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Ethical Community Stakeholder Engagement in the Global Environment: Strategies and Assessment

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Given the importance of and challenges in stakeholder engagement in the global context, this study examines the perceptions of local community members on the stakeholder engagement strategies of multinational corporations (MNCs) operating in Peru as well as the relationship outcomes of such engagement. A survey with 300 local community members in Cajamarca, Peru was conducted. Results indicated that among the different engagement strategies, symmetrical/ethical communication is the most critical whereas mediated communication is the least effective in increasing the effectiveness of stakeholder engagement for both stakeholders and organizations. In the process of stakeholder engagement, uncertainty reduction plays a more important role than anxiety reduction in increasing perceived control mutuality and trust. Appropriate stakeholder engagement strategies and stakeholders' anxiety and uncertainty management significantly predicted organization-stakeholder relational outcomes.
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Ni, L., Wang, Q., De la Flor, M., & Peñaflor, R. (2015). Ethical community stakeholder engagement in the global environment:
Strategies and assessment. Public Relations Journal, 9(1), Available online: http://www.prsa.org/Intelligence/PRJournal/Vol9/No1/
Ethical Community Stakeholder Engagement in the Global
Environment: Strategies and Assessment
Lan Ni, Ph.D., Qi Wang, Ph.D., Maria De la Flor, MA, & Renato Peñaflor, MA
This research project was funded by the Arthur W. Page Center for Integrity in Public
Communication at Penn State University.
ABSTRACT
Given the importance of and challenges in stakeholder engagement in the global
context, this study examines the perceptions of local community members on the
stakeholder engagement strategies of multinational corporations (MNCs) operating in
Peru as well as the relationship outcomes of such engagement. A survey with 300 local
community members in Cajamarca, Peru was conducted. Results indicated that among
the different engagement strategies, symmetrical/ethical communication is the most
critical whereas mediated communication is the least effective in increasing the
effectiveness of stakeholder engagement for both stakeholders and organizations. In
the process of stakeholder engagement, uncertainty reduction plays a more important
role than anxiety reduction in increasing perceived control mutuality and trust.
Appropriate stakeholder engagement strategies and stakeholders’ anxiety and
uncertainty management significantly predicted organization-stakeholder relational
outcomes.
Keywords: community, engagement, ethics, global, stakeholders, strategy
INTRODUCTION
With the growing trend of globalization, multinational companies (MNCs) are entering
developing countries at a rate faster than ever before. In this context, the behaviors of
stakeholders, local or virtual, are having an increasing impact on any organization
(Parmar et al., 2010). Stakeholder engagement, or the interactions and consequent
relationships between an organization and its stakeholders (e.g., Noland & Phillips,
2010), is therefore critical to any MNC’s survival and success. This research topic has
gained increased attention in various research fields such as business strategy,
business ethics, marketing (Parmar et al., 2010), and more recently, communication
(Johnston, 2014). Stakeholder engagement is defined as “a type of interaction that
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Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 2
involves, at minimum, recognition and respect of common humanity and the ways in
which the actions of each may affect the other” (Noland & Phillips, 2010, p. 40). In the
global context, an MNC’s use of ethical stakeholder engagement requires a focus on
open information exchange and genuine care of its local communities, which facilitates
effective communication and relationship building in the long term.
Although much research has examined stakeholder engagement processes and
outcomes from the organizations’ perspective (e.g., Burchell & Cook, 2008; Corus &
Ozanne, 2012), little has factored in cultural differences or community stakeholders’
perspective (with the exception of a few studies such as Burchell’s, 2013). In addition,
research is lacking in building theoretical links from engagement strategies to
psychological and relational outcomes based on community members’ perceptions.
Such research is important for both MNC public relations scholars and practitioners
because it uncovers mechanisms of effective public relations to address MNCs’ critical
audiences in the global context, and meanwhile, contributes to ethical communication
because it reflects the responses of local community members who tend to be less
powerful and less heard.
This study examines how local stakeholders’ perceived MNC engagement strategies
influence their mental wellbeing as reflected in anxiety and uncertainty management
(AUM, Gudykunst, 2005), as well as their perceived effectiveness of relationship
management, or organization-public relationships (OPRs, Hon & Grunig, 1999) of the
MNCs.
The mining industry in Peru was chosen as the research setting. Peru is rich in natural
resources and has become the target of MNCs in their entry into extractive industry.
Many regions where extractive companies operate are currently going through turmoil.
Today, the growing opposition to multinational mining companies threatens to derail
major investment and slow the economic expansion that Peru has achieved in recent
years (Kozak, 2012). Studying MNCs and local members communication and
relationship management in such a setting helps fulfill the purpose of the study both
theoretically and practically.
LITERATURE REVIEW
Stakeholder Engagement: Scope and Outcomes
Although stakeholder engagement is usually understood as “practices the organization
undertakes to involve stakeholders in a positive manner in organizational activities”
(Greenwood, 2007, p. 315), stakeholder engagement in itself is neither necessarily
positive nor negative. It may be used for both good and bad purposes and the
consequences of engagement are not always easily quantifiable or tangible (Noland &
Phillips, 2010). Ethical stakeholder engagement, however, consistently brings about
benefits to both the organization and stakeholders such as learning through dialogue,
building trusting relationships (Burchell & Cook, 2008), navigating local norms of
appropriate conduct, identifying new opportunities, strengthening marketing initiatives,
building reputation, and conveying respect and consideration (Corus & Ozanne, 2012).
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Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 3
Organizations with ethical stakeholder engagement also tend to meet a higher standard
of moral legitimacy than those organizations using either legal compliance or
adversarial negotiations for corporate legitimacy (Corus & Ozanne, 2012). Policies and
decisions made after engaging stakeholders tend to be perceived as procedurally fairer
and meet less resistance in implementation (Tyler, 1990). Such engagement
demonstrates an organization’s decision, which is carried through action, to incorporate
its stakeholders’ needs in its growth. Naturally, the stakeholders are likely to feel
respected and heard. Thus, stakeholder engagement tends to lead to positive
organization-public relationships (OPR).
Stakeholder Engagement Strategies and Public Relations Strategies
Stakeholder engagement strategies bear much similarity with communication strategies
commonly discussed in public relations. Both reflect a transition from the organization’s
unilateral influence on its audiences to the equilateral dialogue that involves
organization and its audiences. Stakeholder engagement has transitioned from “a need
for unilateral managerial cognition and control to a perceived need by some for
reciprocal engagement and new dialogic forms of collective cognition” (Payne & Calton,
2002, p. 121). Engagement strategies have been expanded from mere dissemination of
information from an organization through standard and routine reporting practices to
more interactive forms such as stakeholder dialogue (Burchell & Cook, 2006, 2008). In
addition, the nature of such engagement is changing from more adversarial and
confrontational interactions (e.g., communities leveraging land rights against companies
leveraging employment, Garvey & Newell, 2005) to more collaborative and effective
interactions that depend on trustworthy and committed relationships (e.g., involving
communities as partners in local corporate projects, Corus & Ozanne, 2012).
Similarly, public relations literature has identified, refined, and tested four dimensions of
public relations strategies based on Grunig and colleagues’ (e.g., L. Grunig, J. Grunig, &
Dozier, 2002; Huang, 2001) excellence theory. These dimensions reflect an
organization’s efforts in seeking various communication channels to involve its publics
in sense making, decision making, benefit seeking, and relationship building. Two-way
public relations practice refers to the extent to which organizations engage in a dialogue
with and research in the publics so as to understand what those publics have in mind (L.
Grunig, et al. 2002). Symmetrical/ethical public relations practice refers to balancing the
interests and outcomes of both an organization and its publics (Sha, 2004). The other
two variables involve the modes of communication, ranging from mediated
communication to interpersonal communication (L. Grunig, et al. 2002). Whereas
stakeholder engagement indicates conceptually what an organization should do to
relate to its stakeholders, the four PR dimensions dictate more concretely how such
stakeholder engagement can be done. The following paragraphs link stakeholder
engagement with the four dimensions.
Stakeholder engagement and two-way communication. In the process of
stakeholder engagement, dialogue and discussion are differentiated. As compared with
discussion, dialogue is more open, involving the “breaking down entrenched positions
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and the loosening of assumptions(Burchell & Cook, 2008, p. 36). Openness and
willingness to consider alternative viewpoints are critical in stakeholder dialogue where
“the intention is not to advocate but to inquire, not to argue but to explore, not to
convince but to discover” (p. 37). Such dialogues, reflecting the key principle of two-way
communication as a public relations strategy, can be used to transcend the traditional
process of communication in stakeholder engagement to reach understanding (Burchell
& Cook, 2006).
Stakeholder engagement and symmetrical communication. Major challenges in
stakeholder engagement include skepticism and lack of representativeness and
influence among stakeholders in the dialogue (Burchell & Cook, 2008; O’Dwyer, 2005).
In particular, skepticism arises because stakeholder engagement is sometimes used to
merely offset negative publicity (such as a media campaign), endorse products or
legitimize companies’ corporate social responsibility practices (Burchell & Cook, 2008).
Lack of representativeness and influence in stakeholder engagement introduces
another major problem. Corus and Ozanne (2012) pointed out that citizen consent
sometimes does not have value because many subsistence markets consist of mainly
powerful social networks including cultural elite, business groups, and government, and
exclude poor communities. Scholars suggested potential solutions to enhance
representativeness and influence from less advantaged groups, such as a “polyvocal
citizenship conception of social accounting” (O’Dwyer, 2005, p. 33), which requires that
the stakeholders control the agenda for discussion and potentially change the core
organizational values, essentially becoming co-creators of corporate policies (Corus &
Ozanne, 2012, p. 1729). O’Dwyer (2005) advocated for improving information flows to
stakeholders, so they are knowledgeable or have the means to become knowledgeable
to engage with the organizations.
Therefore, symmetry in the engagement process is critical in addressing diversified
publics’ and their skepticism and reach concurrent decision-making. Corus and Ozanne
(2012) identified deliberative democracy as a conceptual structure for stakeholder
engagement, which invites stakeholders to participate in more effective information
exchanges, deep reflection, and constructive problem solving.
Stakeholder engagement and ethics. Ethics is considered key to stakeholder
engagement. Given the skepticism toward stakeholder engagement, organizations are
obligated to ascertain that they engage with stakeholders not just to “greenwash”
themselves or as a mere publicity effort. At the same time, consistent with the
symmetrical public relations strategy, it is not appropriate to completely separate ethics
from considering the organization’s own interests.
When arguing whether being ethical and being strategic are mutually exclusive, Noland
and Phillips (2010) pointed out two major trends in stakeholder engagement, those of
Habermasians and those of ethical strategists. The first trend argues that ethical
engagement needs to have specific conditions of communication to prevent the process
from being influenced by power differences and strategic motivations (Noland & Phillips,
2010). The second trend, on the other hand, argues that engagement of stakeholders
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must be conceptualized as a central part of a firms strategy to ensure its effectiveness.
A preferred strategy does not simply denote an action of a firm, but more importantly,
considers the consequent relationships it brings the firm with stakeholders, because the
very purpose of the firm and the capitalist system is the creation of value for all
stakeholders (Noland & Phillips, 2010).
Noland and Phillips (2010) maintained that the mutual exclusiveness between ethics
and strategy in stakeholder engagement arises from the misunderstanding of
businesses as monolithic entities and forgetting that individuals make up these
businesses and are themselves important stakeholders. Every such individual is “a
social self with vast webs of relationships that shape their identities and provide
purposes over, above, and beyond those of the firm” (Noland & Phillips, 2010, p. 47).
Ethical stakeholder engagement takes stakeholders as “human being with names, faces,
and families” (McVea & Freeman, 2005, p. 67). If a firm does not engage stakeholders,
it can be taken as a clear sign of disengaging its mission and vision from its identity.
Therefore, leaders of a firm need to be aware that ethical behavior in stakeholder
engagement ought to be part of firms’ strategies, because it is necessarily in their self-
interest (L. Grunig, et al., 2012; Noland & Phillips, 2010).
Stakeholder engagement and communication modes. Finally, to engage
stakeholders of diverse backgrounds, it is necessary to employ various communication
channels. The use and effectiveness of different channels vary by purpose and the
nature of communication (Hallahan, 2010). Interpersonal communication involves
certain degree of personal touch (e.g., face-to-face, telephone, megaphone, etc.) and
can be more effective when in-depth information, interaction, and negotiation is needed.
On the other hand, mediated communication (e.g., pamphlets, brochures, TV, radio,
internet, etc.) is more effective when a large number of audience needs to be reached
within a short amount of time.
To summarize, ethical stakeholder engagement and the four public relations dimensions
discussed in excellence theory complement each other. Both argue conceptually that
organizations and their audiences should communicate and grow together. The four
public relations dimensions specify the ways to realize stakeholder engagement.
Although stakeholders, especially less powerful ones, often hold skepticism towards
organizations’ communication with them, consistent ethical stakeholder engagement
over long term may change the stakeholders’ mindset and lead to trust. Such trust may
further bring stakeholders’ psychological change towards the organization. Sloan and
Oliver’s (2013) study empirically demonstrated stakeholders’ cognitive and emotive
change because of the organization’s engagement strategies.
Sloan and Oliver (2013) examined trust building in multi-stakeholder partnerships. The
authors distinguished between cognitive and emotive trust, with the former associated
more with information and rational thinking, and the latter, more with perceived
connection and feelings. Sloan and Oliver (2013) found that obstacles to trust included
partner stereotypes, different languages, values, cultures, history of relationships, and
power imbalances. However, emotion-bonding engagement practices such as asking
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provocative questions, offering sensitive disclosures, opening the agenda to pursue
spontaneous ideas, and valuing the other in attitudes and acts, can transform negative
emotions into positive ones. Sloan and Oliver (2013) also concluded that engagement
practices establish trust between stakeholders and organizations on an interpersonal
level by changing stakeholders’ cognitive and emotive perceptions towards the
organization.
Built on Sloan and Oliver’s (2013) suggestion, the following section uses Gudykunst’s
(2005) anxiety and uncertainty management (AUM) to discuss how stakeholder
engagement can affect stakeholders’ mentality. This theory is chosen because it was
founded in intercultural communication contexts (Gudykunst & Hammer, 1988) and
supported in linking public relations practice with the publics’ psychological perceptions
(e.g., Ni & Wang, 2011).
Stakeholder Engagement and Anxiety and Uncertainty Management (AUM)
In a nutshell, AUM states that, in an intercultural setting, personal frame of reference
formed through enculturation and communication between a stranger of a culture
(labeled as stranger) and a host of the culture work together to influence the
communicators’ levels of uncertainty and anxiety, which in turn influences the
effectiveness of communication and the stranger’s adaptation to the culture. Uncertainty
refers to the lack of confidence in making attributions or predictions about others or the
environment (Gudykunst & Hammer, 1988). Different from uncertainty that is cognitive,
anxiety is mostly affective and refers to the apprehension of possible negative outcomes
(Gudykunst & Hammer, 1988). Ni and Wang (2011) developed and tested an
intercultural public relations management model in a university setting. Relationship
cultivation strategies such as access, positivity, openness, assurance of legitimacy,
networking, and sharing of tasks were all found to contribute positively to the
management of anxiety and uncertainty, which in turn contributed positively to
stakeholders’ perceptions of OPR. That study found that the effect of relationship
cultivation strategies on OPR was mostly mediated through AUM.
As discussed earlier, one of the major benefits of stakeholder engagement is learning
through dialogue and gaining understanding. Through stakeholder dialogue, “perceived
relationships between self and others change as new learning occurs” (Payne & Calton,
2002, p. 133). Burchell and Cook (2008) discovered that such understanding as a result
of learning does not necessarily bring about more agreement, a conclusion shared by J.
Grunig (2000, 2006) and Kent and Taylor (2002). However, it does assist with the
negotiation and interaction between the two parties (Burchell & Cook, 2008). Similarly,
the role of persuasion, or the desire to make the public agree with an organization, is
not the essence of two-way and symmetrical communication. Both parties should sit
down and exchange information rather than try to persuade or indoctrinate the other
with one’s own ideology. The effort to empower each other with knowledge may
facilitate collaborative decision-making processes (J. Grunig, 2000, 2006) and increase
trust (Sloan & Oliver, 2013). The focus on increasing communication and empowering
each other may reduce stakeholders’ anxiety and uncertainty and help build a solid
foundation to enhance the likelihood of a positive organization-stakeholder relationship.
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OPR as an Outcome of Stakeholder Engagement
Organization-public relationships (OPRs), a key construct in the current public relations
literature, can be considered a major outcome of stakeholder engagement. Although
stakeholder engagement helps establish trust and change relationships (Burchell &
Cook, 2008), effective relationships do not mean that different parties must agree with
each other on everything. Examples include those relationships in which NGOs could
engage as “critical friends” (Burchell & Cook, 2008). Trust, considered the central spine
around other outcomes, can have an indirect long-term effect on the way organizations
and NGOs approach joint problems or campaigns. It is noted that during the interaction
between organizations and stakeholders, facts on their own do not always convince
anyone; it is the people that stakeholders trust that convince them.
Wang, Ni, and de la Flor (2014) found that control mutuality and trust are two crucial
OPR qualities. Trust refers to the confidence in and willingness to be open to the other
party (Hon & J. Grunig, 1999). Control mutuality is the “degree to which partners agree
about which of them should decide relationship goals and behavioral routines” (Stafford
& Canary, 1991, p. 224). Engagement strategies are likely to affect OPR through AUM
(Huang, 2001; Ni & Wang, 2011). Meanwhile, engagement strategies influence
stakeholders’ relationship with the organization directly as well (Sloan & Oliver, 2013).
Therefore, a theoretical model that contains both direct and indirect causal paths from
stakeholder engagement strategies to organization-public relationships is proposed
through the following hypotheses:
HYPOTHESES
H1: The increased use of each of the four public relations strategies (two-
way communication, symmetrical/ethical communication, interpersonal
communication, and mediated communication) leads to reduced anxiety
and uncertainty.
H2: Reduced uncertainty and reduced anxiety both lead to increased
control mutuality and trust.
H3: The increased use of each of the four public relations strategies leads
to increased control mutuality and trust.
METHOD
Research Setting
Located in the northern highlands of Peru, Cajamarca province is situated
approximately at 8,900 feet above sea level and has a population of about 316,000
(Censo INEI, 2014). The province is comprised of 12 districts. Cajamarca has great
value in the history of Peru. This region has historically been the setting of the
encounter between the culture of Spain and the Andean world. Cajamarca has
remained a scenario of frequent social conflicts due to local community opposition to the
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exploration and exploitation of mining projects in the region (Oposición a Inversión
Minera haría Retroceder a Cajamarca, 2012). In 2013, mining investment in the region
fell to 55% due to social conflicts (La Inversión Minera en Cajamarca Cayó 55%, 2014).
Adding to the conflict, the Peruvian Government perceives extractive companies as
strategic allies that can bring more revenue to the country through taxes and social
investment programs, and thus, help to alleviate poverty. With the government of
Ollanta Humala, Peru offers greater legal stability and confidence, and therefore has
opened its doors to foreign investment (¨Perú tiene estabilidad juridica, genera
confianza y abre sus Puertas a las Inversiones, 2012). However, although in many
cases, multinational companies were able to obtain the necessary licenses given by the
government officials, they do not always have a “social license” to operate or gain
support from the community to extract their natural resources. In the process of gaining
legitimacy, MNCs need to establish and cultivate quality relationships based on trust
through ethical stakeholder engagement.
Recruitment and Participants
Participants were recruited from two of the 12 districts in Cajamarca, District of Baños
del Inca and District of Cajamarca. Both districts are located in the Northern side of
Peru. A local research consultant and several research assistants were hired to help
with the recruitment. Cluster sampling was used to recruit participants (Babbie, 2010).
To define the sample, the geographical map of the districts of Baños del Inca and
Cajamarca was divided into clusters, assuring that all of the areas within these two
districts were covered. These clusters consisted of a maximum of 100 houses. A total of
30 clusters were identified, each of which represented the routes that were followed by
the researchers.
To recruit the houses, the random walk method (Conducting the Field Work, 2012) was
used. The random walk method includes two separate steps. The first is to choose a
starting point and the second is to select the households from that point onward. In the
random walk method, field workers are instructed to begin the survey process from
some geographic point and follow a specified path of travel to select the households to
interview. It may entail either selecting every nth household. For this study, the starting
point represented the intersection of two major streets or avenues and we selected one
in every three households.
Once the households were determined, the researchers asked the person who opened
the door about the number of people who lived at the house and these residents’ birth
dates. The person who has had the most recent birthday was selected to be the
participant. Up to two subsequent visits were conducted in order to enroll at least one
person in each house. Once the person was identified, he or she was asked to
complete the questionnaire.
Participants were 300 Peruvians from the District of Cajamarca (n = 250; 83.3%) and
the District of Baños del Inca (n = 50; 16.7%). The district of Baños del Inca is located 6
kilometers east from the city of Cajamarca and has a population of 34,749 inhabitants.
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Of this total, 35% live in the metropolitan area and 65% in rural areas. The District of
Cajamarca has a population of 188,363, of which 78% live in urban areas, while 20%
live in rural area. According to the last Census INEI (2014), the population of Peru is
over 27 million of people, thus, the province of Cajamarca represents approximately 1%
of the population of Peru.
The ages of the sample varied between 18 and 60 (M = 36.60, SD = 12.17; Median =
35.00). One hundred and fifty-three (51.0%) were female and 147 (49.0%) were male.
All participants reported speaking Spanish at home. Most identified themselves as
Mestizos (n = 209; 69.7%), followed by White (n = 78; 26.0%), Asian (n = 3; 1.0%),
Amazon (n = 1; 0.3%), and Quechua (n = 1; 0.3%). Eight (2.7%) identified their
ethnicities as “other.” Like other Latin-American countries, Peru is characterized by a
great ethnic diversity. Indigenous people account for an estimated 45% of the
population, “Mestizos” or people of mixed ethnic heritage (mainly indigenous and
Spanish ancestry) represent roughly 37% of the population, an estimated 15% is of
European descendent and there are small black and Asian minorities (Census INEI,
2014).
The most reported highest degree earned was university completed (n = 74; 24.7%),
followed by secondary school completed (n = 67; 22.3%), university uncompleted (n =
47; 15.7%), and technical education (n = 35; 11.7%). Secondary school uncompleted
and below added up to 18.3%. Four (1.3%) completed postgraduate and four (1.3%)
checked the no education category. Fourteen (4.7%) did not respond. It is important to
note that in general, the level of education in the province of Cajamarca is low: Only 6.8%
of the population has completed university studies, 39% has primary school and almost
16 % of the population does not have education at all (INEI, 2014).
Regarding the monthly household income, most reported 600-999 soles or $215-$358
(n = 86; 28.7%) and 1000-2499 soles or $358.4 $895.7 (n = 74; 24.7%). Others
reported 300-599 soles or $107.5 - $214.7 (n = 30; 10.0%), less than 200 soles or $71.7
(n = 29; 9.7%), 2500-7999 soles or $896 - $2867 (n = 20; 6.7%), and 8000 soles or
$2867.4 and more (n = 1; 0.3%). Sixty participants (20.0%) did not respond to this
question. The current currency exchange of US dollars to Peruvian soles is 1:2.79.
According to APEIM (2013), Peru socioeconomic status is broken into five categories, in
which E is the lowest while A the highest. Average monthly earning for E, D, C, B, and A
are around US $340, US$659, US$955, US$1080, and US$2026 respectively. Among
the 80% who reported income in this study, around half (48.4%) belonged to the E
category, about a quarter (24.7%) were the middle class, and 7% were the upper class.
The average length of community residence was over 22 years (M [units in month] =
267.08, SD = 173.93; Median = 249.00), with a range of 3 months to 727 months. The
average length of knowing at least one of the extraction companies was over 15 years
(M [units in month] = 190.27, SD = 98.00; Median = 190.00), with a range of 10 months
to 600 months.
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Measurements
The measurements as described below all used a 5-point Likert scale, where 1 =
strongly disagree and 5 = strongly agree. Higher scores indicated higher levels on
intended variables. A full-model structural equation modeling that included both
conceptual and measurement models were run to test the proposed model, following
Kline’s (2010) suggestion. Cronbach’s alpha was used to assess each measurement’s
internal consistency. Measurement items and factor loadings are reported in Tables 1
and 2.
The participants were asked to rate the public relations practices and organization-
public relationships of a company. In the questionnaire, they were instructed to think of
the “company” in all questions as one major foreign extractive company that operates in
or near their community.
Public relations practices. Measures for two-way, symmetrical/ ethical (ethical
henceforward), interpersonal, and mediated public relations were adapted from previous
studies (L. Grunig, J. Grunig, & Dozier, 2002; Huang, 2001, 2004; Kim, 2007; Sha, 2004;
Wang et al., 2014; Yun, 2006). All four public relations measures had high reliability:
two-way (M = 2.86, SD = 1.10; α = .85), symmetrical/ethical (M = 2.61, SD = 1.05; α
= .88), interpersonal (M = 2.66, SD = 0.99; α= .84), and mediated (M = 3.21, SD = 1.09;
α= .84).
Uncertainty and anxiety. Gudykunst and Nishida’s (1986) attributional confidence
measure was originally developed to inversely reflect uncertainty people experience
when interacting with strangers. This measure indicated high reliability and validity in
cross-cultural contexts (e.g., Gudykunst & Nishida, 1986, 2001). Stephan and Stephan’s
(1985) emotional assessment of intergroup anxiety was originally developed to measure
anxiety level experienced in intercultural encounters. This measure’s reliability and
validity in intergroup communication contexts have been widely acknowledged (e.g.,
Gao & Gudykunst, 1991; Plant & Devine, 2003; Turner, Hewstone, & Voci, 2007). Wang
et al.’s (2014) study shortened these two measures and the adapted versions indicated
high reliability and unidimensionality. In the current study, five best performing items
from uncertainty and anxiety each were extracted (Table 2). Both measures indicated
high reliability: uncertainty (M = 2.47, SD = 1.13; α = .91) and anxiety (M = 2.39, SD =
0.96; α = .87).
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Table 1:
Measurement Model Statistics for Public Relation Practices
Measurement Model
Standardized
Loadings
Two-Way Communication
1. Before starting public relations activities, the companies researched
and tried to understand the position of local community with respect to
their companies or toward a given issue.
.76**
2. After completion of public relations activities, the companies conducted
an evaluation.
.85**
3. During the interactions with community members, the companies tried
to understand the opinions and suggestions of local community.
.81**
Symmetrical/ Ethical Communication
1. The companies consulted those community members who were
influenced by their organizational policies during decision making.
.75**
2. During communication, the companies took into account the possible
negative impact on the community members.
.75**
3. The companies considered both their and the community’s opinions
and positions during communication.
.88**
4. The companies considered how their public relations influenced the
community members.
.84**
Interpersonal Communication
1. The companies contacted community members in person.
.82**
2. The companies contacted community members by telephone.
.73**
3. The companies organized community forums or town hall meetings to
communicate with local community members face to face.
4. The companies contacted community members by using local radio or
megaphone.
.80**
.67**
Mediated Communication
1. In communicating with the local community, the companies sent out
press releases and held press conferences.
.74**
2. In communicating with the local community, the companies used mass
mediafor example, TV, radio, newspaper, magazines, and so on.
.82**
3. The companies sent out organizational publications, brochures, and
pamphlets.
.83**
Note. **p < .01.
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 12
Table 2:
Measurement Model Statistics for Uncertainty, Anxiety, Control Mutuality, and Trust
Standardized
Loadings
Uncertainty*
1. I’m accurate in interpreting the companies’ missions.
.78**
2. I’m accurate at understanding the companies’ general policies.
.90**
3. I can understand the companies’ cultures.
.89**
4. I can put myself into the companies’ positions.
.84**
5. I know the company very well
.64**
Anxiety
When I communicate with the companies, I often feel:
1. Awkward.
.78**
2. Impatient.
.82**
3. Defensive.
.64**
4. Suspicious.
.70**
5. Under stress.
.78**
Control Mutuality
1. Generally, the companies and I are both satisfied with the decision-
making process.
.82**
2. In most cases, during decision making, the companies and I have equal
influence.
.86**
3. Both the companies and I agree on what we can expect from each
other.
4. The companies and I are cooperative with each other.
.86**
.83**
Trust
1. I am confident that the companies have the ability to accomplish what
they say they will do.
.86**
2. Members of the companies’ leadership are truthful with me.
.88**
3. The companies treat me fairly and justly, compared to other similar
local organizations.
.81**
4. The companies keep their promises.
.84**
Note 1. * The items measured attributional confidence. The scores were reversed to reflect the levels of
uncertainty.
Note 2. **p < .01.
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 13
OPR outcomes. Measures of control mutuality (four items) and trust (four items) were
adapted from Huang (2001), Ki and Hon (2007a), and Wang et al. (2014). Both
measures indicated high reliability: control mutuality (M = 2.47, SD = 1.05; α = .91) and
trust (M = 2.40, SD = 1.09; α = .91;).
Translation Procedure
To ensure translation accuracy, back translation and decentering translation procedures
(Van de Vijver & Leung, 1997) were used. First, one Spanish-English bilingual author
translated the questionnaire into Spanish. The words and phrases in the English version
that did not have equivalences in Spanish or that did not apply to the context were
modified. This author then invited two bilingual public relations experts that worked as
industry consultants to compare the two versions and provide feedback. Then the
Spanish version was translated back into English for an equivalence check. The
bilingual author and the two bilingual practitioners discussed inconsistencies between
the English versions, and resolved inconsistencies. The modified Spanish version was
used in the finalized survey.
RESULTS
Model Assessment
Structural equation modeling using IBM Amos 22 (IBM SPSS, 2014) was performed to
evaluate the entire model and assess the hypotheses. The criteria of RMSEA ≤ .06,
SRMR ≤ .08, and CFI ≥ .95 that Hu and Bentler (1999) suggested were used to assess
the model fit. The 32 measurement items (3 for two-way public relations, 4 for
symmetrical/ ethical public relations, 4 for interpersonal public relations, 3 for mediated
public relations, 5 for uncertainty, 5 for anxiety, 4 for control mutuality, and 4 for trust)
were entered under their respective latent factors composing the measurement models.
The conceptual relations based on the three hypotheses were drawn in the conceptual
model. In general, the model was sustainable, χ² (438, N = 300) = 1013.46, p < .01;
χ²/df = 2.31; CFI = .97, SRMR = .05, and RMSEA = .06. The measurement model
indicated high sustainability. The conceptual relations were not all supported. Figure 1
depicts all hypothesized standardized regression coefficients based on conceptual
relations; Table 3 reports these coefficients again for readers who prefer tabled results.
Table 4 reports factor correlations. Conceptual relations are discussed in the following
hypothesis testing section.
Table 3:
Standardized Regression Coefficients Based on the Hypothesized Model
Two-
Way
Ethical
Interpersonal
Mediated
Uncertainty
Anxiety
Uncertainty
-.03
-.25*
-.42**
-.09
Anxiety
.09
-.36**
-.17
-.12
Mutuality
.37**
.31**
-.09
-.01
-.41**
-.01
Trust
.27**
.32**
-.04
.07
-.32**
-.05
Note. *p < .05, **p < .01.
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 14
Figure 1. Conceptual model of public relations practices, anxiety and uncertainty
management, and OPR outcomes. The significant structural relations (based on
hypothesis testing) between the latent variables are depicted in concrete lines; the non-
significant relations are depicted in dotted lines. Standardized regression coefficients
are reported. ηi = error terms (i = 1 to 4); *p < .05, **p < .01.
Table 4:
Variable Correlations in the Structural Model
Two-
Way
Ethical
Interpersonal
Mediated
Uncertainty
Anxiety
Mutuality
Ethical
.66**
Interpersonal
.63**
.70**
Mediated
.64**
.56**
.58**
Uncertainty
-.34**
-.53**
-.55**
-.31**
Anxiety
-.12
-.21**
-.16*
-.18*
-.08
Mutuality
.58**
.61**
.54**
.48
-.62**
-.08
Trust
.63**
.65**
.63**
.56
-.61**
-.09
.80**
Note. *p < .05, **p < .01.
Two-way
Uncertainty
Anxiety
Mutuality
Trust
Sym/
Ethical
Interpersonal
Mediated
η1
η2
η3
η4
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 15
Hypotheses
H1 states that the increased use of each of the four public relations strategies (two-way
communication, symmetrical/ethical communication, interpersonal communication, and
mediated communication) would lead to reduced anxiety and uncertainty. As shown in
the model, this hypothesis received partial support: Whereas symmetrical/ethical
communication significantly reduced uncertainty and anxiety, two-way and mediated
communication did not have effects on either uncertainty or anxiety. Interpersonal
communication significantly reduced uncertainty, but not anxiety. Altogether, the four
public relations exogenous variables explained 28% of variances in uncertainty
reduction (multiple R2 = .28), but only 8% in anxiety reduction (multiple R2 = .08)
H2 stated that reduced uncertainty and anxiety both would lead to increased control
mutuality and trust. Results indicated that uncertainty reduction significantly increased
perceived control mutuality and trust, but anxiety did not have effects on these two
outcomes. Therefore, H2 also received partial support.
H3 stated that the increased use of each of the four public relations strategies would
lead to increased control mutuality and trust. Results indicated that both two-way and
symmetrical/ethical communication had significant effects on control mutuality and trust,
but interpersonal and mediated communication did not. Therefore, H3 received partial
support. Altogether, the four public relations exogenous variables as well as the two
mediating variables (uncertainty and anxiety reduction) explained 66% of variances in
control mutuality (multiple R2 = .66), and 71% in trust (multiple R2 = .71).
DISCUSSION AND CONCLUSIONS
Stakeholder Engagement Strategies
This study examines stakeholder engagement strategies and impact on community
stakeholders in the global environment. Results indicated that among the different
engagement strategies, symmetrical/ethical communication was the most critical
whereas mediated communication the least in increasing the effectiveness of
stakeholder engagement for both stakeholders and organizations. Symmetrical/ethical
communication strategy significantly reduced both uncertainty and anxiety of
stakeholders, and also directly increased control mutuality and trust. These findings
support the current literature that symmetrical/ethical communication is essential in
promoting genuine (vs. superficial) stakeholder engagement (e.g., Corus & Ozanne,
2012, O’Dwyer, 2005). As a win-win strategy, it may enhance both organizational
interest and organization-stakeholder relationship (Grunig, et al., 2012). Balanced and
mutual give-and-take can be both realistic and effective.
On the other hand, mediated communication had no effect on either uncertainty or
anxiety, nor any outcome of engagement. This result might be specific to the particular
research setting of this study: The local community members may not be used to
messages sent through print and broadcast media, and thus appear immune to their
effects.
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 16
Although current engagement literature highlights the importance of interpersonal
interaction (e.g., Sloan & Oliver, 2013), interpersonal channels in this study had limited
effects: It showed significant effect on uncertainty reduction, but not on anxiety
reduction or either engagement outcome. These findings suggest that in this particular
research setting, communication through interpersonal channels is limited to information
learning and does not reduce the feeling of anxiety. Sloan and Oliver (2013) did reveal
multiple stages of emotional development in stakeholder engagement. Therefore,
interpersonal communication is now being used as a means of reaching cognitive
confidence of stakeholders by gaining more understanding of the organizations and
reducing uncertainty. It is possible that at a later, more mature stage of stakeholder
engagement, interpersonal communication will play a more important role in emotional
bonding with an organization.
Two-way communication as an engagement strategy also showed limited effects.
Whereas it did not have effects on either uncertainty or anxiety, it increased control
mutuality and trust. This means the effect of two-way communication on engagement
outcomes is direct, not mediated by uncertainty and anxiety reduction. This result may
be due to the measurement of the variable: All three items measured the efforts from
organizations to understand the community members’ perceptions, with no item
measuring the efforts of community members to understand the organization. The lack
of the measurement of the community stakeholders’ research in MNCs may have led to
uninfluenced anxiety and uncertainty of these members.
Stakeholder Engagement Process and Outcome
Findings suggest that in the process of stakeholder engagement, uncertainty reduction
plays a more important role than anxiety reduction. Uncertainty reduction significantly
increased perceived control mutuality and trust, but anxiety did not have an effect on
either. This seems to be in agreement with the emphasis in current literature on
reaching understanding and learning as a key to stakeholder engagement (Burchell &
Cook, 2008; J. Grunig, 2006; Kent & Taylor, 2002; Payne & Calton, 2002). In particular,
stakeholder engagement facilitates learning through dialogues such that stakeholders
and their representative NGOs gain a better understanding of the pressure or
constraints faced by companies and the rationale behind certain decision making
process, thereby reducing uncertainty. However, such increased understanding does
not always lead to affective changes, such as more acceptance of company’s decisions,
or leniency toward companies (Burchell & Cook, 2008).
Overall, the proposed model explained large variances in the stakeholder engagement
outcomes: 66% of variance in control mutuality and 71% in trust. Therefore, the
proposed engagement strategies and stakeholders’ perceptions about engagement
outcomes bear both statistically and substantively significant effects (Kline, 2010).
Implications for Public Relations Practice
These findings provide important implications for practitioners. First, an MNC should
establish a clear ethical identity that unites its interest with local stakeholders’.
Appropriate and effective actions should be taken to conduct research in the local
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 17
communities and their contexts (e.g., historical, economic, etc.). The MNC’s identity
should be based on such research and show its determination to grow together with the
local communities. This identity can be demonstrated through its mission statement,
goals, policies (especially those that support local recruitment and giving back), and the
like. Second, the MNC should uncover effective communication channels to allow the
intended symmetrical communication to actually happen. Instead of investing in print
media, interpersonal channels should be used; NGOs are perhaps mutually trusted
sources that help facilitate such interpersonal communication. A sincere stakeholder
engagement intention carried through actions that allow community stakeholders to truly
shape or refine organizational policies will do more to bring about effectiveness than
passively using conventional public relations applied in MNCs’ original countries.
Finally, the willingness to be flexible and adapt based on local communities’ needs can
help reduce skepticism and build trust in the long run. Although appearing ideal, ethical
stakeholder engagement may be the most effective strategies to sustain an MNC in a
foreign land full of historical and contemporary social conflicts. The bottom line is that
MNCs’ engagement with their local stakeholders is just another form of human
interaction and “the recognition and respect of common humanity” (Noland & Phillips,
2010, p. 37) applies here as to all.
Limitations and Research Directions
This study has three main limitations. First, this study used translated questionnaires.
Although we have used multiple steps to ensure the quality of translation and made
adjustment based on comments made by bilingual researchers, it was possible that
certain items might still be unclear or had different meanings for the participants. In
addition, the outcomes of stakeholder engagement were measured only from one party:
the community members. Future research may examine both parties (community and
organization) at the same time to gain complementary perspectives.
Future research may use longitudinal design and test the dependent variables at a
separate, later time than when the independent variables are tested. Although structural
equation modeling allow the assessment of directional effects (Kline, 2010), temporal
order can help examine long term organization-stakeholder relationship after the
engagement strategies are implemented and work over time.
ACKNOWLEDGMENTS
The authors would like to thank the Arthur W. Page Center for Integrity in Public
Communication at Penn State University for funding the project as well as Dr. Marcia
DiStaso and the anonymous reviewers for their constructive comments.
Ni, Wang, De la Flor, & Peñaflor Ethical Community Stakeholder Engagement
Public Relations Journal, Vol. 9, No. 1 (Spring 2015) 18
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LAN NI, PH.D. is an associate professor of communication at the University of
Houston.Email: lni[AT]uh.edu
QI WANG, PH.D. is an associate professor of communication at Villanova University.
MARIA DE LA FLOR, MA is an executive director for Communica PR Consulting.
RENATO PEÑAFLOR, MA is CEO of IMASEN, Peru.
... That is, groups that are close to the firm's location and have face-to-face interaction with organizational representatives. Although "local community" may be difficult to define [43], most community-specific works share this understanding of the construct, e.g., [17,22,[44][45][46][47][48][49]. ...
... For instance, Anguelovski [44] endorses having iterative dialogues with fringe communities to solve conflicts, while Dare et al. [45] show that certifications could enrich this process by raising managerial awareness. Holley and Mitcham [16] and Ni et al. [48] reveal that two-way communication reduces uncertainty during meetings, Keenan et al. [53] suggests a gender approach in fringe community dialogue because women may be more affected than men, and Lehtimaki and Kujala [54] focus on how language affects the development of the conversation. Therefore, we still have not grasped fringe-stakeholder dialogue in a comprehensive manner. ...
... Concerning the implication of the dialogues (DC; Figure 3), two-way communication emerged as key variable, which matches this tradition's consensus, e.g., [7,9,48]. This confirms that dialogue necessarily implies bidirectional communication, regardless of the context. ...
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Campaigning activities of non-governmental organisations (NGOs) have increased public awareness and concern regarding the alleged unethical and environmentally damaging practices of many major multinational companies. Companies have responded by developing corporate social responsibility strategies to demonstrate their commitment to both the societies within which they function and to the protection of the natural environment. This has often involved a move towards greater transparency in company practice and a desire to engage with stakeholders, often including many of the campaign organisations that have been at the forefront of the criticisms of their activity. This article examines the ways in which stakeholder dialogue has impacted upon the relationships between NGOs and businesses. In doing so, it contributes to the call for more ‘stakeholder-focused’ research in this field (Frooman in Acad Manag Rev 24(2): 191–205, 1999; Steurer in Bus Strategy Environ 15: 15–69 2006). By adopting a stakeholder lens, and focusing more heavily upon the impact on one particular stakeholder community (NGOs) and looking in depth at one form of engagement (stakeholder dialogue), this article examines how experiences of dialogue are strategically transforming interactions between businesses and NGOs. It shows how experiences of stakeholder dialogue have led to transformations in the drivers for engagement, transformations in the processes of engagement and transformations in the terms of engagement. Examining these areas of transformation, the article argues, reveals the interactions at play in framing and shaping the evolving relationships between business and its stakeholders.