Session 9, Chikudate

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Reputation & CSR: Learning from case-studies

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Session 9, Chikudate

  1. 1. Collapsed Buffer, Reputation, Instrumental CSR: Toyota’s Crisis 2010 Nobuyuki Chikudate, Ph.D. Professor Department of Management Studies Graduate School of Social Sciences Hiroshima University
  2. 2. Overview of Toyota’s Recall Crisis in 2010 2007 starting mechanical complaints in U.S. 2009 rise of complaints against Toyota cars in U.S. TV coverage of a horrific crash involving a California highway patrolman 2010 Jan.-Mar. floods of issuing recalls by Toyota Feb. Jim Lentz (Toyota Motor Sales U.S.A.), Yoshifumi Inaba (CEO of Toyota U.S.A.), & Akio Toyoda (grandson, president of Toyota) testified at Public Hearings, US congress. Toyota paid a record fine of $16.4 millions. groups of lawsuits against Toyota 2011 Feb. Ray Lahood of NHTSA announced, “We feel that Toyota Vehicles are safe to drive.”
  3. 3. Lessons for CSR Communicators <ul><li>1. Reconsidering relations among CSR communication, corporate reputation, and crisis management/communication </li></ul>ideal model practical model CSR com. as normative - activities of honored and responsible corporate citizens green, philanthropies, etc. CSR com. as instrumental - managing/controlling of interactions with particular stakeholders lobbying, political contribution, advocacy advertising, etc. reservoir of goodwill corporate reputation preventing interference with internal operations influencing stakeholders’ attitudes/opinions buffering during crises defending corporate image
  4. 4. In fact, Toyota have done both in global communities. However, as for Toyota, these methods failed in U.S. I analyzed how Toyota failed in crisis communication as for CSR communications. <ul><li>My analytical frameworks </li></ul>corporate communications adequate responses to critical situations inadequate initial responses to crisis influencing amplifying leading ideal model diagnostic model
  5. 5. 2. Pathologies surrounding corporate communication adequate responses to crisis reality construction of critical situations by Toyota’s executives influencing certain perceptions shaped by intersubjective lifeworld among Toyota executives delaying/disturbing collective myopia the situation in which members of certain communities or organizations are able to make sense and give sense in each context in which they live but are not able to monitor the emerging order or patterns as a whole created by themselves stagnation of sensemaking in view of external events even in emergent, changing, and critical situations of corporate crises collective hyperopia People try to make sense of something external, aloof, and general by ignoring the reality of internal, immediate, and concrete contexts. -”Being far” means external stakeholders/general advocacies, and “being near” means internal stakeholders– U.S. employees
  6. 6. As for Toyota, these pathologies compounded and led inadequate responses to the crisis <ul><li>Symptoms of pathologies </li></ul>Collective myopia “ As I look at where we were in the past, what had become…with our success… as a company, we had a little bit of an attitude. Arrogance is probable the best explanation.” (Jim Lentz) Collective hyperopia “… I am personally angry. Somewhat with the newspapers but largely with private TV stations… Shall I retaliate? To be honest, the big corporations would not let [pundits who criticize what we did] appear on TV. It is obvious that the sponsors of such TV programes are not big corporation (such as Toyota)…” (Hiroshi Okuda, former CEO & President of Toyota: from Asahi Shimbun Morning Issue, 13 November 2008) “ We are willing to do political donation…” (Hiroshi Okuda, : from Asahi Shimbun Morning Issue, 28 May 2003) the feudal warlord from a little province of Mikawa, Japan Toyota might have wondered such an attitude and strategic CSR communication worked to prevent criticisms against Toyota during its crisis in U.S.
  7. 7. ▶ huge political donations toward U.S. congress-persons ▶ hiring former inspectors of NHTSA ▶ crashing the formal negotiations with NHTSA ▶ neglecting initial responses to public criticisms ▶ Reckless public speeches by Toyota’s two executives angered Japanese public. (unprepared Crisis Communication) ▶ no political supports from Japan (LDP -> DPJ) ▶ mid-term elections in U.S. ▶ sensationalism seeking U.S. media + It’s too expensive for Toyota to learn lessons about CSR communication. Toyota’s instrumental CSR communication activities in U. S. But, these were not effective, Because there were uncontrollable factors. The only option left for Toyota was corporate apologia.

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