Trust as an Essential pre-requisite for Effective Corporate Communication
The end of the millennium was marked by a widespread obsession with the dot.com phenomenon typified by companies with few tangible assets and little likelihood of profits. The bursting of the dot.com bubble illustrates the importance of continuing commitment to companies which use the traditional styles of corporate communication and which use only reliable sources of media of conveying an important corporate message.
MFD, a mid-sized technological company, which is used as the point of illustration in this paper, is important for a number of reasons. First, MFD is undergoing a transformation from a batch producer of engineering components to the mass manufacturer of electronic assemblies: an effective corporate communication technique is, thus, needed to convey all top-to-down messages to its employees. Second, the company is based in a small, relatively isolated town in which it is the major employer (400 employees) and of massive significance to the local economy. Finally, the case illustrates the interaction of corporate communication techniques used by MFD and institutional change (Hitt and Ireland, 2000).
MFD, a privately owned company, was founded over forty years ago to supply casting and machined components to the Ministry of Defense (MoD). An inability to obtain new markets to replace defense-related work meant that between 1992 and 1994 the workforce was reduced by 50 per cent to approximately 450 employees. The owner/manager who was increasingly concerned about the company’s ability to survive initiated a number of changes including the recruitment of managers with experience of modern manufacturing and using effective corporate communication techniques (Kanter, 2000). Gradually, a range of new corporate communication technologies were introduced which were used to tell employees about the new products, improve manufacturing processes and create better communication systems within MFD. At an operational level, the special sources of media (local TV and company’s web-page) were employed. This was done in contrast to most other long-used techniques such as pamphlets and announcements broadcasted on the internal radio system, which were often obsolete and failed to respond to the changing needs for the new types of communication presented by workers of the 21-st century.
The topic of effective corporate communication has attracted a considerable amount of academic interest since the emergence of a field of inquiry termed organization theory. Beginning with the seminal work of Lewin (1947) and including important contributions by Bennis (1964) through to more recent work the concept of an effective corporate communication has been a central feature of academic research. Primarily because of the North American influence terms such as entrepreneur or corporate entrepreneur are now more common in the management literature (Kanter, 2000). A concurrent body of literature examines ways in which choice of media, norms and beliefs conveyed by a particular communication technique, influence both managerial decisions and organizational structures.
Shane (1994) suggests corporate communication must take on championing roles related to hierarchy, autonomy, equality, persuasion, monitoring and cross-functional ties. Differences between champions and non-champions based on the six roles were evaluated by questionnaire data from 4405 respondents representing forty-three organizations in sixty-eight countries (Shane, 1994). Champions were defined as those who had overcome obstacles to innovation by taking action, involving some personal risk, outside their formal job description. According to the results champions were more likely to bypass hierarchy, preferred autonomy, encouraged equality among subordinates, and were less likely to demand financial justification for innovation. There were no differences according to team monitoring as both groups preferred teams to obtain authority before proceeding to the next stage of the innovation process. Differences between groups were significant for cross-functional ties but not in the expected direction. Non-champions preferred to establish cross-functional ties by obtaining support from other departments. Perhaps more significantly, deviant behavior appeared to “transcend culture” because in all sixty-eight countries “champions hold significantly different views from non-champions about five different roles for champions in established organizations” (Shane, 1994, p. 417).
Sharma and Christian (1999, p. 11) suggest there is a “striking lack of consistency” in definitions of both corporate communication and media in corporate communications. A range of terms are adopted to describe what is broadly the same phenomenon and these include corporate media, corporate venturing communication and corporate communication appraisal techniques. Some authors associate corporate communication with business diversification through the development of new ventures, products or markets.
In his influential contribution to the literature, Drucker (1994) identifies a number of US-based companies which demonstrate long-term commitment to corporate communication principles; these include 3M, Johnson and Johnson and General Electric. Transforming mature firms into organizations with effective corporate communication means, using proper media sources, requires a management team that is visionary, persistent and willing to allow individuals to adopt entrepreneurial roles. Corporate entrepreneurs must extend existing capabilities without breaking links with the organization’s core competences. The authors go on to argue that middle managers are the locus of corporate entrepreneurship because they are central to the resolution of the capability – rigidity paradox. Knowledge theory emphasizes the importance of subjectivism, empiricism and pragmatism as central to the validation of organizational beliefs. Social network theory provides insights into the role of weak ties, actor centrality and emergent networks as a basis for opportunity recognition.
Combining the knowledge and social elements, the model suggests that opportunities for entrepreneurship are perceived within organizations because individuals have access to unique information through weak social ties and because they are willing to accept ideas based on subjective criteria.
The issue of corporate communication principles is examined by investigating the interaction of institutional structures and individual agency during a period of major change within MFD. The study is influenced broadly by literature associated with entrepreneurship and corporate communication in which it is generally assumed that such individuals must be prepared to adopt a championing role which involves challenging or subverting organizational rules (Shane, 1994). In other words, managers implementing effective corporate communication techniques must be prepared to fight against the challenges represented not only by rules and routines but also by those unwilling to change or who have a vested interest in maintaining the old style of management.
Within MFD two significant events which occurred in 1996 to 1967 seem to have stimulated a re-evaluation of the company’s strategic opportunities: first, recognition throughout the management team that they had to pay much greater attention to customers, and second, a willingness by the owner, to invest considerable sums of money in new equipment.
It was first obvious with the recognition that the defense business would not be enough for us to survive on. The family has now recognized that there are other ways of doing things but that is not the only answer. It is possible to suppose that there are other people who are going to determine how the company will be run rather than the familiar immediate group.
Survival meant that new products and new customers were a necessity. Therefore, change in MFD was a reaction to external threats rather than a proactive search for new opportunities. Evaluation of the changed external environment was primarily the responsibility of the owner and it became obvious that reliance on MoD contracts was at an end. There was gradual acceptance that the traditional top-down approach was no longer appropriate and that employees at all levels had to be given greater responsibility for their day-to-day tasks. A further significant structural change was the creation of module champions who were given responsibility for liaising between their departments and the team introducing the new computer system (Hitt and Ireland, 2000).
As seen by the MFD’s case, the concept of corporate communication has returned to prominence in organization studies as a result of research by scholars such as DiMaggio and Powell (1983) and DiMaggio (1991). This signifies a rejection of functionalist theories which portray efficiency as the driving force behind decision-making and adaptation to the environment as suggested by contingency theorists. New institutional theorists also reject the behaviorist aggregation of individuals by emphasizing cultural influences on both decisions and organizational structures because individuals operate “in a web of values, norms, rules, beliefs and taken-for-granted assumptions that are at least partially of their own making” (Barley and Tolbert, 1997, p. 93).
In other words, institutions act as constraints on what media can undertake but those constraints can be modified over time. Such a view of the links between individual and institution clearly has strong similarities with corporate communication theory. New institutionalism has been criticized recently for failing to account for the role of individual media sources. If corporate communication theory is to advance then there must be more explicit acknowledgement of the interdependence of media and media actions (Barley and Tolbert, 1997). This may be done by developing a more dynamic model of institutions as well as by adopting methodologies which investigate recursive links between media actions and institutions. Although corporate communication theory is powerful in demonstrating the way in which organizations are linked to their environment, the role of media is underestimated. It is therefore important to examine the processes by which strategic choice of media (e.g. TV, radio, or Internet) is exercised within organizations. Textbooks (and lecturers) emphasize the media role in most corporate communication activity ranging from strategic business planning to day-to-day decision-making. In general, new organizations pay little attention to links between media actions and corporate communication change.
There has also been some focus on the role of institutional entrepreneurs who access scarce corporate communication resources. This has important implications for the study of innovation and corporate communication because of the suggestion that media remain wedded to activities with which they are most familiar. The degree of innovation, incremental or radical, can lead to a modification or replacement of rules and resources. Innovation is subversive because it undermines existing practices, and constitutive because it creates new practices and routines.
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