Critical analysis of stakeholder theory and corporate social responsibility in. social media

Transcription

1 Stream 15 Sustainability and social issues in management Competitive session Critical analysis of stakeholder theory and corporate social responsibility in social media Tom Schermer School of Communication and Arts, University of Queensland, Brisbane, Australia Associate Professor Bernard McKenna UQ Business School, University of Queensland, Brisbane, Australia 2

2 Stream 15 Sustainability and social issues in management Competitive session Critical analysis of stakeholder theory and corporate social responsibility applied in social media ABSTRACT: This paper analyses the effectiveness of the stakeholder model used in corporate social responsibility and corporate governance when applied in social media. The two recent social media based attacks on Halal Certification and Coal Seam Gas in Australia are used as case studies with a view to identify the salience of contemporary social media based external stakeholders. The activists groups are reviewed against a criterion of legitimacy, focussing on political, corporate and societal legitimacy, and stakeholder impact. Findings indicate that not all social media stakeholders should be treated equally, and suggestions are made for a revision of the stakeholder model used in corporate social responsibility and corporate governance. Keywords: media and public relations, stakeholder management, corporate social responsibility, governance. The proliferation of social media use and engagement by corporations is being closely followed by an increasing volume of academic research seeking to understand and manage these new media platforms (Johnston, 2015; Coombs & Holladay, 2014). The near exponential increase in social media use in society has left corporations inadequately prepared to engage with this new medium (Bruce & Soloman, 2013). Literature concerned with the development of corporate governance (Johnston, 2015) and corporate social responsibility systems is growing (Tihanyi, Graffin, & George, 2014); however some fundamental principles in developing such systems must be further investigated to ensure these remain appropriate and effective for use in the new media. In particular, stakeholder management needs to be addressed rigorously to fit with this new media model. The following section discusses the disconnect between existing models of communication in terms stakeholder theory and corporate social responsibility 3

3 Stakeholder theory and social media The most popular method of identifying stakeholders today is still Freeman s (1984) definition that a stakeholder is anyone can be affected by the corporation and anyone who can affect the corporation (Paul, 2015; Mitchell, Agle, & Wood, 1997). Stakeholder theory as developed Freeman (1984) was rapidly accepted and embraced by business practitioners and scholars alike, and the model has been employed in every type of industry (Freeman, 2004; Mitchell, Agle, & Wood, 1997). Consequently, stakeholder theory has arguably been instrumental in developing the contemporary application of CSR practices (Freeman, 2004). Despite Freeman s (Freeman et al, 2010; Freeman, 2004) later efforts to promote a more advanced stakeholder model, contemporary applications of stakeholder theory have not significantly evolved to be more pragmatic in identifying a greater diversity of stakeholders. When Freeman developed stakeholder theory in 1984, the principles for identifying a stakeholder meant that the media could be identified as a stakeholder to companies (Freeman, 1984). Subsequently in the social modern media environment any person or group can act as a media outlet, and following those methods, can thus be identified similar as a media outlet. Hence the methods and systems for dealing with the original version of media are no longer suitable (Coombs & Holladay, 2014). For instance, in the 1980 s the news media (in its fourth estate role) could generally be relied upon to have certain orientations towards accountability, and sections of quality media could be relied upon to employ certain standards. Although for news media organisations acting in the social media environment the traditional expectations of accountability and standards are still applied, those standards cannot be expected of all social media participants. Pre-existing corporate stakeholder and media communications models do not take into account the user generated content of social media (Bruce & Soloman, 2013). Thus the recent hurried and widespread uptake by corporations to establish a social media presence has left many corporations unprepared to deal with these previously unimagined stakeholder complexities (Bruce & Soloman, 2013) and stakeholder subgroups (Coombs & Holladay, 2014). For instance, a single person can now qualify as a stakeholder as an end-product consumer, media consumer, and as a media entity. 4

4 Corporate social responsibility and stakeholder theory In the traditional news media environment the corporation enjoyed the benefits of disproportionate economic and other resources to ensure it has greater influence in communication channels (Bruce & Soloman, 2013), including the corporation s ability to communicate it s corporate social responsibility (CSR) strategies and achievements (Tench & Jones, 2015). Nearly a century has passed since Dean Donham from the Harvard Graduate School of Business Administration claimed The only way to defend capitalism is through leadership which accepts social responsibility and meets the sound needs of the great majority of our people (Dodd, 1932, p. 1155). The manner in which firms practise CSR is directly influenced by corporate governance. The OECD defines corporate governance as Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation such as the board, managers, shareholders and other stakeholders and lays down the rules and procedures for decision-making (OECD, 2004). Hence corporate policies, frameworks, and methods for CSR and corporate governance are interrelated in terms of stakeholder practices, rights and responsibilities. The concept of CSR has evolved and become more refined during the last century. A contemporary view of CSR, developed through consensus of academics and practitioners for the International Standards Organisation, determined that The objective of social responsibility is to contribute to a sustainable environment (International Organization for Standardization, 2010, p. 3), which is facilitated through companies deploying social and environmental policies that go beyond their formal legal duties and potentially beyond their goal of maximising profits to their shareholders (Shamir, 2010, p. 532). Advocacy of CSR has gained momentum during recent decades (Freeman, Harrison, Wicks, Parmar, & DeColle, 2010), and CSR practices are increasingly employed by corporations (Shamir, 2010) in pre-emptive attempts to avoid governments legislating mandatory CSR practices (Camilleri, 2015). Through academic, industry, and government consultation, the International Standards Organisation recently developed ISO26000 as a guide for corporate social responsibility practices (International Organization for Standardization, 2010). ISO26000 guides corporations to manage 5

5 stakeholders and identifies six stakeholder focused subjects. Namely; human rights, community involvement and development, consumer issues, fair operating practices, the environment and labour practices (International Organization for Standardization, 2010). Corporate social responsibility should be practiced following the two fundamental principles of recognising social responsibility and stakeholder identification and engagement (International Organization for Standardization, 2010, p. 14). The stakeholder groups represented in ISO26000 are readily identifiable through the application of Freeman s (1984) stakeholder theory. Representation in social media versus traditional corporate environment Applying the popular concept of stakeholder theory in corporate social responsibility is not congruent with the hybrid nature of social media. Because social media is by nature founded in the public domain, each entity, be it a large company or single person, is represented individually and with equal voice as any other entity (Bruce & Soloman, 2013). This contrasts with the traditional disparity in how individuals and larger companies and organisations are represented in other society and media. For instance, the physical presence of a large corporation in traditional media is often congruent with the economic power of that organisation. In the social media environment, each participant, be it a large corporation or individual person, has the same authority, rights and limitations (Bruce & Soloman, 2013). Despite this, often the corporate social responsibility and corporate governance methods employed in the traditional news media are directly employed in social media without updating those corporate social responsibility and corporate governance systems and methods to reflect the new environment (Sora, Soo-Yeon, & Sung, 2014). Although those corporate governance methods for engaging and valuing stakeholder contributions in the traditional platforms have been successful, they appear to be unsuitable for dealing with the dynamic, fast moving, and sometimes anonymous environment of social media (Johnston, 2015; Coombs & Holladay, 2014; Sora, Soo-Yeon, & Sung, 2014). The hybrid nature of social media, as a tool for information sending and receiving with a large numbers of participants, places it outside the parameters of traditional information distribution services (Bruce & Soloman, 2013). This unique aspect of information distribution not only challenges the traditional information distribution models of news media, but 6

6 also the accountability aspect that was relied upon in the traditional news media. Traditional news media was, and still is, accountable to the owners of the news media organisation, news industry ethics associations, government legislation, and civil actions such as defamation. In contrast, social media users are not accountable to anyone, and through anonymity, such as fake social media accounts (Tench & Jones, 2015), can more easily avoid defamation claims. The social media model places information dissemination into the hands of anyone without any requirement of accuracy, media ethics, or accountability (Bruce & Soloman, 2013). Hence social media can and does carry with it a greater risk of spreading unreliable and incorrect information. Recent examples of unreliable social media ranges from the hacked AFP twitter account stating the White House was attacked (Moore & Roberts, 2013), to claims of riots in a London burger restaurant (Proctor, Vis, & Voss, 2011). The implications that follow from such lack of accountability and responsibility, combined with the potential of an individual or small interest group effectively developing a greater social media audience than a corporation, situates the traditional methods of stakeholder engagement as an outdated and ineffective model. Further compounding stakeholder management issues, throughout the last decade collective action groups have formed on social media, with some of these groups achieving significant success in furthering the development of their respective causes (GetUp Australia, 2015; Shirky, 2011). Such successes inspired a proliferation of social media action groups seeking to influence social, economic and political agendas in corporations and governments alike (Shirky, 2011). These implications for stakeholder theory as employed in social media for corporate social responsibility and corporate governance, suggest that the existing models are no longer fitting. Mitchell, Agle, & Wood (1997) proposed a new model of stakeholder management whereby stakeholder salience could be catagorised on the basis of urgency, legitimacy and power. Their model, when applied in a rudimentary form, is more than adequate for illustrating the significant differences between social media activist groups when the prima facie attributes of the social media groups appear similar. More recent studies have focussed only on the legitmacy of stakeholders as a means improve stakeholder management (Tihanyi, Graffin, & George, 2014). To exemplify the 7

7 shortfalls of these models, the concept of legitimacy is here employed to distinguish the complexities of corporate social responsibility in stakeholder management through social media. METHOD Activism appears to have found a nurturing milieu in social media. Consequently, activism in social media offers a large array of appropriate case studies. For the purpose of reducing cultural impacts (Williams & Zinkin, 2008), two case studies were selected from the same geographical location, northern New South Wales, Australia. These being: the anti-halal certification of food products and the anti-csg (Coal Seam Gas) social activists. Although both groups operate at a national level, they also operated on a local level. The anti-halal certification activists targeted Byron Bay Cookies, and the anti-csg activists targeted Metgasco s operations at nearby Lismore. The issues were selected as similarities between the two groups aid to illustrate differences in terms of their respective salience as stakeholders. Both groups have a large diversity in their respective followers and stakeholders. Social media for both groups was assessed against the following criteria as a means to determine the stakeholder legitimacy and consequently, salience. Legitimacy of impact on stakeholder - are the stakeholders personally affected by the issue? Political legitimacy - do the stakeholders have political affiliations which can in turn lead to policy influence? Corporate legitimacy - do the stakeholders engage with the business, or are they opposed to negotiation or discussion? Physical legitimacy - do the stakeholders have a physical presence? Societal legitimacy - do the stakeholders behave in a manner congruent to socially acceptable conduct? Do the stakeholders appeal to mainstream society, and thereby increase support for their cause? These criteria allow the stakeholders to be evaluated for legitimacy, without conferring on the legitimacy of the issue. Data was sourced from the respective activist groups Facebook pages 8

8 (Gasfield Free Northern Rivers, 2015; Lock The Gate Alliance, 2015; Knitting Nannas, 2015; Boycott Halal in Australia, 2015; Restore Australia, 2015), and websites (Gasfield Free Northern Rivers, 2015a; Gasfield Free Northern Rivers, 2015b; Knitting Nannas, 2015a; Lock The Gate Alliance, 2015). FINDINGS AND DISCUSSION Legitimacy of impact on stakeholder: The anti-halal social media groups are not personally affected through the Halal certification of food products (including biscuits or milk served on airplanes or purchased in shops). Conversely, a significant number of the stakeholders of the anti CSG group would be directly affected in their communities by the CSG exploration and extraction activities (Gasfield Free Northern Rivers, 2015a). Political legitimacy: A number of election candidates from the Greens (a significant Australian political party) gave support to the anti-csg groups (Farrow-Smith, 2015), and used the issue as a policy platform. As a result, one gained enough support to win a seat in the state parliament, and the other gained a large increase in votes for his political party (Farrow-Smith, 2015). In contrast, the anti-halal groups received nominal support from unelected political candidates from minor political parties (ABC, 2015; Restore Australia, 2015) and consequently are less likely to gain political legitimacy. Following elections, the anti-csg groups have received support in a parliamentary speech by a local Member (New South Wales Government, 2015). Corporate legitimacy: Possibly the most important difference between the two groups of social media protestors is the manner in which they engaged with the companies of concern. For example, Byron Bay Cookies was accused by the anti-halal groups for supporting terrorism and that their products are a representation of evil, and are not true to Australian values. Instead, the anti-csg social media based protestors seek dialogue with the company which they are accusing of practices that are not in line with corporate social responsibility, to question the validity of CSG extraction. Physical legitimacy: The significant difference between the action groups is that the anti Halal certification protestors are predominantly social media based, whereas CSG protestors repeatedly 9

9 displayed a physical presence in the form of protests in a fixed location (Gasfield Free Northern Rivers, 2015a). The physical presence is important for media coverage, and also confirms that not all social media supporters are developed using fake or anonymous profiles. Societal legitimacy: The methods employed by the two groups are significantly different in terms of how they appeal to society. Oftentimes, the anti CSG groups refer to (at a minimum) quasi scientific studies and data whilst, the anti-halal groups are citing an ambiguous single and unconfirmed investigation (ABC, 2015) suggesting links to terrorism funding. As illustrated in Figure 1, the method of engagement by the some of the anti-halal group supporters could be considered defamatory. The anti Halal social media action groups attempt to employ concepts such as Australian values in what appears to be an attempt to relate the issue to the average Australian and thereby gain further support. However, research has shown that appealing to purported national values is ineffective when used to communicate with out-groups (Heath, 1973). For example, speeches by African American leaders were ineffective when they employed commonly held American values such as freedom and equality (Heath, 1973), as the white audiences viewed the African Americans as out-groups. Hence persistent attempts by the social media action groups to make these issues applicable to mainstream society, are likely to fail if the speeches are made by outgroups and are not a representation of the society from which they seek support. Instead of employing aggressive and arguably slanderous accusations, the anti CSG groups social media protest groups seek to make their case by drawing on scientific knowledge, and actively seek the intervention of government authorities to investigate the matters thoroughly (Gasfield Free Northern Rivers, 2015a). Furthermore, the anti-halal social media groups engaged in an ideological campaign whereas the anti CSG group is focussed on perceived environmental damage. It appears that mainstream contemporary society responds more readily to scientific evidence rather than ideological reasoning. At first sight, the anti-csg activist groups appear to be operating individually and separately. However, during the course of studying these activist groups, it has become apparent that they have close affiliations with similar groups, and appear to enjoy significant collective support that could initiate government policy change. In addition, a closer look indicates that these groups share media 10

10 and other resources (Lock The Gate Alliance, 2015; Gasfield Free Northern Rivers, 2015b; Knitting Nannas, 2015a). Hence a cautionary view should be taken when attempting to estimate the membership, strength and resources of some activist groups. Astroturfing, the synthetic development of action groups (Shirky, 2011), has become problematic in social media. Due to social media security protocols, one person can create multiple online identities for themselves on social media. This makes it possible for one person to develop a synthetic social media action group, through establishing multiple fake profiles which then make it appear as though the group has attracted support from numerous people. A rudimentary investigation of both Restore Australia and Boycott Halal in Australia (Boycott Halal in Australia, 2015) supporter s profiles found numerous of these to be incomplete, and likely to be fake profiles. In other words it appears that these action groups have many supporters, however it is difficult to establish the number of bona fide supporters. Furthermore, the conduct of the social media users and the campaigns of the social media action groups may affect the influence of the action groups. The manner in which the campaigns are conducted could be viewed as a reasonable path to political legitimacy. CONCLUSION Although not all stakeholders should be viewed equally in terms of power, influence, or social legitimacy (Mitchell, Agle, & Wood, 1997), scholarly literature often suggests that engaging with all stakeholders is an important aspect of CSR practices (Sora, Soo-Yeon, & Sung, 2014; Freeman, et al, 2010; Freeman, 1984). The above examples illustrate that not all social media should be considered as constructive contributions to an organisation s activities (Bruce & Soloman, 2013). This brief overview of two different social media activist groups indicates that not all social media stakeholders should be considered equal with regard to power, influence, and particularly in terms of legitimacy. In this context, traditional stakeholder, corporate governance, and corporate social responsibility systems appear to be ineffective in the social media environment. If we are to consider the view that society is a legitimate stakeholder in corporations, then social media does not serve either society or 11

11 business well if it promotes an ethos that the nominal actions of a few should influence outcomes of many. Although some social media stakeholders can claim to have legitimacy, corporations should proceed with caution when determining whether to respond, engage, or submit to social media stakeholder demands. It is clear that corporate systems must further evolve and adapt to the new social media environment to allow corporations to remain effective in communication with stakeholders. Future research on the methods of identifying and engaging with social media stakeholders would improve and aid in the development of more appropriate systems of corporate governance, corporate social responsibility and stakeholder models. References ABC. (2015, April 21). Fact check: Does halal certification fund terrorism? Retrieved June 24, 2015, from ABC News: Boycott Halal in Australia. (2015, June 24). Boycott Halal in Australia. Retrieved June 24, 2015, from Facebook: Bruce, M., & Soloman, M. R. (2013). Managing for media anarachy: A corporate marketing perspective. Journal of marketing theory and practice, Byron Bay Cookies. (2015). Byron Bay Cookies. Retrieved from Facebook: Camilleri, M. A. (2015). Environmental, social and governance disclosures in Europe. Sustainability Accounting, Management and Policy Journal, 6(2), Coombs, T., & Holladay, S. D. (2014). How publics react to crisis communication efforts : Comparing crisis response reactions. Journal of Communication Management, 18(1), Dodd, E. M. (1932). For whom are corporate managers trustees? Harvard Law Review, 45, Farrow-Smith, E. (2015, April 8). NSW election 2015: Nationals retain seat of Lismore, Greens pick up seat of Ballina. Retrieved June 2015, from ABC News: Freeman, R. E. (1984). Strategic management: A stakeholder approach. Marschfield, MA: Pitman Publishing Inc. Freeman, R. E. (2004). The stakeholder approach revisited. Zeitschrift fur Wirtschaft - un Unternnehmensethik, 5(3),

12 Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & DeColle, S. (2010). Stakholder theory: The state of the art. Cambridge: Cambridge University Press. Gasfield Free Northern Rivers. (2015). Gasfield Free Northern Rivers. Retrieved from Facebook: Gasfield Free Northern Rivers. (2015a, June). About the Gasfield Free Campaign. Retrieved June 2015, from Gasfield Free Northern Rivers: Gasfield Free Northern Rivers. (2015b, Sept). Gasfield Free Northern Rivers - resources. Retrieved Sept 2015, from Gasfield Free Northern Rivers: GetUp Australia. (2015). About GetUp Australia. Retrieved June 24, 2015, from GetUp Australia: Heath, R. L. (1973). Black rhetoric: an example of the poverty of values. Southern speech journal, 39, International Organization for Standardization. (2010). Discovering ISO Retrieved June 2015, from International Organization for Standardization: Johnston, J. (2015). Loose tweets sink fleets and other sage advice: social media governance, policies and guidelines. Journal of Public Affairs, 15(2), Knitting Nannas. (2015). Knitting Nannas Against Gas. Retrieved from Facebook: Knitting Nannas. (2015a, Sept). Knitting Nannas - links. Retrieved Sept 2015, from Knitting Nannas: Lock The Gate Alliance. (2015, Sept). Go mining free. Retrieved Sept 2015, from Lock The Gate Alliance: Lock The Gate Alliance. (2015). Lock The Gate Alliance. Retrieved from Facebook: Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience. Academy of management review, Mondelēz International (Cadbury). (2015). Cadbury Dairy Milk Australia. Retrieved from Facebook: Mondelēz International (Vegemite). (2015). Vegemite. Retrieved from Facebook: 13

13 Moore, H., & Roberts, D. (2013, April 24). AP Twitter hack causes panic on Wall Street and sends Dow plunging. Retrieved June 2015, from The Guardian: New South Wales Government. (2015, Sept). Hansard - Gasfield Free Northern Rivers. Retrieved Sept 2015, from Parliament of New South Wales: n&refnavid=ha8_1 OECD. (2004). Glossary of statistical terms - Corporate Governance definition. Retrieved June 2015, from OECD: Paul, K. (2015). Stakeholder Theory, Meet Communications Theory: Media Systems Dependency and Community Infrastructure Theory, with an Application to California s Cannabis/Marijuana Industry. Journal of business ethics, 129( ). Proctor, R., Vis, F., & Voss, A. (2011, December 8). Reading the riots: Investigating England's summer of disorder. Retrieved June 2015, from The Guardian: Restore Australia. (2015, June 24). Restore Australia. Retrieved June 24, 2015, from Facebook: Shamir, R. (2010). Capitalism, governance,and authority: The case of corporate social responsibility. The annual review of law and social sciences, 6( ). Shirky, C. (2011, January). The political power of social media. Retrieved July 2015, from Foreign affairs: Sora, K., Soo-Yeon, K., & Sung, K. H. (2014). Fortune 100 companies Facebook strategies: corporate ability versus social responsibility. Journal of communication management, 18(4), Tench, R., & Jones, B. (2015). Social media: the Wild West of CSR communications. Social Responsibility Journal, 11(2), Tihanyi, L., Graffin, S., & George, G. (2014). Rethinking governance in management research. Academy of management journal, 57(6), Williams, G., & Zinkin, J. (2008). The effect of culture on consumers' willingness to punish irresponsible corporate behaviour: applying Hoftstede's typology to the punishment aspect of corporate social responsibility. Business Ethics, 17(2),

14 Figure 1: Anti-Halal certification social media comments Sources: (Mondelēz International (Cadbury), 2015; Mondelēz International (Vegemite), 2015; Byron Bay Cookies, 2015) 15