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Master's Thesis, 2011, 129 Pages
1.1. Introduction to the Topic
1.2. Academic & Managerial Relevance
1.3. Research Objectives
1.4. Structure & Method
2. Literature Review
2.1. Background to CSR
2.1.1. Defining CSR
2.1.2. The Development of CSR
2.2. Influential CSR Theories
2.2.1. Stakeholder Theory
2.2.2. Shareholder Value Theory
2.3. The Position and Function of CSR today
2.3.1. CSR as a Marketing Tool
2.3.3. The Tobacco Industry in the UK, Germany and Croatia
2.3.4. CSR & the Tobacco Industry
2.3.5. The Tobacco Industry’s Limits of CSR
2.3.6. CSR and its Stakeholders
2.3.6. The Tobacco Companies’ Stakeholders
2.4. Communicating CSR
2.4.1. Marketing Communication
2.4.2. CSR Marketing Communication
2.4.3. Tobacco Companies’ CSR Marketing Communication
2.4.4. The Trouble with CSR Communication
2.5. CSR Communication Approaches
2.5.1. The Three Communication Strategies
2.5.2. The Three Communication Strategies in the Context of the Tobacco Industry
2.5.3. The AC²ID Test
2.5.4. The AC²ID Test in the Context of the Tobacco Industry
2.5.5. Du, Bhattacharya and Sen’s Framework for CSR Communication
2.5.6. Du, Bhattacharya and Sen’s Framework for CSR Communication in the Context of the Tobacco Industry
2.6. Perceptions of CSR Communication
2.6.1. Perceptions of CSR Communication in a Cultural Context
3. Conceptual Framework
3.1. Analysis Strategy
3.2. The Framework
4.1. Questionnaire Design
4.2. Data Collection Method
5. Data Analysis
5.1. Questionnaire Results
5.1.1. Respondent Demographics
5.1.2. CSR Awareness
5.1.3. CSR Commitment and Impact
5.1.4. CSR Motive
5.1.5. CSR Fit
5.1.6. Stakeholder Involvement
5.1.7. Further Results
8. Limitations and further discussion
Appendix A (1): Tvornica Duhana Rovinj’s CSR section on its website
Appendix A (2): Overview of the PM21 Public Relations Campaign
Appendix A (4): BAT’s CSR section on its website
Appendix A (5): PMI’s interactive map of their charitable giving programs
Appendix B (1): Questionnaire
Appendix C (1): Data Reliability Test
Appendix C (2): Crosstabs
Appendix C (3): ANOVA Test
List of Figures
Figure 1: Tobacco Industry in Croatia
Figure 2: Tobacco Industry in Germany
Figure 3: Tobacco Industry in the UK
Figure 4: Tobacco Industry’s Stakeholders in the PowerInterest Matrix
Figure 5: The Role of CSR in Tobacco Promotion
Figure 6: The CSR Marketing Communication Model
Figure 7: Variables applied for the Primary Research
Figure 8: Respondent Demographics Overview
Figure 9: Are you aware that tobacco companies communicate that they are socially and environmentally responsible?
Figure 10: Tobacco companies with their social/environmental initiatives make a positive contribution to the society
Figure 11: I think that tobacco companies invest sufficient time and money into their social/environmental initiatives
Figure 12: Do you believe that tobacco companies are involved in social/environmental initiatives because they sincerely want to make a positive impact to the society?
Figure 13: What do you think is the main motivation of tobacco companies addressing and communicating their social/environmental involvement?
Figure 14: Which of the following social/environmental topics do you think is important for tobacco companies to support?
Figure 15: Support of domestic violence
Figure 16: Support of general education
Figure 17: Tobacco companies support all initiatives mentioned above. Do you consider it meaningful for tobacco companies to address such diverse initiatives?
Figure 18: I believe, that by providing feedback to tobacco companies, I am able to influence their social initiatives to some extent
Figure 19: If asked, I would be willing to provide feedback to tobacco companies about the social/environmental initiatives
Figure 20: I think overall it is important that tobacco companies support social/environmental initiatives
Figure 21: I think it is important that tobacco companies communicate their social/environmental involvement
Figure 22: I would be more likely to chose a cigarette brand of a company that communicates its social/environmental contributions over one that does not communicate
List of Abbreviations
Abbildung in dieser Leseprobe nicht enthalten
‘ Tobacco companies strive for the status of good corporate citizens. However, they need to accept that they are fighting on a different legitimacy battlefield : they practice CSR for the mere right to exist.’ (Palazzo & Richter, 2005)
When scanning the trends within the business environment throughout the past decade, a concept that has gained much attention is the increasing involvement of companies in Corporate Social Responsibility (CSR). Companies started to increasingly address and demonstrate their commitment to CSR, yet many businesses struggle with this effort (Lindgreen & Swaen, 2010). More than ever before, corporations are investing a tremendous amount of resources in various social and environmental initiatives (Du et al., 2010). This trend illustrates that nearly 90% of all current Fortune 500 companies explicitly address CSR initiatives and there is an increasing number of companies that report and communicate their CSR involvement (Kotler & Lee, 2005; Crane et al., 2009).
CSR as an academic theory and business tool has emerged as a consequence of corporate scandals due to an increasing number of unsafe products, environmental pollution, accounting frauds etc, and brought forward by transnational corporations’ realization to account for and redress their adverse impact on society (Hirschorn, 2004). Another driving force for companies’ CSR engagement is the increasing interest of the public in knowing what company stands behind the products and brands they market, using this knowledge to reward ‘ good’ and punish ‘ bad ’ companies (Bowd and Harris, 2006). In a research conducted by Cone (2007), 87% of American consumers are likely to prefer a brand that is linked with a good cause (Du et al., 2010), which implies a common need for companies to address and communicate CSR related initiatives.
Whereas many companies rely on proactive CSR communication, for instance cause related marketing strategies such as Krombacher Beer’s Klimaschutz Projekt, or CSR integrated advertising messages like BP or EON, a great number of companies trust in a more inward CSR communication through e.g. its corporate websites with the focus to inform mainly non-governmental organisations (NGO’s) or other specific stakeholder groups (Hirschland, 2005). This divergence with respect to approaches and adapting CSR communication appears to arise from a perceived sensitiveness of the CSR issue as well as a general ambiguity and lack of knowledge about its potential – and perhaps more importantly – its risks. Hence, the question can be raised why CSR communication is such a sensitive issue, in spite of increasing interest in corporate behaviour (Ernst&Young, 2007).
While CSR involvement of companies is increasingly expected and encouraged by the public, CSR communications is not always appreciated, often seen critically, and perceived as self-complacent and even distasteful by company stakeholders (Morsing & Beckmann, 2006). This is particularly the case for corporations that operate in controversial industries, such as tobacco companies.
Tobacco companies such as British American Tobacco (BAT), Imperial Tobacco (IP) or Philip Morris International (PMI) invest a considerable amount of resources and create “so much noise” in being perceived as a good corporate citizen. They would like to be perceived as socially responsible companies, in order to gain public trust and credibility (Owoeye, 2010).
Marketing in general is viewed with a high level of cynicism and suspicion when conveying a more socially responsible image (Acikdilli & Jahdi, 2009), and its communication, in many cases, is perceived as manipulative and insincere (van de Ven, 2008).The accomplishment of overcoming the two key challenges of CSR communication, CSR awareness and stakeholder skepticism (Du et al., 2010), presents a difficult and critical task for every company, but more predominately for tobacco companies.
This following research will analyze, incorporating both a company and consumer perspective, recent CSR marketing communications (CSR marcom) attempts of tobacco companies and how the transmitted messages are perceived by the public.
While previous research has linked the connection and impact of CSR on corporate performance, little research can be found focusing on the effect and perception of CSR communication. As mentioned by Bert van de Ven (2008) and Morsing & Beckmann (2006), there is not much research concentrating on how consumers perceive CSR marcom. Whereas CSR is a widely discussed issue within the academic and business world, minimal research focused on CSR communication issues within controversial industries, particularly the tobacco industry. Research on CSR communication is still scarce and diverse, and compiling an overview of theories concerned with communicating CSR can be quite complex due to its fragmented nature of existing literature (Morsing & Beckmann, 2006). Hence, by outlining and integrating several approaches and frameworks concerned with CSR communication throughout this research, the development of a recapitulatory and coherent theoretical framework for evaluating CSR communications provides a valuable contribution to the existing literature.
The results of the primary research extends the existing literature by adding an international approach to analyze consumer perceptions on CSR marcom by tobacco companies, and aims on demonstrating critical dissimilarities with respect to different demographic characteristics (e.g. nationalities, gender and smokers/non-smokers). The results will provide the industry with information on
- whether consumers are aware of tobacco companies communicating CSR
- how credible and effective their CSR communications are,
- whether consumers believe in the sincere nature of CSR marcom by tobacco companies,
- whether the perception of CSR as communicated by tobacco companies influences the consumer’s purchase and brand decision.
This research paper strives to add to existing academic body of knowledge on CSR communication by pursuing the following research question:
Based on the public perception, how effective are CSR marketing communications of tobacco companies?
One aim of the research paper is to provide an overview and analyze recent CSR communications by tobacco companies. In order to effectively approach the analysis on respective CSR communications, the development of a theoretical framework provides the basis for a meaningful analysis. The obstacles of CSR communication, as well as the various existing academic sources that provide fragmented information, need to be conceptualized and added together to build on a meaningful argument on the defined research question.
The secondary research provides the basis for the conceptualization and integration of a number of various theories and frameworks addressing CSR communication. Furthermore, secondary research will set the stage for the primary research, incorporating an international panel to identify possible variations among nationalities and other demographic factors. Secondary as well as primary research is directed at achieving the following research objectives:
1) To investigate how tobacco companies communicate their CSR initiatives and who they address with these measures.
2) To assess critical aspects of CSR communication with a more specific view on tobacco companies.
3) To explore consumers’ perception of CSR communication and how they relate to identified CSR effects.
4) To identify how CSR can be communicated more effectively.
5) To draw managerial implications from the findings with respect to tobacco companies.
First, within the Literature Review section the reader will be given an overview of the approach to CSR taken in this report, in which background information of CSR, dominant CSR theories and theorists, as well as CSR with respect to communication issues and tobacco companies will be critically reviewed and presented to the reader.
By comprehensively reviewing various frameworks, models and theories concerned with CSR communication, the main objective of the Conceptual Framework section is to demonstrate, based on existing literature, a theoretical model incorporating and integrating the most prominent theories in the field, which will be an important step to set the stage for the model to be tested within the following primary research.
The Methodology section of this research paper will then demonstrate the research methodology conducted in the form of an online questionnaire, and outline the data collection method and procedure, and provide justification, accuracy and reliability with respect to the research design and the data collected.
The main objective of the Data Analysis section is to project and describe the collected data in light of the conceptual framework. In the Conclusion, key findings will be summarized and related back to the research question. Managerial implications that arise from research will then be outlined in the sector of Recommendations, followed by the Limitations and Discussion.
Corporate Social Responsibility is a broad topic characterized by many influencing factors and peculiarities. The following part of the research paper provides background information on the complexity of CSR and CSR communication. It is directed at providing and laying the foundation of a theoretical framework of the research focused on understanding and analyzing the CSR communications by tobacco companies.
As mentioned before, even though there is a tremendous increase in the number of companies becoming involved with CSR, there is a wide and inclusive interpretation of CSR, including related terms and issues, that all address in different ways the role of business in society, such as environmental management, human rights and waste management (Visser et al., 2010). As a consequence Corporate Social Responsibility (CSR) as a term differs equally in its definition across the economic literature just as academic works’ approach and comprehension of CSR vary concerning the evaluation of purpose and motivation of a company’s CSR engagement (Crane & Matten, 2010; Dobers, 2009).While Milton Friedman advances the view that the only social responsibility of a firm is to increase its profits (New York Times, 1970), Keith Davis (1973) counters that CSR requires ‘ consideration of issues beyond the narrow economic, technical and legal requirements of the firm.’
The concept behind CSR is the increasing belief held by the general public that companies have a responsibility to society that reach beyond their monetary commitment to shareholders or investors of the firm (Visser et al., 2010). Currently, however, there is no one universally accepted definition of Corporate Social Responsibility (CSR) (Mark-Herbert and von Schantz, 2007). Frankental (2001) even argues that ‘ CSR is vague and intangible term which can mean anything to anybody, and therefore is effectively without meaning.’ A meaningful, yet again broad attempt to define CSR is given by Kotler and Lee (2005) who describe the concept as ‘ a commitment to improve [societal] well-being through discretionary business practices and contributions of corporate resources.’
The rather vague definitions and conceptualizations of CSR can be attributed to the lack of CSR measurement tools and the notable ambiguity of Corporate Social Performance (CSP) (Jamali, 2008), a theory that attempts to provide a means to evaluate the social performance of companies (Albinger and Freeman, 2000). Although various approaches and measures of responsible business performance have been introduced, such as the ISO 26000 Standard of CSR, ISO 14000, SA 8000, the Global Reporting Initiative or the UN Global Compact (Dobers, 2009), even the best conceptualizations and approach to regulate and measure CSR are still in its embryonic stages (Lindgreen & Swaen, 2010).
Despite several organizations making an attempt to define the business’ role of CSR such as the Agenda 21 by the United Nations (2009), a CSR definition that has been widely accepted among recent academic literature is the one provided by the European Commission (2011), that defines CSR as
‘ A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’.
With the objective not to limit the extent of corporate responsibility to only social issues, the term “Corporate Social Responsibility (CSR)” has been increasingly replaced by solely “Corporate Responsibility (CR)”. While the breadth and complexity of the concept is conjointly acknowledged, the widely established term “Corporate Social Responsibility” and its abbreviation “CSR” will be utilized for this research paper.
The idea that companies need to take responsibility for their actions and address adverse business effects on social and environmental topics has been around for a very long time. However, until the 1950s conceptualizations of CSR, along with the related concepts of Corporate Social Response and Corporate Social Performance became subject mainly within management literature (Maignan and Ferrell, 2004).
While CSR can be traced as far back as the Industrial Revolution, (Carroll, 2009), the 1960s and early 1970s were described by Murphy (1978) as the ‘ Awareness’ and ‘ Issue ’ eras of CSR, characterized by an increasing social consciousness and overall responsibility. The following ‘ Philanthropic ’ era saw an increased focus on charitable donations by companies. Whereas a number of formal CSR definitions started to emerge during the 1970’s, the 1980’s featured a cumulative focus on linking CSR with corporate financial performance and was classified by Frederick (2008) as the ‘ Corporate/Business Ethics’ period. As a result of key events such as the sinking of Shell’s Brent Spar and Nike’s misuse of “sweatshop labour”, which all demonstrated default of corporate responsibility to the general public, corporations increasingly began to engage in a more strategic approach to CSR (Kotler and Lee, 2005).
As more and more literature started addressing CSR and related topics, firms became increasingly aware that a poor CSR performance and communication embodied a major risk for corporate reputation and success. Consequently, a professional approach to CSR could serve as a source for competitive advantage. CSR has been adopted and influenced a number of related topics, such as cause-related marketing, corporate social marketing and corporate philanthropy (Carroll, 2009).
Globalization and its effects, such as an increased number of multinational companies with much more authority in a global context (Albareda, 2008), worked as another driver of CSR development. This was characterized with the establishment of various CSR regulation/advisory bodies and international organizations, such as the OECD, European Union and United Nations. Their aim is regulating CSR and other business practices steering the concept of CSR into a more manifest direction.
Interrelated with societal trends, the academic literature has contributed with theories that enabled the emergence, development and ongoing evolution of CSR. The following theorists and their concepts of CSR represent a necessary step to establish a meaningful theoretical framework.
Unlike CSR, which aims at aligning corporations and its responsibilities, the stakeholder theory’s main concern is identifying various groups to which a firm has responsibilities (Crane and Matten, 2010). The general argument is that it is insufficient for companies to solely focus on their shareholders, but it is essential to address a wider range of groups, namely stakeholders (e.g. customers, suppliers and distributors, employees etc.), therefore bringing organisations closer to a more human and less mechanical approach within the business context.
Consequently, Edward Freeman, one of the most influential academics in the concept of stakeholder theory, defined stakeholders as ‘ any identifiable group or individual who can affect the achievement of an organization’s objectives or who are affected by the achievement of an organization’s objectives’ (Freeman and Reed, 1983). Further refinement of this concept was undertaken by Hill and Jones (1992) and Clarkson (1995), who added that stakeholders are not only characterized by having interest in a firm’s objective, but also command ownership, (legal) rights or claims in a company. Companies like BAT, PMI and IT therefore release annual stakeholder dialogue reports (BAT, 2011), provide a stakeholder panel (Imperial Tobacco, 2011), and regularly meet and engage with their key stakeholders (Philip Morris USA, 2011).
Particularly in today’s globalized, comprehensive and interconnected business world, the stakeholder theory seems to represent a meaningful approach to proactively addressing and communicating topics with stakeholders to develop effective long-term and mutually beneficial relationships. It is increasingly accepted as a corporate criterion for good responsible management (Blowfield and Murray, 2008). Despite the fact this theory provides a business approach which is more respectful to human dignity and rights, the stakeholder theory has been criticized as an excuse for managerial opportunism. It enables managers to justify self-interested decisions by appealing them to the interest of stakeholder groups who benefit, at the expense of others (Jensen, 2001).
Furthermore, there is a lack of addressing the complexity of identifying stakeholder groups as mutually excluding entities, and the theory can be accused of only being ethical to a certain extent, as the implementation of stakeholder incorporation within business decisions cannot be done without harming the common good (Melé, 2008). Nevertheless, despite of its drawbacks, the stakeholder theory can be considered a meaningful and forceful theory for a more ethical business – society relationship (Melé, 2008).
In direct opposition to Freeman’s stakeholder theory, the shareholder value theory, brought forward by Milton Friedman, argues that a company’s only responsibility is creating profit for the shareholders within the legal framework. Even though Friedman’s concept was clearly contra corporate responsibility and pointed out the threat for shareholder value creation, this theory was quite widely spread in the US and Anglo-Saxon countries until mid-twentieth century (Melé, 2008).
Although this concept makes sense within a free market economy where profits and superior economic performance present the supreme goal, arguments against this concept seem to outweigh its advantages. As economic performance does not represent the whole public good, there is increasing evidence that long-term business success can only be achieved when taking into account not only shareholder, but also employee, supplier, consumer, community and other group’s interests, suggesting a more stakeholder driven approach (Melé, 2008). Furthermore, complying with the law is in many cases insufficient, as this proved to be the case for companies operating within the tobacco industry.
Therefore, it is currently accepted that focusing solely on shareholder value creation is simply not enough for generating long-term business profitability. Hence, companies increasingly adapt and pay attention to CSR, by taking into account the interests of a wider range of stakeholders (Melé, 2008).
CSR, from the time it was first mentioned as a theory, has always attracted controversial discussions and views. The Economist (2005) for instance has classified CSR as a useless business fad. However, an overall recognition of the potential and actual significance of the concept of CSR in today’s business world has more or less trivialised the detractors and moved the discussions on CSR from an ‘ if ’ to a ‘ how ’.
Among companies, CSR is becoming an increasingly significant part of corporate strategy. According to a study by KPMG (2008), more than 80% of the world’s 250 largest companies are reporting on corporate responsibility, indicating that they are not only involved with attaining more social and environmental responsibility, they are also communicating their CSR attempts.
Notwithstanding this trend of increasing CSR practices, a straightforward and coherent strategy for a meaningful and effective implementation has not yet been carved out. There does not seem to be one, but a multiple of right ways which can be traced back to the overall issues of complexity and vagueness as well as the multiple facets of CSR implementation, including communication.
Even though potential CSR bottom line effects, such as risk reduction, competitive advantage, brand enhancement, consumer loyalty and increased sales are acknowledged all through CSR literature, the problem of how to illustrate the impact of CSR on a company’s performance remains a main hindrance (Luo and Bhattacharya, 2006). This research paper aims to contribute to this still developing range of market research by focusing on the function of tobacco companies’ CSR communication with respect to how those communication attempts are perceived by the general public, a significant stakeholder group.
Before drawing the focus on the specific role and function of CSR and CSR communication within the tobacco industry, it is important to acknowledge the role of marketing within the CSR context. Many companies see CSR as an effective marketing tool that serves for brand and reputation enhancement (Delbard, 2010). However, many companies fail to ‘ walk the talk ’, and the public is increasingly conscious of companies’ modality and CSR claims (Beckmann, 2006). A company’s motivation for engaging in CSR and the corporate identity, is underlined by research revealing that consumers avoid or even punish companies that are perceived as insincere within their social environment (Becker-Olsen et al., 2006). Therefore, it is a critical task for companies, and predominantly for tobacco business, to be aware of the risks and potentials when approaching CSR from a marketing related perspective.
Marketing in general is viewed with a high level of cynicism and suspicion, especially when it comes to communicating a more socially responsible image within the tobacco industry (Acikdilli & Jahdi, 2009). While marketing takes many forms and incorporates a whole range of business functions, Kotler et al. (2008) defines marketing as a ‘ social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others’. Even though the main objective of marketing is the development and long-term retention of profitable customer relationships, Kotler et al. (2008) evince that marketing is not merely a managerial task, it also calls for a social approach. Therefore, the business world has increasingly adopted the societal marketing concept, which emphasizes how marketing affects society and vice versa Kotler and Keller (2006). It aims at directing the whole marketing system towards an approach that is in accordance with the society’s objectives (Hanulakova, 2001).
The marketing of CSR has the potential for companies to enhance their brand image, boost sales and create value for the company while at the same time attempting to be socially responsible (van de Ven, 2008). Many companies fail, yet others successfully reap the benefits of marketing a socially responsible brand, such as the pioneers in this marketing process, The Body Shop and Johnson & Johnson (Acikdilli & Jahdi, 2009). However, adopting CSR within a marketing context is a delicate process, and along with the benefits of building a socially responsible brand, stakeholders respond adversely to any marketing strategies that could be perceived as deceptive or manipulative (Forehand and Grier, 2003).
As differentiation in product attributes and services from competing brands becomes increasingly difficult, companies look for CSR practices to establish and maintain loyalty, trust and support from stakeholders (Lindreen et al., 2009). It is not only internal, but external drivers outside the company, such as increasing consumer expectation and consciousness, stricter government legislation and changing employee demands, that exact companies to adapt a stronger social marketing strategy, reaching beyond the organization and its customers and create a two-way dialogue with the company’s key stakeholders (Kotler and Keller, 2006). This demonstrates the central role of the stakeholder theory in the concept of CSR and its inclusion in marketing. Hence, it can be said that marketing as a supporting function of CSR is ought to be stakeholder driven. This is a complex process considering that the specific type of marketing practices must depend on the nature of relevant stakeholder groups and the type of issues addressed (Lindgreen et al., 2009).
Whilst Lindgreen et al. (2009) point out the significance of a stakeholder approach in applying CSR as a marketing tool, Bert van de Ven (2008) emphasizes the significant role of branding within the context of marketing and branding using CSR in an emerging ‘ emotion economy’. Whether a company is successfully using marketing as an effective function in CSR, van de Ven (2008) argues that it is important to distinguish between the virtuous and the merely responsible firm. Naming truthfulness and accuracy as the pillars of meaningful CSR marketing, the author implies the AC²ID test framework suggested by Balmer and Greyser (2003), to determine whether the firm is a virtuous firm. This topic will be further discussed in a later section.
While the number of smokers in developed countries is declining, tobacco companies benefit from a 3.4 % annual increase in the number of tobacco users in developing countries (Smoking Statistics, 2009). The United States, Russia, Indonesia and Japan account for the largest amount of cigarette consumption per person, and in 2007, China consumed 37% of the world’s cigarettes (The Tobacco Atlas, 2009). With respect to the three chosen countries focused in this research, the annual cigarette consumption per person in 2007 in Croatia was 1,849, followed by Germany with 1,125 and UK with 790 cigarettes. The following charts (Figures 1-3) provide an overview of the tobacco industry market share in the respective countries.
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Source: (Tvornica Duhana Rovinj, 2007)
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Source: (Deutscher Zigarettenverband, 2011)
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Source: (ASH, 2011)
All tobacco companies mentioned above, including the Croatian manufacturer TDR (Appendix A 1), communicate their corporate responsibility on their respective websites. As PMI and BAT are the two biggest tobacco manufacturers in the world (ASH, 2011), their behaviour most likely shapes the perception of the public of the whole tobacco industry (Palazzo and Richter, 2005). Therefore, much of the research focuses on BAT and PMI.
The 1990s was a decade filled with uncomfortable surprises for the tobacco industry. Mounting restrictions on smoking, legislative investigations and lawsuits as well as increasing political pressure along an extensive disclosure of internal documents, presented a major challenge for the industry (Hirschhorn, 2004). It was those years in which the tobacco companies were drawing negative attention and deep public mistrust. Due to increasing pressure and regulations on tobacco use, PMI was seriously considering to divest its tobacco products (Smith and Malone, 2003). Refusing this idea rather quickly, PMI decided to address the threats and take proactive measures in form of the ‘ PM21’ or ‘ Philip Morris in the 21st Century ’ campaign (Appendix A 2). This public relation (PR) campaign was designed to recover and improve the corporate image and credibility while undermining tobacco control (Tesler and Malone, 2008). Part of the ‘ PM21’ campaign was the launching and communication of several projects, like the ‘ Youth Smoking Prevention ’ project (Appendix A 3), representing the industry’s first steps taken towards creating a more responsible image (Wakefield et al., 2006).
In 2002, PMI became involved in 130 youth smoking prevention programs in more than 70 countries (Landman et al., 2002). Quickly it became known that PMI and other tobacco companies involved in youth smoking prevention programs did not aim to complete its own objectives to reduce the number of smoking teenagers, but it served ‘ the industry’s political needs by preventing effective tobacco control legislation, marginalizing public health advocates, preserving the industry’s access to youths, creating allies within policymaking and regulatory bodies, defusing opposition from parents and educators, bolstering industry credibility, and preserving the industry’s influence with policymakers ’ (Landman et al., 2002). Some studies show that those programs even encouraged, and not prevented teenagers from smoking (Landman et al., 2002).
As a result, the tobacco industry entered the CSR debate and has started to position itself as good corporate citizens. Most of the major tobacco companies have attempted to address social and environmental issues and communicate their CSR attempts. BAT for instance, communicates its engagement in civic life issues in Chile, Venezuela, and the UK (BAT, 2011) (Appendix A 4), in financial disaster relief in Sri Lanka (BAT, 2011) as well as in proving downloadable annual CSR reports. As well, PMI is providing an interactive map on their website to show their full range of global charitable giving (Appendix A 5) (PMI, 2011).
However, an increasing number of critics have stated that CSR efforts have all but a positive impact on public health (Owoeye, 2010). Hastings and Lieberman (2009) even argue that CSR and tobacco is an oxymoron. According to the authors, the only reason tobacco companies practice CSR is namely the right and legitimacy to grow its businesses and profits. Being accused for mainly having extrinsic motives and misusing CSR as indirect tobacco promotion, the legitimate question can be raised if this is truly subject to only companies within the tobacco industry.
It appears that whenever tobacco companies communicate their CSR effort, critics in support of NGO’s such as the World Health Organisation (WHO) issue a critical counterstatement. The obvious deep mistrust in tobacco companies and especially in their CSR communications, can be traced back to two main reasons (Palazzo and Richter, 2005). First, the industry’s constant dubious behaviour and public denial of their harmful products, even though being well aware of that fact (National Center for Tobacco-Free Kids, 2000). Second, the cigarette as the product itself cannot fulfil the minimum CSR criteria of ‘ primum non nocere’, a Latin phrase standing for ‘ first, do no harm’ (Drucker, 1973 as cited in Palazzo and Richter, 2005).
While desperately trying to be a good corporate citizen, the tobacco industry carries on feeding its detractors with dubious declarations and controversial actions. Although claiming to adhere to advertising restrictions, tobacco companies regularly conduct extensive political lobbying, still have intact PR machinery and continue hidden marketing activities, such as the Red Rush PR event that took place in Zagreb/Croatia (Last.fm, 2010). Recently PMI was accused of being involved in exploitation of migrant workers as well as forced labour in Kazakhstan (Human Rights Watch, 2010).
While CSR activities and its communication are aimed on gaining public trust, credibility, and a strengthened business, it seems hardly feasible this can be achieved by tobacco companies. Within a slightly skewed approach to the ‘ mainstream ’ concept of CSR, tobacco companies can perhaps be accepted as good corporate citizens (Palazzo and Richter, 2005).
In order for companies to achieve societal corporate legitimacy through CSR, they ought to be in the position to fulfil the following four CSR peculiarities that can be considered as the pillars of ‘mainstream’ CSR (Palazzo and Richter, 2005). Because of these limits the tobacco industry is restricted in adopting a full and widely accepted CSR approach. First, Corporate Philanthropy, which generally stands for a company’s charitable donations to various causes (Wilson, 2011), is limited for tobacco companies due to the fact that the majority of receiving institutions do not want to be associated with so called “dirty money” (Palazzo and Richter, 2005).
Second, for attaining close stakeholder collaboration, external groups fear a bad reputation as a result of cooperation with tobacco companies. Because of this, cigarette businesses are more or less isolated from an extensive stakeholder liaison. Proof of this is given on BAT’s website, stating that ‘ this is an area we have tried to address by inviting such stakeholders to our formal dialogue sessions but their willingness to participate remains a challenge. We remain open to meeting our critics and engaging in constructive discussion’ (BAT, 2011) When BAT initiated a stakeholder dialogue, only 34 of 167 invited stakeholders attended the UK sessions (Moerman and van der Laan, 2005). The NGO Action on Smoking and Health (ASH) stated that: ‘ we take a cynical view of dialogue - it’s about getting critics in a room to stop them criticizing you ’ (Lewis, 2003). Even though tobacco companies like BAT are providing a CSR report, there is a need of higher transparency and a call to address the core aspect and issues of its businesses, namely the annual death of its customers (Burton and Rowell, 2002).
As long as tobacco products continue to kill its users, companies in this sector will not be perceived as practising true CSR. In order for tobacco companies to achieve credibility and to be accepted as good corporate citizens, a ‘ transactional ’ approach to CSR performance must be considered (Palazzo and Richter, 2005). Adapting a ‘ transactional ’ strategy with respect to CSR demands addressing and responding to the changing expectations of a company’s key stakeholders in a way that is feasible and contingent for the company (Castelló et al., 2009). Whereas a ‘ transactional ’ strategy calls for absolute transparency, fair behaviour, the keeping of promises and the adherence to moral and legal rules of the society, a ‘ transformational ’ strategy, that stresses the companies’ benevolence and its pursuit to contribute to the welfare of the society, does not represent a reasonable strategic choice for the tobacco industry (Palazzo and Richter, 2005). This finding raises the question of why tobacco companies assert their integrity, as it seems like a battle that cannot be won. Palazzo and Richter (2005) attempt to provide an answer to this question: ‘ Tobacco companies have to accept that they are fighting on a different legitimacy battlefield. They are fighting for the mere right to exist.’
It must be noted that tobacco firms attempt, whether rooted in intrinsic or extrinsic motives (Du et al., 2010), to be better corporate citizens than maybe other industries. Realizing their eligible critique, the tobacco industry needs to be appreciated and recognized for its attempts even though there is room for improvement in the form of increased business operation transparency and stricter adherence to moral and legal rules.
Furthermore, it can be argued that tobacco companies are making too much noise about their CSR practices (Owoeye, 2010). As tobacco companies stand at the lowest level of acceptance, it could be therefore recommended to not unnecessarily draw too much attention on themselves. Sometimes, ‘ silence speaks louder than words ’.
As outlined before, stakeholder theory takes on a central role within the concept of CSR, and has gained an ascendency in existing CSR research (Jamali, 2008). In this perspective, companies are expected to responsibly address and manage an ‘ extended web of stakeholder interests across increasingly permeable organization boundaries ’ (Simmons, 2004). A range of studies have investigated the link between stakeholder management and CSR (Uhlaner et al., 2004; Abreu et al., 2005; as cited in Jamali, 2008). Through these studies a dependence of the stakeholder approach in a CSR context has been proven (Foster and Jonker, 2005). Whereas CSR as a concept leaves much room for interpretation, a stakeholder approach is much more practical and construable. It provides a meaningful and manageable implementation of CSR, as it is less complex for businesses to connect issues with relevant stakeholders (Jamali, 2008).
In their book, Friedman and Miles (2006) project fifty-five different definitions of the stakeholder approach. Among the main stakeholders, various subgroups can be distinguished. Whereas primary stakeholders are those directly involved in an economic exchange with the company, secondary stakeholders can be considered groups that still affect or are affected by a company’s objective, but are not yet directly involved in any economic exchange with the firm (Friedman and Miles, 2006). Generally, a company’s main stakeholder groups are labelled as being employees, suppliers, consumers and the local community (Longo et al., 2005), whereas Papasolomou-Doukakis et al. (2005) adds investors, and Friedman and Miles (2006) add shareholders to the range of main stakeholders.
Clearly, every industry and company is surrounded by a distinct environment, thus the range and relative importance of stakeholders to each business is unique. It is therefore essential for a company to distinguish and segment all relevant stakeholders and develop strategies to develop and maintain long-term mutually beneficial two-way relationships with each of them.
Stakeholders generally attribute negative attention especially to companies within controversial industries, like weapon, alcohol and tobacco (Morsing and Schultz, 2006). The stakeholder groups mentioned above represent the main stakeholders that every company needs to deal with. For the tobacco industry, and other listed above, NGO’s, governments, regulators and policy makers, the media and the general public represent powerful groups that are strongly affected and affect the tobacco companies’ objectives (Friedman and Miles, 2006).
In addition to the groups mentioned, BAT (2011) considers the scientific and public health communities and sustainability opinion leaders as important stakeholders, whereas PMI (2011) regards elected officials and community leaders as their stakeholders. In general, it can be said that the consumers are certainly one of the key stakeholders of every company within the marketing exchange process (Morsing and Beckmann, 2006). In 2001, according to a PMI executive, the company labelled its adult consumer as the company’s key stakeholder group, and created a Corporate Responsibility Team to actively address issues connected with this group (Hirschhorn, 2004). In that same year, BAT inaugurated their formal stakeholder dialogue program (Lawson, 2009).
Certainly, the tobacco industry needs to deal with a wide and diverse range of stakeholder groups. The extent to which companies need to address issues and interact with each distinct stakeholder group can be considered to vary, and it might be interesting to see how different stakeholder groups perceive the same CSR marcom. However this research will focus on the stakeholder group ‘ general public’, incorporating also the stakeholder group of ‘ consumers ’, which was before labelled as a key stakeholder group.
Based on the findings, the tobacco companies’ stakeholders could be structured as following within the PowerInterest Matrix (Figure 4) (Friedman and Miles, 2006):
Figure 4: Tobacco Industry’s Stakeholders in the PowerInterest Matrix
Source: Own Illustration
The following section of this research provides an overview to the field of how to communicate CSR to a company’s wide range of stakeholders.
‘For most companies, the question is not whether to communicate but rather what to say, to whom, and how often’ (Kotler, 2003, 563).
The communication of CSR can be explained as applying promotional means aimed on informing about an organization’s CSR and supporting a more CSR-based brand identity (Kitchen, 1999). The interest in CSR communications, meaning the communication designed to distribute a company’s CSR efforts, is a relatively new topic introduced in marketing research (Schlegelmich and Pollach, 2005; Du et al., 2010). Nevertheless, companies do not only see an increasing need to incorporate their CSR approach as part of their corporate strategy, they must also find appropriate ways to communicating their CSR to their stakeholders (Brønn and Vironi, 2001). Stakeholders are also becoming increasingly interested in companies attempting to convey a more socially and environmentally responsible image (Ziek, 2009). However, some researchers indicate that CSR communication does not necessarily positively affect a company (Sen and Bhattacharya, 2001), others prove CSR communication to enhance an organization’s image and reputation (Swaen and Vanhamme, 2004). Not only does the general theory of CSR presents a vague academic area (Coelho et al., 2003), but also the communication of CSR is quite diverse and can be approached from numerous viewpoints and theories (Morsing and Beckmann, 2006; Ziek, 2009). There are many ways a company can inform their stakeholders, through their annual and social reports, through the company’s code of conduct, through standards and product labelling, by sponsoring events, or through indexes or organizational linkages with cooperation partners (Ziek, 2009; Hellenic Network for CSR, 2011).
The opening statement suggests that it is not a question if a company should communicate and inform its stakeholders about their CSR approach, it is subject to how it should be communicated. If done in a meaningful way, CSR communications do not only provide a company with the potential for increased awareness, it also is a way of creating a strong bond between the organization and its stakeholders (Maignan and Ferrell, 2004).
CSR communication can be seen as part of a corporate communication strategy. Some see it as part of a company’s marcom, while again others might consider both communication approaches interchangeable. However, it can be framed that corporate communication is concerned with a whole range of activities that aim on managing all inward and outward communications with the objective to create beneficial starting points with the company’s stakeholders (Van Riel and Fombrun, 2007). Hence, corporate communications can be seen as the superordinate concept of a company’s communication (Lies, 2008). Marcom tools such as advertising, sponsorship, direct marketing, and PR are applied to convey a company’s CSR message with the objective to contribute to the corporate image and the company’s brand equity (Acikdili and Jahdi, 2009; Kotler and Lee, 2005). Marcom therefore is considered as an integral part of corporate communications, and is characterized by messages directing the company’s market (Lies, 2008).
One form of CSR marcom that became highly popular within the past decade is the concept of cause-related marketing (Nan and Heo, 2007), which is referred to as a tool for promoting CSR activities through various campaigns that are designed and delivered through collaborative social alliances with non-profit organizations (Liu and Ko, 2011). For example, PMI launched a cause-related marketing campaign with the purpose of collecting money to combat domestic abuse and providing aid for its victims. While raising the impressive amount of $60 million for the project, it became public that the company was spending an additional $100 million to communicate and promote its own generosity (Bischoff, 2000/2001 as cited in Stole, 2008).
Another vehicle of CSR marcom, which is becoming the most powerful marcom tool (Ries and Ries, 2004), is Public Relations (PR), which aims at building a good corporate image and heading off unfavourable rumours (Kotler et al., 2008).
Shimp (2010) differentiates between two major approaches to PR, ‘ marketing PR’ and ‘ general PR’. Whereas the marketing-orientated PR focuses on generating a favourable company image with actual and prospective customers, the more general PR aims at fostering goodwill between the company and its publics (Shimp, 2010). The PR department works closely with the company’s various publics, and considers themselves a minor part of the company’s marketing force. Their communication attempts do not necessarily need to be directly linked to the company’s increase in sales and profits – thus PR is sometimes referred to as a marketing stepchild (Kotler et al., 2008).
Nevertheless, the tobacco industry’s CSR communication can be considered as mainly a strategy to build and maintain the companies’ image and reputation with the organizations’ various stakeholders. Hence, it can be claimed, that the CSR communication of tobacco companies is a part of a market orientated PR approach, and can therefore be labelled as marcom. Ultimately this needs to be blended into the overall corporate communication of the company.
Marcom has always been seen as a so –called promotional mix, aiming at linking a company’s products with its consumers, applying tools like advertising, sales promotion, direct marketing, personal selling and PR (Pelsmacker et al., 2007). As a result of an increasing intensity of marketing messages and major corporate scandals with companies such as Enron or Worldcom (Mohr et al., 1998), the public has increasingly perceived marcom more sceptically. Companies therefore saw the need of applying a more ethical approach to conveying their messages (Kimmel, 2006). One example is the attempt of enquiring CSR media material and information from PMI for this research. A refusal to send any marketing material as part of the company’s voluntary ethical marketing code was received via e-mail (PMI E-Mail, 2011).
There are numerous communication platforms, such as advertising, sales promotion, personal selling, direct marketing and PR that can be considered the most dominant means of conveying marketing messages (Shimp, 2010). According to Acikdilli and Jahdi (2009), PR can be employed as a major marcom tool to convey an organisation’s CSR policies to stakeholders. Smith and Malone (2003) as well as organizations like Sourcewatch (2011) consider CSR to be a ‘ multi-billion dollar PR specialty in the business world ’. Generally, PR fuels suspicion and often the term ‘ spin doctors ’ is referred to the companies performing PR (Acikdilli and Jahdi, 2009). In line with the more critical views on CSR, Frankental (2001) classifies CSR as simply an invention of PR, which will not change unless CSR is able to gain real substance within the academic and business world. Nevertheless, tobacco companies do apply PR to convey their CSR messages to their stakeholders, which the following section will take a closer look at.
Tobacco companies’ marcom efforts take on many forms. It appears, that especially the corporate sponsorship of sports, arts, entertainment, and social causes present interesting means for companies to enhance the public’s perception of the credibility, trustworthiness, and social responsibilities of the tobacco sponsors. This consequently results in favourable company image and brand equity (National Cancer Institute, 2008).
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