Documente Academic
Documente Profesional
Documente Cultură
Graduate School of Wayne State University, Detroit, Michigan in partial fulfillment of the requirements for the degree of
Advisor
Date
3344308
2009
3344308
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
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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.
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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......173 REFERENCES.207 ABSTRACT...229 AUTOBIOGRAPHICAL STATEMENT..231
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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
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
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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;
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?
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
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
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 aNd 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
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
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 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
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
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
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.
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
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.
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 act Shift the blame Act performed by other Evasion of Responsibility Provocation Responded to act of another Defeasibility Lack of information or ability Accident Act was a mishap Good intentions Meant well in act Reducing Offensiveness of Event Bolstering Stress good traits Minimization Act not serious Differentiation Act less offensive Transcendence More important consideration Attack accuser Reduce credibility of accuser Compensation 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
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
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
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
18 there is no problem, reassure the stakeholders that the organization can generate future revenues, and/or take action to restore normal operations.
Defensive
Accommodative
attack accuser denial excuse justification ingratiation corrective full apology action
malevolence
accidents misdeeds
Source: From Ongoing crisis communication: Planning, managing and responding (p. 124), by W. T. Coombs, 1999, Thousand Oaks, CA: Sage Publications.
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
19 and computers programmers. In fact, Intel mismanaged the handling of its crisis communication. First, it did not disclose to the public the information about the Pentium flaw when they initially realized there was a problem. Then when the problem finally did come out into the open, they downplayed it instead of helping the users who had purchased the flawed chips. Only after considerable damage had been done to Intels reputation and IBM had suspended orders for the chip did Intel take corrective action to replace the chips, and Andy Grove, Intels president, issued a full apology. According to Coombs (2006a), SCCT is offered as a theory-based, empirically tested method for selecting crisis response strategies. SCCT is composed of three core elements: 1) the crisis situation, 2) crisis response strategies, and 3) a system for matching the crisis situation and crisis response strategies. SCCT evolves from converging lines of communication research (e.g., Hearit, 1994; Benoit, 1995a) which state that the effectiveness of communication strategies is dependent on characteristics of the situation (Heath & Coombs, 2006). This means that the situation helps to determine an appropriate response. SCCT shares the belief in the power of communication with image restoration theory (Benoit, 1995a). However, Coombs (2007b) argues that image restoration theory offers no conceptual links between the crisis response strategies and elements of the crisis situation. SCCT draws upon the strategies articulated in image restoration theory by integrating those strategies into a system that predicts how stakeholders should react to the crisis and the crisis response strategies used to manage the crisis (Coombs, 2007b, p. 171). SCCT indicates that the way to protect the reputational resource is by selecting the crisis response strategies that best fit the reputational threat presented by the crisis.
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.
Secondary Crisis Response Strategies Explanation Example The organization tells stakeholders The organization restated its Reminder about its past good works. past good work and improved its recent work. Crisis manager praises The organization thanked stakeholders and/or reminds them stakeholders for their help. Bolstering Ingratiation of past good works by the organization. Crisis managers remind Victimage stakeholders that the organization is a victim of the crisis too. Source: Adapted from The protective powers of crisis response strategies: Managing reputational assets during a crisis, 2006, Journal of Promotion Management, 12, p. 248. Strategies
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
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.
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
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 Covert and implicit Message internalized Much nonverbal coding Reactions reserved Distinct ingroups and outgroups Strong interpersonal bonds Commitment high Time open and flexible Examples of context by country: Japan, China, Korea Low Context Cultures Overt and explicit Messages plainly coded Details verbalized Reactions on the surface Flexible ingroups and outgroups Fragile interpersonal bonds Commitment low Time highly organized Examples of context by country: Germany, USA, Great Britain, Australia