Development of Web Corporate Communications Function by Official Web Sites and Value Added Ranking: Case of Croatia
Ivana Bilic, MA, University of Split
ABSTRACT
The complex and dynamic modern business environment driven by empowerment of individual stakeholders and supported by technology has launched a new era of disclosure of a business. The advent of the Internet has changed the way how companies do their business and how they communicate with all interested stakeholders. Driven and empowered by new communication technology development stakeholders have raised their expectations and now require more information about companies, products and services. The development of the web, especially of WEB 2.0 with its two-way, mostly read-write web and ability of stakeholders to communicate with one another, social networking etc. make companies more vulnerable than ever before. Upgrading of Corporate Communication function to strategic level can be correlated with companies’ high performances. In response to the dynamic and stakeholder oriented environment, companies with strategic positioning of corporate communications function try to assure a two-way dialog with its stakeholders through the official web site. The aim of this paper is to provide evidence of transparency of selected companies’ corporate communications function disclosure on their official web sites. The development of corporate communication function is observed through the components such as: basic web disclosure, online selling and presenting companies’ product/service, media relations, investor relations, employee relations, CSR, disclosure of corporate strategy, corporate communication executives’ direct contact and evidence of electronic media communication. The sample was chosen from the top 500 value added Croatian companies in the year 2008 (according to the Institute for Business Intelligence). Analyzed companies are Croatian companies with the highest and the lowest value added ranking in that year. We can assume there is a positive link between achieving higher value added and companies’ disclosure to all interested stakeholders. Statistical methods will be used to argument this hypothesis and to research how companies that are on the top and on the bottom of the value added list communicated with interested stakeholders.
Keywords: corporate communication, management, strategy, electronic communication
INTRODUCTION
Corporate communications as a management function can be considered as a very important strategic function in modern management. The development of new media, such as the Internet and its components such as the World Wide Web, open a dialog between companies and interested stakeholders. Modern companies’ management can use official web sites for presenting a company and communicating with all interested stakeholder. The times of recessions and economic downturns are especially sensitive and they highlight the necessity of building intensive relationships between companies and their interested stakeholders. Recession programs cut costs of doing business as a general rule so through official web site communications intelligent companies can build and maintain stable relationships under the pressure of cost-cutting. There is an assumption that the amount of contents for key stakeholder on company's official website is positively related to company's higher value added and other characteristics of a business.
The main purpose of this paper is to look for evidence of companies’ corporate communications through the official web sites. The remainder of this paper is organized as follows. Firstly, theoretical aspects of corporate communications as the key factor of company’s success, particularly the importance of strategic development of function and the impact of new communications media on the development of a web version of corporate communication function will be presented. Then, research hypothesis will be developed in correlation with higher or lower value added company’s ranking. After that, variables used and sampling methodology will be described. The last part will summarize the findings, conclusions, and research limitations and provide suggestions for future research.
CORPORATE COMMUNICATIONS FUNCTION
There is a widespread belief in the professional world that in today’s society the future of any one company depends critically on how it is viewed by key stakeholders such as shareholders and investors, customers and consumers, employees, and members of the community in which the company resides (Cornelissen, 2006).
Corporate communications functions integrate communications efforts in building and maintaining relationship with companies’ stakeholders particularly with key stakeholders such as customers, investors, employees, media etc. Having analyzed the list of key influential stakeholders, the authors in the field of corporate communication (Argenti, 2006, Goodman, 2000, Cornelissen, 2008) agree that corporate communication function includes the following components: investor relations, media relations, employee relations, government relations or public affairs, marketing communication, and corporate reputation.
Corporate communications is a management function that offers a framework for effective coordination of all internal and external means of communications with the overall purpose of establishing and maintaining a favorable reputation with stakeholder groups upon which the organization is dependent (Cornelissen, 2008).
Corporate communications is also an instrument of management by means of which all consciously used forms of internal and external communication are harmonized as effectively and efficiently as possible, so as to create a favorable basis for relationships with groups upon which the company is dependent (Van Riel, 1995).
Corporate communications as a management function need to establish and maintain a dialog between company and their stakeholders. Moreover, the level of development of function has a strong influence on companies’ brands, image and reputation what can be crucial in difficult times, such as those of crisis, recessions or economic downturns which we have been experiencing for the past two years. Modern management need to recognize corporate communication function as a strategic management function. Strategic approach, disclosure, open dialog and interactivity with interested stakeholders are forms of invisible capital which companies owe and valuable competitive advantage on the global market.
Literature review on Corporate Communications function on the official web sites
Marshall McLuhan predicted almost forty years ago that the world would become a global village because of new technology which would be developing. Since that time the development of new technology, particularly of communication technology has had a strong influence on the development of corporate communication function. Since January 19, 1996, when the New York Times went online at www.nytimes.com other newspapers, business magazines and Web portals and companies have also set up their official web sites.
The advent of the Internet has changed the meaning and process of corporate public relations. Companies must react to public inquiries and dialogue, with less opportunity to prepare for presenting their own version of reality. Although the Internet allows companies to present their viewpoints directly to key constituents, control over information dissemination is lost (Ihator, 2001). Technologies such as the Internet underscore the global character of communication (Goodman, 2000).
The Internet is a self-changing system and medium of communication which incorporates press, radio and television, and more precisely, the web (Martin-Barbero 2006). Technologies such as the Internet underscore the global character of communication. In practice, corporate communication is a strategic tool for the corporation to gain a competitive advantage. Companies use it to lead, motivate, persuade, and inform employees – and public as well (Goodman, 2004). The Internet facilitates rapid communication of information at a very low cost. Many companies around the world have launched web sites, which are used to communicate information to anyone who is interested and who possesses the technological resources to access it (Gowthorpe, 2004). Corporations have a different power dynamic with their constituents, who have ready access to mass media and can post information on blogs or other online sources. Constituents can spread whatever stories they want from their own perspectives, making them part of the public record (Argenti, 2006).
Today, companies have less control of communication while various constituencies, competitors and the general public have greater access to information and to employees at all levels within companies. Technology accommodates real-time dialog between companies and their constituents, replacing unidirectional messages from faceless managers (Argenti, 2006).
Organizations engage in a variety of relationship-building communication strategies and behaviors. One important tool for relationship building and maintenance is the organizational web site. Web sites have many characteristics that make them attractive for public relations. They offer corporations an opportunity to participate in "setting the agenda" on public policy issues. Web sites can also employ interactive features to collect information, monitor public opinion on issues, and proactively engage citizens in direct dialogue about a variety of matters (Esrock & Leichty, 1998). Furthermore, Esrock & Leichty agree that web sites have several attractive features of organizational self-presentation and they can serve more active audiences when they seek and process information.
Many scientists advocate the growing potential for the development of corporate communication functions by the Internet. The Internet as a new and growing mass medium can ensure in a 24/7 cycle connections between companies and its stakeholders. Upgrading the Corporate Communication function to a strategic level can be correlated with companies’ high performances. In response to a dynamic and stakeholder oriented environment, companies with strategic positioning of corporate communications function try to assure a two-way dialog with their stakeholders through the official web site.
Furthermore, the Internet is seen as not just a tool, but as a crucial factor in strategic orientation and development of corporate communication function. Communication is strategic more than ever before, as in an information-driven society, it is an integral part of the corporation strategy (Argenti, 2001.) In corporate communication research, Argenti pointed out that the Internet is not just a tool; the Internet is a strategy because, according to anthropologists, a new tool in a human system changes that system. The Internet has changed dramatically the way people in corporations communicate internally and externally. It has at once created a sense of liberation, and also represents a constantly present taskmaster.
Since the advent of the Internet and its most popular part, i.e. the World Wide Web many companies have started a new era of communication between an organization and all interested stakeholders. A great percentage of companies all over the world have an official web site. Companies have used their official web site with the intention of interacting and maintaining relationships with existing customers, employees, investors, media and the general public. In general, companies use their web site for two main purposes: corporate presentation or online selling. Independently of its business objectives, every company, particularly company which is going public or has listed securities, needs to own a presentation web site.
Any information which can be interesting to stakeholders can be published on a company’s web site. Companies all over the world usually publish financial reports, product and service catalogs, relevant information on company’s strategy, company’s news, information for current and potential employees, announcement for media, corporate social responsibility goals, strategy and activities etc. The main advantage of WEB 2.0 is its interactivity, as it enables a company to be known as either being open to dialog with stakeholders or not, because having only presentation without direct feedback is not enough.
The rapid growth of the number of the Internet users and the development of new online services like blogs, forums, Twitter, Facebook, RSS, LinkedIn and other social networks open up the possibilities for companies to establish and maintain a dialog with all interested stakeholders. Moreover, any of the interested stakeholders has the possibility of becoming a journalist and publishing information about the company and their experience with the company. When information is published, anybody can comment on it or republish it. However, the old fashioned term “word of mouth” is becoming more interesting and powerful in the 21th century through the electronic media and social networking owing to the well-known fact that people believe more other people, ‘i.e. somebody like them’.
The first example of blog violation of corporate reputation was presented in 2005, when an irate blogger attacked Dell for inadequate customer services. Dunkin Donuts have also been attacked by a blogger. Other network services also provide information about companies, product, services, costumer experiences etc. Since the advent of interactive online services, companies have become more vulnerable than ever before and corporate communication function needs to handle more sources than ever before to reach their stakeholders. Furthermore, intelligent companies step out and open online services (blogs, forums, Twitter, LinkedIn etc.) to keep an eye on their stakeholders before they could do any damage to companies’ reputation.
‘People want interactivity’ is an assumption which has underpinned much recent debate about digitizing of communications technology: the idea being that the way people want to communicate has changed (Sims, 2004). Sims statement supports the theory that electronic communication development of corporate communication function is a part of modern business strategy for the 21th century.
Corporate Communication Institute recently conducted a study on the relationship between spending on corporate communication functions and its reputation as reported by Fortune in its annual ranking of the ‘Most Admired’ companies. According to this study, the Internet is isolated as having important implications twice, i.e. because of two main reasons, one being a strategy, and the other being its speed. Internet experts compare the Internet year to a ‘dog’ year (Goodman, 2004).
Research Review
According to the theoretical background, communication through organizational official web site is a growing form of modern strategic oriented corporate communications function.
Ninety of the 100 corporations in the sample from Fortuna 500 had a web site at the time of the study in November of 1997 (Esrock & Leichty, 1998). According to the same study, 92% of corporations had content Product/Service Catalog, 90% had content Corporate Profile/History, 81% had Press Release, 61% had Contact Information/Dealer and Retailer Location, and only 31% had content Annual Report.
Gowthorpe (2004) conducted a research into the web site content of smaller listed companies in the UK in terms of financial reporting using the Internet. The results revealed that 95% of them had an e-mail link from the web site, 81% of them had financial press release and as many as 77% of them had the full version of current year annual report.
Financial reporting on the Internet is voluntary in Croatia. Companies that publish their financial statements on the Internet on a timely basis try to establish and maintain a favorable reputation with stakeholder groups. Financial reporting has a critical role in the corporate communication function of building and maintaining relationships with existing and potential investors and creditors.