CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Corporate

6
Responsibility
And Corporate
CHAPTER Identity
What is Ethics
LE AR NI NG OUTC OMES
By the end of this topic, you should be able to:

1. Explain corporate culture;

2. Explain corporate identity;

3. Discuss corporate responsibility;

4. Relate corporate governance to cause related marketing and socially responsible

investment;

5. Explain corporate reputation and

6. Relate corporate identity, image and reputation.

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

INTRODUCTION
Culture is transmitted among members of a
society through communication. Within any
organisation, we can identify different ex-
pressions of culture by examining some of the
dimensions of communication that take place.
Organisations may foster a certain vocabulary
and language that reinforce certain beliefs
and perceptions, not only about the organisa-
tion itself but also about other organisations
with which it may compete. Myths also help
to perpetuate organisational culture. Rituals,
for example, are an expression of organisational culture. Therefore, in this chapter we will fo-
cus on corporate culture, corporate identity, corporate responsibility, relationship to corporate
governance, cause-related marketing and socially responsible, identity and image.

6.1 Corporate Culture

Culture is an important aspect of any organisation. Understanding the culture is relevant to un-
derstanding the total communicative atmosphere of the organisation. Rituals, myths, and formal
and informal symbols all determine how the members of the organisation will interact with each
other. Culture refers to an organisations values, beliefs, and behaviors as shown in figure 6.1.
In general, it is concerned with beliefs and values on the basis of which people interpret ex-
periences and behave, individually and in groups. Cultural statements become operationalised
when executives articulate and publish the values of their firm which provide patterns for how
employees should behave. This concept is illustrated in the following Figure 6.1.

Beliefs Culture Values

Behaviour

Figure 6.1: Culture refers to values, beliefs and behaviour

Corporate culture is the collective behavior of people using common corporate vision, goals,
shared values, beliefs, habits, working language, systems, and symbols as shown in figure 6.2.
It is interwoven with processes, technologies, learning and significant events. In addition, dif-
ferent individuals bring to the workplace their own uniqueness, knowledge, and ethnic culture.
So corporate culture encompasses moral, social, and behavioral norms of your organisation
based on the values, beliefs, attitudes, and priorities of its members. This is illustrated in the
Figure 6.2.

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CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Vision

System Goals

Corporate
Culture
Symbol Values

Working
Habits
Language

Figure 6.2: Corporate culture is the collective behaviour of people

Table 6.1: Edgar Shein describes the three levels of a corporate culture

Edgar Shein describes the three levels of a corporate culture:

At this level, culture is both enacted and reinforced through visible
appearances and behaviors, such as physical layouts, dress codes, or-
1. Surface level
ganisational structure, company policies, procedures and programs,
and attitudes.

2. Middle level Here, culture is manifested through our beliefs and Values.

At this level, culture is manifested through basic assumptions our

3. Deepest level long-learned, automatic responses and established opinions Figure
6.3:shows the three Levels of Corporate Culture.

Culture is both enacted through appearances Surface Level

Culture is manifested through beliefs Middle Level

Culture is manifested through assumptions Deepest Level

Figure 6.3: Three levels of corporate culture

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

Case Study:

Toyotas Global Competitive Advantage

Toyotas global competitive advantage is based on a corporate philosophy known as the Toyota
Production System. The system depends in part on a human resources management policy that
stimulates employee creativity and loyalty but also on a highly efficient network of suppliers
and components manufacturers.

Employee empowerment: Average annual results

More than 700,000 improvement suggestions were submitted by Toyotas employees.
That is an average of over 10 improvement suggestions per employee per year.
Over 99% of suggestions were implemented.
Corporate culture: The fundamental reason for Toyotas success in the global marketplace lies
in its corporate philosophy the set of rules and attitudes that govern the use of its resources.
Toyota have successfully penetrated global markets and established a world-wide presence by
virtue of its productivity. The companys approach to both product development and distribution
is very consumer-friendly and market-driven. Toyotas philosophy of empowering its workers
is the centre piece of a human resources management system that fosters creativity, continu-
ous improvement, and innovation by encouraging employee participation, and that likewise
engenders high levels of employee loyalty. Knowing that a workplace with high morale and job
satisfaction is more likely to produce reliable, high-quality products at affordable prices, Toyota
have institutionalised many successful workforce practices. Toyota has done so not only in its
own plants but also in supplier plants that were experiencing problems.

Although many car manufacturers have earned a reputation for building high-quality cars, they
have been unable to overcome Toyotas advantages in human resource management, supplier
networks and distribution systems in the highly competitive car market. Much of Toyotas suc-
cess in the world markets is attributed directly to the synergistic performance of its policies in
human resources management and supply-chain networks.

The Focus of Toyota Production System

Real TPS is not just about flow or pull production or cellular manufacturing or load lev-
elling. TPS in Toyota is primarily concerned with making a profit, and satisfying the customer
with the highest possible quality at the lowest cost in the shortest lead-time, while developing
the talents and skills of its workforce through rigorous improvement routines and problem solv-
ing disciplines. This stated aim is mixed in with the twin production principles of Just in Time
(make and deliver the right part, in the right amount, at the right time), and Jidoka (build in
quality at the process), as well as the notion of continuous improvement by standardisation and
elimination of waste in all operations to improve quality, cost, productivity, lead-time, safety,
morale and other metrics as needed.

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Five Ss
The Five Ss refer to the five dimensions of workplace optimisation: Seiri (Sort), Seiton (Set in
order), Seiso (Shine), Seiketsu (Standardise), and Shitsuke (Sustain).

7 Principles of Toyota Production Services (TPS):

Reduced setup times: All setup practices are wasteful because they add no value and they
tie up labour and equipment. By organising procedures, using carts, and training workers to
do their own setups, Toyota managed to slash setup times from months to hours and some-
times even minutes.

Small-Lot production: Producing things in large batches results in huge setup costs, high
capital cost of high-speed dedicated machinery, larger inventories, extended lead times, and
larger defect costs. Because Toyota has found the way to make setups short and inexpensive,
it became possible for them to economically produce a variety of things in small quantities.

Employee involvement and empowerment: Toyota organised their workers by forming

teams and gave them the responsibility and training to do many specialised tasks. Teams
are also given responsibility for housekeeping and minor equipment repair. Each team has a
leader who also works as one of them on the line.

Quality at the source: To eliminate product defects, they must be discovered and corrected
as soon as possible. Since workers are at the best position to discover a defect and to im-
mediately fix it, they are assigned this responsibility. If a defect cannot be readily fixed, any
worker can halt the entire line by pulling a cord (called Jidoka).

Equipment maintenance: Toyota operators are assigned primary responsibility for ba-
sic maintenance since they are in the best position to defect signs of malfunctions.
Maintenance specialists diagnose and fix only complex problems, improve the performance
of equipment, and train workers in maintenance.

Pull production: To reduce inventory holding costs and lead times, Toyota developed the
pull production method wherein the quantity of work performed at each stage of the process
is dictated solely by demand for materials from the immediate next stage. The Kamban
scheme coordinates the flow of small containers of materials between stages. This is where
the term Just-in-Time (JIT) originated.

Supplier involvement: Toyota treats its suppliers as partners, as integral elements of Toyota
Production System (TPS). Suppliers are trained in ways to reduce setup times, inventories,
defects, machine breakdowns etc., and take responsibility to deliver their best possible parts.
Adapted from: http://www.1000ventures.com/business_guide/cs_efficiency_toyota_
ps.html.

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

Many of the most successful organisa-

tions today are thriving and growing be-
cause, in large part, of their unique and
strong styles and values their corpo-
rate culture. Organisational Many of
the most successful organisations to-
day are thriving and growing because,
Cracker Barrel Strong
in large part, of their unique and strong
culture
styles and values their corporate cul- attracts Zen Restaurent
ture. Organisational culture as shown
in figure 6.4 is an important asset of an
organisation and one that needs to be
nurtured. Since an organisations cul-
ture is a set of learned patterns of behav-
ior and belief, its important to see how
training and performance improvement
professionals can design and manage Figure 6.4: People attracted to the organisational environment
Source: http://www.lowyat.net/v2/images/stories/
their organisations learning and com-
Gathering1/g4.jpg
munication systems so that the culture http://www.york.ac.uk/enterprise/eio/cpd/images/upload/
continues to thrive, remain strong, but active/IT
not stagnate.

Organisations that have strong and unique cultures generally experience excellent perfor-
mance.
Consumers are attracted not just to products, but to the entire communication environment
around their purchases, and to the idea of supporting a company whose values and styles
they respect. Having a strong culture (as well as good food), for example, has meant that the
Cracker Barrel Old Country Store restaurant chain had several customers who in 1997 each
paid more than 500 visits to their stores in one year! People will buy Ben and Jerrys ice
cream not just for the taste, but because they like what they hear about the way the company
is run through press accounts of their management style and community investment.
Employees are much more likely to want to work for companies that they feel proud of, and
where they feel that they enjoy a distinctive work experience. For example, a recent study
by a foodservice industry group found that workers named organisational culture factors as
some of the strongest motivators in terms of staying in their jobs. Even if they could get a
few more dollars at a restaurant down the road, respondents said that factors such as feeling
that the company is well-managed and having a boss who is moral would lead them to stay
where they were.
Certain kinds of organisational cultures promote learning and information-sharing. In these
environments, much less investment in formal training is necessary, and the investment that
is made is much more effective. The same goes for job performance; where there is a general
ethic to work hard and to be dedicated, fewer external incentives and policies are needed to
ensure that employees do whats expected of them.

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Table 6.2: Questions about Culture To Pose to Your Leadership Team

Questions about Culture To Pose to Your Leadership Team

What would you say characterises our culture?

Which of those elements are important to retaining our customers and employees?

Which of those elements may tend to impede performance?

How can we both maintain the values and styles that are the foundation of our identity and
success and still develop a learning culture in which people and teams grow, and through
which the Organisation learns, innovates, experiments and thrives?
How can the potential pitfalls of distance and diversity and size best be overcome and
turned into opportunities?

What should be our learning priorities?

What are the elements (policies and practices) regarding communication and learning that
will promote a distinctive culture and excellence in performance?
How do we learn and grow and continue to be us?

Slogans Beliefs

The culture
Inside Jokes consists Myths
of things
like

Language Rituals

Values

Figure 6.5: Some components of corporate culture

Many aspects of an organisation need to be examined and brought into consistency if a strong,
identifiable culture is to be created.

These include:
socialisation (recruiting, orienting, and mentoring employees)
the physical setting (what the environment says about the companys values and the role of
people within it)
graphic identity (the look of the logo, print materials, etc.)
communication channels (how people can communicate with eavch other including aspects
of formality and accessibility.

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

Figure 6.6: Example of corporate vision

Source: http://www.1000ventures.com/business_guide
Why is understanding the employers corporate culture important? Because the organisations
culture will affect you in many, many ways, such as hours worked per day and per week, avail-
ability of options such as flextime and telecommuting, how people interact with each other in
the workplace, how people dress for work, benefits offered to employees, office space, training
and professional development opportunities, perks and just about everything related to your
time at work.
SELF-CHECK
1. What are the three level of corporate culture proposed by Edgar Schein?
2. Give few examples of Organisation culture.

WEBSITE 1. http://www.1000ventures.com/business_guide/crosscuttings/culture_
corporate.html
2. http://www.1000advices.com/guru/org_culture_vk.html
3. http://www.dgayeski.com/culture.html

6.2 Corporate Identity

Corporate identity refers to the visual manifestation of the image as conveyed through the or-
ganisations, logo, products services, buildings, stationery, uniforms and all other tangible bits
of evidence created by the organisation to communication with variety of constituencies. Con-
stituencies then form perceptions based on the messages that companies send out in tangible
form..

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

A corporate identity is the "persona" of a corporation which is designed to accord with and
facilitate the attainment of business objectives. It is usually visibly manifested by way of brand-
ing and the use of trademarks.[1]

Corporate identity comes into being when there is a common ownership of an organisational
philosophy that is manifest in a distinct corporate culture the corporate personality. At its
most profound, the public feel that they have ownership of the philosophy.

Corporate identity is often viewed as being composed of three parts as shown in figure 6.7:
Table 6.3: Corporate identity
Corporate identity
1. Corporate design (logos, uniforms, etc.).
2. Corporate communication (advertising, corporate communications, information, etc.).
3. Corporate behavior (internal values, norms, etc.).

Figure 6.7: McDonalds identity

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

McDonalds have their own identity that runs through all of their products and merchandise.
The trademark M logo and the yellow and red appears consistently throughout the McDon-
alds packaging and advertisements.

6.3 What is Corporate Responsibility?

Corporate social responsibility (CSR, also called corporate responsibility, corporate citizen-
ship, responsible business and corporate social opportunity[1]) is a concept whereby organisa-
tions consider the interests of society by taking responsibility for the impact of their activities
on customers, suppliers, employees, shareholders, communities and other stakeholders, as well
as the environment as shown in figure 6.8.

Source: http://formula1.files.wordpress.
Supplier Community com/2007/12/bridgestone_official_f1_tyre_supplier.
jpg
http://i.cnn.net/money/.element/img/1.0/sections/
mag/fortune/global500/2007/sn
http://nccc.org.my/webimages/proton_logo.jpg

Customer

Figure 6.8: People affected by organisational activities

By their own assessment, corporate com-

munications companies are focused primar-
ily on delivering tailored messages for their
clients.

But when it comes to managing corporate

responsibility programs, some critics argue Well-known for

the message can ring hollow because of PR corporate

responsibility
firms' own missteps on ethics and the ques-
tionable cast of characters that often grace
their clientele rosters, especially if the mes-
sage lacks substance and action to back it
up.

Stakeholder groups, such as non-govern- Figure 6.9: PR firms with dedicated corporate responsibili-
mental organisations and the press, are tySource: http://www.pmlive.com/assets/burson_marstell-
er_big44915.jpg
increasingly questioning how corporate http://www.edelman.com/image/contribute/KL.jpg
responsibility is being incorporated into http://www.iowaapco.org/photogallery/2005_National/
company strategies and practices. This is, apco2005_002.jpg

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

at least in part, because many early efforts to communicate on corporate responsibility have
been high on production value and low on substance.

Many would argue that is simply the nature of PR communications. It is a profession, one ob-
server notes, preoccupied with symbolism, imagery and perception rather than substance.

But many large PR firms, including Burson-Marsteller, Edelman and APCO as shown in Figure
6.9, have launched dedicated corporate responsibility practices on both sides of the Atlantic.
And some are led by well-known names in corporate responsibility circles.

So, are PR companies a good fit for the complex and critical corporate responsibility strategy
development needed by todays corporations? Or, in the hands of PR firms, does corporate re-
sponsibility become little more than reactive spin and damage control in response to existing
practices? Experts say many firms are in a reactive mode and need to start seeing corporate re-
sponsibility as something positive for both their firms and wider society by developing a more
rigorous, proactive agenda.
For example, Wal-Marts recent corporate im-
age campaign is a good example of such a re-
active mistake, many analysts say. The Wal-
Mart is working for everyone campaign,
managed by Hill and Knowlton, has stirred up
more critics than it has silenced, some crisis
communications experts say, by inadvertently
drawing attention to the companys less-than-
stellar recent corporate communications track
Corporation
responsibility record. In fact, some analysts say corporate
spin may be on its last legs. Because of trans-
Business
parency, they say, it has become more difficult
management
and the messaging needs to correspond more
Organisation closely to the simple truth.

Figure 6.10: A good communication plan But given the right people, with the right
training, a PR firm can be useful in helping
a company develop and communicate key messages, both internally and externally, Once the
base has been laid, a PR firm can create a communications plan for external stakeholders to help
build the corporate reputation. A good communications plan as shown in Figure 6.10, done with
a company that is integrating corporate responsibility into its business management, can be a
good influence.

WEBSITE Visit:

http://www.greenbiz.com/feature/2005/09/01/corporate-responsibility-and-pub-
lic-relations to learn more about corporate responsibility.

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

Relationship to Corporate Governance, Cause-

6.4 related Marketing and Socially Responsible
Investment
The definition of corporate governance differs depending on ones view of the world. Shleifer
and Vishny (1997) define corporate governance as the ways in which suppliers of finance to
corporations assure themselves of getting a return on their investment. Taking a broad perspec-
tive on the issues, Gilan and Starks (1988) define corporate governance as the system of law,
rules and factors that control operations at a company. Adrian Cadbury defines corporate gover-
nance as concerned with holding the balance between economic and social goals and between
individual and communal goals. The governance framework is there to encourage the efficient
use and resources and equally to require accountability for the stewardship of those resources.
The aim is to align as early as possible the interests of individuals. The governance framework
is there to encourage the efficient use of resources and equally to require accountability for the
stewardship of those resources. The aim is to align as nearly as possible the interests of indi-
viduals, corporations and society. Malaysia defines corporate governance as the process and
structure used to direct and manage the business and affairs of the company towards enhancing
business prosperity and corporate accountability with the ultimate objective of realising long-
term shareholder value, whilst taking into account the interest of other stakeholders (Report on
Corporate Governance, 1999).

Irrespective of the particular definition used, cor-

porate governance is often viewed as having four
pillars as shown in figure 6.11: integrity or ac-
Corporate Governance countability, transparency responsibility and fair-
ness. Integrity is a quality that exists in social and
organisation integrity is closely associated with
ethics integrity and ethics are not subjected to
Responsibility
Transparency

regulation and neither can it be enforced (Abdul

Integirity

Fairness

Munid, Yusoff & Nordin, 2007).

Corporate governance is about the way a compa-

ny, its employee and all those involved with it are
managed thus relating it to the corporate respon-
sibility matter of addressing the companys differ-
Figure 6.11: Pillars of corporate governance ent stakeholders interests, corporate responsibility
initiatives that goes beyond what is required by
law and a strategic dimension that corporate responsibility can provide to a company.

The corporate responsibility framework is integrated into business systems, objectives, targets
and performance measure. The corporate governance systems, whose purpose is to control,
provide resources, opportunities, strategic direction of the organisation and be held responsible
for doing so, is an integral part of business hence corporate responsible system.

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

The positive effect of good corporate governance on different stakeholders ultimately is a

strengthened economy, and hence good corporate governance is a tool for socio- economic de-
velopment. Good corporate governance systems will allow organisations to realise their maxi-
mum productivity and efficiency, minimise corruption and abuse of power, and provide a sys-
tem of managerial accountability as shown in Figure 6.12. These goals are equally important for
both private corporations and
Strengthen
Realise
Maximum
government bodies.
Economy Productivity
Organisations could assess
their capabilities to harness
Provide
A System of
Good Realise Ef-
the corporate governance to-
Accountability
Governance ficiency
wards corporate responsibility.
Stakeholder collaboration is
Minimise now the key to creating eco-
Minimum
Abuse of
Power
Corruption nomic wealth. Stakeholder
collaboration does more than
Figure 6.12: Effect of good corporate governance gain resources and political
support. A recent survey from
the Economist Intelligence Unit, produced in collaboration with Oracle Corporation, reveals
that more business executives and corporate investors are factoring corporate responsibility
into their decision-making (AME Info, 2005).

Cause marketing or cause-related marketing refers to a type of marketing involving the corpo-
rative efforts of a for-profit company and non-profit organisation for mutual benefit. The term
is sometimes used more broadly and generally to refer to any type of marketing effort for social
and other charitable causes, including in-house marketing efforts by non-profit organisations.
Cause-related marketing differs from corporate giving (philanthropy) as the latter generally
involves a specific donation that is tax deductible, while cause related marketing is a marketing
relationship generally not based on a donation hence not tax deductible.

Cause marketing, also referred to as cause-

related marketing, corporate responsibility, For-Profit
Not-For-
Profit
corporate philanthropy, and corporate social
responsibility, is a public relations practice Visibility PR Practice Cause
Awarness
that links for-profits with not-for-profits Good Will

for mutual benefit. The non-profits benefit Positive

Media
Relation
Employee
from cause awareness and media relations, Relation
Mutual Benefits

while the corporation receives visibility that Customer

Loyalty
results in goodwill, positive employee rela- Sales

tions, customer loyalty and sales. Figure

Figure 6.13: Goals of corporate governance
6.13 shows goals of corporate governance.

Embracing a cause makes good business sense. Nothing builds brand devotion among todays
increasingly hard-to-please consumers like a companys proven commitment to a worthy cause.

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 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

In fact, most people prefer to do business with a company that stands for something beyond
profits.

Increased visibility and sales. Cause-related marketing can become

a cornerstone of your marketing plan.
Improved customer loyalty.
Your cause-related marketing activities
Enhanced company image. should highlight your companys repu-
tation within your target market.
And a media relations advantage.

Figure 6.14: Benefits of cause-related marketing

Cause marketing can positively differentiate your company from your competitors and provide
an edge that delivers other tangible benefits, including. Benefits of cause-related marketing are
given in Figure 6.14.

The possible benefits of cause marketing for nonprofit organisations include an increased ability
to promote the nonprofit organisations cause via the greater financial resources of a business,
and an increased ability to reach possible supporters through a companys customer base. The
possible benefits of cause marketing for business include positive public relations, improved
customer relations, and additional marketing opportunities.

Cause-related marketing (CRM) is defined as the public association of a for-profit company

with a nonprofit organisation, intended to promote the companys product or service and to
raise money for the nonprofit. CRM is generally considered to be distinct from corporate phi-
lanthropy because the corporate dollars involved in CRM are not outright gifts to a nonprofit
organisation, hence not tax-deductible.

There are six main types of CRM arrangements as shown in Figure 6.15. The first four relate to
standard corporate practices.

Table 6.4: Six Main Types of CRM Arrangements

Six Main Types of CRM Arrangements

Advertising, where a business aligns itself with a particular cause and uses ads to com-
1. municate the causes message; public relations, where a business calls press and public
attention to a strategic partnership between itself and a non-profit group.
2. Sponsorship, where a business helps fund a particular program or event.
3. Licensing, where a business pays to use a charity logo on its products or services.
Direct marketing, where both a business and a non-profit raise funds and promote brand
4.
awareness.
Facilitated giving, where a business facilitates customer donations to the charity ... or to
5.
themselves.
Purchase-triggered donations. This is where a company pledges to contribute a percent-
6.
age or set amount of a product's price to a charitable cause or organisations.

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Sponsorship

Licensing Advertising

Types of CRM
Arrangements

Direct Marketing Facilitated Giving

Purchase-triggered
Donations

Figure 6.15: Types of CRM arrangement

The reasons that organisation gets involved in cause related marketing are many and varied
and one of the core themes is to build or demonstrate corporate responsibility and corporate
citizenship (Adkins, 2009). Cause-related marketing enables companies to achieve business
objectives and address social issues. It is an additional tool for addressing the social issues of
the day through providing resources and funding whilst at the same time addressing business
marketing objectives. In a typical cause related marketing campaign the company will donate a
percentage of its profits to its partner charity for each product sold.

Do you know?

NOTES The American Express campaign to restore the Statue of Liberty, is credited
as the blueprint. The company promised to contribute one cent for every card
transaction and $1 for every new card issued during the last quarter of 1983.
American Express not only collected $1.7 million for the restoration effort
there was a 28 percent increase in use of their credit cards, not to mention mas-
sive press coverage and free publicity. These results were not lost on other busi-
nesses. Between 1990 and 1999, American companies spent increasing amounts
on CRM; the total annual sum has now passed the one billion dollar mark.

Todays consumer demands a fairly high level of corporate responsibility. Cause related mar-
keting could result in a favorable consumer attitude towards the firm, its product and a non-
profit cause. In evaluating their purchase options, consumers look beyond the attributes and en-
vironmental consequences of the product itself into the corporations background, attitude and
behavior (Manakkalathil & Rudolf, 1995). Other things being equal, many consumers would
rather do business with a company that stands for something beyond profits.

People are re-evaluating their relationship with their jobs and communities, as well as the com-
panies with which they work and do business. As the boom economy slowly slipped beneath,
the waves of recession and its bloated crew scrambled for lifeboats consumers, employees and
top executives began looking for companies with integrity.

Examples are the adventure outfitter Patagonia, cosmetics line Avon and quirky frozen food
manufacturer Ben & Jerrys as the grandparents of modern brand building through living. There

15
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

are companies that have made the cause the brand, the vice-versa-companies where consum-
ers feel secure that a small percentage of their dollars are going to good cause as shown Figure
6.16.

AV O N
FOUNDATION
Global Impact - Avon in the Global Community

Asia Pacific | Europe | Latin America | North America

Asia

Avon Malaysias Kiss Goodbye to Breast Cancer campaign donated Mammotome

Breast Biopsy machine to Putrajaya Hospital. Fundraising proceeds from the cam-
paign also provided subsidised mammogram screenings for women in need.

Avon Philippines opened the Breast Care Center at the Philippine General Hospital
(PGH) with funds raised from its Kiss Goodbye to Breast Cancer campaign and the
Avon Foundation donated a mammogram machine to the clinic.

Avon Indonesia donated funds raised from its Kiss Goodbye to Breast Cancer cam-
paign to the Indonesia Cancer Foundation marking its fifth donation to this founda-
tion. Fundraising proceeds also funded breast cancer early detection programs.

Figure 6.16: Example of corporate social responsibility by AVON

Patagonia uses it extensive website and seasonal outdoor gear catalogues to promote corporate
responsibility in the minds of health-and cause-conscious yuppie consumers-all of whom ap-
pear to like the idea of their dollars giving to save the rainforest, prevent artic drilling, and fight
genetic engineering, and who best of all, are willing to pay just a bit more for it.

With the change in the global economy, organisations play an even increasing role in commu-
nity and have a greater impact on society. People in the dual role as consumer and citisen will
expect companies to use their power and influence wisely to meet the needs more effectively.

Consumers are influenced by their corporate responsibility awareness, and cause-related mar-
keting is a key way to projecting and communicating corporate responsibility. Cause-related
marketing could be the extremely effective in bringing consumers attention to the contribution
that particular organisations are making.

Socially Responsible Investment (SRI) is an investment strategy that integrates social or envi-
ronmental criteria into financial analysis. SRI funds have come a long way since the first one
started showing up more than 30 years ago. SRI recognises that corporate responsibility and
societal concerns are valid parts of investment decisions. SRI considers both the investors
financial needs and an investments impact on society. SRI investors encourage corporations
to improve their practices on environmental, social, and governance issues. You may also hear
SRI-like approaches to investing referred to as mission investing, responsible investing, double
or triple bottom line investing, ethical investing, sustainable investing, or green investing.

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 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

As a result of its investing strategies, SRI also works to enhance the bottom lines of the compa-
nies in question and, in so doing, delivers more long-term wealth to shareholders. In addition,
SRI investors seek to build wealth in underserved communities worldwide. With SRI, inves-
tors can put their money to work to build a more sustainable world while earning competitive
returns both today and over time.

Socially responsible investors include individuals and also institutions, such as corporations,
universities, hospitals, foundations, insurance companies, public and private pension funds,
nonprofit organisations, and religious institutions as shown in Figure 6.17. Institutional inves-
tors represent the largest and fastest growing segment of the SRI world.

Figure 6.17: Socially responsible investors

Source: http://brej.org/edit/individuals.jpg
http://www.celdf.org/Portals/0/Images/Democracy%20
School%20Training%20DSCN0907.jpg
http://www.blogger.com/.../Orient+Insurance+Company.JPG
http://historicbuildingsct.blogspot.com/2007_10_01_archive.html
http://www.leeds.ac.uk/medhealth/apm/photos/belfast/The%
20Royal%20Hospitals%20Trust%20Belfast.jpg
http://www.mortlock.info/vhutshilo/classroom.jpg
http://pdkv.mah.nic.in/university/images/unigate.jpg

Hospital

SRI recognises that corporate responsibility and societal concerns are valid parts of invest-
ment decisions. SRI considers both the investors financial needs and an investments impact
on society. SRI investors encourage corporations to improve their practices on environmental,
social, and government issues. As a result of its investing strategies, SRI also works to enhance
the bottom lines of the companies in question and, in so doing, delivers more long-term wealth
to shareholders. In addition, SRI investors seek to build wealth in underserved communities
worldwide. With SRI, investors can put their money to work to build a more sustainable world
while earning competitive return. In general, socially responsible investors favor corporate best
practices that promote environmental stewardship, consumer protection, human rights, and di-
versity. Some (but not all) avoid business involved in alcohol, tobacco, gambling, weapons, the
military, and/or abortion.

Since the late 1990s, socially responsible investment has become increasingly defined as a
means to promote environmentally sustainable environment. Many investors consider effects
of climate change a significant business and investment risk. A growing concern about climate
change and its risk for portfolios is intensifying the interest in SRI among money managers.
Investor demand is growing for portfolio opportunities is clean and green technology, alterna-
tive and renewable energy, green building and responsible property development and other
environmentally driven businesses.

17
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

A large and expanding number of institutional investors are actively supporting shareholder
resolutions on social environmental, and corporate governance issues and joining investor co-
alitions, such as the Investor Network on Climate Risk, to make their concerns known about the
risks and opportunities associated with issues such as climate change (Trend Reports, 2007).
Table 6.5: Four basic strategies

Social investors use four basic strategies to maximise financial return and attempt to maximise so-
cial good (Monash Sustainability Enterprise and KPMG, 2001) and this concept
is illustrated in the figure 6.18

Screening excludes certain securities from investment consideration based on social

and/or environmental criteria. For example, many socially responsible investors screen
1.
out tobacco company investments. This is an example of a social screen at work. Show
tobacco company image Label SRI screen out Tobacco company investment.
Divesting is the act of removing stocks from a portfolio based on mainly ethical, non-
2.
financial objections to certain business activities of a corporation.
Shareholder activism efforts attempt to positively influence corporate behavior. These
efforts include initiating conversations with corporate management on issues of con-
cern, and submitting and voting proxy resolutions. These activities are undertaken
with the belief that social investors, working cooperatively, can steer management on a
course that will improve financial performance over time and enhance the well being of
3.
the stockholders, customers, employees, vendors, and communities. Recent movements
have also been reported of investor relations activism, in which investor relations
firms assist groups of shareholder activists in an organised push for change within a cor-
poration: this is done typically by leveraging their enhanced knowledge of the corpora-
tion, its management (often via direct relationships), and the securities laws as a whole.
Positive investing involves making investments in activities and companies believed to
have a high and positive social impact. Positive investing activities tend to target under-
4.
served communities. These efforts may support activities designed to provide mortgage
and small business credit to minority and low-income communities.

Figure 6.18: SRI strategy to maximise social good

Tobacco Company Screening Source: http://www.teara.govt.nz/NR/rdonlyres/5190B876-073-
and C-4FE2-BBCF-E1BA6DA6B728/125042/p4571enz.jpg
Divesting http://www.nieuwsuitamsterdam.nl/afbeeldingen/chinatown_
Gambling House
gambling_house.jpg

18
 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

1. http://www.patagonia.com/web/us/home/index.jsp?OPTION=HOME_
WEBSITE
PAGE&assetid=1704&slc=en_US&sct =US&src=pfmxaff
2. http://www.rosica.com/cause-related-marketing.html
3. http://www.sourcewatch.org/index.php?title=Cause-related_marketing
4. http://www.socialinvest.org/resources/sriguide/srifacts.cfm

What is Corporate Reputation: Identity

6.5
and Image

Corporate reputations are aggregate perceptions and interpretations of a companys past ac-
tions and future prospects. Corporate reputations crystallise from the personal past experiences
individuals have about a company and are influenced by a companys own messaging and by
media coverage about the company. Positive corporate reputations will benefit in the following
areas (Greyser, 1999):
Table 6.6: Corporate Reputation
Corporate Reputation
1. Preferences in doing business with a company when several companies products or ser-
vices are similar in quality and price.
2. Support for a company in times of controversy.
3. A companys value in the financial marketplace.

A firm with a good overall reputation owns a valuable asset. Yet, unlike other assets, reputa-
tion cannot easily be traded on the open market as it represents a higher order rather than a
mobile resource. Reputation is an asset of immense value. Coca-cola, Heinz, BMW, British
Airways and others can charge a premium for their products, rightly, they are trying to put a
valuation on the competitive advantage and this is illustrated in Figure 6.19.

Figure 6.19: They charge a premium for their products

Source: http://upload.wikimedia.org/wikipedia/
commons/6/6a/British_Airways_A320-100_G-BUSB.jpg
http://www.bmw48.com/bmw/auto-bmw-m3-car.jpg
http://images.businessweek.com/ss/06/07/top_brands/
image/heinz.jpg
http://www.governorsrun.net/Logos/Coca%20Cola%20
web.gif

Coca-Cola

19
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

Reputation cannot be judged on performance alone. For a number of years Fortune has pub-
lished an annual corporate repu-
Component of Reputation tation index. The index is based
on research carried out in the
USA, among some 10,000 se-
nior executives who are asked
Overall impression Object specific to rate the ten largest companies
in their industry. This index at-
Figure 6.20: Components of reputation
tempts to broaden the reputation
variables considered by respondents beyond financial performance.

Reputation can be seen to have two components: an overall impression component and an
object-specific component as shown in Figure 6.20. The overall impression component can ex-
ist at a corporate level when a firm uses its corporate name as a brand, or it can exist at a lower
level where the firm in addition to, or in substitution of, the corporate name makes use of one
or more brand names (Caruana, 1997).

It is often that the concepts of corporate identity are ambiguous and need clarification. Indeed,
our knowledge about corporate identity concept are based on our common sense and under-
standing of communication and reality. While comparing among the managers in the firms it
has become general concern about the interest of corporate identity.

Corporate identity refers to the visual manifestation of the image as conveyed through the or-
ganisations logo, products, services, buildings, stationery, uniforms and all other tangible bits
of evidence created by the organisation to communicate with variety of constituencies. Constit-
uencies then form perceptions based on the messages that companies send out in tangible form.
If these notions accurately reflect on organisations reality, the identity program is a success. If
the perceptions differ dramatically from the reality and this often happens when companies do
not take time to analyse whether a match actually exists, then either the strategy is ineffective
or the corporations self understading need modification (Argenti, 1998).

Corporate identity is also defined as a fusion of strategy, behavior (culture) and communica-
tions. It is not preserve of any one management discipline but instead draws from several. It
comes into being when there is a common ownership of an organisations philosophy (Balmer,
1993). Basides that, corporate identity
Culture
also refers to the way a company pres-
ents itself through behavior, as well as
Corporate through symbolism, to internal and
Identity external audiences. It is rooted in the
behavior of individual from members,
Core Compe- expressing the firms sameness over
Strategy
tencies time, distinctiveness and centrality
Figure 6.21: Corporate identity A set of intrinsic charecteristics
(van Riel and Balmer, 1997).

20
 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Larcon and Reitter (1979) refer the corporate identity as a set of intrinsic characteristics or
traits (e.g strategy, culture, core competencies) as shown in Figure 6.21 that give the organisa-
tion its specificity, stability and coherence. On the other hand, corporate identity defined as the
firms presentation of itself to stakeholders and the ways it distinguishes itself from all other
firms through a variety of cues. It represents how the organisation would like to be perceived
and can include corporate identity programs, advertising, dress codes, and standards of cus-
tomer contact .

Abratt (1989) recognised that the concepts of corporate image and corporate identity were often
used interchangeably, He describes corporate identity as an assembly of visual clues-physical
and behavior by which an audience can recognise a company and distinguish it from others and
which can be used to represent or symbolise the company (Abratt, 1989, 68).

Corporate identity is a very important business concept because it demonstrates corporate ethos,
aims and values and presents a sense of individuality that can help to differentiate an organisa-
tion from its competitors (Hatch and Schultz, 1997). According to Zinkhan et. al. (2001:154),
corporate identity represents the ways a company chooses to identity itself to all the publics.
As Baker and Balmer (1997) more simply noted, corporate identity is what an organisation
is. Corporate identity can be viewed as a vehicle by which a companys character is conveyed
to different audiences (Erikson, 1960). It reflects the sense of essential character, since each
company has its own personality, uniqueness and individuality (Bernstein 1984; Schmitt and
Pan 1994). Expressing corporate identity is a dynamic process (Gioia, Schultz and Corley, 200)
evolving as the organisational context changes (Gioia, 1998) effectively managed through the
use of an appropriate model.

Effective corporate identity management can build understanding and commitment among an
organisations diverse stakeholders. It helps attract and retain customers and employees, achieve
strategic alliances, gain support from financial stakeholders and generate a sense of direction
and purpose (Hatch and Schultz, 1997). Senior managers attach considerable importance to CI
modelling and regard it as a strategic marketing issue (Balmer, 1994; 1995).

A corporate image refers, to how a corporation is perceived. It is a generally accepted image

of what a company stands for. The creation of a corporate image is an exercise in perception
management. It is created primarily by marketing experts who use public relations and other
forms of promotion to suggest a mental picture to the public. Typically, a corporate image is
designed to be appealing to the public, so that the company can spark an interest among con-
sumers, create share of mind, generate brand equity, and thus facilitate product sales. Image is
the corporation as seen through the eyes of its constituencies (Argenti, 2003). An organisation
can have different images with different constituencies.

Unlike its image, the organisations identity should not vary from one constituency to another.
Identity consists of a companys defining attributes, such as its people, products, and services.

Such identity building and maintenance require a variety skills, including the ability to conduct

21
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

marketing research, to design attractive brochures, and to enforce identity standards and cohe-
sion, it should be spread around several different functions in the absence of a single, centra-
lised corporate communication function.

The distinction between identity and image is expressed most explicitly by Margullies (1977):
identity means the sum of all the ways a company chooses to identify itself to all its publics,
the community, customers, employees, the press, present and potential stockholders, security
analysts, and investment bankers, image, on the other hand is the perception of the company by
these publics.

For Margulies, corporate identity is the sum of symbols and artifacts designed and managed
in order to communicate the ideal self-perception of the organisation to its external publics.
Identity, thus. Becomes as an integral aspect of an organisations market communication func-
tion. The corporate image, on the other hand, refers to the reception of these communication
efforts by the external world or more specifically to the general impression of the organisation
held in common by a relevant group in the organisations external surroundings. Although an
organisation, as Margulies seems to suggest, can influence its image indirectly by managing its
corporate identity, identity is something which is organised and sent from an organisation to its
external world, an image is something which emerges beyond the organisations formal bound-
aries and, eventually is sent back to the organisation via external analyses.

Today these is a generally accepted distinction between corporation identity (what the firm is)
and corporate image (what the firm is perceived to be). It is important to pay attention to cor-
porate identity in all aspects of a firms presentation. Corporate identity should be incorporated
into every element of a firm, including the architecture and building interiors. Interaction or ex-
perience with a corporate identity is what produces a corporate image in the mind of the public.
This distinction is extremely important since firms retain complete control of their identities,
their presentation of themselves, but have no control over their image, what the public perceives
them to be (Marguiles, 1977). The corporate reputation is then formed over time by repeated
impression of the corporate image whether positive or negative (Gary & Balmer, 1977).

SELF-CHECK

What is the different between identity and image?

Relationship Between Corporate Identity,

6.6
Image and Reputation

Corporate identity merges strategy, culture and communications to present a memorable per-
sonality to prospects and customers. The term is closely linked to corporate philosophy, the
companys business mission and values, as well as corporate personality, the distinct corporate

22
 CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

culture reflecting this philosophy and corporate image. The main objective of corporate identity
is to achieve a favorable image among the companys prospects and customers. When c cor-
poration is favorably regarded this is likely to result in loyalty. If the corporate identity is the
self-portrayal of a company, then the corporate image is the perception of an organisation by
the audience. The closer the corporate image is to the corporate identity; the closer the publics
perception of a company is to how the company defines itself, making for superior corporate
communication. For example, most companies have access to the same technology. If they want
to further distinguish themselves, the strategy must rely on another factor than technology, the
user experience. As the audiences focus changes constantly, corporate strategies must move in
the same direction as the customer.

The consumers impression of a company, or the corporate image, is highly influenced by how
he or she experiences the companys products. The product identity, the sum of the products
formal and functional properties, will help the user shape a mental image of the product man-
ufacturer. Therefore, the corporation needs to carefully plan what it wants to communicate
through its product and how.

Figure 6.22 depicts corporate identity as a bottom-up process, the mission affects identity, iden-
tity affects image and image builds the reputation over time. While the bottom (the mission and
the identity) is within control of the firm, the top half of the model includes the element that
are ultimately within the control-in the form of perception-of the public. In order to corporate
identity to move from the firms control to the domain of the consumer, exposure of the corpo-
rate identity must occur. This is possible through interpersonal customer contact, but the most
widespread exposure is likely to occur formal mass communication channel such as advertising
and public relations (Allesandri, 2001).

Communicate

Corporate Identity

Gedrag Symbolic

Figure 6.22: A model of the way corporate identity works

Another two models proposed by Suvatjis and Chernatony as shown in Figures 6.23 and 6.24.

23
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

Figure 6.23: The six-station corporate identity model proposed by Jean Yannis Suvatjis and
Leslie de Chernatony
Source: http://www.fym.cl/documentos/corporate_identity_model-jean_yannis_
suvatjis(university_of_birmingham).pdf

24
CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Figure 6.24: The four-station corporate identity model proposed by Suvatjis and Chernatony
Source: http://www.fym.cl/documentos/corporate_identity_model-jean_yannis_suvatjis(university_of_
birmingham).pdf

SUMMARY

1. This chapter focused on corporate culture, corporate identity, corporate responsibility,

relationship to corporate governance, cause-related marketing and socially responsible,
identity and image.

25
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

glossary

Ethnic culture - Distinctive ways of living built up by a group of people.

Ethos - The distinctive spirit of a culture or an era.

Innovation - The act of starting something for the first time; intro-
ducing something new.

Logo - A company emblem or device.

Rosters - List of names.

Synergy - The working together of two things to produce an effect

greater than the sum of their individual effects.

reference
Books

Argyris, C. & D.A. Schn. (1978). A Theory of Action Perspective. Organizational

Learning. Reading MA: Addison-Wesley.

Carroll, A. B. & A. K. Buchholtz. (2000). Business & Society, Ethics and Stakeholder
Management. Cinn., Ohio: South-Western Publishing.

Drucker, P. (1955). The Practice of Management. London: Heinemann.

Duncan, T. & S. Moriarity. (1997). Driving Brand Value. NY: McGraw-Hill.

Fombrun, C. (1996). Reputation. Realizing Value from the Corporate Image. Boston,
MA: Harvard Business School Press.

Mintzberg, H. (1983). Journal of Business Strategy. The Case for Corporate Social
Responsibility (3-16).

Mokhiber, R. (2000). Top 100 Corporate Criminals of the Decade.

Olins, W. (1989). Corporate Identity. Making business strategy visible through design.
London: Thames & Hudson.

OSullivan, T. (1997). Marketing Week. Why charity schemes need a delicate touch
(22-24).

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CHAPTER 6 l CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY

Senge, P, Carnall. C & Butterworth- Heinemann (1997). Strategic Change. The learning
organization. UK: Oxford.

Stopford, J. M. & C. W. F Baden-Fuller. (1993). Implementing Strategic Processes. Or-

ganizational Strategies for Building Corporate Entrepreneurship, in. Change. Learn-
ing and Co- operation. Blackwell, London: Lorange, P., Chakravarthy, B., Roos, J. &
Van de Ven, A., eds.

Treio, L. K., Hartman, L. P. & M. Brown. (2000). How Executives Develop a Reputa-
tion for Ethical Leadership. Moral Person and Moral Manager. California Management
Review.

Van Riel, Cees B. M. (1995). Principles of Corporate Communication, Hemel Hemp-

stead, UK: Prentice Hall.

Zadek, S. (2001). The civil corporation. The new economy of corporate citizenship,
London: Earthscan Publications Ltd.

Web Links

http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1259&language=eng
lish

http://www.segro.com/segro/Media/PressReleaseEn/2007/AGMANDCorporateNotice.
htm

http://wistechnology.com/article.php?id=3969

http://home.bi.no/fgl96053/bostonpaper.pdf

http://en.wikipedia.org/wiki/Corporate_identity

www.ccr.com

multiple choice questions

1. When culture is enacted and reinforced through visible appearances and behaviours, the
corporate culture is at ____________.
A. middle level
B. surface level
C. deepest level

27
 CORPORATE RESPONSIBILITY AND CORPORATE IDENTITY l CHAPTER 6

2. Corporate identity is composed of three parts ____________.

A. corporate design, corporate communication, corporate behaviour
B. corporate behaviour, corporate culture, corporate logo
C. corporate design, corporate vision, corporate culture

3. Good corporate governance systems will allow Organisations to ____________.

A. realise their maximum productivity and efficiency
B. minimise corruption and abuse of power among its customers
C. provide a system of stakeholders accountability

4. Corporate identity ____________.

A. varies from one constituency to another
B. is the way the company projects itself
C. the perception of the company by its stakeholders

5. As the audiences focus changes constantly, corporate strategies must ____________.

A. move in the same directions as the customers
B. must never change
C. move in the opposite direction as the customers

28