Corporate communication

2 Literature review

This chapter introduces fundamental theoretical concepts that are related to the subject of study. The key concepts and principles of corporate communications, reputation manage-ment, stakeholder communications, investor relations and legal implications of financial communications are discussed in this chapter. The role of corporate annual reporting, pri-mary target audience of annual reports and the impact that the specified documents have on corporate reputation are discussed at the end of this chapter.

2.1 Corporate communication

Cornelissen (2011, 5) defines corporate communication as a “management function that offers a framework for the effective coordination of all internal and external communication with the overall purpose of establishing and maintaining favourable reputations with stake-holder groups upon which the organization is dependent”. According to Doorley & Garcia (2011, 39), corporate communication function integrates employee communication, media relations, government relations, investor relations, and community relations among others.

2.1.1 Communication agenda: building corporate reputation

According to Cornelissen (2011, 3), the objective of building, maintaining and protecting the company’s reputation is the core task of corporate communication practitioners. The concept of corporate reputation has many definitions that vary depending on the discipline from the point of which the definition has been given, however van Riel and Fombrun (2007, 43) summarize the existing definitions to a clear and simple one: reputation is the overall assessment of organizations by their stakeholders. They also specify, that it is so-cial, finanso-cial, product and recruitment images that together shape corporate reputation (Fombrun 1996, in van Riel and Fombrun 2007, 43). Argenti (2013, 72) suggests “Reputa-tion framework” that illustrates how the percep“Reputa-tion of customers, investors, employees and community in general of corporate identity elements (names, brands, symbols, self-presentations) together frames corporate reputation (Figure 2).

Doorley and Garcia (2011, 32) agree with Fombrun (1996) regarding reputation being a sum of images, however, add their own specification: “Reputation = Sum of Images = Per-formance and Behaviour + Communication”, meaning that in order to build strong

reputa-9

tion an organization shall not only focus on achieving KPIs (performance), but also act de-cently (behavior) and skillfully inform stakeholders about those achievements and decent behaviors (communication).

Figure 2. Corporate Reputation Framework, adapted from Argenti (2013, 72)

Roper and Fill (2012, 7) use another definition by Fombrun (1996) to provide a summary of various interpretations of reputation:

“A corporate reputation is a collective representation of a firm’s past actions and results that describes the firm’s ability to deliver valued outcomes to multiple stakeholders. It gauges a firm’s relative standing both internally with employees and externally with its stakeholders, in both its competitive and institutional environments.”

Thus, corporate reputation is based on perceptions of the external and internal stakehold-ers of an organization. As Figure 2 illustrates, having positive images among the four key stakeholder groups - customers, investors, employees and community overall - is a pre-requisite of good reputation. Reputation is built up over time and is not a simple percep-tion at a given moment (Argenti 2013, 87). However, a company that fails to fulfil its obli-gations towards any of its key stakeholder groups loses its good reputation built over time quite quickly.

2.1.2 Corporate personality, identity, brand, image and reputation

At this point, it is important to define essential concepts of corporate communications: cor-porate personality, image, identity and reputation. There are certain contradictions be-tween the terminologies even amongst scholars. Table 1 illustrates a comparison bebe-tween

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the definitions used in studies by Argenti and Druckenmiller (2004, 369) and Roper and Fill (2012, 34-36).

Table 1. Comparison of terminology between the works of Argenti and Druckenmiller (2004, 369) and Roper and Fill (2012, 34-36)

Roper &

Consists of a company’s defining at-tributes, such as its people, products, and services.

A brand that spans an entire company (which can also have disparate under-lying product brands.) Conveys expec-tations of what the company will deliver in terms of products, services, and cus-tomer experience. Can be aspirational.

Who do you say you are and want to be?

Corporate

Image Image

The organization as seen from the viewpoint of one constituency.

Depending on which constituency is involved (customers, investors, employees, etc.,) an organization can have many different images multi-ple constituencies’ images of a com-pany, built up over time and based on a company’s identity programs, its per-formance and how constituencies have perceived its behavior

Roper and Fill (2012, 35) use a concept of corporate personality and at the same time consider corporate identity and corporate brand as synonymous. Roper and Fill (2012, 35) see corporate personality as the core nature of any organization. Markwick and Fill (1997, in Roper & Fill 2012, 35) define two key facets of corporate personality: the dominant cor-porate culture and strategy development process. Even though organizational culture de-fines both internal and external behaviour, corporate personality is more of internal char-acteristic, “what goes on behind the scenes”. Mission, vision and values of the company are the elements of corporate personality that are being communicated externally. Argenti and Druckenmiller (2004, 369), use the concept of corporate identity as the very core of an organization, a set of its defining attributes.

Corporate identity, according to Roper & Fill (2012, 35) or corporate brand in terminology used by Argenti and Druckenmiller (2004) is organization’s strategic choices and its

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pression thereof (Abbrat & Kleyn 2012, 1051.) Roper & Fill (2012, 35) explain that corpo-rate identity is how an organization presents itself to internal and external stakeholders, including such key points as (1) what an organization is (2) what it does and (3) how it does it (Olins 1995, in Roper and Fill 2012, 35) and consists of three elements: symbolism (visual identity), planned and unplanned communications, and the behaviour of employ-ees and management.

Corporate image is how an organization is perceived by different audiences. Argenti &

Druckenmiller (2004, 369) emphasize that the difference between image and reputation is that different constituencies may have varying images of an organization, but reputation is the multiple representation of such images. This statement one more time confirms the definitions of corporate reputation by Doorley and Garcia (2011, 32) and van Riel and Fombrun (2007, 43) provided in subchapter 2.1.1, stating that reputation is a sum of im-ages held by different constituencies.

All in all, Argenti & Druckenmiller (2004), Doorley & Garcia (2011), Roper & Fill (2012), and van Riel and Fombrun (2007) agree that corporate reputation is the collective percep-tion of a company by its customers, employees, investors and community built over time.