and money laundering (Wang & Chuang, 2007).
The Collapse of HIH Insurance
The HIH failure was Australia's biggest-ever corporate disaster. HIH collapsed on
March 15, 2001, and moved from provisional liquidation to full liquidation on August 27,
2001. Prior to its collapse, the HIH Group was the second largest general insurer in
Australia, comprised of 217 subsidiaries. HIH liquidators estimated that the company
loss with debts was about A$5.3 billion (US$3 billion). Following the failure of the HIH
group, the Australian Federal Government established the HIH Royal Commission to
inquire into the causes of the collapse. Justice Neville Owen, who led the HIH Royal
Commission, noted that the collapse of the HIH has reverberated throughout the
community, with consequences of the most serious kind (The HIH Royal Commission,
2003). According to the report of the HIH Royal Commission, the primary reason for the
failure was that adequate provision had not been made for insurance claims and past
-
8/14/2019 A Cross-cultural Study of Corporate Response
15/239
7
claims on the policies had not been properly priced. This meant that HIH had
mismanaged of its core business activity. Specifically, many of HIHs difficulties could be
attributed to its failed acquisition strategy and business operation.
Within HIH management, there appeared to be no clearly defined statement of
duties or limits on authority. The HIH Royal Commission (2003) revealed that a corporate
culture of not questioning leadership decision making appeared to have developed within
HIH. The type of culture was inimical to sound management practices. It resulted in
decision making that fell well short of the required standards. Executive self-indulgence
and corporate expenditure also hurt HIH. For instance, the founder and CEO Ray
Williams continued to give lavish presents and parties for friends and executives, when
the company was already in financial straits (Donaldson, 2008). On April 15, 2005,
Williams was jailed for 4 years 6 months with a non-parole period of 2 years 9 months,
after pleading guilty to misleading shareholders about the financial position of HIH. He
walked out of Sydneys Silverwater jail on January 14, 2008 (Main, 2008).
Summary
This chapter first identifies the lack of understanding cultural differences in crisis
communication. To this end, it is important to explore how communication strategies
reflect different cultural factors. Using the cases of Martha Stewart, BenQ and HIH from
three different countries, the goal of this study is not only to understand the strategies
they used to address their corporate crisis but also to examine the importance of cultural
sensitivity in crisis communication. The next chapter examines the literature relevant to
crisis communication in organizational settings. This literature review provides a more
detailed rationale for the necessity addressing cultural issues in crisis communication.
-
8/14/2019 A Cross-cultural Study of Corporate Response
16/239
8
CHAPTER 2
LITERATURE REVIEW
This chapter provides a theoretical foundation for exploration of the role of the
cultural factor played in crisis communication. I revisit the existing literature in public
relations, crisis communication and intercultural communication for formulating three
research questions and later for developing the research design. This chapter is divided
into four sections: 1) crisis communication, 2) crisis communication and culture, and 3)
cultural issues in crisis communication, and 4) the three research questions which will
guide the analysis of this study.
Crisis Communication
Crisis & Crisis Communication Defined
A variety of crisis typologies can be found in the literature (Coombs, 2007a;
Ulmer, Sellnow, & Seeger, 2007). While crises possess different characteristics,
basically they have been categorized into identifiable types. For example, Ulmer,
Sellnow and Seeger (2007) describe two major types of crises: (1) intentional crises (i.e.,
terrorism, sabotage, workplace violence, poor employee relationships, poor risk
management, hostile takeovers, and unethical leadership), and (2) unintentional crises
(i.e., natural disasters, disease outbreaks, unforeseeable technical interactions, product
failure, downturns in the economy). In this study, the crises of Martha Stewart, Ben Q
and HIH occurred from organizational misdeeds which placed the stakeholders at risk.
Specifically, the crises were created by the leaders of the organization whose unethical
and knowingly illegal behavior violated the law.
In fact, crisis events can and do strike organizations of all types. Every kind of
-
8/14/2019 A Cross-cultural Study of Corporate Response
17/239
9
organization, from Fortune 500 companies to small family owned businesses, have the
potential of being a victim of crisis (Seeger, Sellnow, & Ulmer, 2003). Fishman (1999)
points to five elements that are common in most definitions of a crisis situation. First, an
unpredictable event occurs. Second, important values for an individual or institution must
be threatened for a crisis situation to exist. Third, the intention of an actor or an
organization plays a minor, if negligible, role in analyzing a crisis situation. Fourth, a
crisis occurrence represents a time-sensitive situation. Fifth, a crisis situation involves a
dynamic or multi-dimensional set of relationships within a rapidly-changing environment.
As such, effective communication is essential to maintaining a positive relationship with
key stakeholders such as employees, customers, suppliers, and shareholders
(Fishman, 1999, p. 348).
Fearn-Banks (2007) defines crisis communication as the dialog between the
organization and its public prior to, during, and after the negative occurrence. The dialog
details strategies and tactics are designed to minimize damage to the image of the
organization (p.9). Moreover, crisis communication is concerned with the transferring of
information to significant persons to help avoid or prevent a crisis (or negative
occurrence), recover from a crisis, and maintain or enhance reputation (Fearn-Banks,
2007). Crisis communication, as Seeger and Ulmer (2002) note concerns the processes
whereby organizations create and exchange meanings among stakeholders regarding
the risk of crisis, cause, blame, responsibility, precautionary norms, and crisis-induced
changes in the organization and its relationship to stakeholders (p. 128).
As noted earlier, for an organization to manage the effects of a crisis it must
communicate to both internal and external stakeholders. Crises, in almost all
-
8/14/2019 A Cross-cultural Study of Corporate Response
18/239
10
circumstances, immediately trigger a deluge of questions from an organizations many
different publics (Marra, 1998). Reporters, employees, stockholders, government
officials, and local residents all want to know what happened. Ulmer, Sellnow, and
Seeger (2007) suggest all crises involve the general communication strategies of
reducing uncertainty, responding to the crisis, resolving it, and learning from it. The
ability to communicate quickly and effectively is clearly an important component of
successful and effective crisis management. Effective crisis communication can not only
defuse or eliminate crisis, but it can sometimes bring an organization a more positive
reputation than before the crisis occurred (Kauffman, 2005). On the other hand, Marra
(1998) argues if an organization fails to respond to a crisis in the correct manner, a bad
situation can be made worse. Hence, crisis communication strategies can substantially
diminish the harm caused by a crisis or magnify the harm if mismanaged.
Several general theoretical frameworks have been adapted to explain a crisis
situation. According to Seeger, Sellnow, and Ulmer (2003), these theories emphasize
such crisis elements as uncertainty, the novelty of the situation, and the potential threat
to established routines and order (p. 21). Further, they note that crisis theories try to
reveal and explain the understanding of risk factors associated with the concept of crisis,
organizations response to these factors, and the impact of crises on the key publics and
stakeholders. Based on the need for better understanding of organizational crisis and
communication, crisis communication studies have emerged as a vibrant research area.
Fishman (1999) agrees that of all the areas in public relations, none has grown faster
than crisis communication. Currently, the main lines of crisis communication research
relevant to the current study are corporate apologia, image restoration, and situational
-
8/14/2019 A Cross-cultural Study of Corporate Response
19/239
11
crisis communication theory.
Corporate Apologia
When an organization is criticized for wrongdoing, the situation can easily
escalate into a crisis situation. This often happens when the organization is thought to be
incompetent or is seen as being careless towards the community. At such times,
discourse becomes an organizational resource that corporations utilize as part of a
comprehensive crisis management strategy. The primary way to counter charges is to
choose an apologetic strategy (Hearit, 1994). Ware and Linkugel (1973) are the first to
classify apologetical discourses as a distinct form of public address and characterized
apologia as speech of self-defense. They identified four factors commonly found in
speeches of self-defense which included denial, bolstering, differentiation, and
transcendence.
Dionisopolous and Vibbert (1988) are the first to posit that the apologia genre can
be applied to organization. Apologia seeks to defend an organizations or an individuals
alleged offensive actions while reestablishing organizational legitimacy. They argue that
organizations have a public persona and are generally perceived as individuals by their
various stakeholders. If organizations are considered to be individuals and have
personas, it is possible to experience attacks on character and the need to engage in
self-defense (apologia). Hearit (1995) claims that in apologia, organizations employ
three prototypical appearance/reality disassociations. These include 1) denial of guilt
through opinion/knowledge disassociation, 2) differentiation of guilt by scapegoating
through individual/group disassociation, and 3) distancing from guilt through act/essence
disassociation.
-
8/14/2019 A Cross-cultural Study of Corporate Response
20/239
12
Hearit (1994) explains that an apologia is not an apology (though it may contain
one); rather it is a response to a social legitimation crisis in which an organization seeks
to justify its behavior by presenting a compelling counter account of its actions. Although
corporations are not individuals but rather juristic persons before the law, the current
trend is for corporations to make use of the personae of CEOs as spokesperson to
deliver their apologia (Hearit, 1995). The CEO may bring authority and credibility to a
highly equivocal situation and establish the moral tone for the crisis response. The CEO
may further accept responsibility and take steps to provide appropriate compensation
and provide assurances that similar events will not occur again. Hearit (2001) indicates
such a move has two effects. First, apologies are character-based defenses in which
people measure the degree to which individuals have changed, and the use of CEOs
assists auditors in gauging corporate sincerity. Second, if apologies fail, then there are
ready-made scapegoats of individuals (i.e., the CEOs) who have publicly taken
responsibility for the situations.
In one of the most thoroughly studied examples of public relations and crisis
management, Johnson & Johnsons CEO, James Burke took decisive action that helped
save his company after 13 people died from Tylenol capsules laced with cyanide in
1982. Moving fast to save its product, the company withdrew the entire Tylenol stock
from stores. Burke then appeared on the media to explain that the company had nothing
to do with the poisoning incident. He further presented a plan to guarantee that Tylenol
could never again be tampered with. Tylenol sales rebounded, largely because of the
credibility of Burkes remarks and the personal reassurance he offered. He built
credibility and goodwill through his appearance on the media, and this goodwill helped
-
8/14/2019 A Cross-cultural Study of Corporate Response
21/239
13
the company survive (Ulmer, Sellnow, & Seeger, 2007).
There are instances, however, when a CEO is not familiar or comfortable with the
press, when he or she is not an effective communicator, and when it may not be
appropriate to expose the CEO to probing media questions. When Exxons tanker
Valdez ran into an Alaskan reef in 1989, spilling 1.5 million gallons of crude oil, chairman
and CEO Lawrence Rawls response made the damage to the company much worse.
Rawl defended the company and sought to avoid responsibility by blaming Captain
Joseph Hazelwood for the spill and the State of Alaska for the failed clean-up. At the very
time when cooperation was needed, Rawl became engaged in a public dispute with
Alaskas Governor Steve Cowper. The Exxon Valdez oil spill is generally recognized as a
public relations disaster which was compounded by Rawls behavior (Small, 1991).
Image Restoration
In image restoration theory, the organization determines what is threatening its
reputation or image and also determines which publics must be addressed and
persuaded to maintain and restore a positive image (Fearn-Banks, 2007). Specifically,
when images are threatened, as they are during crises, organizations are forced to
respond. They attempt to regain consumer confidence, minimize negative publicity, and
return the company to economic stability. Based on the work of Ware and Linkugels
(1973) theory of apologia, Burke's (1970) discussion on guilt, and Scott and Lyman's
(1968) accounts approach to self defense, Benoit (1995a) has developed a
comprehensive typology of image restoration strategies. This includes denial, evasion of
responsibility, reduction of the offensiveness of the act, corrective action, and
mortification.
-
8/14/2019 A Cross-cultural Study of Corporate Response
22/239
14
There are two major assumptions that underlie Benoits (1995a) theory of image
restoration. First, he argues that communication is a goal-oriented activity. This means
that humans communicate with an agenda. Some goal or outcome is desired when
humans communicate. His second assumption is that a very important communication
goal is to maintain or preserve ones image or reputation after alleged or suspected
wrongdoing. This process of image management is also known as face-work. Five
strategies make up the rhetoric or image repair discourse and each of these strategies
have a set of tactics within them as shown in Table 1.
Table 1: Benoits Image Restoration Strategies
Strategy Key Characteristic Denial
Simple denial Organization did not perform actShift the blame Act performed by other
Evasion of ResponsibilityProvocation Responded to act of anotherDefeasibility Lack of information or ability
Accident Act was a mishapGood intentions Meant well in act Reducing Offensiveness of Event
Bolstering Stress good traitsMinimization Act not seriousDifferentiation Act less offensiveTranscendence More important consideration
Attack accuser Reduce credibility of accuserCompensation Reimburse victim
Corrective Action Plan to solve or prevent problem Mortification Apologize for act
Source: Adapted from Image repair discourse and crisis communication,by W. Benoit, 1997, Public Relations Review , 23 , p. 197.
Benoit (1995a) argues that individuals made various communication decisions
when responding to an accusation that threatens their image or reputation in order to
restore their good standing before salient audiences. He further suggests that multiple
-
8/14/2019 A Cross-cultural Study of Corporate Response
23/239
15
image repair strategies are most frequently used. If the organization or individual is
falsely accused, says Benoit, denial might be an effective initial approach. Once the
accused has established his innocence through denial, bolstering may still be required to
repair residual effects of damage to his reputation. Mortification, for example, might be
used to precede corrective action.
Benoit and colleagues have developed and applied the model to a variety of
different crisis situations. For instance, Benoit and Brinson (1994) analyze AT&Ts
defense following an interruption of its long-distance service in New York in September
of 1991. Initially, AT&T tried to shift blame to low-level workers. As the complete story
emerged, however, AT&T apologized for the interruption (mortification) and began to
bolster its image by stressing its commitment to excellence, the billions of dollars
invested in service, and the quality of its employees. Finally, AT&T promised corrective
action and introduced a comprehensive review of its operations to anticipate and prevent
further problems. It also stressed its commitment to providing excellent service and its
willingness to spend billions of dollars to do so. Given these corrective action strategies,
AT&Ts finally restored its image.
Benoit (1995a) also examines Union Carbides response to the Bhopal, India, gas
leak that killed thousands and injured hundreds of thousands. Union Carbides primary
strategies, bolstering and corrective action, were focused on four specific actions: a relief
fund, an orphanage, medical supplies, and medical personnel. Although these strategies
were appropriate and timely, Benoit claims that Union Carbide failed to address the most
important question: What were they doing to prevent another tragedy?
Fishman (1999) comments that the strength of Benoits typology lies in the details
-
8/14/2019 A Cross-cultural Study of Corporate Response
24/239
16
that it provides, and that the model can be adapted to cover virtually every attack-defined
situation from a celebrity crisis such as the Tonya Harding case (Benoit & Hanczor,
1994) to a company which defends its actions by promising reforms for overcharging its
customers for automobile services (Benoit, 1995b). However, Fishman (1999) thinks that
Benoits approach lacks a comprehensive picture of the entire cycle of a crisis as well as
a mechanism for examining multiple parties and their culpability in the crisis.
Burns and Bruner (2000) revisit Benoits theory, arguing that at certain points, it is
constrained by its current language and mental representations and even invites
misinterpretation (p. 27). They note that the theory reflects a more static or linear view
of rhetoric which is based on a simple stimulus-response sequence that does not
emphasize a more audience-oriented point of view (p. 28). They are also concerned
that Benoits theory oversimplifies the assessment of effectiveness. Hence, they suggest
that: 1) a more comprehensive understanding of multiple audiences may help focus the
assessment of effectiveness, and 2) diverse and more precise measures of
effectiveness may help in some cases. More specifically, the suggestion is to employ the
triangulation of research methods to the measurement of precise relationship between
image restoration discourse and other phenomena (Burns & Bruner, 2000).
Ulmer, Seeger, and Sellnow (2007) also point out that the focus of image
restoration is limited primarily to post-event discourse and to that communication
specifically associated with accusations and responses (p.131). The success of image
restoration strategies depends on the crisis and this focus can represent a small portion
of the messages associated with a crisis event, both in terms of time and scope. While
such strategies may be effective, they sometimes come across as insincere and even
-
8/14/2019 A Cross-cultural Study of Corporate Response
25/239
17
deceptive, particularly when the organization is obviously in the wrong (Ulmer, Sellnow,
& Seeger, 2007).
Situational Crisis Communication Theory
Coombs (1995) combines the work of corporate apologia and image restoration
theory to develop situational crisis communication theory (SCCT). He synthesizes
existing literature to create a list of crisis response strategies and develops a set of
guidelines for the appropriate use of a given strategy. The guidelines are based upon the
attribution theory and use the crisis situation and the public as the factors that help to
determine when a crisis response strategy is appropriate. Attribution theory is premised
on the belief that people assign responsibility for negative, unexpected events (Weiner,
1986). Coombs (2007a) indicates that crises are unexpected and negative, so they
provoke attributions of responsibility. In turn, these attributions shape how a stakeholder
feels and behaves toward the organization.
Conceptual frameworks for Coombs approach have evolved over time. He states
that a more productive approach is to identify the most common crisis communication
strategies and to discover a thread that connects them together (Coombs, 1999).
Coombs later revised his theory to place crisis situations along a continuum from weak
responsibility to strong responsibility. The continuum reflects a range of actions from
defensive to accommodative. In his revised approach, Coombs (1999) chooses
strategies that are cited as most commonly being used by corporations faced with
reputation-altering decisions. Figure 1 places the common crisis communication
strategies on such a continuum. Accommodative responses accept responsibility, admit
a problem exists, and/or attempt to take corrective action. Defensive responses insist
-
8/14/2019 A Cross-cultural Study of Corporate Response
26/239
18
there is no problem, reassure the stakeholders that the organization can generate future
revenues, and/or take action to restore normal operations.
Source: From Ongoing crisis communication: Planning, managing and responding (p. 124),by W. T. Coombs, 1999, Thousand Oaks, CA: Sage Publications.
Figure 1: Coombs's Continuum of Crisis Strategies
Defensive Accommodative
attackaccuser denial excuse ustification ingratiation corrective
actionfull apology
Weak Crisis Responsibility Strong CrisisResponsibility
rumors malevolence accidents misdeeds
naturaldisasters
In SCCT, a crisis manager begins by identifying the basic crisis type to determine
the initial level of crisis responsibility stakeholders will attribute to the crisis situation.
Next, performance history and the amount of damage are considered to determine if
adjustment should be made to the original crisis responsibility assessment. After the final
adjustment, the crisis managers select the crisis response strategy to fit the level of crisis
responsibility. SCCT concentrates on crisis response strategies that will maximize
protection of the organizations reputation (Coombs, 2006a).
Using Coombss typology of crisis response strategies, Wilcox and Cameron
(2006) examine the case of Intel. In 1993, Intel initially denied there was a problem with
its Pentium 586 chip. As the crisis deepened and was covered in the mainstream press,
Intel used the justification strategy by saying that the problem was not serious enough to
warrant replacing the chips. It minimized the concerns of end-users such as engineers
-
8/14/2019 A Cross-cultural Study of Corporate Response
27/239
-
8/14/2019 A Cross-cultural Study of Corporate Response
28/239
20
As shown in Table 2, Coombs (2006a) defines the primary and supplemental crisis
response strategies used in SCCT. Crisis response strategies are grouped into four
clusters. Bolstering strategies are only supplemental and must be used with one of the
other three.
Table 2: Coombss Crisis Response StrategiesPrimary Crisi s Response Strategies
Strategies Explanation Example
Deny
Attack the Accuser
Crisis manager confronts theperson or group claiming somethingis wrong with the organization.
The organization threatened tosue the people who claim acrisis occurred.
Denial Crisis manager asserts that nocrisis exists.The organization said that nocrisis event occurred.
ScapegoatCrisis manager blames someperson or group outside of theorganization for the crisis.
The organization blamed thesupplier for the crisis.
Diminish
Excuse
Crisis manager minimizesorganizational responsibility bydenying intent to do harm and/orclaiming inability to control theevents that triggered the crisis.
The organization said it did notintend for the crisis to occurand that accidents happen aspart of the operation of anyorganization.
JustificationCrisis manager minimizes theperceived damage caused with thecrisis.
The organization said thedamage and injuries from thecrisis were very minor.
Rebuild
Compensation Crisis manager provides money orother gifts to the victims. The organization offeredmoney and products ascompensation.
Apology
Crisis manager publicly states thatthe organization takes fullresponsibility for the crisis and asksstakeholders forgiveness.
The organization publiclyaccepted full responsibility forthe crisis and askedstakeholders to forgive themistake.
Secondary Cris is Respons e StrategiesStrategies Explanation Example
Bolstering
ReminderThe organization tells stakeholdersabout its past good works.
The organization restated itspast good work and improved
its recent work.
Ingratiation
Crisis manager praisesstakeholders and/or reminds themof past good works by theorganization.
The organization thankedstakeholders for their help.
VictimageCrisis managers remindstakeholders that the organizationis a victim of the crisis too.
Source: Adapted from The protective powers of crisis response strategies: Managing reputationalassets during a crisis, 2006, Journal of Promotion Management , 12 , p. 248.
-
8/14/2019 A Cross-cultural Study of Corporate Response
29/239
21
Although SCCT does have a limited scope of application, it can be used by
organizations when they face any of the above crisis types. SCCT is not meant to apply
to individuals such as politicians or celebrities. There are financial/legal limits to the
selection of crisis response strategies (Coombs, 2006b). SCCT recognizes that crisis
managers may be forced to use suboptimal crisis response strategies because the
organization cannot afford the financial and legal liabilities of strategies that accept full
responsibility for the crisis. At times, financial/legal constraints will prohibit an
organization from using a crisis response strategy that openly accepts responsibility. On
a related note, an organization can express compassion without accepting responsibility.
Demonstrating compassion may be a way to enhance organizational credibility, a
valuable aspect of the reputation.
On the other hand, Coombs has frequently used empirical method to examine
how an organizations reputation is impacted as a result of crisis (Coombs, 2004, 2006a).
However, communication scholars do not always use empirical approaches because of
the difficulty in controlling the uncertainty surrounding organizations in crisis. Seeger,
Sellnow and Ulmer (1998) argue that the inherent threat to the organization and its
employees may diminish respondents willingness to share information honestly on a
survey (p. 259). In addition, when relying on student populations (as Coombs often
does), comprised of neither the actual stakeholders of the organizations studied, nor
even those representative of the actual stakeholders, artificiality is introduced
(Ezzeddine, 2006, p. 48).
In sum, the stream of image restoration research or crisis response strategy has
helped establish a useful framework from which practitioners can determine the most
-
8/14/2019 A Cross-cultural Study of Corporate Response
30/239
22
appropriate crisis response type, ranging from accommodative to defensive strategy.
Specifically, they are designed to understand what strategy is relevant to be used for a
given circumstance. An organization may use one or more crisis strategies in
combination as long as they are not contradictory (Ihlen, 2002). For example, it is a
contradiction if crisis managers used deny strategies with strategies that acknowledge a
crisis has occurred. Face, image, reputation are important concepts embedded in this
line of research. However, there is little research on the role of culture in crisis response
strategies. In the next section, the concept of culture is reviewed. The importance of
cultural factors in crisis communication is addressed as well.
Crisis Communication and Culture
Research by Pauchant and Mitroff (1988) indicate a strong relationship between
an organizations overall culture and its response to crises. Sriramesh, Kim and Takasaki
(1999) have followed the line of research and described how societal culture influences
the practice of public relations in every nation and region of the world. Taylor (2000)
argues that one of the most difficult challenges for public relations in the global
marketplace will be in the area of crisis communication. She explains further that crises
are exacerbated when they occur in an international environment. Similarly, Molleda and
Quinn (2004) point out that public relations professionals practicing in more than one
country are challenged by conflicts that impact their organizations or clients activities
and reputation in more than one location at the same time. This is elaborated when a
national issue becomes international in an instant, impacting host, home and
transnational publics. In particular, nowadays the internet technology can inform their
local public about problems in different areas of the world that become a global issue.
-
8/14/2019 A Cross-cultural Study of Corporate Response
31/239
23
In short, to understand culture, we must find ways to assess and compare
cultures. There are three influential and accepted comparison points for intercultural
communication: Halls idea of context (1976), Hofstedes cultural dimensions (1980) and
Trompenaars and Hampden-Turners cultural factors (1998). The following section
explains each and relates them to the field of crisis communication.
High-Context and Low-Context Cultures
There are many different contexts which lead to differences in how and what
people communicate. Edward T. Hall (1976) proposed the concept of high versus low
context as a way of understand different cultural orientations. The difference between
high and low context cultures depends on how much meaning is found in the context
versus in the code. The code can interpret as message and context as setting or
circumstance, including the people, in which the message appeared. More specifically,
context leads to differences in how and what people communicate.
In Halls view, a high context culture is one in which people are deeply involved
with each other. As a result of intimate relationship among people, a structure of social
hierarchy exists, individual inner feelings are kept under strong self-control, and
information is widely shared through simple messages with deep meaning. The
communication styles of Asian and Arab nations, for example, are high context cultures.
In contrast, European and American communication styles are considered low context
cultures. A low-context culture is one in which people are highly individualized,
somewhat alienated, and fragmented, and there is relatively little involvement with
others (Hall, 1976, p. 39). As a consequence, social hierarchy, as well as society in
general, imposes less on individuals lives, and communication between people is more
-
8/14/2019 A Cross-cultural Study of Corporate Response
32/239
24
explicit and nonpersonal. Lustig and Koester (2006) summarize the key communication
differences between high and low context cultures as shown in Table 3.
Table 3: Characteristics of High and Low Context Cultures
High Context Cultures Low Context Cultures Covert and implicit Overt and explicit Message internalized Messages plainly coded Much nonverbal coding Details verbalized Reactions reserved Reactions on the surface Distinct ingroups and outgroups Flexible ingroups and outgroups
Strong interpersonal bonds Fragile interpersonal bonds Commitment high Commitment low Time open and flexible Time highly organized Examples of context by country:
Japan, China, Korea Examples of context by country:
Germany, USA, Great Britain, Australia
Source: Adapted from Intercultural competence: Interpersonal communicationacross cultures (p. 114), by M. W. Lustig and J. Koester, 2006, Boston: Allyn &Bacon.
Dimensions of Culture
Hofstedes Dimensions of Culture
Various researchers have suggested underlying principles or dimensions that can
be used to examine culture comparatively. The work of Geert Hofstede (1980) has been
widely used as a foundation of culture and business communication. Hofstede (1980)
defines culture as the collective programming of the mind which distinguishes members
of one human group from another. He points out cultures are built on values; values
create the collective programming. Collective programming means that people share
patterns of thinking, feeling, acting, and reacting. Thus, people from different cultures
can see and react to the same event in every different ways.
-
8/14/2019 A Cross-cultural Study of Corporate Response
33/239
25
In a study of IBM employees from around the world, Hofstede (1980) found four
dimensions of societal culture: power distance , individualism or collectivism , uncertainty
avoidance , masculinity or femininity . Later, with Bond (1988) he identified a fifth category
Confucian dynamism or long-term-short-term orientation that has its roots in Eastern
culture. These five variables are present in all cultures and the degree of their presence
influence the internal and external communication of any organization.
Hofstedes (1980) first dimension, power distance focuses on how a society deals
with the fact that people are unequal in physical and intellectual capabilities. Specifically,
power distance refers to the openness of upward communication in an organization. In a
high power distance culture, public relations practitioners may hesitate to express their
opinions to their supervisors (Taylor, 2001). The individualism versus collectivism
dimension focuses on the relationship between the individual and social group. People
with high individualistic values tend to care about self-actualization and career
progression in the organization, whereas people with collectivist values tend to value the
overall benefits to the organization more than their own individual interests (Taylor,
2001). Sriramesh, Kim, and Takasaki (1999), for example, identify the collectivism as a
major influence on Japanese public relations. The concept of wa, meaning harmony, and
amae , meaning others goodness, results in public relations efforts that create a mutual
solidarity in the organization.
Hofstedes uncertainty avoidance dimension measures the extent to which
different cultures socialize their members into accepting ambiguous situations and
tolerating uncertainty. There tend to be more written rules, regulations, and stress in high
uncertainty avoidance culture. Basically, humans have used technology (particularly
-
8/14/2019 A Cross-cultural Study of Corporate Response
34/239
26
automation), rites and rituals (a facet of corporate culture), and formalization (also an
aspect of corporate culture) to cope with ambiguity in organization (Sriramesh, Kim, &
Takasaki, 1999, p. 275). Nations that have high uncertainty avoidance are not tolerant of
risk or crisis. Taylor (2001) suggests that organizations that operate in high uncertainty
avoidance nations must recognize that situations that may appear to be low risk may
actually be perceived to be a crisis (p. 77).
Masculinity versus femininity dimension looks at the relationship between gender
and work roles. In masculine cultures, sex roles are distinguished and traditional
masculine values, such as achievement and the effective exercise of power,
determined cultural ideals. Finally, Hofstedes fifth and newest dimension, Confucian
dynamism or time-orientation dimension, refers to a persons point of reference about life
and work. Cultures that promote a long-term orientation toward life admire thriftiness,
perseverance, and the desire for orderly relationships with others.
Trompenaars and Hampden-Turners Cultural Factors
In 1998, Trompenaars and Hampden-Turner incorporated some of Hofstedes
dimensions, but used seven different terms to describe culture:
1. Universalism versus particularism
Universalist societies emphasize standards and obedience to the rules; particularist
societies are those in which particular circumstances and relationships are stronger
than abstract rules.
2. Individualism versus communitarianism
Individualism is about rights of the individual. It seeks to let each person grow or fail
on their own, and sees group-focus as denuding the individual of their inalienable
-
8/14/2019 A Cross-cultural Study of Corporate Response
35/239
27
rights. Communitarianism is about the rights of the group or society. It seeks to put
the family, group, company and country before the individual.
3. Neutral versus affective orientation
In emotionally neutral cultures, one carefully controls emotions. In cultures with an
affective orientation, people freely express their emotions.
4. Specific versus diffuse
People from a specific oriented culture tend to analyze elements of a situation
separately, viewing the whole as the sum of its parts. People from a diffuse culture
tend to see all elements of a situation as interwoven, viewing the diffuse whole as
more than simply the sum of its parts.
5. Achievement versus ascription:
Achievement oriented societies accord status to people on the basis of their
performance only. Ascription oriented societies also attribute status based on age,
class, gender, education, etc.
6. Internal versus external control orientation
In cultures with an internal control orientation, people tend to believe that they can
dominate their environment. In cultures with an external control orientation, people
are inclined to adapt to external forces instead of resisting them.
7. Time orientation
Cultures which focus on time give relevance to the past, present, and future and their
short versus long-term orientation.
Trompenaars and Hampden-Turner (1998) see culture fundamentally as the way
in which groups of people solve problems and reconcile dilemmas. Thus, they propose
-
8/14/2019 A Cross-cultural Study of Corporate Response
36/239
28
that value orientations represent a cultural groups solution to fundamental human
dilemmas related to living together and interacting with the environment. While Hofstede
talks about cultural difference in terms of a sort of psycho-emotional programming,
Trompenaars and Hampden-Turner attempt to identify the varying internal logics used by
differential groups to explain their value choices (Shaules, 2007, p. 53). Table 4 shows
the comparison of Hofstedes and Trompenaars and Hampden-Turners cultural
dimensions.
Table 4: Comparison of Hofstedes and Trompenaars and Hampden-TurnersDimensions
Hofstede (1980) Trompenaars and Hampden-Turner (1998) Individualism-Collectivism Individualism vs. Communitarianism Uncertainty Avoidance Universal vs. Particular Uncertainty Avoidance Neutral vs. Affective Long-term Orientation Time Orientation Masculinity vs. Femininity Internal vs. External control Power Distance Specific vs. Diffuse Power Distance Achievement vs. Ascription
Cultural Issues in Crisis Communication
Coca Cola Tainting Crisis in Europe
Taylor (2000) applies the concept of uncertainty avoidance and power distance to
examine the case of Coca Colas tainting crisis in Europe. The case examined the crisis
faced by Coca Cola in Belgium on June 14, 1999, in which school children fell ill after
consuming its products. Coca Cola had to recall about 30 million cans and bottles, the
largest ever product recall in its 113-year history. The crisis cost the company about
$200 million (Mitroff, 2001). The Belgian government instructed Coca Cola to withdraw
all of its products from the market and prohibited any distribution of related Coke
products until government approval was obtained. Later, the governments of Spain and
-
8/14/2019 A Cross-cultural Study of Corporate Response
37/239
29
France also banned the sale of Coca Cola to safeguard the health of their publics. Other
nations, however, such as Denmark, Norway, and Sweden, did not ban sales of coke
products.
Taylor (2000) notes that uncertainty avoidance and power distance are most
applicable and affect an organizations communication and public response to crisis in
two ways. First, organizations from low power distance and low uncertain avoidance
cultures may not see a need to communicate to the public about the situation. On the
other hand, organizations from high power distance and high uncertainty avoidance
cultures may directly communicate with governments during a crisis to secure their
support. Second, the fact that power distance and uncertainty avoidance interact
seriously affects how the public responds to the crisis. People who live in high
uncertainty avoidance nations seek rules, rituals, and laws to guide behaviors, and in
high power distance nations, people respect those who hold power. When these two
dimensions interact, it has serious implications for crisis public relations (Taylor, 2000).
The tainted Coca Cola crisis case showed that this multinational organization
misjudged its publics on a variety of cultural dimensions. Belgium, France and Spain are
high power distance and high uncertainty avoidance nations. The cultures of these three
countries do not tolerate an incident that creates risk, ambiguity, and conflict. However,
Coca Cola failed to communicate to each government during the crisis. The action was
initially taken by Belgiums Minister of Health after the Coca Cola failed to respond in a
timely and appropriate manner. Coco Cola delayed its response because it believed that
there was nothing technically wrong and that the children and their parents were
overreacting to the situation (Mitroff, 2001, p. 19). Taylor (2000) argues that it was Coca
-
8/14/2019 A Cross-cultural Study of Corporate Response
38/239
30
Colas CEOs absence, in both comment and presence that directly affronted the high
power distance nations during this crisis. The company was not condemned for the
tainting situation. It was criticized because the company remained silent for over a week
after the first illnesses. In contrast, more risk-tolerant nations including Sweden, Norway
and Denmark appear to be more patient and if the Coca Cola crisis is any indication,
more forgiving of mistakes (Taylor, 2000).
Airl ine Crash Crises
Drawing upon Hofstedes five dimensions of culture, Haruta and Hallahan (2003)
contrast the organizational responses to two major airline crashes that occurred in 1985
in Japan and the United States. The study reveals significant cultural differences that
affect communication practices by Japan Air Lines Flight 123 and Delta Air Lines Flight
191. Haruta and Hallahan (2003) point out that both airlines were obviously striving for
the same goal of obtaining control over and alleviation of the crisis situation. However,
each company followed a different set of protocols that had been thought to meet the
expectations of their own corporate and national culture.
In these two airline crashes, the study shows significant differences in the use of
apology, media strategies, and litigation concerns (Haruta & Hallahan, 2003). Most
importantly, the use of apology reveals the greatest contrast between the two societies.
While JAL President Takagi was highly visible and repeatedly made public apologies to
the victims families and the survivors, neither the CEO nor the president of Delta ever
made a public apology. Strong Confucianism in the Japanese culture stress virtue. In this
case, virtue dictated that JAL to offer an apology. Haruta and Hallahan (2003)
emphasize when an organization makes a mistake that disrupts society, the large power
-
8/14/2019 A Cross-cultural Study of Corporate Response
39/239
31
distance in Japanese culture also demands that the person at the top of the
organizations hierarchy take the most responsibility. Reflecting the highly masculine
culture in Japan, men are expected to take control of situations. People in a society that
tends toward uncertainty avoidance also demand decisive leadership. In contrast, in the
Delta crash case, the US airline never literally said sorry. It seems that making a public
apology was neither desirable for Delta airline because of litigation concerns nor
expected by the public. The findings suggest that cultural sensitivity is a key to
developing a successful crisis communication plan in the airline industry.
South Asia Financial Crisis
Based on Trompenaars and Hampden-Turners framework (1998), PrudHomme
(1998) analyzes the 1997 Asia financial crisis for understanding the relationship between
culture and economic behavior. He argues that there are large cultural differences
between the Western world and East Asia, but also within East Asia itself.
Cultural similarities resulted in the crisis being felt similarly all over East Asia, but the differences enabled some nations to deal with it moresuccessfully than others. Hong Kong, Singapore, China and Taiwan haveemerged as relatively the best survivors, while Indonesia, Korea andThailand needed IMF support packages and the near term outlook forJapan is still deteriorating, unless the government there introducesmeasures to address the financial sector problem. (PrudHomme, 1998, p.27)
PrudHomme (1998) explains that concealment of financial losses underlines
much of the crisis in the Japanese financial sector. The Japanese have a special word
for practice of hiding losses, tobashi . For example, at Yamaichi Securities, the first
financial institute to collapse during the crisis, losses of US$2 billion were hidden for
seven years. Tobashi becomes a dangerous custom when the distinct Japanese
-
8/14/2019 A Cross-cultural Study of Corporate Response
40/239
32
cultural values of particularism and external control orientation are taken to the extreme
(PrudHomme, 1998, p. 27). To some extent, this reflects that the Japanese maintain
harmony and discourage self-assertions. As a result, warning and negative comments
against the organization are perceived as violating harmonization. Not surprisingly,
problems are often hidden, until the situation explodes. PrudHomme (1998)
acknowledges that the Hong Kong and Singapore systems seem to be reasonably stable
and robust, perhaps because they integrate Western values with East Asian values. This
integration leads to a combination of flexibility and focus, to transparency, and to fast
response and long-term strategies.
Given these examples, culture does matter and plays a major role in response to
the crisis situation. However, crisis communication theory is largely rooted in the
ethnocentric lens and based on Western (mostly American) theorizing about managing
communication in times of crisis. As a result of its origins in American thought, little
attention has been paid to the cross-cultural aspects of crisis communication. However,
the American theory might not be extensive enough to address all situations and explain
worldwide cultural variances. More specifically, ethnocentric assumptions and theories
invariably reflect biases of the society in which those assumptions originate, and might
not necessarily be applicable across cultures (Vercic, L. Grunig, & J. Grunig, 1996).
Therefore, there is a need for cross-cultural study to understand the cultural dimensions
of crisis communication.
Although organizational culture is an important factor in crisis communication, this
study emphasizes societal culture as the primary focus in these three cases.
Organizational culture involves the internal dimensions of an organization, including
-
8/14/2019 A Cross-cultural Study of Corporate Response
41/239
33
values, norms, traditions, symbols and communication processes, among other factors.
An organizations individual culture obviously has some relationship to the societal
culture within which it is embedded. Moreover, organizational culture will affect how the
organization responds to a crisis and the organizational culture will be affected by crises
the organization experiences.
Research Questions
Based on earlier discussion, this study seeks to understand how the
organizational leaders make their public statements during the corporate crisis and
explore the cultural differences in their crisis communication strategies. Simply put, this
study focuses on two areas of communication: 1) corporate communication managing in
times of crisis on the cases of Martha Stewart, BenQ and HIH, and 2) the cultural
variances shown in crisis communication contexts. Specifically, this study is guided by
the following three questions:
RQ1: How did Martha Stewart, BenQ and HIH manage communication during
their corporate crisis?
RQ2: How were these corporate communication strategies received and
interpreted by the stakeholders?
RQ3: How did their corporate communication strategies reflect different cultural
factors?
These research questions are proposed based on the previous theoretical
discussion and literature review. The first research question explores how Martha
Stewart, BenQ and HIH manage their organizational crisis situation through
communication. As such, this study first reviews what communication strategies Martha
-
8/14/2019 A Cross-cultural Study of Corporate Response
42/239
34
Stewart, BenQ and HIH use in times of corporate crisis. Basically, image restoration
strategies are designed to help the organization shift the blame, reduce responsibility,
avoid damage to the companys reputation and get past the crisis as quickly as possible
(Ulmer, Sellnow, & Seeger, 2007). Moreover, organizations use the impression
management strategies, which Coombs (2007a) terms crisis response strategies , to
repair reputational damage from a crisis. Coombs (2007a) points out crises threaten to
damage reputations because a crisis creates negative impressions of the organization.
Put in plain terms, reputations are widely recognized as a valuable, intangible asset. In
essence, reputation management attempts to build and maintain a favorable perception
of an organization among its stakeholders (Coombs, 2007a). Poorly managed issues,
imposing excessive risk to others, and callous responses to crisis damage an
organizations reputation. Similarly, Wilcox and Cameron (2006) affirm when this
damage is extreme, image restoration strategies may help (p. 246). Hence, Coombss
crisis response strategies (2007a) are utilized to examine how strategically these three
companies disseminate their information to various stakeholders during the corporate
crisis.
The second research question further explores how these strategies are received
and interpreted by the stakeholders of these three companies. The question tries to find
out whether these strategies work out or not. Furthermore, how do these strategies
impact on corporate performance (e.g., significant decline in stakeholder trust and stock
price)? How do the news media report these crisis events?
The third question examines the cultural differences of organizational responses
following corporate leaders misconduct in the U.S., Taiwan and Australia. There may be
-
8/14/2019 A Cross-cultural Study of Corporate Response
43/239
35
some generic similarities in managing basic crisis response procedure across cultures.
However, practice is expected to be influenced by innumerable cultural factors. Under
certain circumstances, the crisis responses need to be more culturally conscious. As
mentioned earlier, culture is recognized as having an important effect on crisis
communication. To be precise, this question explores the crisis response strategies and
examines crisis communication in a context outside of American culture.
Summary
This chapter reviewed the fundamental concepts related to crisis communication.
They included the definition of crisis communication, type of crisis and communication
perspectives to crisis research. In particular, three crisis communication theories
relevant to the current study, corporate apologia, image restoration, and situational crisis
communication theory were addressed. However, existing theoretical frameworks of
crisis communication may not be adequate in explaining the complex settings and
dynamic mechanisms in international crisis communication. Thus, the importance of
cultural factors in crisis communication is highlighted. The goal of this is to illustrate that
one size may not fit all in the different cultural contexts of organizational crisis. Three
research questions proposed in each case allow for an examination of these issues in
more detail. The next chapter provides more detail about the rationale for using a case
study method and explains in detail the data collection and analysis procedures.
-
8/14/2019 A Cross-cultural Study of Corporate Response
44/239
36
CHAPTER 3
METHOD
This chapter provides a rationale and description of the case study method and
demonstrates its applicability in the field of crisis communication. Specifically, this
chapter details the three-case study methodology which is uniquely suited for
highlighting similarities and differences in crisis response strategies and is used to
answer the proposed three questions regarding how organizations manage their crisis
communication. This chapter also describes the sources of data and explains the
procedures for analysis.
Case Study as Method
Davey (1991) defines case study research as a method that involves an in-depth,
longitudinal examination of single instance or event. It is a systematic way of looking at
what is happening, collecting data, analyzing information, and reporting the results. Yin
(1994) offers another description of the case study as an empirical inquiry that uses
multiple sources of evidence to investigate a contemporary phenomenon within its
real-life context, in which the boundaries between the phenomenon and its context are
not clearly evident.
Stacks (2002) mentions that an obvious strength of the case study method is that
what is being studied has already occurred. The case study looks back in an attempt to
explain through the use of direct observation, participatory informal research, and
secondary research of what and why something occurs and how that outcome is
managed. The case study, then, provides detail only found in hindsight and presents it in
such a way as to establish what strategies work and why. Thus, the case study, for
-
8/14/2019 A Cross-cultural Study of Corporate Response
45/239
37
example, in public relations can examine the way the problem is stated and the initial
research gathering stages based on environmental scanning and monitoring; the
strategic communication planning based on stated objectives; the messages
themselves, the actual outputs; and the evaluation of the entire program or campaign
(Stacks, 2002). Merriam (1998) emphasizes that the advantage of the case study is its
ability to discover new relationships, concepts, and understanding, rather than
verification of predetermined hypotheses.
An objective of case study research is to generate knowledge of the particular.
Schwandt (2001) explains that case study research seeks to discern and pursue the
understanding of issues intrinsic to the case. Schwandt states, however, that cases can
be chosen and studied because they are thought to be instrumentally useful in furthering
the understanding of a particular problem, issue, and concept. According to Gomm,
Hammersley, and Foster (2000), in-depth research of specific instances in case studies
can actually show causal processes in context, which allows researchers to see which
theoretical perspectives provide the best explanations. Wimmer and Dominick (2006)
suggest case study research is most valuable when the researcher seeks to obtain a
wealth of information about the research topic. Case study methodology is not only at the
exploratory stage of research but also gathering descriptive and explanatory data. The
case study method also affords the researcher the ability to deal with a wide spectrum of
evidence.
Rationale for the Case Study Method in Crisis Communication
Crisis communication inquiries have traditionally been conducted using
naturalistic and critical approaches (Seeger, Sellnow & Ulmer, 1998). Naturalistic
-
8/14/2019 A Cross-cultural Study of Corporate Response
46/239
38
research in crisis communication can be categorized as either frequency-based or
descriptive/exploratory. The frequency-based approaches have included surveys and
content analyses and usually involve only one audience group. According to Seeger,
Sellnow and Ulmer (1998), when a crisis is still unfolding or in the process of being
managed, the practicality of administering and responding to a survey is often neither
practical nor desirable. As such, case study analysis provides the crisis researcher with
the opportunity to conduct descriptive and exploratory inquiries (Seeger, Sellnow, &
Ulmer, 1998). Of all the methods, those that are descriptive/exploratory, like the case
study method, tend to be best suited for the study of the messages addressed to
multiple stakeholders in a crisis situation (Seeger, Sellnow, & Ulmer, 1998, p. 264).
In other words, case study allows researchers to explore different outcomes of
general processes suggested by theories depending on different crisis contexts, which
suits crisis communication research that seeks application of theories to practice. In
essence, it is not surprising that a growing number of crisis communication studies have
used the case study approach (Benoit, 1995b; Benoit & Brinson, 1994; Fishman, 1999;
Hearit, 1994; Kauffman, 2005; Seeger, & Ulmer, 2002; Seeger, & Ulmer, 2003; Taylor,
2000).
Furthermore, the case study method draws on thick descriptions without
disrupting the organization, victims of the crisis or the context. Ezzeddine (2006) also
states that this allows researchers to examine a crisis even after much time has passed
since the actual events. These historical approaches have the added benefit of allowing
for an examination of the crisis events and their impact on multiple stakeholders over an
extended period of time (Ezzeddine, 2006, p. 49).
-
8/14/2019 A Cross-cultural Study of Corporate Response
47/239
39
Multiple Case Selection
Yin (1994) indicates that the evidence from multiple cases is often considered
more compelling, and the overall study is therefore regarded as being more robust (p.
45). In this study, three cases, Martha Stewart, BenQ and HIH, are explored to examine
the crisis communication practices among these organizations. Daymon and Holloway
(2002) argue that the use of multiple case studies enables some measure of
generalization to a wider universe. It is thus necessary to look closely at the individual
case in order to discover what is essentially unique about them. To effectively analyze
the data from the multiple case studies, the cross-case analysis technique is also
employed (Merriam, 1998). Given the interest in cross-cultural studies, findings based on
three countries are preferable to findings based on one because they encompass more
of the cultural variety. Of particular interest is the different cultural variation from one
case to the other. Cross-case analysis compares each of the cases in order to determine
underlying similarities and differences. The distinctive feature then can be identified by
evaluating similarities and contrast between cases. More clearly, cross-case analysis
strengthens the precision, validity and stability of the research findings.
The cases for this study Martha Stewart, BenQ, and HIH were selected
because of their exemplary nature. First, these three cases are analogous each involving
a similar crisis but within a different situation. The use of similar cases for analysis can
provide larger contexts for understanding the specific circumstances of events. A more
robust study can be constructed by gaining insights into the situation and phenomenon
from similar examples. Second, these three cases have involved corporate executive
wrongdoings. The corporate misdeeds have decreased stakeholder confidence and
-
8/14/2019 A Cross-cultural Study of Corporate Response
48/239
40
raised the concern of corporate governance problems. Third, all of three executives are
strong business leaders in their industry. Martha Stewart, K. Y. Lee and Ray Williams,
through their unethical misconduct, placed these companies in crisis. In a sense, their
personalities help shape the personalities of their companies brand. When personal
reputation is impaired, as a result, corporate reputation and financial outcomes might be
unavoidably and seriously undermined. Fourth, crisis communication studies are
predominantly American-based. Through the comparative analysis of these cases from
different countries, this study can shed some light on the importance of considering
culture in crisis communication and point to a need for international crisis communication
research and practice.
In short, communication scholars often use the case study method in order to
analyze individual and corporate communication strategies. For this study, a
multiple-case study approach allows the research to perform a more complete and
compelling analysis. Furthermore, the three research questions designed and guided for
this study seek to increase the understanding of corporate leaders crisis response
strategies and cultural variances in crisis communication.
Sources of Data
Generally speaking, the case study is flexible and unobtrusive in that data can be
obtained both from the organization and from the public domain. One of the
characteristics of the case study is the triangulation of data such as collecting evidence
from multiple sources (Yin, 1994). According to Yin (1994), the six sources of evidence
that are typically associated with the case study include documents, archival records,
interviews, direct observation, participant-observation, and physical artifacts.
-
8/14/2019 A Cross-cultural Study of Corporate Response
49/239
41
For this study, texts documenting Stewart, BenQ and HIHs discourse in response
to incidents that threatened their image were collected from multiple sources.
Specifically, this study employs predominantly two types of data: documents and archival
records. It begins with gathering data and finding facts related to cases and defining the
specific tasks. The actions and communication strategies used by Martha Stewart,
BenQ, and HIH are reviewed with information from their corporate websites, press
releases and media coverage. Martha Stewart, BenQ and HIH are all publicly traded
companies. A look at the organizational archival records (e.g., stock prices, sales and
annual reports) and official government records (e.g., court records and commission
reports) contribute to understand the impact of corporate scandals have had on the
companies financial performance and their stakeholders.
Selection of News Art icles
Traditionally, media articles are considered a secondary source of data which
illustrate how the organization is presented in the public discourse. To some degree,
these data reflect the attitudes and interpretations of the media and the perceptions of
the general public. The three cases in this study created a crisis on a national scale. As a
result of the national nature, the data were focused on reports from the nations largest
circulation national newspapers. More specifically, these sources were chosen because
of their interest in the case and the amount of coverage on the crisis.
In this study, the major criterion on organizational misconduct was that news had
to focus on either the corporate executive or on the organization itself. The selected
news article data were used to explore how the major media told news stories about the
crisis situation of Martha Stewart, BenQ and HIH. Therefore, the contents of the
-
8/14/2019 A Cross-cultural Study of Corporate Response
50/239
42
collected news articles were qualitatively analyzed to find the major concepts embedded
in the news coverage and the attitudes of news narration.
The media coverage on the Martha Stewart case was found through Lexis Nexis
Academic keyword search of Martha Stewart & insider trading in The New York Times
and The Washington Post. For the purpose of the valance of news narration in this study,
the period of analysis covered two time frames (during the crisis and post-crisis). The
first time frame started from the trading day to the verdict, beginning in December, 2001
and running through March, 2004. The second time frame started from the day of
sentencing to her release from prison, beginning on July 16, 2004 and running through
March 2005.
Similarly, the keyword search of the BenQ case was BenQ & insider trading in
the two major native language newspapers: The China Times and The United Daily
News. The other two English newspapers in Taiwan, The Taipei Times and The China
Post were also included. The period of analysis covered a five-month period, starting
from the day of the investigation to the indictment of five executives, beginning on March
14, 2007 and running through August 21, 2007.
For the case of HIH, the keyword search was HIH collapse in the two major
Australian national newspapers: The Australian and The Australian Financial Review .
The first time frame started in September, 2000, when the financial difficulties began in
the market and ran through August, 2001. The analysis of the second time frame began
with the post-collapse developments, such as the HIH Royal Commission Inquiry by
Justice Neville Owen in 2003 and the sentencing to jail of the two HIH major directors,
Ray Williams and Rodney Adler in 2005, through their release from prison in 2008.
-
8/14/2019 A Cross-cultural Study of Corporate Response
51/239
43
In summary, three representative cases namely - Martha Stewart, BenQ and HIH
were chosen for this study. They provided a larger context for understanding specific
circumstances of corporate communication in times of crisis. Documents and archival
records were the major sources of evidence. More specifically, data were collected from
their corporate websites, press releases, media coverage, organizational archival
records and official government records.
Unit of Analysis
According to Babbie (2007), units of analysis, are those things we examine in
order to create summary descriptions of all such units and to explain differences among
them. In other words, units of analysis in a multiple case refer to the phenomena being
studied. As a general guide, the definition of the unit of analysis is related to the way the
initial research questions have been defined (Yin, 1994, p. 22). Since the research
questions of this study were related to crisis communication strategies, the unit of
analysis for this study was the corporate response to stakeholders during and post crisis.
The unit of analysis provided a message-centered technique for understanding how a
company manages its corporate communication in times of crisis. Thus, the strategies
were apparent through the types of evidence. As noted earlier, major theoretical
frameworks such as crisis communication and intercultural communication served to
explain how crisis response strategies are similar and different in these three cases.
Theory and Case Research
This study attempted to offer a rich overview of data, using both individual case
and comparative analysis. Analyzing case study evidence is particularly difficult since
techniques and procedures have not been well defined in the past (Yin, 1994). Yin
-
8/14/2019 A Cross-cultural Study of Corporate Response
52/239