and consequently, the number of recipients has also increased. The Internet itself has changed from a stationary concept with relatively slow connection to a mobile and infinitely faster concept that utilizes a more matrix-‐focused structure in the way communication flows.
Finally, web 2.0 has changed the requirements for audiences’ literacy. Traditional protest campaigns can go viral instantly and as the analysis show, the development in information technology has developed the creative approach to protesting and harming companies.
However, before the Internet even existed in web 1.0 form, the fewer variants of distribution channels resulted in prolonged scandals since the time required for people to become aware of the conditions and react to them collectively was significantly longer. Looking at the cases through Healy’s issue life cycle, the Nike case thus represents an example of how corporate reactions and participation in the debate could take years, especially compared to today.
When looking at the next case and the stage of information technology at the time, web 1.0 in it self did not accelerate the aforementioned processes to such a degree that it reached a global audience in any measurable way. This is also evident in the analysis of the consumer impact where it is determined that changes in Coca-‐Cola’s sales revenue and stock value was barely visible on a global scale. The characteristics of web 1.0 indicate that information technology had not reached a stage yet where it could affect and change the global perception of a brand.
A similar significant shift occurred between Coca-‐Cola and Apple’s incident. Social media started to transform into the current form and the characteristics of web 2.0 were in place.
The flow of communication was no longer one-‐way, the availability of revealing evidence against CSR claims started to increase and consumers had become more connected through smart phones and tablets. Thus, the physical size of the Internet had shrunk from a desktop to pocket size and thereby enabling the wide possibilities of sharing. While the possibilities for sharing had grown significantly and with these the audience, it is still worth remembering that the first three scandals all occurred in Asia and as it will be shown, did not have any immediate effect on neither global sales nor stock value.
Finally, Volkswagen’s case presents some interesting differences compared to the first three.
Web 2.0 had reached a stage where social media had incorporated the role of being a forum
where jokes, memes and other user created content could be posted for a variety of purposes.
In this case, such content was created to humiliate Volkswagen and while Volkswagen responded to the accusations both faster and more truthfully, the public ridicule of Volkswagen had already begun before Volkswagen had a change to post any significant apology. Finally, Volkswagen’s case also differed in regards to where it took place. The fraud was discovered in the US and the accusations started with the EPA, but the majority of the affected cars were found in Europe. This dimension will be elaborated further in the discussion.
Looking over the course of the four cases, it is clear that the amount of potential stakeholders has doubled many times over and while companies arguably find this beneficial it has, undeniably, tipped the scale of senders and receivers of communication of any sort.
Companies no longer represent a majority in senders as they did in the time of web 1.0.
Today, anyone with a smartphone can post anything anywhere and companies are no longer able to control the pace or process of crisis communication in the same way they were able to once.
4.4.1 Investigative journalism
As mentioned above, the Nike case is significantly different from the others since it happened before the commercialisation of the Internet. Conventional media was the only way of telling a story, and the amount of work and hours required for publishing anything was consequently substantially higher than it is today. Furthermore, the time required for the public to react was therefore also longer as it took longer for the news to reach enough people. Both of these tendencies are evident in the source material of the report by Ballinger and the timespan of the Nike scandal.
Because the Internet was yet to become common property, one of the major differences between the Nike case and the others is the information generally available to consumers about companies’ value chains, operations and business models.
Not only was there far less information available about these things, but the platforms to distribute such information was limited as well, as was arguably the general public interest in
the subject. As a result of this, the truth about Nike’s unethical business model wasn’t discovered before Jeff Ballinger went the Indonesia and visited the factories. While there is a substantial difference between the capabilities for distribution of information in web 1.0 and 2.0, there were even fewer tools before web 1.0 and thus is was significantly easier to conceal the reality of the working conditions at sub-‐contractors and suppliers on the other side of the globe.
Not only did it take a long time before the news of the sweatshops became a media story, it took almost a year before the public reacted to it in a measurable way and when it was brought to the publics’ attention, Nike denied any responsibility. Thus, the time it took for the issue Nike faced to shift from both emergence to debate stage and from debate to codification stage was far longer than it would take a similar case today. It was only after American national TV stations and newspapers started to bring the story and interview factory workers in Indonesia and Bangladesh that young people around USA started to protest at universities and in front of Nike stores.
Global boycott campaign of Nike from 1994
While the Internet in the web 1.0 form was not available to Jeff Ballinger, other activists and the mainstream media when the scandal started to emerge, the Internet had arrived at the right time for Nike to use it for their advertisement of their new strategies in 1998. Today, the Internet in the form of web 2.0 arguably has huge amplifying effect on everything that is published by sharing to an infinite number of peers and it can all be done in seconds. Nike’s scandal from the 1990’ies wasn’t amplified by the Internet, but was distributed through the conventional news channels. It is therefore interesting to look at how the scandal affected Nike financially compared to the other cases where the Internet, in various forms, have been
utilized by stakeholders to share reports, videos and articles regarding the companies involved. This point will be analysed later.
4.4.2 Transition to web 2.0
Coca-‐Cola’s scandals in India took place in 2000-‐2008, where information technology shifted from web 1.0 to web 2.0 (Visser, 2011). When the allegation of water pollution and evidence of high levels of pesticides within Coca-‐Cola products were brought to the public’s attention in 2000-‐2003, the shift in the web had not yet occurred. At this time, the Internet was available, however social media as we know it today had not been invented yet. However, with the launch of Facebook in 2004 (businessinsider.com) and Twitter two years later, in 2006 (lifewire.com), the change in information technology slowly progressed, as consumers started to become more empowered through social media and thereby raised the focus on stakeholder involvement. During this transformation Coca-‐Cola, as well as other companies, found themselves in a new position where information technology suddenly had the ability to not only provide useful and damaging information to stakeholders, it also provided stakeholders with the opportunity to publicly share and distribute information, giving them the possibility to spread the information globally (Amaeshi, 2008). This meant that companies had to adapt to new external changes, as misalignment through large MNC like Coca-‐Cola could easily have their reputation hurt with CSR misalignment brought public (Ihator, 2011).
In Coca-‐Cola’s case, the scandals in India started as a national issue, however with the shift in web, the scandals expanded and became public knowledge as they progressed and consumer involvement increased (Torres et al., 2012).
If we look at the scandal in India through Healy’s framework, we can determine the progress and time it took for the scandal to first emerge until it finally became enforced through government legislation or consumer boycott. The scandal emerged in 2000, where local people accused Coca-‐Cola of water scarcity and again in 2003, where an Indian NGO reported pesticides in Coca-‐Cola products. Both conflicts quickly became a public debate, in which the company still had not actively involved themselves in the activities. Due to inefficient interaction and lack of acknowledgement from Coca-‐Cola the conflict continued to grow and slowly became codified. When the conflict finally reached enforcement, it was through global boycotts and governmental legislation where Coca-‐Cola was given a fine and banned from working in the Kerala area of India.
4.4.3 Fast growing web 2.0
With information technology’s ability to alter and minimize the power structure between companies and stakeholders, Apple suffered a global reputational loss after 14 workers committed suicide at Foxconn in 2010.
Despite that the issues of Foxconn working conditions were already examined in 2006 by a local newspaper, Apple did not publicly engage in the debate until much later. Instead, Apple decided to let Foxconn resolve the problems locally. Meanwhile, undercover investigations and hidden cameras were used to film the Supplier Code violations of how workers were working and lived under extremely poor conditions at the Chinese factories.
While it still required outside journalist to investigate the factories with hidden equipment, the internet was used to distribute the stories from Foxconn and as more stories and pictures appeared on news and websites, the issues became globally know. As NGOs, online medias and newspapers started to spread the stories, the pile of evidence against Apple continued to grow.
After the investigations, Apple was asked by the BBC to comment on the conditions at Foxconn, but refused to participate in the program. Instead, Apple sent a formal statement that said: “We are aware of no other company doing as much as Apple to ensure fair and safe working conditions” (BBC.com).
When the suicides occurred in 2010, web 2.0 and social media had grown significantly in size since it was introduced and had reached a global user base. The issues regarding human rights that arose from the suicides thus became codified much faster through social media platforms like Facebook and Twitter than the first problems in 2006. The result was that consumers received the information faster than Apple could react to it.
Through a mix of conventional demonstrations against Apple and social media reactions on Facebook, Twitter and online forums, Apple’s image as a company that took care of their employees and treated them fairly started to crack.
Furthermore, while the issue became enforced through global boycotts of Apple products, consumers continued to portray Apple as a corporate villain. Apple’s characteristic ‘i‘ was used online to portray the suicides in repulsive pictures like the post below, which contributed to further damage of Apple’s brand.
It was not until after the majority of the suicides in 2010 had occurred and Apple had been criticized online, that Apple and Tim Cook decided to visit the Foxconn factory and inspect the facilities to see if the conditions had improved. However, according to Apple, the trip to Foxconn was part of Tim Cook’s trip to China.
Reddit forum post
4.4.4 A far-‐reaching matrix structure
When looking at the role of information technology, there is an interesting difference in the Volkswagen case and how it impacted the company’s ability to control and communicate the process. Especially in the immediate aftermath of the exposure, Volkswagen arguably tried to minimise the damage by both apologizing and having the CEO step down, but as it will be shown, Volkswagen’s voice drowned in the sea of user-‐generated comments and contributions.
Another difference is the time in which this scandal was exposed. Consumer awareness was an established concept and the ethical consumer segment described above was established and public expectations on responsible corporate behaviour were at their height.
Furthermore, the subject of global warming and the environmental impact of CO2 emission had risen to the top of politicians, NGOs and companies’ agenda.
Finally, any potential Volkswagen customer had access to the Internet and countless sources of information. Not only was the Internet available to distribute the information about Volkswagen, but the Internet also amplified the exposure to millions of people, who maybe wouldn’t have heard about such a scandal, if they weren’t connected to the Internet.
Due to the matrix-‐like structure of web 2.0 compared to web 1.0 and the options available to participate and communicate everything, Volkswagen was not able to move the focus from the scandal itself with statements such as the public apology without being judged online by stakeholders and to some degree be humiliated. The humilities were largely targeting Volkswagen’s 2015 ‘Clean Diesel’ advert campaign and their low-‐emission diesel cars. The NGO Greenpeace started a campaign that juxtaposed Volkswagen with the villain of the Star Wars franchise. The campaign contained both videos and cartoons that urged people to sign a petition for reduced pollution on new cars.
Greenpeace campaign on Volkswagen
Pages such as 9gag.com, which are hugely popular on social media, distribute and share content made by its followers and users. Across the biggest platforms of social media, 9gag has close to 100 million followers of which many may not be potential Volkswagen customers.
Nevertheless, many of these jokes about Volkswagen indirectly branded the company as a liar and thus damaged the brand further, which made it far more difficult for Volkswagen to repair the damage as long as such jokes were made about their business and CSR claims.
9GAG Facebook post
The case of Volkswagen took off faster than any of the other cases and went from the emergence state to codification within a day. Volkswagen didn’t have any time to participate in the debate and, more importantly, shape the debate and thus control the situation.