Media Literacy and Auditing Corporate Reputation

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Media Literacy and Auditing Corporate Reputation

Craig E Carroll The University of Texas at Austin
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• What is corporate reputation?

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A Workable Definition

• Corporate reputation refers to what the public
  perceives is salient about the firm or its
  characteristics (Fombrun, 1996).

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Multi-Dimensional Nature of Reputation
Emotional Appeal
Vision Leadership
Products Services
Reputation
Financial Performance
Social Responsibility
Workplace Environment
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Why is Corporate Reputation important?

• People invest companies based upon reputation.
• People want to work for a company with a good
  reputation.
• People buy products or services from companies
  based on their reputation.
• People give pause and weigh incoming
  information against companies with good
  reputations.

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The relationship between RQ and change in market
value is not symmetrical
Note Stock prices and share volumes were
examined on September 1, 1999 and October 1, 2000.
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(No Transcript)
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How are corporate reputations formed?

• Direct Experience
• The Mass Media

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• You cannot manage what you cannot measure.

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Auditing Corporate Reputation vis-à-vis Media
Monitoring

• Gathering Stories Companies monitor their media
  coverage via news aggregators such as
  Lexis-Nexis. Topical index terms include both
  company names and subject headings.
• Building a Database of News Each story in which
  the company is mentioned is streamed into a
  database its position within the paper/magazine,
  publication name, date (plus time for broadcast),
  and the corresponding circulation or audience
  figure of the particular media are identified.
• Developing Dictionaries and Rules The rules
  through which stories are coded involve much more
  than a simple list of search words. Coders
  train the computer to recognize the complex
  ideas being tracked through a series of
  transparent tests and retests on random samples
  of stories.
• Coding Stories Once the dictionaries and rules
  are built and tested, each story is then scored
  for content that is relevant to any of the
  reputational attributes. These ideas are then
  summarized as they relate to each company
  mentioned in each story to identify the tone of
  writing about the company in each story.

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Measuring Media Coverage

• Prominence
• Salience

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• The prominence of media coverage devoted to
  particular companies affects the salience of
  these companies and their attributes in the minds
  of the public.
• Salience would occur in a number of ways
• which companies are thought about in the first
  place, how they are thought about (favorably or
  unfavorably),
• which issues described in connection with the
  firms name best describe the firms reputation,
• and whether the firm falls favorably or
  unfavorably in terms of these issues.

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Comparative Media Performance
Tone
Frequency
Frequency
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Example
Emotional Appeal
Sources Magazines, Journals and Newspapers
Company SR Group Estimated Number of Articles
65 Number of Articles Reviewed 40
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Example Summary Chart
High
Low
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Example Competitive Map
High
Emotional Appeal
Low
Low
High
Media Exposure
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• Media exposure as a proxy for corporate
  reputation may not be as clear cut as a first
  glance may indicate.

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5 views of the media

• 1 Reflects no distortion.
• 2 Influenced by media workers socialization.
• 3 Influenced by media routines.
• 4 Influenced by social institutions (the
  market or social responsibility.
• 5 Influenced by dominant ideologies.

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Media Literacy

• Since the media influence
• The images opinions the public holds about
  major corporations
• The measurements organizations use for gauging
  how the public currently respond,
• it is important to understand the political and
  organizational forces that shape which stories
  get told.

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Goals of Media Literacy

• Media Literacy is concerned with individuals
  developing
• informed and critical understanding of the nature
  of mass media,
• the techniques used by them,
• and the impact of these techniques.

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Agenda-Setting Theory

• While the media may not be successful in telling
  us what to think, they are very successful in
  telling us what to think about.

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• Mass media content is a socially created product,
  not a reflection of an objective reality.
• Media content ? real world indicators.
• Not everything eligible to be mass media
  content actually gets into the media.

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But

• Who sets the medias agenda?

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News Room Norms

• The longer a journalist works for a news
  organization, the more socialized they are to the
  policies (stated unstated) of the organization.
• The more journalist follows the routines of their
  organization, the more likely their content is to
  be used.
• On stories without established routines (in the
  early stages of an issue) individual journalistic
  discretion will be more influential than routines.

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Routine Public Events

• Events that are congruent with media routines are
  more likely to be covered than events that are
  not.
• News off the beaten path may go unreported.
• Issues without good film/video footage may not be
  included in TV newscasts.
• A press conference held just before a newspapers
  deadline is more likely to be included than one
  just after.

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News values

• Prominence/importance
• Human interest
• Conflict/controversy
• The unusual
• Timeliness
• Proximity

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Information subsidies

• The growing dependence of mass media on press
  releases (and other PR efforts) by various
  organizations.
• The insider syndrome where journalists face
  pressures to cooperate with official views,
  formula writing and standardization.

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Journalistic Balance

• Example
• A large, well-organized antiwar rally in Texas
  was given equal treatment with a much smaller,
  more disorganized pro-war demonstration.

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Influences on the Media Agenda

• Advertising Media Circulation
• Capitalist Values The Media subscribes to
  dominant capitalist values which supports the
  Corporate Agenda (e.g., business, in general, is
  a good thing)

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• Corporate Ownership Independent newspapers are
  both more favorable and more disfavorable (e.g..,
  more extreme) in their news coverage
• Media Conglomerates Companies with located
  within the media industry (e.g., General
  Electric, AOL-Time Warner, Disney) will receive
  more favorable treatment than non-media
  conglomerates.

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Influences on the Media Agenda

• Size All other things being equal, larger
  (national) companies receive more media coverage
  than smaller (regional) companies.
• Age Older companies receive more media coverage
  than younger companies.

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• Regional Economies The media write more
  favorably about companies/industries within the
  reach of their local economy than other similar
  companies outside the sphere of influence of the
  local economy.

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Influences on the Media Agenda

• West Coast/East Coast bias Companies
  headquartered in on East or West Coast receive
  more (favorable?) news coverage than those HQed
  elsewhere.
• Diversity All industries were to receive equal
  coverage, companies operating in multiple
  industries would receive more coverage than
  companies operating in singular industries.
  companies receive more media coverage than
  smaller (regional) companies.

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• Previous Reputation Companies with better public
  reputations will receive more non-negative news
  coverage than companies with less favorable
  reputations.
• Celebrity CEOs The media are drawn to the Jack
  Welchs of the corporate world.

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Conclusions

• Before decoding what impact media coverage has
  on corporate reputation, consumers need to be
  aware of
• What goes into the production of news.
• The interaction between media and
  organizational forces