Media Literacy and Auditing Corporate Reputation Craig E

Media Literacy and Auditing Corporate Reputation Craig E Carroll The University of Texas at Austin The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 1

n What is corporate reputation? The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 2

A Workable Definition n Corporate reputation refers to what the public perceives is salient about the firm or its characteristics (Fombrun, 1996). The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 3

Multi-Dimensional Nature of Reputation Emotional Appeal Products & Services Vision & Leadership Social Responsibility Financial Performance Workplace Environment The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 4

Why is Corporate Reputation important? n n People invest companies based upon reputation. People want to work for a company with a good reputation. People buy products or services from companies based on their reputation. People give “pause” and weigh incoming information against companies with good reputations. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 5

The relationship between RQ and change in market value is not symmetrical: Note: Stock prices and share volumes were examined on September 1, 1999 and October 1, 2000. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 6

The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 7

How are ‘corporate reputations’ formed? n n Direct Experience The Mass Media The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 8

n You cannot manage what you cannot measure…. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 9

Auditing Corporate Reputation vis-à-vis Media Monitoring 1. 2. 3. 4. Gathering Stories —Companies monitor their media coverage via news aggregators such as Lexis. Nexis. Topical index terms include both company names and subject headings. Building a Database of News —Each story in which the company is mentioned is streamed into a database; its position within the paper/magazine, publication name, date (plus time for broadcast), and the corresponding circulation or audience figure of the particular media are identified. Developing Dictionaries and Rules —The rules through which stories are coded involve much more than a simple list of search words. Coders “train” the computer to recognize the complex ideas being tracked through a series of transparent tests and retests on random samples of stories. Coding Stories — Once the dictionaries and rules are built and tested, each story is then scored for content that is relevant to any of the reputational attributes. These ideas are then summarized as they relate to each company mentioned in each story to identify the “tone” of writing about the company in each story. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 10

Measuring Media Coverage n n Prominence Salience The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 11

n n The prominence of media coverage devoted to particular companies affects the salience of these companies and their attributes in the minds of the public. Salience would occur in a number of ways: n n n which companies are thought about in the first place, how they are thought about (favorably or unfavorably), which issues described in connection with the firm’s name best describe the firm’s reputation, and whether the firm falls favorably or unfavorably in terms of these issues. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 12

Comparative Media Performance Well Above Average Tone Well Above Average Well Below Average Frequency The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 13

Example: Emotional Appeal Company: SR Group Estimated Number of Articles: 65 Number of Articles Reviewed: 40 Sources: Magazines, Journals and Newspapers The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 14

Example: Summary Chart Competitor 1 Competitor 2 Competitor 3 Competitor 4 Company Emotional Appeal High Low The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 15

Example Competitive Map Competitor 1 Competitor 2 Competitor 3 Competitor 4 Company Emotional Appeal High Low High Media Exposure The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 16

n Media exposure as a proxy for corporate reputation may not be as clear cut as a first glance may indicate. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 17

5 views of the media n n n 1: Reflects no distortion. 2: Influenced by media workers’ socialization. 3: Influenced by media routines. 4: Influenced by social institutions (“the market” or “social responsibility”. 5: Influenced by dominant ideologies. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 18

Media Literacy n Since the media influence: The images & opinions the public holds about major corporations n The measurements organizations use for gauging how the public currently respond, n n it is important to understand the political and organizational forces that shape which stories get told. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 19

Goals of Media Literacy n Media Literacy is concerned with individuals developing informed and critical understanding of the nature of mass media, n the techniques used by them, n and the impact of these techniques. n The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 20

Agenda-Setting Theory n “While the media may not be successful in telling us what to think, they are very successful in telling us what to think about. ” The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 21

n Mass media content is a socially created product, not a reflection of an objective reality. n n Media content ≠ real world indicators. Not everything “eligible” to be mass media content actually gets into the media. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 22

But n Who sets the media’s agenda? The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 23

News Room Norms n n n The longer a journalist works for a news organization, the more socialized they are to the policies (stated & unstated) of the organization. The more journalist follows the routines of their organization, the more likely their content is to be used. On stories without established routines (in the early stages of an issue) individual journalistic discretion will be more influential than routines. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 24

Routine & Public Events n Events that are congruent with media routines are more likely to be covered than events that are not. News off the beaten path may go unreported. n Issues without good film/video footage may not be included in TV newscasts. n A press conference held just before a newspaper’s deadline is more likely to be included than one just after. n The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 25

News values n n n Prominence/importance Human interest Conflict/controversy The unusual Timeliness Proximity The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 26

“Information subsidies” n n The growing dependence of mass media on press releases (and other PR efforts) by various organizations. The “insider” syndrome where journalists face pressures to cooperate with official views, formula writing and standardization. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 27

Journalistic “Balance” n Example: n A large, well-organized antiwar rally in Texas was given equal treatment with a much smaller, more disorganized pro-war demonstration. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 28

Influences on the Media Agenda n Advertising & Media Circulation n Capitalist Values: The Media subscribes to dominant capitalist values which supports the Corporate Agenda (e. g. , business, in general, is a good thing) The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 29

n Corporate Ownership: Independent newspapers are both more favorable and more disfavorable (e. g. . , more extreme) in their news coverage n Media Conglomerates: Companies with located within the media industry (e. g. , General Electric, AOL-Time Warner, Disney) will receive more favorable treatment than non-media conglomerates. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 30

Influences on the Media Agenda n Size: All other things being equal, larger (national) companies receive more media coverage than smaller (regional) companies. n Age: Older companies receive more media coverage than younger companies. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 31

n Regional Economies: The media write more favorably about companies/industries within the reach of their local economy than other similar companies outside the sphere of influence of the local economy. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 32

Influences on the Media Agenda n West Coast/East Coast bias: Companies headquartered in on East or West Coast receive more (favorable? ) news coverage than those HQ’ed elsewhere. n Diversity: All industries were to receive equal coverage, companies operating in multiple industries would receive more coverage than companies operating in singular industries. companies receive more media coverage than smaller (regional) companies. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 33

n Previous Reputation: Companies with n Celebrity CEOs: The media are drawn to better public reputations will receive more non -negative news coverage than companies with less favorable reputations. the Jack Welch’s of the corporate world. The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 34

Conclusions n Before “decoding” what impact media coverage has on corporate reputation, consumers need to be aware of: What goes into the production of news. n The “interaction” between media and “organizational” forces n The Reputation Institute 111 Fifth Avenue, 8 th floor New York, NY 10001 Telephone 212 -998 -0211 Fax 212 -443 -1006 35