New generation CSR-crisis management through social media : an explorative study on how organizations use social media in order to rebuild credibility after CSR-related incident

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NEW GENERATION CSR-CRISIS MANAGEMENT THROUGH SOCIAL MEDIA An explorative study on how organizations use social media in order to rebuild credibility after

CSR-related incident

Author Aleksi Ali-Lekkala Student number 11084235 Final version 23.06.2016

MSc in Business Administration – Marketing track University of Amsterdam

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STATEMENT OF ORIGINALITY

This document is written by Student Aleksi Ali-Lekkala who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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ACKNOWLEDGEMENT

My time as a student in Business Administration at University of Amsterdam is coming to an end by finalizing this Master Thesis. Passed year as Master-degree student at UvA has been a great learning opportunity for me and I have had the privilege to study abroad, find new friends and to be part of new culture. University of Amsterdam has been a great place for acquiring new academic skills, which I strongly believe will benefit my success in the labor market in the future.

Here, I have a great chance to thank my supervisor Dr. Lars Moratis, who can have a great deal of credit for completing this Master Thesis. He has given his time and effort to help me in my problematic situations and his approach to this project has been very professional. Corrections and comments from him have always been supportive, which have helped me to carry on with this project. I would also like to thank the whole University of Amsterdam –organization for believing me by admitting me to this Master –program and for offering me good quality courses throughout the year. A big thank you goes also to my family and my fiancé, who have given me endless support.

Hopefully you will enjoy reading this Thesis!

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ABSTRACT

Consumers have become more demanding about organizations sustainability issues and growing amount of people want to be more environmentally friendly. This trend has led organizations to improve their Corporate Social Responsibility (CSR) –activities but even though managers and companies try to improve their sustainability, sometimes negative things about their CSR-related activities can occur. According to Golob et al., (2013), social media is used to spread CSR-related advertising and annual reports but nowadays it is also used more and more for CSR-crisis management. There has been a lot of previous literature about CSR, CSR communication and crisis communication, but there is only very little research done about credibility rebuilding after CSR-related crisis and this is the very first research that explicitly investigates the role of social media as a mediator in this topic. The aim was to also fill the research gap presented by Colleoni (2013) and Heradstveit & Hagen (2011) in their work, where they suggested that more research has to be done in CSR-crisis communication through social media. Since the growth of social media has been very rapid and it is highly understudied in CSR-related area, it was decided to include social media for this research. This thesis contributes to existing literature by giving actual insights from real-life managerial-interviews, where situations and opinions come from 10 CSR-professionals from different companies. Based on the findings from these interviews, it can be concluded that different social media channels work differently for different CSR-crisis situations and that companies use social media for reaching large bases of consumers with very fast pace. Also findings indicate that the importance of social media as a marketing and communication tool will only rise in the future. This explorative research generates hypotheses and conceptual framework at the end of this thesis, from where future researchers can continue to work with the topic of credibility rebuilding after CSR-related crisis in social media.

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INTRODUCTION

1.1 Primary elements

The current way of society’s consumption is pressurizing the limits of our planet’s ecosystem. If our generation want to leave the same amount of resources that we had to future generations, “companies need to make drastic changes in their research-and-development, production, financial, and marketing practices if sustainability is to be achieved”, (Kotler. 2011: p. 1). Organizations have woken up to this situation and they have seen that CSR actions can also affect to the performance of the organization. CSR can have a big contribution to organizations performance, but the amount of that contribution can be inconsistent. Business returns from firm’s CSR activities depends on how well the stakeholders are aware of the firm’s CSR related actions. To get the most returns out of the CSR investment, it is important for managers to understand how to do CSR communication properly. This includes the questions around the message content, message channels and the attributes of company and stakeholders. CSR communication is very sensitive job to do, because while stakeholders want to know about the good CSR actions that the organization has done, the stakeholders can also easily get a feeling that the organization has extrinsic motivation if they advertise their CSR actions too heavily (Shuili et al, 2010). So with this communication problem, it can be seen that why current social media development might play a significant role in corporations CSR communication.

While some says that there is no such thing as bad publicity, CSR failure generates a negative publicity around the organization. For example Coca Cola was accused of mismanagement of water resources in India in 2008 even though Coca Cola tried to image itself as a global leader in water conservation (Srivastava, 2008). Also Puma claimed 2007 that their factories in China have had A-ranking for years in a row, but when China Labor Watch (CLW) investigated the conditions of the factory and worker’s,

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8 CLW reported that the conditions were actually really poor (China Labor Watch, 2008). Apple then have been accused that they only act if there is a complaint or protest against the organization and that they have only a reactive CSR strategy (Godelnik, 2012). Probably latest big CSR failure has been the large Volkswagen scandal. Volkswagen installed a device to their cars, which tricked the emission measurement software to show lower emission readings, but in real life the emissions were much greater and at the same time Volkswagen claimed to manufacture eco-friendly vehicles (Dans, 2015). When these kinds of CSR related failures and negative publicity from sustainability efforts comes public, organizations must come forward with a statement or explanation of what has happened. Social media can be seen as a good channel for organizational communication. Perry et al., (2003) argue that organizations, that engage consumers to interact with the organization before, during and after a crisis present a shift from one-way crisis communication to two-way crisis communication and social media can be seen as a two-way channel. According to Heradstveit & Hagen (2011), Internet has revolutionized people’s and organization’s responses to crisis and information travels quickly and almost real-time so organization’s response has to be almost equally quickly. Because the rise of social media has been rapid, organizations might use social media as a communication channel to deliver their CSR related messages, especially in this when trying to re-build credibility after CSR related incident. In this thesis, social media as channel in re-building credibility after CSR failure will be examined, so that it can be seen that in what ways and what level companies use social media as message delivery channel.

There is a lot of previous research about CSR and CSR-related communication but the amount of research about the credibility rebuilding after CSR-related crisis, especially in social media is very limited. One reason for this is that the rising of social media has been rapid and organizations have been present in social media for only a little time. Because of these aspects, this thesis is explorative in

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9 nature. According to Saunders & Lewis (2012, p.110), the definition of explorative study is “research that aims to seek new insights, ask new questions and to assess topics in a new light.” This is exactly what this research is about, finding new insights about relatively new topic and to make way for future research, since there has been hardly any previous research. This is the reason why this thesis is positioned strongly as an explorative.

This thesis will investigate that how and when organizations use social media, more specific Facebook and Twitter in their CSR related communications. According to THE SMI-WIZNESS SOCIAL MEDIA SUSTAINABILITY INDEX(2012), the most used social media channels by companies are Facebook and Twitter, so this study will mainly focus on these two social media channels in a crisis communication situation. The topic of this thesis concentrates on situations where organizations encounter a CSR related failure, what is the role of social media in responding to this failure and re-building credibility, re-re-building credibility acting as a dependent variable. This leads to a question of how organizations use social media in these situations, what kind of content they broadcast and what does the managers think, that how those messages affect consumers. Based on these questions the research question of this thesis is formulated as following:

Research question: What is the role of social media as a mediator in firm’s quick response credibility re-building after CSR failure?

1.2 Structure of the Thesis

The structure of this Master Thesis will be following: In the beginning of the literature review, concept of CSR is introduced and the reasons behind conducting CSR related activities and the effects of it are

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10 shown. Then social media is defined and the relationship between social media and CSR is investigated. Also because the credibility of CSR claims can be seen problematic and especially CSR claims from social media can be a pitfall, literature of the credibility of CSR is studied for identifying the main issues. At the end of the literature review, a research question is introduced, which represents basically the whole idea behind this thesis. After the research question is introduced, a conceptual framework will be presented where components, which author sees relevant, are present. Then research method, the sample and also the procedure are discussed. The final chapters will include the results from the interviews of the managers and after that a conclusion section rounds up the findings. Also limitations of this research, suggestions for further research and theoretical and managerial implications are represented.

1.3 Academic relevance

At the moment, current literature about the effect of social media communication in credibility rebuilding after CSR-related scandals or incidents is very limited and more research has to be done in this area. Heradstveit & Hagen (2011) studied the effect of social media in crisis situation, but they did not explicitly concentrate on CSR-related crises. This thesis adds to that previous study by adding CSR, which has different kind of characteristics, especially in a crisis situation. In her research paper, Colleoni (2013) underlined that more research has to be done about CSR-crisis communication in social media, which can be seen as a clear gap in the literature. Neither of these studies had a credibility rebuilding-variable, which is included to this study so this study adds to existing literature in multiple ways. This research adds more insights to this topic and goes further than the existing literature in crisis communication, especially in social media. On top of that, this thesis combines the area of marketing, corporate social responsibility, communication and social media content creation,

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11 since all of these are linked to each other, when creating a successful corporation image. This area of research had very limited amount of previous literature, so this study also acts as basis for future researchers, since more research has to be done, because of the multiple dimensions that this topic has.

1.4 Managerial relevance

Managerial and organizational interests towards sustainability issues and corporate social responsibility is rising, because of the awareness of global warming and worsening state of climate conditions around the world. More and more managers and organizations are willing to invest in sustainability, since it enhances the image of the organization, which is proven to affect positively on revenues. Since CSR-efforts are rising, the communication about it is also more visible than before and this also leads to situations where sometimes negative things can also occur. In these situations, managers should know how to answer and respond to these negative issues in a proper way, in order to gain back the credibility of the company. This research gives valuable insights to managers, that how they should act and respond in these situations, especially in social media. This area has very limited amount of previous research, so the findings can be very helpful for the managers, so that they can get the best possible outcome from these CSR-related incidents. In their study, Heradstveit & Hagen (2011) had very small sample, gathered only from one country which might result to low generalizability of the results. In this study when there were a lot more respondents, gathered from 3 different countries, the results are more generalizable and the results can be used by more managers. These managers can use the findings of this study to find the best social media channel for their purpose and they can also understand that what kind of content should be used in different social media channels. With the findings of this study, managers and organizations can perform better in today’s market and achieve the best possible outcome from their CSR-related communication. The effect of correct crisis

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12 communication has both short-term and long-term effects on organizations credibility and image. The main point is still to create valuable insights for academics and managers, who have interests concerning credibility rebuilding in social media after CSR-related incident.

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2. LITERATURE REVIEW

2.1 Corporate Social Responsibility

2.1.1 Defining CSR

It is hard to give definition to Corporate Social Responsibility (CSR) because of its complexity but one way of defining it can be as an organization’s strategic plan to take responsibility from their business actions in environmental, societal and economic dimensions (Werre, 2003). According to Malik, (2015) organizations align their social goals with organizational goals and CSR is used as a strategic tool for maximizing firm value, shareholder and stakeholder value. Kotler and Lee (2005) then define CSR as “a commitment to improve community well-being through discretionary business practices and contributions of corporate resources” (p.3). Carrol (1991) created the Pyramid of Corporate Social Responsibility, which consisted four layers of responsibilities concerning CSR: economic-, legal-, ethical- and philanthropic-responsibilities. Upon these different layers, organizations can build their own CSR-policies.

Complexity of the CSR becomes from its context and nature, for example it is hard to underline what kind of industry generated harms must be focused on and what kind of effects these actions will have to the organization. Some think that if organization produces small harm somewhere far away, it doesn’t need any attention but some in the other hand think that all of the harms that organization’s actions create must be addressed. The ecology, society and the economic system is highly mixed entity and CSR can have effect to all of these sections (Sheehy, 2015).

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14 Corporate social responsibility (CSR) has existed a long time, traces of evidences can be found from centuries back, however most of the literature is produced in the past 50 years (Carroll, 1999). Since the arise of environmental and labor market concerns, there has been a huge increase in CSR investments, issuance of CSR reports and in-depth research analyses, which clearly shows the importance of the CSR topic in the current business literature (Malik, 2015)

2.1.2 Why organizations engage in CSR-related activities

According to Aguinis & Glavas, (2012) there are 5 different reasons why organizations engage to CSR. First is, that organizations engage to CSR because of the instrumental reasons, such as expected financial outcomes and performance. Secondly, there are normative reasons, such as organizational values, for example when organizations believe that they are doing the right thing. Third, there is a positive relationship between organization’s CSR activities, policies and financial returns. Furthermore, there are numerous non-financial outcomes that corporations receive from CSR activities such as improved product quality, operational efficiency, attraction towards investors and buyers and more diversified demographics, for example ethnic minorities. Fourth, CSR can be seen as an opportunity that organizations can exploit. And finally, when thinking about relationship between CSR-outcomes moderators, relationship becomes stronger when the level of exposure and visibility are high and the organization’s size is large.

One reason behind organization’s CSR related activities is that CSR can produce significant amount of financial benefits and this topic has gotten a considerable amount of attention in the literature. Peloza et al, (2012) argues that sustainability can enhance firm’s financial return in multiple ways, such as energy reduction, waste recycling and sustainability can even be seen as a source of innovation within the organization. But most of all, sustainability can affect to performance through the positioning of the

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15 organization with stakeholders. Brown and Dacin (1997) argued that positive CSR associations in corporate context enhanced the product evaluations and on the other hand negative corporate associations decreased product evaluations. Luo and Bhattacharya (2006) show’s us that CSR affects to firm’s market value and financial gains are gathered through customer satisfaction. Du et al (2011) then argues that CSR can be used as a challenger’s competitive weapon against market leader, where the challenger gets more positive attitudinal and behavioral reactions among consumers who participated in challenger’s CSR initiative

When company is investing to CSR, they will not only achieve positive stakeholder attitudes and behaviors, but also, they will enhance corporate image and strengthen relationship between stakeholder and company. Also stakeholders’ advocacy behavior increases, such as word-of-mouth and employee commitment. CSR can backfire, if stakeholders become suspicious about firm’s extrinsic motives in firm’s CSR activities. Corporations must overcome these suspicions to create positive CSR attributions. To maximize benefits from CSR, companies must gain deeper understanding of how to communicate in the most effective way (Shuili et al, 2010). Although existing studies concentrate mostly on the positive impact of corporate responsibility activities, there can also be negative ones. Lopez et al (2007) argue that the relationship between firm’s performance and CSR is negative, especially in first years when CSR policies, such as training, safety, pollution prevention, non-polluting technologies and recycling are implemented to corporate strategy.

On top of financial returns, CSR can have positive effects to organization’s reputation and as well to brand equity. For companies to capitalize on the potential of brand-building with sustainability, executives must create real and perceived CSR claims that are superior to competitors (Peloza et al, 2012). Firm’s CSR activities are perceived to create trusting relationship between the firm and the

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16 consumer (Torres et al, 2012). Hur et al, (2014) presents a corporate brand credibility, which is based on consumer trust as a mediator, linking perception of the firm’s CSR to corporate reputation and brand equity. Their study showed that CSR has a significant, positive, effect on corporate brand credibility and corporate reputation. Torres et al, (2012) argue that the effect of CSR that is directed to stakeholders is positive to brand equity both long term and short term.

2.2 CSR communication; why and how?

According to Brønn and Vironi (2001), a company which engages to socially responsible activities must understand that they operate in shared environment with stakeholders and these stakeholders have mutual impact to firm’s achievement of the objectives. Because of this relationship, the management of this relationship is important and it is the core of CSR. Organizations must establish two-way communication with these stakeholders so that the objectives can be met. For stakeholders, it is important that the CSR campaigns are trustworthy, honest and that the organization has a long-term commitment to a cause. There are things that affect the stakeholders’ perception of firm’s CSR claims, such as the company-cause fit, commitment to a cause and attributions made by consumers about the firm’s motives to engage in CSR activities. Consumer response to firm’s CSR activities was best, when consumers attributed both value-driven and strategic motivation as firm’s motivation to engage in CSR. With high-fit between company and cause, consumers felt that the motivation behind firm’s CSR is the willingness to help others, while this led to higher purchase intent. Low fit between company and cause was seen as a reaction to stakeholders’ pressure. With high fit, it was expected from the firm to be committed for a long time to the cause. With low commitment to a cause, consumers’ viewed that organization is only trying to meet the expectations of others and not acting by their own values (Ellen et al., 2006). To establish these attributes in a CSR-related campaign, organization must not only adopt

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17 CSR as a part of the whole organization, but also communicate this to the stakeholder. Chaudhri & Wang (2007), also argue that the key issue of CSR is a transparent and proactive communication.

Organizations face a dilemma of how to create something concrete out of CSR activities. This dilemma is usually figured out by referring to the channel that organizations use for communication. Previously CSR has been communicated through web-based communication for addressing the characteristics of CSR content, advertising for CSR disclosure and annual reports for reporting general guidelines and stakeholder issues (Golob et al., 2013). Social media can nowadays also be counted as communication channel for CSR activities and the amount of organizations using social media is rising. Yeomans (2013) put it this way “By empowering people with the sensibility that their voice matters and can make a difference, social media technologies have changed forever the way people communicate and act online. Sustainability practitioners at first were slow to realize social media's potential to help communicate their efforts but over the last three years they've made up for lost time.”

Social media is a term that seems to appear everywhere in our current society and especially in marketing and communication. Companies are participating and they are seeking to exploit the extensive possibilities that social media offers. For example, a great percentage of consumers review the products and services in social media, and other consumers refer to these reviews before making purchase decision. For this buying decision, word of mouth messages in social media plays an important role and companies can try to exploit this opportunity (Ghosh et al., 2014). We have seen the rise of the social media platforms, such as MySpace (2003), Facebook (2004), Youtube (2005) and Twitter (2006), all within the last decade (Kaplan & Haenlein, 2010) and the number of social media platforms are growing. Social media can be defined as: “a group of Internet-based applications that

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18 build on the ideological and technological foundations of Web 2.0, and that allows the creation and exchange of User Generated Content”, by Kaplan & Haenlein, (2010, p.61).

TV and printed media are channels which involves only one-way communication, in the context of corporate advertising messages. Some of the social media platforms can be seen as a two-way communication channel with asymmetric response, these platforms can be websites and blogosphere. In asymmetric response category, visitors can leave comments without changing the dominance of the author’s voice. Some of social media channels, such as Facebook and Twitter, provide two-way communication, which is close to symmetric. On the other hand, there are also risks in two-way communication between stakeholder and the organization, such as raising stakeholders’ expectations and not being able to meet them, and this can harm organization’s reputation (Lyon & Montgomery, 2013).

Social media increases the amount of information that consumers and activists can get, which increases the amount of surveillance the firm gets (Lyon & Montgomery, 2013). As the usage of social media increases, consumers are more empowered and more in control of the messages from the media, because consumer have a much wider access to information than before. Some organizations have begun to exploit the possibilities from social media by promoting their organizational values and responsible behavior. For example, Tom’s Shoes uses Twitter for their CSR communication, which is donation program for kids in developing countries who are in a need for shoes. Toyota uses Facebook for their “Cars for Good” CSR program, which has a purpose to engage communities all over U.S and these are just a few examples to mention. Even smaller organizations, such as Patagonia engages to CSR activities and the results have been good, Patagonia has doubled their revenues in eight years. As

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19 it can be seen, social media has a great power for diffusing ideas and messages around the world to the target audiences (Kesavan et al., 2013).

There are multiple different social media channels that organizations can use for their CSR communication. Companies have also a very different kind of CSR-related campaigns and the used social media channel depends a lot from the nature of the campaign. The SMI-Wizness Social Media Sustainability Index publishes annually a report, which “takes an exhaustive look at how 400 global publicly listed companies are communicating their sustainability actions and initiatives using social media” (THESMI-WIZNESSSOCIALMEDIASUSTAINABILITYINDEX2012, p.4). According to this report, the most used social media channels for CSR-related communication are Facebook, Twitter, Youtube and Blogs. Because Facebook and Twitter are clearly most dominant channels that are used, this thesis will concentrate on researching organization’s Facebook and Twitter usage in CSR-related communication.

2.3 CSR failures and communication responses

While a lot of companies engage in CSR-related activities, sometimes media or activists find out CSR scandals or failures, where organizations neglect environment or social communities with their business actions. Cedillo Torres et al., (2012) researched some of the known CSR-related scandals and organizations responses to these scandals. Coca-Cola was in the center of scandal in 2003, when Indian NGO Centre for Science and Environment (CSE) found out that Coca Cola and PepsiCo beverages contained amount of pesticides which exceeded European standards. After founding out the pesticides, CSE contacted Indian government so that better water standards could be applied. This scandal gathered massive amount of publicity in media and public, which could be seen immediately in

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20 Coca Cola revenue streams. Walmart got caught on using child labor in Bangladesh 2005, when 10-14 years old children were found working on Walmart’s factories which produced products for Walmart’s Canadian market. This finding let to the situation that Walmart had to close two factories immediately. Also Apple has been in the center of CSR-related scandal and maybe the most famous one is the Foxconn worker’s suicides in China. Foxconn is a manufacturer of iPhones and iPads and Foxconn includes over 15 factories and 900,000 workers. Undercover investigation discovered that that the facilities on these factories are good but the management is horrible. Managers are military-like, workers were not allowed to interact with each other and workers had to do over 70-hours in a week. This led to exhaustion and at least 13 worker committed suicide.

When the scandals appear, the organizations response becomes relevant. Different companies take different kind of approach to these scandals, some try to brush it under the carpet, some try to fight against the accusations and some tell the truth and promise to behave better in the future. Coca Cola’s strategy was to try to regain consumer trust by statements and attempts to be more transparent but the damage to Coca Cola’s operations were too heavy. This resulted to the decision of implementing more strict CSR-policies which Coca Cola uses still. Walmart’s decision was to fight back and to try to overrun the accusations. This approach did not work for them and Walmart ended up implementing CSR policies for non-discrimination. Apple then decided to publish separate statements in its annual Supplier Responsibility Progress Report. Apple also required that its suppliers should take immediate actions for preventing child labor now and in the future (Cedillo Torres et al., 2012). In this thesis, these kinds of CSR-related scandals will be examined but more specific from social media angle. Verhage, (2014) conducted a study of CSR communication through social media. The results indicated that the CSR communication has moved to social media and twenty percent of the Dutch energy companies Facebook messages included CSR communication. These messages contained different kind

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21 of content, for example encouragement of CSR behavior or describing outcome of CSR-related actions but no scandal communication was included.

2.4 CSR communication through social media in crisis situation

A lot of current literature has been concentrating on the communication of CSR and the message content of the CSR communication, but very little is yet known on the scandal communication through social media. Although the literature for social media as a CSR communication channel has increased dramatically in recent years, there are only few studies yet about CSR crisis communication through social media. Heradstveit & Hagen (2011), studied social media as a crisis communication tool with a research question “How can companies of the 21st century utilize social media as a communication tool when dealing with stakeholders in a crisis situation?” They found out that if organizations want to achieve good reputational effects after a crisis, organizations should concentrate on two-way communication with stakeholders and social media is particularly good channel for two-way communication and thus, it can be used as an effective communication channel. This study by Heradstveit & Hagen (2011) can be seen as a good starting point for my thesis as they address a small sample from only one industry as a limitation of their paper.

Also Colleoni (2013) addressed a limitation in her research paper, where she underlined that further research needs to be done about CSR crisis communication in social media. Neither of these studies concentrates particularly on the re-building credibility after CSR-incident and so this can be seen as a clear gap in the literature and acts as a good starting point for Master Thesis. After a CSR-related crisis, organizations want to regain the credibility in the eyes of consumers, which creates an interesting angle for CSR communication. How can organizations communicate their CSR-related content so that the

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22 credibility of the organization can be strengthened? Because there are only few previous studies on this topic, this thesis will be exploratory in nature, so hypotheses will be formatted at the end of the thesis, so that further research can be done on the basis of these hypotheses. So after identifying this gap in the literature, I have decided to choose the topic of the relationship between social media and the re-building credibility after CSR conflict.

2.5 Credibility rebuilding after crisis

Sometimes even though managers and organizations try to achieve positive results from their CSR-related activities, the results are not as good as they anticipated. Because of the sensitivity of CSR as a topic, many stakeholders see things differently than what the company has presented. Especially now at the age of social media, consumers can find negative aspects about organizations more quickly than ever before. This leads to situation where more negative things can be found from companies and their activities, and those negative things can spread through social media in a matter of hours. Because of this managers and organizations have to react to this negative publicity and they have to try to regain the credibility they once had.

According to Bonini et al,. (2009), things that can affect credibility rebuilding are the growing importance of web-based media, importance of NGO’s (non-governmental organizations and also decreasing trust towards advertising. Organizations and managers have to also make better efforts in listening their customers, in order that they can be prepared better to emerging issues. With this better relationship, organizations can create better understanding about stakeholders and their concerns. Organizations reputation is based on consumer’s perceptions and organizations have to know what are

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23 expected from them. When they know that, what are the expectations towards them, they can try to meet those expectations and rebuild their credibility.

Bonini et al., (2009) argue that that credibility is not built on communication but more about the actions that the company does. Companies have to communicate about their actual actions that they have done and to not only rely on communication through third party, such as NGO’s. It is also argued that transparency is a key thing for convincing consumers that the organization is heading towards right path after the crisis. According to Lindström (2015), there are 5 steps for rebuilding credibility after PR-crisis and those steps are acknowledging the issue, identifying your friends, creating empathy, turning your tables around and rebuilding reputation. With these steps, organizations will cope better with crisis and they can start to rebuild their credibility.

After reviewing the existing literature, a conceptual framework and 3 hypotheses are formatted. Since there is very limited amount of previous research done about this topic, this thesis is explorative in nature. This means that the hypotheses and conceptual framework that is presented after the literature review are preliminary and these hypotheses and conceptual framework will be adjusted with the findings from this study in the discussion section. These preliminary hypotheses and conceptual framework are as follows:

Hypothesis 1: Social media, especially Facebook and Twitter are useful communication channels for CSR-related content, since they can be used to reach fast large bases of consumers.

Hypothesis 2: Negative publicity from CSR-related publicity can be turned to a positive by responding fast and transparent in social media.

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24 Hypothesis 3: When a CSR-related crisis occurs, organizations should communicate about it in social media, especially in social media and not try to hide it, in order to rebuild the credibility.

FIGURE 1, CONCEPTUAL FRAMEWORK

Regaining the credibility H1 Reaching large base of consumers H2 H3

Reacting fast and transparent

Being open about the situation

Usage of social media in

CSR-related crisis communication

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3. METHODOLOGY

3.1 Research method and sample

This Thesis will investigate that how and when organizations use social media, more specific Facebook and Twitter in their Corporate Social Responsibility (CSR) related communications. Verhage (2014) conducted a study of CSR communication through social media and the results indicated that the CSR communication has moved to social media. Colleoni (2013) addressed a limitation in her research paper, where she underlined that further research needs to be done about CSR crisis communication in social media. Qualitative research method is chosen for this Thesis for couple of reasons. First reason is that since the topic is relatively little studied, this research will be exploratory in nature, which leads to hypothesis-generating perspective rather than hypothesis-testing and because of this exploratory nature, qualitative method, such as interviews are suitable for the purpose of this research (Saunders & Lewis, 2012). Second reason for choosing qualitative method, more detailed interview-technique was because interviews give insight to actual situations in real-life contexts (Gephart, 2004). The qualitative method gives respondents more freedom to explain their opinions and explanations, when compared to quantitative methods, such as surveys. Qualitative method allows also the interviewer to ask more questions, so that all of the details can be explained properly and everything is clear for both parties in the interview. Third reason for choosing qualitative method is the sensitivity of the topic. Some companies, specifically those who have encountered CSR-related crisis, might not be so willing to talk about their mistakes and crises if those crises have happened recently and the wounds are still fresh. By interviewing respondents by Skype or by telephone, the uncomfortable-feeling can be reduced and of course anonymity is promised for the respondents.

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26 Inductive approach is applied, because the topic is relatively new, so there is no previous theory existing. In inductive strategy, a specific observations, measures, patterns and repeated occurrences are used in order to create hypotheses and in the end conclusions or theories. Also inductive strategy is more flexible for changes during the research, which is useful criteria while studying a new phenomenon (Saunders & Lewis, 2012).

The selected companies for this research were selected by purposeful sampling, where the most suitable sample to answer the research question will be selected (Marshall, 1996). There were three main criteria for selection of organizations. First criteria were that the organization is active in social media. This was really important aspect, because this research concentrates on CSR-related communication through social media, so it is very important the particular organization is active in social media. The criteria for social media usage were limited to Facebook and Twitter. The second criteria for choosing the organization were the particular organization has a strong level of CSR-participation. With the strong level of CSR-participation, it could be ensured that the organization has had effective campaigns and related plans for the future. Also it was important that the CSR-related campaigns of these campaigns had gathered visibility among the audience and specifically if the organization had faced CSR-related campaign, the strong CSR-participation ensured that the crisis had been quite significant and public. Third criteria for choosing the organization were that the particular company is operating in international level. This ensures the visibility of the organization’s CSR-related activity. The goal was to gather managers from 5-10 suitable companies and these organizations were found from CSR networks, supervisor’s networks and from my own networks.

An invitation was sent to all possible respondents in the organizations and the aim was to approach firstly the CSR-manager of the company and through her or he, try to invite also communication

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27 manager or social media manager. The goal was to get two managers from different positions around the table at the same time to ensure the reliability and validity of the answers and after discussion with the Thesis supervisor, the positions of the interviewed managers were decided to be such as social media manager, communications manager and/or CSR manager. In the invite it was told that these interviews will happen face-to-face or by Skype, depending on the location and the availability of the respondents. Based on previous theses with similar research designs, the length of the interviews was promised to be around 45 minutes and it was promised to respondents that the interviews will take maximum of 1 hour of their time. In the invitation was also mentioned that the respondents will be part of a Master Thesis in Business Administration at the University of Amsterdam and the topic of the research was explained more detailed in the invitation. On top of that, a timeframe for answering was given and that the interviews would take place during a period of four weeks in April and May 2016. If the manager of the particular company was willing to participate, it was asked from them to appoint a suitable time, date, location and preference for a face-to-face or Skype-method for the interview. The invitation request was sent to overall of 55 companies, from which 10 managers were willing to participate to this study. Other did not respond at all, or informed that they were unable to participate due to limited resources of theirs.

Because of limited previous knowledge about the subject, there is a need of insider perspective so all interviews will be conducted in semi-structured way and by using semi-structured interviews it can be made sure that the answers are detailed and in-depth (Leech, 2002). Interviews were recorded, if respondents gave permission, so that the interviews could be listened later and all the details from interviews could be collected (Saunders & Lewis, 2012).

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28 To achieve good validity and reliability of the research, certain strengths were identified such as accurate answers from respondents. Because the topic is relatively little studied, the best way to get most reliable data is to interview managers, who have faced these situations in real business life. In this way, gathered data is real data and not assumptions.

3.2 Research procedure

After indicating and finding suitable organizations to the study, an interview date and time was agreed. If a respondent wanted to answer in a written format, the questions were sent in a Word-document, so that the respondent could fill out the document with their opinions and remarks. If the respondent agreed to have a interview, it was agreed whether the interview would happen via Skype or a mobile phone. Some of the respondents did not have the possibility for a Skype, so the interview was done by mobile phone but because of the high prices of calling to other countries, Skype was preferred. All the interviews were done on either of these ways and no face-to-face interviews were possible since the respondents were many times abroad and with these given resources, travelling for face-to-face interviews were not possible.

Once the lines were open, each interview started with a introduction of the researcher and the topic. Also the main terms such as CSR were many times explained even in the emails before the actual interviews. The topic was made clear, so that the respondent knew exactly that what was the whole research about. Before starting with the questions, it was made clear that all of the answers will be confidential and anonymous, so that the respondent would feel comfortable with giving answers and also permission to record the interviews were given by all of the respondents. After making these things clear, the actual interview could be started.

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29 The form of the interviews was semi-structured, because of the uncertainty of the answers, complicated questions and also because of the possibility to change the order of the questions (Saunders & Lewis, 2012). The interview contained ten main questions but sub-questions were asked, if the answer of the respondent was not clear or if there was more to ask about the topic. Also some of topics could be dropped out from the interviews if they were not suitable for some particular respondents (Saunders & Lewis, 2012). The most general questions were placed in the beginning of the interview and the more specific ones were left for the last. During the interview a small breaks were given to respondents so that they would have more time to think about their answers and questions were repeated if respondents did not hear clearly or if they did not understand fully the question. Also probing-technique was used in cases when there was clearly something more to get about the topic from the respondent, such as “Can you tell a little bit more about this” and “What did you mean when you mentioned this?”

Aim of the first question was to understand the motivations for doing CSR-related activities of that particular company and the reasons of why they are doing so. The first sub-questions was that how those CSR-related activities of that company is communicated towards stakeholders and this was asked to understand their ways of communication. Purpose of this was to reveal if that particular company has strong CSR-related communication towards stakeholders, or if it only relies on consumers own willingness to find information. The second question was about their CSR communication strategy, whether they use one-way or two-way-communication, or other words if they only push their information towards stakeholder or if they have interactive relationship with consumers. Next question was continuum for the previous one and on the third question it was asked if that particular company has received any feedback about their CSR-related activities, and if yes, from which channels. The purpose for this was to find out if that company has been communicating with the consumer and also to find out which channel was the most used by those consumers.

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30 The next part of the interview focused mainly on the social media aspect. The first question of this section was about if the company is active in social media and which social media channels are the most important ones for that company. This was asked in order to find out, if that company uses mostly Facebook and Twitter, which were recognized as the most by used social media channels by organizations (THE SMI-WIZNESS SOCIAL MEDIA SUSTAINABILITY INDEX 2012). The next question was about whether that company uses social media in particular for CSR-related communication and what are the objectives of doing so. This way it could be found out, if that company has a clear social media strategy for CSR-related material. The sixth question of the interviews was about the type of content organizations post on social media and the results from this. With this question it could be found out of what type of content organizations post on social media, whether it is articles, CSR reports or user-generated-content and what have been the results of these posts. Next one was about the value of social media compared to more traditional communication channels, such as websites or product labels and how do these managers see the development of social media in the CSR-related use in the future. This question gave answers to the managers’ ideas behind the usage of social media for CSR-related material.

The final, and the most important, part of the interview contained three main questions and these questions dealt with the CSR-related crises or scandals, and how companies responded to these situations. If that particular company haven’t faced any CSR-related crisis or scandal, it was questioned whether these companies have prepared for this kind of situation. Question number eight was about whether that company has faced any CSR-related scandal, and if yes how did they respond to it, and if no, how are they prepared for this kind of event. With this question, it was asked to tell detailed about the scandal, how it affected the company, how did they respond to it and how the response was received by the consumers. If the company hasn’t faced any scandals, it was questioned if they are

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31 prepared for it, how they are prepared for or in some cases, if they have even thought about it. Second to last question was about active communication through social media after CSR-related scandal, and that do those managers believe that active communication through social media will be beneficial for regaining the credibility after the crisis. With this question, managers had the chance to tell their opinions about social media usage in these kinds of situations and why they thought so. In the last question of the interview, it was asked that what are the key aspects in rebuilding the credibility after CSR-related crisis and that if those managers thought that social media is a good channel for that rebuilding. In this question, respondents had the chance to freely give their opinions about rebuilding the credibility and how it should be done and also whether the managers thought that social media is a good channel for that credibility rebuilding. After the final question, a big thank you was given for their time and efforts and contacts were given, if they come up with any additional information or answers later. Results of the research were promised to them, and all of them wanted to also have them, once the study is finished.

3.3 Data analysis

Conventional content analysis is applied to this Thesis for a couple of reasons. First of all, because of the limited amount of previous research literature and the existing theories conventional content analysis is the best way to approach the data for this Thesis. Second, the knowledge gained from the conventional analysis is based on actual data gathered from managerial interviews, so they are not assumptions. (Hsieh & Shannon, 2005). The interviews were transcribed accurately and the data analysis started by reading all the interview transcripts repeatedly to get an idea of the whole topic. After this, the concrete analysis started where the transcripts and notes were read word by word so that some codes would appear. This phase is really important, since without a good knowledge about the

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32 data, it is impossible for researcher to do credible research about the topic (Ruusuvuori, Nikander & Hyvärinen, 2014)

Once this coding had been going on for a while, those codes were divided into categories, themes, based on how they are related and linked to each other. (Hsieh & Shannon, 2005). When analyzing the collected data, there will always be arising new angles from which to study the topic. This leads to decisions for a researcher of how strictly the researcher will follow the research question and will the researcher decide to follow the new arising topics (Eskola, 2015).The codes and themes changed during the process but the final amount of codes that were derived from the transcripts was 239 and the amount of themes was 11. The themes that were derived from the data were as follows: Active social media communication after crisis, characteristics of social media, credibility rebuilding, CSR activity in social media, CSR communication, CSR communication strategy, CSR-crises, feedback, motives for CSR, reasons to use social media for CSR communication, types of CSR content in social media.

Qualitative research data can be analyzed with the help of computer software’s and in some cases the usage of assisting software’s is even recommendable (Gephart, 2004). So because of this, an analysis software tool was decided to use, Nvivo in particular. This software was chosen because of its relatively simple usage, import of documents can be done directly from Word (where all the interviews transcriptions were) and because of the possibility to code the documents on the screen (Welsh, 2002). Also one of the criteria for using Nvivo was the free availability on the university campus. When using conventional data analysis, comparing to existing theories and previous research happens in the discussion section of the Thesis (Hsieh & Shannon, 2005). Some patterns were recognized from the transcripts of the managerial interviews (Saunders & Lewis, 2012) and these patterns are discussed in the results-section.

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4. RESULTS

4.1 Motives for CSR

Because of this Thesis is all about CSR, it must be understood that why companies engage in CSR-related activities and how do they personally perceive the importance of CSR as a part of their business. When talking about CSR, it often comes to question whether the motives behind doing CSR-related is intrinsic or extrinsic, in other words whether the company is participating to CSR from their own will or because of the strong external pressure. This was the case with the respondents as well, most of them said that their participation to CSR is mainly because of their own willingness to be a model citizen but also external pressure was mentioned, as one manager said “Well in our case, this CSR is based on both voluntary and it is kind of required by law but of course the questions and the pressure is external”.

Many managers felt that CSR was not a separate unit or a “thing” to participate but they felt that CSR is built into their way of doing business and into their organization as a whole and one organization, which felt that the CSR is more built to their DNA told “Our wants to be a good corporate citizen and hence our corporate responsibility is reflected in its strategy as well as its success factors of commitment to care, simplicity and courage. Responsibility is integral to all our operations”. From this it can be easily observed that there are multiple different point of views to CSR-topic and organizations and managers all see it in a bit different light. It also makes the studying the topic of CSR interesting and at the same time complicated, which also leads to many studies regarding CSR since there is some many different point of views. Many times people tend to think CSR only as a way of protecting the nature and the environment but many times they keep forgetting that CSR is also about protecting the wellbeing of the people in the supply chain, the manufacturers and also people working in those

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34 companies. This was addressed by many managers, and one example from this was as follows: “The main motto of our company is to create a better every-day life, also for the people who are involved in the supply chain, involved with the company, so that means customers, employees of the company but then also all the people that are linked to production. If we have an impact to people, we want that impact to be positive”.

Since this study included multinational companies, from which every one of them operated in multiple countries, their way of doing things were different compared to each other. One good example from this is being part of a bigger mother-company. This makes conducting and reporting CSR-related activities a bit incoherent, “We follow the decisions regarding CSR made in our parent but of course we have had our own legislations and regulations even before we weren’t part of our current parent company”. Also since some organizations parent companies are listed companies but the subsidiaries are not, CSR-reporting might be a bit complicated as one manager told “Us as subsidiary, we don’t have to give any specific CSR-report since we are not a listed company whereas our parent company has to”. This leads to situation of inconsistent reporting and communication between organization’s sub-divisions in different countries and many times it could be notified that the organizations don’t have a clear idea or strategy in their CSR-communications across the countries and the crisis communication might be inconsistent inside the company. Since the companies that were included to this study all operated on a multinational level, many of them still did not have a unified CSR-communication strategy between the countries ”I cannot say that we have a really unified, social media approach, activity really depends on country to country”. This situation was addressed by some companies and they had plans for unifying their communication strategies between the countries. When asked from one manager that whether they have unified social media communication strategy between the countries they operate in, the answer was “They are a little bit different. We have tried to make

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35 global digital strategy but we not managed to finalizing it yet, so I can’t say that we have for now a one finished digital strategy for our brands We do have a strategies, channel strategies for individual markets, so in Finland for example the strategy is telling the story about our brands in Finland and it would be the same in Denmark and so on. So it varies a little bit”. This was the case in many companies, they did not yet have a unified strategy but they have started to work on it. If a company doesn’t have clear, unified strategy, it might lead to inconsistent communication, especially in a case of crisis it might be a reason for the decreasing credibility of a company.

4.2 CSR communication and communication strategies

Since my research question is What is the role of Facebook and Twitter as a mediator in firm’s quick response re-building credibility after CSR failure, it has to be understood that how companies interact and communicate towards their stakeholders so that the role of Facebook and Twitter in organizations communication strategies can be examined. Organizations can have multiple ways of communicating with their stakeholders and many have even different target groups to aim their communication efforts, so it is important to understand the communication strategies of different companies or if they even have a clear strategy at all.

When talking about CSR-related communication, some of the managers found it hard to distinguish between CSR-related communication and normal business-related communication, since by their opinion, CSR is part of their DNA and everything they do is somehow related to CSR: “So if start from these things, of course you can always look things through “CSR-glasses”, secondly this stuff is our core business that we operate by the laws and regulations, so CSR is part of our everyday life and communication. So you cannot really distinguish them, since they go hand in hand”.

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36 There were also distinguished two different types of CSR-related communication, proactive which means forecasting the future topics, and reactive which means reacting to situations and phenomenon’s that have already happened. This is particularly important concerning the topic of this Thesis, since rebuilding the credibility after a CSR-related crisis is reacting to situation that has already happened. By being proactive, this crises could be prevented or at least minimize the impact. One of the companies that participated to this study underlined this subject, “We conduct both proactive and as well reactive communication, for example in our social media channels”. Managers also underlined that the companies try to sense the markets and the consumers if there is an upcoming crisis-situation coming in order to be prepared for a crisis situation. One manager told that their company prepares sometimes even a statement ready for the potential crisis, “If we know there is an upcoming crisis on something and we think that this might be something that more people will be angry or there will be some people who are unhappy about whatever it is. Then we will, when we prepare for the crisis handling we also prepare in our statement that will do well in Facebook, if you know what I mean. So for instance you have prepared in a crisis situation a question and answer and tell social media managers that you have that (a statement ready)”.

In order to keep customers and stakeholders interested throughout the years, a couple of organizations have created some differentiation in related communication and the focus of each year’s CSR-related activities, “Campaigns throughout the year, when we have, let’s say we have a certain focus. Either we focus on water, or we focus on children and their rights or we focus on small scale producers, we have several of those campaigns every year, where we have a certain disadvantage communities around the world”. While some companies altered the focus of their CSR-related activities, one organization decided to change the way of communicating their CSR-efforts in order to

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37 see which works the best, “Yes, in some years we have decided to try a little bit more modern ways of CSR-communication, such as creating Youtube-videos, in which we have talking about our CSR-efforts and this year we decided to do these kinds of presentations, which means that we talk about our CSR-efforts in different kind of events in a presentation format”.

4.2.1 Communication channels

Companies that participated to this study had different kind of communication channels for CSR-related communication and also for their usual communication, even though the organizations chosen to this study had a strong social media -presence. Many organization’s believed that social media is good channel for distributing CSR-related content and the reason for that was, that social media is the channel where consumers are nowadays, “Just the thing where people are nowadays, which means social media. I believe that, that is a very good way of spreading the information on top of our communication towards our business partners. Business partners want this kind of communication in a more directed way, so social media is a good way for spreading the information towards consumers. Of course there is still the company website and these kinds of more traditional digital-channels as well”. Other channels of communication also included traditional media channels, presentations, environmental journalists, sustainability reports, store displays, catalogues and dialogues with NGO’s. It was widely recognized that social media is a game changer in today’s communication field, “This is the big game changer now for companies in general and us as a company and its a up to the company to engage with consumers with completely different way than they have done in the past. And it’s up to us to be good at handling these conversations and engaging consumers in conversation about our products and content”. The importance of social media as a communication channel was also believed only to grow in the future “So some of our traditional marketing expenses are now going to into

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38 creating content in social media rather than creating for instance new television commercial” and another answer regarding to this topic was “I believe that social media will be growing and growing as a communication channel for companies”.

4.2.2 Feedback and interaction with stakeholders

When talking about interaction between company and its stakeholders, many managers had an opinion that they do sufficient amount of interaction between their stakeholders, “Of course we respond and engage in conversation with our stakeholders about those topics that our stakeholders want to talk about”. Another manager backed this proposition by saying: “With interest groups, we conduct an active and open reciprocal dialogue on the effects of our activities”. The aim of most of the companies was to increase the amount of dialogue between the stakeholders and organization, from which one answer was a good example, “The company systematically develops its communication channels to enable more efficient communications and to facilitate constructive discussion”. This leads to situation where it could be thought that social media is a good communication channel to interact with stakeholders and customers, but this relationship between CSR communication and social media is studied more detailed in next section. When asked about the interaction between the company and its stakeholders and whether this interaction has led to situation where stakeholders are more interested about CSR compared to before, the answer was “Well, maybe it has been increasing a bit because of the social media as consumers ask more about these things”.

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39 4.3 CSR and social media

There are a lot of different kind of social media channels and different kind of content that organizations can post on social media. Different organizations use different channels for different purposes but couple of channels were the most used ones in CSR-related communication by companies. These two channels were Facebook and Twitter, and this is further evidence that the decision to separate these two channels in the research question of this Thesis was a right choice, “Nowadays those (questions) come mostly from social media, Facebook and Twitter are the two main-channels”. When asked whether these two channels are the most used, the answer was “Yes, those are the two main channels, but then there is Instagram coming as a new way of communication, which is based on pictures so there is not so much conversation as in Facebook and Twitter”. Another manager approached this topic by looking things by the eyes of the customer, “Our company wants to serve and be present in those channels that our customers are. More and more customers appreciate digital services better than before and they want to discuss about their topics in social media. Our most important social media channel is currently Facebook”.

This leads to a topic that organizations use different kind of social media channels for different kind of communication towards stakeholders. Channels that were most often mentioned were Facebook, Twitter, Linkedin, Instagram and Youtube, and almost every time managers saw that they use these channels for different kind of communication and the content posted on social media will be studied in the next section in more detailed way.

Still the reason to use social media for CSR-related communication differs also between the companies. Some companies see it as a channel to post CSR-related content but some of them see it as a channel to