Discussion Question

Learning Objectives

What We Will Be Investigating: • Examine the interdependent roles of internal and external channels of communication in modern

organizational life. • Identify the variety of relevant external information sources that typically influence organizational

activities. • Examine how open systems theory describes the need for external organizational communication

and illustrates how exchanges between organizations and environments enable achievement of key goals at multiple levels of organizing.

• Examine the systems transformation process used to develop organizational inputs into desired outputs.

• Identify the key components of the interorganizational field and typical members of relevant organizational environments.

• Identify strategies for building effective cooperative relationships with representatives of interde- pendent external organizations, including examination of boundary-spanning organizational roles.

• Understand how strategic organizational communication activities such as marketing, public relations, advertising, and lobbying are used to promote effective external organizational communication.

• Examine the ethical dimensions of interorganizational communication.

Chapter 10

Communicating within Interorganizational Fields

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CHAPTER 10Introduction

The ability to express an idea is well nigh as important as the

idea itself. —Bernard Baruch

Chapter Outline

10.1 The Interorganizational Field Information-Gathering Activities Information-Giving Activities

10.2 External Organizational Communication Activities Public Relations Lobbying Marketing and Advertising

10.3 The Small-World Phenomenon

10.4 The Relevant Environment

10.5 The Interorganizational Field and Systems Hierarchy

10.6 Boundary-Spanning Activities

10.7 Relationship Development and Interorganizational Communication

10.8 Ethical Dimensions of External Organizational Communication

Introduction The primary focus of organizational communication study is on internal communication. In fact, most of the chapters in this book have focused on internal organizational com- munication, such as ways in which members of work groups coordinate efforts, ways in which communication is used to develop meaningful relationships within organiza- tions, and ways in which leaders interact with workers. However, there is another side to organizational communication that bridges the organization to its external environment: external organizational communication.

Internal and external channels of communication are tightly connected and interdepen- dent. In Chapter 9 we described how internal and external channels of communication are used to help promote a balance between innovation and stability in organizations. We also described how internal and external channels of communication are used to inform organizational development efforts. But there is much more to external communication in modern organizational life and the interdependence between internal and external chan- nels of organizational communication, which we will examine in this chapter.

External organizational communication targets a varied group of external constituents (including suppliers, buyers, shareholders, community members, and so on) and involves a broad range of interrelated organizational activities such as the following:

• Public relations professionals emphasize the importance of external organiza- tional communication with a focus on developing communication activities and programs that promote a positive, externally recognized organizational identity and building strong external relations between organizational stakeholders.

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CHAPTER 10Section 10.1 The Interorganizational Field

• Lobbyists endeavor to build relationships and provide information to promote cooperation with and influence the activities and legislative efforts of key policy makers.

• Marketers develop organizational strategies for communicating about and posi- tioning organizations and their products and services with key external audiences.

• Advertisers develop specific communication campaigns and programs for pro- moting organizational products and services with customers.

Often, these external communication activities are grouped together within an organiza- tion, sometimes along with internal organizational communication functions, under the broad title of strategic organizational communication.

This chapter examines the importance of coordinating activities with other relevant organizations within the larger interorganizational field. We describe typical constitu- ent members of interorganizational fields, including supplying organizations, regulating organizations, competing organizations, as well as organizational customers and other stakeholders. We also examine strategies for establishing effective cooperative relation- ships with representatives of these interdependent organizations, including boundary- spanning organizational activities (communication exchanges between organization members and relevant others from outside the organization), and the use of marketing, public relations, advertising, and advocacy campaigns. The chapter closes with a case study that illustrates the strategic use of communication to establish and maintain effec- tive interorganizational relations.

10.1 The Interorganizational Field

Every organization operates within a larger environment of organizations. This orga-nizational environment is often referred to at the interorganizational field. The interorganizational field includes all the organizations that are relevant to a particular organization. This can include, among others:

• organizations that supply raw materials to the organization, • government agencies and professional associations that regulate organizational

activities, • consumer groups, • competing organizations, • unions, and • organizational partners.

It is important for organizational representatives to coordinate organizational activities with these members of the interorganizational field. Just as organizational members must use communication to establish cooperation with one another, members of interorganiza- tional fields also use communication to elicit interorganizational cooperation.

Two primary organizational communication activities are essential to coordinating efforts between organizations within the interorganizational field: information-gathering activi- ties and information-giving activities. Let’s examine each.

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CHAPTER 10Section 10.1 The Interorganizational Field

Information-Gathering Activities

Information-gathering activities (sometimes referred to as intelligence gathering, research, or due-diligence functions) occur when boundary-spanning organizational actors use their interorganizational connections to keep up with changes within the environment that are relevant to their organizations. For example, advance-planning representatives for the Olympic Games Site Selection Committee are sent out to collect information about poten- tial Olympic Game sites to help determine whether the sites have the requisite qualities, resources, and venues needed to adequately host the Olympic games. These advance- planning representatives interact with local government officials, financial backers, facility managers, and others to gather the information needed to make an informed recommen- dation about whether to award the Olympic games to a particular site.

There are many times in organizational life when information is needed from the exter- nal organizational environment to guide planning and decision making. Additionally, information from external sources can alert organization members about emerging orga- nizational constraints and opportunities. For example, information about new competing products can alert the organization to the need to innovate its own product line to main- tain its market share. Information about new technologies might let organizational lead- ers know about the opportunity to develop new strategies for increasing organizational efficiency and productivity.

Information-Giving Activities

Information-giving activities (sometimes referred to as publicity, lobbying, or sales func- tions) occur when boundary-spanning organizational actors provide strategic information to key representatives of external organizations within the environment to elicit support and coordination for their own organizations. For example, call center specialists at the Cancer Information Service (CIS), operated by the National Cancer Institute, answer questions from callers on their toll-free telephone hotline (1-800-For-Cancer) about cancer diagnoses, treatments, clinical research, and how to cope with side effects from cancers and cancer treatments. The goal of the CIS is to reduce the national cancer burden by providing members of the public who are confronting cancer with relevant information about early detection, diagnosis, treatment of cancers, as well as about successful cancer survivorship so these individuals can make informed decisions about the best health care and quality of life choices.

It is imperative for the CIS specialists to provide callers with timely, accurate, and rel- evant information to help callers cope with the many uncertainties and challenges of deal- ing with cancer. The specialists are carefully trained to communicate effectively over the phone with callers from different backgrounds, education levels, and levels of health lit- eracy. The specialists are provided with computer databases with cancer information, as well as scripts they can recite to callers to help answer common questions. The specialists can also mail or email relevant text to callers to provide them with written transcripts of the health information they need. The information-giving functions of the CIS help the National Cancer Institute achieve its goal of reducing the national cancer burden by providing evidence-based health information to individuals coping with cancers so these callers can make good decisions about managing the disease. Relevant cancer informa- tion from the CIS can help callers make good decisions about effective cancer prevention,

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CHAPTER 10Section 10.2 External Organizational Communication Activities

early detection, treatment, and survivorship, helping to reduce cancer incidence, morbid- ity, and mortality. Information-giving activities serve a similar role in for-profit organiza- tions where consumers call in for product information and assistance.

10.2 External Organizational Communication Activities

As already noted, external organizational communication encompasses a broad range of activities including public rela- tions, lobbying, marketing, advertising, and more. Such strategic communica- tion includes the broad range of internal and external communication functions in modern organizational life. Although many of the external communication activities tend to overlap, we will exam- ine some of the major avenues for exter- nal organizational communication in this section to give you a flavor for the ways that external channels of communication are used. We’ll start with public relations.

Public Relations

Public relations (PR), sometimes referred to as public affairs communication, is a term used to cover an integral area of organizational communication. PR is used to coordinate inter- actions between organizations and key audiences (publics). Although the primary focus of public relations activities is typically on coordinating organizational activities with external audiences (such as with customers, regulators, and competitors), there is also an internal communication dimension to public relations. That is, PR professionals also focus on com- municating effectively with organizational members, who comprise a key internal public for organizational communication. For example, PR professionals often conduct employee surveys to identify internal organizational issues and produce company newsletters to keep organization members informed about and involved with organizational activities.

Public relations has been used to describe many different important organizational commu- nication activities including corporate publicity, shareholder relations, financial relations, environmental and consumer affairs, internal communications, labor relations, community affairs, media relations, government relations, issues management, advertising, branding, corporate identification, and corporate advocacy (Grunig & Hunt, 1984). Public relations activities are often quite complex and involve careful planning and research. For example, crisis-management activities designed to minimize harm to an organization and to its pub- lics during emergencies, such as oil spills or chemical contamination, generally involve coordination of many individuals representing media outlets, government agencies, con- tractors, consumer groups, first-responder groups, and members of scientific communities. It is important for crisis-management communicators to provide relevant, accurate, and timely information that enables those affected in emergencies to respond effectively to the

What does the Nike logo communicate to its external environment?

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CHAPTER 10Section 10.2 External Organizational Communication Activities

situation, as well as to demonstrate the responsibility of the organization in addressing the crisis situation. Poorly handled crises can destroy organizational reputations, while well- handled crisis communication can enhance public respect and loyalty to organizations.

Organizations in Action A Study in Crisis Management

Today, every time you open up a bottle of aspirin, or a jar of mustard, or a jug of pancake syrup, what you’re doing—and how you are doing it—is directly connected to one of the most famous examples of crisis management in U.S. history: Johnson & Johnson’s handling of the Tylenol scare in 1982.

As noted in this chapter, crisis management activities are designed to minimize harm to an organization and its publics, and the handling of the Tylenol scare is quite literally a textbook example of how firms need to proceed in such an emergency.

In October 1982, seven people in the Chicago area were reported dead shortly after taking extra- strength Tylenol capsules. Initially, it was unclear who was responsible for these deaths, although it was clear that the Tylenol capsules were tainted with lethal doses of cyanide. Needless to say, Johnson & Johnson was on the hot seat: consumer confidence in Tylenol and the company was shaky, and the whole situation could deteriorate into a corporate disaster. Indeed, Tylenol’s market share during this period plummeted from 37 percent of the market to only 7 percent. But McNeil Consumer Products, the relevant subsidiary of Johnson & Johnson, embarked on a crisis-management program that has often been used as a model for such efforts.

What did they do? First, they took a strong moral and ethical stand: As far as the company was concerned, it was “people first and property second.” Period. And to walk the talk, Johnson & Johnson pulled 31 million bottles of Tylenol off the shelves, at a loss of more than $100 million. The firm also halted all advertising for the product. After determining that the cyanide did not get into the capsules at any Tylenol plant, Johnson & Johnson nonetheless reintroduced the product with

triple-seal tamper resistant packaging, becoming the first company to comply with a Food and Drug Administration mandate of such packaging. Further, to motivate consumers to start buying Tylenol again, they offered a $2.50 coupon on future purchases. And to restore confidence in the product, the company made over 2,250 presentations to the medical community about their efforts (Effective Crisis Management).

Johnson & Johnson also offered a $100,000 reward for information leading to the arrest and conviction of the Tylenol killer, but no one was ever charged with the crime (“A Bitter Pill,” 2000). But as far as the public was concerned, Tylenol was not to blame for these deaths, and given the company’s aggressive strategy to investigate and deal with the problem, consumer confidence was eventually restored. Although in the short run, Johnson & Johnson’s reaction may have seemed excessive, unnecessary, or

risky, it demonstrated a type of corporate responsibility that could and did restore public trust. And as a result of that tragic incident in 1982, virtually every firm that markets food and drugs today makes use of the same packaging safeguards—safeguards that were simply nonexistent in most consumer products prior to this unfortunate incident.

Why does Johnson & Johnson’s han- dling of the Tylenol crisis make it a good example of crisis management?

(continued)

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CHAPTER 10Section 10.2 External Organizational Communication Activities

Lobbying

Lobbying activities involve the development of influential relationships between orga- nizations and relevant policy makers, such as representatives from legislative bodies, regulating agencies, accrediting organizations, consumer groups, media outlets, and gov- ernment organizations. Lobbyists build their credibility with policy makers and media representatives by providing these influential individuals with relevant, accurate, and timely information concerning complex issues of interest to organizations.

Briefing documents are often written by lobbyists to provide key decision makers with rel- evant background information about important issues. The best briefing documents are suc- cinct, informative, and persuasive, motivating policy makers to favor the interests of the lobbyists’ organizations. Press releases are specialized briefing documents that lobbyists use to influence press coverage concerning important organizational issues. To be effective, lob- byists need to make sure their press releases have news value, provide the right kind of information needed by media representatives, and are responsive to media constraints con- cerning messages’ content and structure. Strategic lobbyists target the right media outlets for covering organizational issues that are most likely to reach and influence relevant audiences.

Marketing and Advertising

Marketing and advertising activities are designed to communicate organizational prod- ucts and services to key audiences. Marketing professionals develop communication strat- egies for positioning organizational products and services to meet audience demands. A critical part of effective marketing is to gather data through market research about the needs, attitudes, and preferences of key audiences for organizational products and ser- vices. Who are these audiences? What are their key beliefs, values, and attitudes concern- ing organizational products and services? How receptive are they likely to be to paying attention to and accepting organizational messages?

Marketing efforts involve making strategic external communication decisions based on the marketing mix, popularly known as the 5 Ps (product, price, place, promotion, and posi- tioning) (see Figure 10.1). This marketing mix involves the following:

Critical Thinking Questions

1. In a crisis situation such as the Tylenol scare, what various “publics” must a company like Johnson & Johnson be concerned about?

2. Why might restoring trust in a company after a crisis be difficult? 3. What is the value of long-term thinking in such a crisis situation?

Sources

Effective Crisis Management. (n.d.). The Tylenol crisis, 1982. Retrieved from http://iml.jou.ufl.edu/ projects/fall02/susi/tylenol.htm

Bergman, J. (2000, November 2). A bitter pill. The Chicago Reader. Retrieved from http://www .chicagoreader.com/chicago/a-bitter-pill/Content?oid=903786

Organizations in Action (continued)

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CHAPTER 10Section 10.2 External Organizational Communication Activities

1. Developing communication strategies to increase understanding about organiza- tional products.

2. Pricing those products so they are attractive to key audiences. (This means not only the financial price of products but also the psychological costs and rewards connected to organizational products or services.)

3. Placing messages about organizational products and services on communication channels that will capture audience attention.

4. Promoting products with motivating messages. 5. Positioning products and services as attractive options for audiences within the

marketplace of similar and competing products and services.

The promotion of a product can include a number of different promotional tools being used, including advertising, direct marketing, sales promotions, personal selling, and public relations. Advertising activities involve the development and implementation of creative communication strategies to promote organizational products and services. Advertising professionals design communication campaigns to create audience aware- ness about organizational products and services, as well as to persuade audiences to pur- chase those products and services.

Advertising campaigns use a range of different media, such as television, radio, newspa- pers, magazines, billboards, messages delivered via the Internet and through social media, and even through word-of-mouth interpersonal communication channels. There is a strong focus in advertising on developing targeted persuasive messages that capture audience attention and influence audience behaviors. However, those creative messages are not just

Marketing Mix

Price

PlacePromotion

Positioning

Product

Figure 10.1: The Five Ps of Marketing

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CHAPTER 10Section 10.2 External Organizational Communication Activities

generated from the minds of copywriters. They are typically based on extensive audience research and message testing data. The most effective advertis- ing campaigns are strategically designed based on extensive research. These campaigns are targeted to specific segmented audiences, use multiple rein- forcing messages, and are distributed over a range of familiar and easy-to-use channels over time.

Advocacy advertising has become an increas- ingly popular way to promote the image and social responsibility of organizations. In advocacy advertising, organizations align themselves with important social causes, such as health promo- tion, environmental protection, and human rights issues, to demonstrate ways that the organization gives back to the community. Often the advertis- ing illustrates ways that the organization is sup- porting efforts to address important social issues and advocates support from others to address these issues. Advocacy advertising is important for building organizational credibility, loyalty, support, and to position organizational image and identity, or the ways that the public perceives the organization. External communication, such as advocacy advertising, is often used to enhance these images. For example, since many people may have negative impressions of large petroleum companies, these compa- nies spend a lot of money on television commercials and print advertisements that tell the public about all the positive things they do, like helping the environment, disadvantaged children, or providing jobs for the unemployed. These advocacy advertisements help to counter some of the negative images people may have about these huge corporations by showing these organizations as good, caring, and contributing participants in society.

How does Coca-Cola use the 5Ps of marketing? What marketing channels does it utilize?

Organizations in Action A Philip Morris Misstep

Global awareness, advocacy advertising, and communication ethics: all are discussed in this chapter, and they all relate to a controversial advocacy spot aired by Philip Morris in 2001.

Wanting to promote its image and its sense of social responsibility, Philip Morris chose to create and run an advocacy ad that would demonstrate its concern for the victims of war-torn Kosovo. (The Kosovo War in the former Yugoslavia killed countless thousands in the late 1990s.) In terms of its image, the firm wanted to remind the world that it makes more than cigarettes, including its non- tobacco products such as Kraft cheese. Karen Brosius, Philip Morris’s director of corporate affairs, said, “It’s important for [us] to get across the message that we’re more than a tobacco company, and that we have dedicated employees.”

What kind of advocacy spot was broadcast? As Shelly Branch writes in the Wall Street Journal, “The TV screen shows a 10-acre refugee camp, its makeshift tents trembling in the (continued)

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CHAPTER 10Section 10.2 External Organizational Communication Activities

snow. Hundreds of Kosovar refugees, shielding their faces from the harsh conditions, march toward safety and shelter. In the distance, a military helicopter pierces the gray sky. The words ‘based on a true story’ appear on the screen. As the aircraft lands, cargo doors fly open to expose the contents of its belly: huge cardboard boxes marked ‘Kraft.’” Then, to personalize this moment of corporate philanthropy, a woman shouts, above the din of the helicopter rotors, “Hi, I’m Molly from Philip Morris.” (Branch, 2001).

However, despite its intention to do a good deed and also improve the corporate image, critics have raised several haunting ethical questions about this 60-second “feel good” spot. First, “Molly”

was not a Philip Morris employee, but an actor flown in from Atlanta. Second, the ad was shot in the Czech Republic, not Kosovo. Third, all of the “refugees”—350 of them—were not actual refugees and were handpicked because of their dark olive complexions.

In the ad, Branch writes, they “huddled over bowls of Kraft Macaroni & Cheese prepared by a team of local assistants who had never before seen the bright- yellow noodle dish.” Fourth, the weather in Kosovo was mild, not frigid, as portrayed in the ad, but the ad agency hired by Philip Morris thought the snow “added a sense of realism to the commercial.” Fifth, and perhaps most important, the production costs for the ad—never revealed by Philip Morris but estimated at well over $1 million—far exceeded the net value of the donated food, which was in the $125,000 range. Not surprisingly, critics have argued that if Philip Morris really wanted to help the actual refugees, they should have simply donated all the money to this worthy cause.

As more companies concern themselves with charitable giving, it’s becoming more difficult to separate a “marketing effort” from a “true philanthropic effort,” said Peter Radford of the Center for Responsibility in Business.

Critical Thinking Questions

1. Do you regard the Philip Morris campaign described here as more ethical or more unethical? Why?

2. Should companies try to publicly “pat themselves on the back” for their charitable giving, and if so, how?

3. Do you know of any corporate philanthropic efforts that meet the highest standards of corporate ethics?

Source

Branch, S. (2001, July 24). Philip Morris’s ad on macaroni and peace—Kosovo tale narrows gap between philanthropy, publicity. Wall Street Journal, (p. B11A).

Case Study (continued)

What mistakes did Philip Morris make in its advocacy ad?

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CHAPTER 10Section 10.4 The Relevant Environment

10.3 The Small-World Phenomenon

The rapid development and widespread adoption of powerful communication technol-ogies have transformed the world into a global village where organizations represent- ing different nations and geographic regions of the world routinely confront one another and must be able to successfully cooperate to survive and prosper (Bouwman, et al, 2005; Kreps, 1988; McLuhan, 1962; 1964). Advanced technologies, used to enhance human com- munication and transportation, have decreased the functional distance between people and nations, increasing levels of international interaction and interdependency.

From a systems theory perspective, the modern world has become a huge suprasystem composed of numerous international social systems sharing a common environment, shar- ing information, and depending on cooperative activities to promote system integration and resist entropy (Berrien, 1976). Futurist Buckminister Fuller (1963) has described this situation of interorganizational interdependency quite vividly by likening the earth to a spaceship in which occupants share similar risks and constraints, such as limited food and fuel, and need to work together to keep the spaceship flying and in good repair. Similarly, modern organizations operate interdependently with many other organizations, sharing similar risks and constraints, and needing to work cooperatively with these organizations.

As we have discussed earlier in the book, increased organizational interdependency has resulted in a “small world” where there is a dire need for effective coordination and coop- eration among members of international interorganizational fields. For example, in the modern automotive industry, U.S. automobile manufacturers such as the Ford Motor Company need not only be aware of and adapt to the activities and products produced by their domestic competitors (such as the General Motors Corporation and the Chrysler Cor- poration); they also need to compete directly with automobile manufacturers from Europe (such as Mercedes, BMW, Volvo, and Volkswagen) and from Asia (such as Toyota, Honda, Subaru, and Hyundai) as well as with automakers from other parts of the world. Addition- ally, foreign companies that supply raw materials (steel, plastics, fabrics) and components (automotive parts, electrical equipment, computer chips) for automobile manufacturing, foreign markets where U.S. automakers sell automobiles, as well as collaborative ventures between U.S. automakers and foreign automobile manufacturers have become important parts of the U.S. automotive industry. Interorganizational communication is essential for coordinating activities between these international organizations. Effective international interorganizational communication performs important roles in modern organizational life to promote coordination and cooperation between interdependent organizations.

10.4 The Relevant Environment

Open systems theory stresses the importance of interorganizational communication by suggesting that organizations and their environments have mutual influences on each other. Environmental changes (such as changes in the economy, regulation, and even the weather) inevitably influence organizational life. Similarly, internal organizational changes (such as new products, services, and personnel) are likely to influence members of the organization’s environment.

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CHAPTER 10Section 10.4 The Relevant Environment

Meanwhile, the environments that organizations reside within are very large. These envi- ronments consist of all the factors external to organizations. Yet different environmental phenomena have differential degrees of influence on organizations. The most influential elements of the environment to the organization are known as the organization’s relevant environment. The relevant environment consists of all the factors external to the organiza- tion’s boundary that have direct influences on the organization and its members. Organiza- tional representatives need to go beyond their organization’s boundaries to seek information about what is going on within their organi- zation’s relevant environment. It is there- fore wise for organizational leaders and other organizational members to establish external organizational communication relationships that help them keep abreast of environmental conditions, In fact, estab- lishing strong and cooperative communi- cation relationships with key members of the relevant environment is critical to orga- nizational success and survival.

As organizational theorist Karl Weick (1979) has explained, relevant organiza- tional environments can be best conceptu- alized as information environments. The relevant environment provides organiza- tion members with information they need to process and respond to if they are to maintain good relations with external publics and continue to achieve organizational goals. Orga- nizational representatives interpret environmental messages to derive information about environmental conditions and to identify the potential influences of changing conditions on organizational activities. Access to key environmental information helps organization members identify emerging constraints on the achievement of organizational goals as well as to identify emerging windows of opportunity for their organizations. These windows of opportunity can open and close quickly, so organizational representatives need to be nim- ble at gathering timely information, feeding it back to organizational leaders, and respond- ing to opportunities. For example, investors need to respond quickly to news about good corporate investment opportunities before others buy out the investments.

The relevant environment is also a primary outlet and audience for strategic messages sent by organizational representatives. Interorganizational messages are needed to pro- vide representatives from the organizational environment with relevant information about organizational activities and products. For example, advertising campaigns inform potential customers about new products and services being offered by a company. Sim- ilarly, organizational recruitment efforts depend on external communication to inform potential job candidates about employment opportunities within organizations. Organi- zations and their relevant environments are indelibly intertwined by message flows that connect them and provide each with important operational information.

What does the relevant environment consist of for a product like Dole bananas?

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CHAPTER 10Section 10.5 The Interorganizational Field and Systems Hierarchy

10.5 The Interorganizational Field and Systems Hierarchy

The concept of systems hierarchy demonstrates the interdependent relationships between organizations sharing similar environments. Every system is composed of hierarchical levels of organization that follow similar system processes. As we mentioned in Chapter 5, the basic level is the system, which seeks and processes inputs from the rel- evant environment into finished outputs that can be sent back out into the environment. For example, in a furniture manufacturing company, raw materials (wood, fabrics, nails, glue, etc.), staff (carpenters, managers, janitors, salespeople, etc.), and energy (electricity, gas, or other forms of power) are sought from the relevant environment to process into finished pieces of furniture (chairs, tables, couches, etc.) that can be sold to customers external to the company.

As you’ll recall from Chapter 5, this process of making inputs into desired outputs is known as the systems transformation process. The systems transformation process occurs at multiple levels of organization because each system is composed of subsystems that also interact with their relevant environments to transform inputs into desired outputs, and each system resides within a larger suprasystem, in which the system interacts with other systems to transform inputs into outputs. Figure 10.2 presents a systems hierarchy model. In essence, the same organizational processes of seeking inputs from the relevant environment to transform into outputs occur at multiple levels of organizing. Communication between the systems and their relevant environments is critically important at all levels of organizing.

Every organization is composed of groups of interdependent organization members, such as departments or divisions. These are the subsystems that operate within organizational systems. The organization (system) also resides within a larger environment with other

System

SubsystemSubsystem

Subsystem Subsystem

Suprasystem

Inputs OutputsInputs Outputs OutputsInputs

Figure 10.2: The Systems Hierarchy Model

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CHAPTER 10Section 10.6 Boundary-Spanning Activities

interrelated organizations. This is the suprasystem. Groups of organizations sharing the same suprasystem environment are often referred to as the interorganizational field, the topic of this chapter. As we noted earlier in the chapter, typical organizational representa- tives of the interorganizational field might include organizations that supply the orga- nization with resources, regulate the activities of the organization, or purchase goods or services from the organization. These organizations depend on one another and have a range of influences (good and bad) on each other.

As you have learned, each level of the system hierarchy (subsystems, systems, and supra- systems) abides by the same basic system properties of interdependence, systems trans- formation, and adaptation. The systems theory concept of homeostatic balance suggests that different system components (subsystems that exist within each level of the system) must coordinate activities by using feedback loops (communication patterns between sub- systems). These feedback loops are used to coordinate the exchange of information and materials needed to achieve organizational goals.

In smooth-running organizations the effective use of feedback loops insures the coordination of activities between system components. Within the interorganizational field, this means that interde- pendent organizations cooperate. However, in the real world, orchestrating this kind of cooperation is not easy to do. Each organization has its own goals and methods that may not match the goals and methods of other organizations. For exam- ple, think about the complexities of establishing cooperative economic relations between differ- ent countries. It is not easy to establish balanced trade agreements between countries because each country is likely to focus on its own best economic interests. Government officials need to establish agreements that are mutually beneficial economically for these nations to cooperate with one another. Moreover, economic issues are likely to change over time, so the officials representing these different countries need to renegotiate trade agreements. They use feedback loops between representatives of the different countries to rene- gotiate these agreements.

10.6 Boundary-Spanning Activities

As we discussed earlier in the book, organization members who have the most com-munication contact with representatives of the relevant environment are known as boundary spanners. Boundary spanners actively gather information from the relevant envi- ronment and feed the information back to the organization to guide adaptation. This is a critical organizational function since many organization members are so focused on

What kind of communication must take place between members of the European Union?

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CHAPTER 10Section 10.6 Boundary-Spanning Activities

accomplishing internal organizational activities that they often are unaware of changing environmental needs and constraints. The boundary spanners also represent the orga- nization to outsiders, influencing the ways that members of the relevant environment interact with the organization.

Boundary spanners typically work in areas of the organization such as public relations, media relations, sales, advertising, personnel, customer service, and market research, where their job responsibilities involve communicating with people outside of the organi- zation. Boundary spanners are often located at the top or bottom of organizational hierar- chies, where these personnel have contact with individuals from outside the organization. Top executives, who have high visibility and mobility, often interact with leaders from other organizations, working out cooperative ventures and serving on industry boards and committees. These leaders often engage in fund-raising activities, media interviews, lobbying activities, and attend social gatherings representing the organization, affording them many opportunities to gather relevant information and represent the organization to different key publics. Lower-level employees—such as those working to deliver, install, and sell products; those who greet visitors (either in person or through the use of media); and clerks, parking attendants, food servers, and customer service representatives—also have many opportunities for contact with representatives of organizations within the interorganizational field.

Yet these upper- and lower-level organizational members are not always well prepared to represent the organization as boundary-spanning communicators. Top executives may be too far removed from daily organizational operations to provide detailed and accurate organizational information to external constituents. These executives may also have diffi- culties providing information gathered from the environment back to the specific internal organizational units that need that information.

Lower-level employees may lack the training they need to communicate effectively with members of the relevant environment. Sometimes clerks and other boundary spanners do not take the time and effort needed to build cooperative relationships with customers. They may not understand the scope of organizational activities or the organization’s mis- sion well enough to communicate relevant information accurately to organizational rep- resentatives. They may not know what to do with key information they gather from the environment, so the intelligence they gather is not shared with those in the organization who could use that intelligence. These lower-level workers typically have little authority to commit organizational resources or make decisions of concern to representatives from the interorganizational field.

Organizations must take care to prepare those members at the top and bottom of the organizational hierarchy who have contact with the relevant environment to communi- cate effectively as boundary spanners. Communication training can help these individuals represent the organization effectively within the interorganizational field, communicate important organizational information to environmental representatives, and preserve and apply information gathered from the environment. Providing boundary spanners with relevant information and materials they can share with key external publics is also wise. For example, providing boundary spanners with mobile technologies such as smart- phones, networked tablets, and netbooks can help these organizational members stay in close touch with key representatives from external organizations. Sending key boundary

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CHAPTER 10Section 10.7 Relationship Development and Interorganizational Communication

spanners to relevant meetings and conferences can also enhance their ability to establish and maintain effective external organizational relationships.

Leaders in organizations can help improve interorganizational communication by develop- ing external communication structures and processes for handling boundary-spanning activ- ities. Mid-level organizational workers in departments such as public relations, lobbying, and market research can be designated and trained to represent the organization meaningfully to key external publics. Organizations can invest in providing travel support for mid-level organization members to attend meetings, meet with clients, and participate in external edu- cation programs. Organizational leaders can encourage the use of communication media for keeping in touch with key publics. They also can invest in community development activities that can help establish cooperative community relations with the organization.

10.7 Relationship Development and Interorganizational Communication

Relationship development is critical to external organizational communication. Inter-organizational communication depends on the quality of interorganizational rela- tionships established between representatives of interrelated organizations. The better developed these interpersonal relationships are, the more effectively boundary spanners can be at gathering relevant environmental information, providing key publics with orga- nizational information, and promoting cooperation between organizations. To accomplish interorganizational goals, organizational representatives must be able to elicit interper- sonal cooperation. Strong interpersonal relationships help boundary spanners promote coordination and cooperation with representatives from related organizations.

As we discussed in Chapter 4, strong relationships are based on the mutual fulfillment of needs and expectations between relational partners (fulfilling implicit contracts). Inevita- bly, when boundary spanners fail to meet the expectations of interorganizational repre- sentatives, they disappoint these representatives, jeopardize their relationships with these organizational partners, and also jeopardize cooperation between their organizations. In effective interorganizational relationships, organizational actors establish clearly under- stood and agreed-upon implicit contracts. Not only are they aware of the expectations they have for one another, they also work at seeking new information and continually updating their perceptions of each other’s expectations.

By being sensitive to the changing needs of their relational partners and changing needs of the organizations they represent, boundary spanners can update their rela- tional expectations and renegotiate their implicit contracts to maintain coordina- tion and cooperation. These boundary spanners work to update their implicit contracts by consistently giving and seek- ing interpersonal feedback, enabling them

How did Toyota jeopardize its relationships with others during its 2010 recall?

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to continue acting appropriately with one another as their relationships grow. The better these relational partners are at effectively updating their implicit contracts, the better they are at fulfilling one another’s needs and strengthening interorganizational coordination. The norm of reciprocity suggests that interpersonal relationships develop incrementally over time with each partner responding in kind to the behaviors of the other partner. By demonstrating cooperation with organizational representatives, boundary spanners can encourage their interorganizational partners to reciprocate by cooperating with them.

10.8 Ethical Dimensions of External Organizational Communication

External organizational communication powerfully expresses the moral character of organizations. The ways organizational representatives interact with one another demonstrates the relative levels of respect, honesty, integrity, equity, responsibility, and trustworthiness of their organizations. As modern organizational life has become increas- ingly politicized, the ethics of interorganizational communication processes often have been stretched by irresponsible attempts to influence interorganizational outcomes.

There are many instances in the modern world where questionable ethical choices have been made in guiding interorganizational communication. News stories regularly cover instances of organizational bribery, extortion, dishonesty, manipulation, and collusion in the ways business, industrial, health care, governmental, and even educational organiza- tions conduct business with their relevant publics. For example, there have been many stories in the news about government lobbyists engaging in unscrupulous activities while representing clients, such as the revelations about former lobbyist and businessman Jack Abramoff, who offered bribes and misinformed officials to reap huge personal profits. Similarly, media coverage of Bernard Madoff’s extortion of clients’ investment funds as part of a Ponzi scheme to steal their money illustrates ethical improprieties in the ways that some devious executives interact with their clients.

Public relations, advertising, and lobbying activities have been particularly susceptible to charges of ethical improprieties. Groups of organizations often have been found to unfairly monopolize control over relevant resources, products, or markets. It is not uncom- mon for organizations to seek financial gains at the expense of their employees, suppliers, customers, or competitors. Such unethical attempts for interorganizational influence and control violate the moral standards of society, weaken the credibility of organizations, and threaten long-term organizational effectiveness.

Three covering principles govern ethical organizational communication: honesty, equity, and avoiding harm (Kreps, 1988):

1. For interorganizational communication to be ethical, organizational communica- tors must strive to be honest. It is not ethical for organizational representatives purposefully to deceive customers, regulators, or competitors. Practices such as false advertising, fudging of records, and withholding information from stake- holders or regulators are clear examples of dishonesty. Other questionable inter- organizational practices include espionage, sabotage, overpricing of goods and services, discriminatory employment practices, and thievery.

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2. For interorganizational communication to be ethical it must be equitable. It is not fair for organization members to exert undue and oppressive influence on different publics. Any organizational practices that unfairly restrain free trade, self-determination, and inhibit the activities of key publics—such as instances of monopoly, conflict of interest, bribery, coercion, stock manipulation, and discrim- ination—threaten equity in organizational life.

3. Organizations also have the responsibility to minimize harm to their environ- ments and to their publics. For example, automakers have the responsibility to build safe and reliable cars that will not put drivers at risk of accidents, fires, and explosions. Farmers have the responsibility to protect against spreading toxins in the foods they produce that could lead to serious illnesses and deaths for con- sumers. Officials who operate nuclear power plants have the responsibility to enforce safety measures to reduce the risk of public exposure to radiation.

Organizations are more or less externally accountable to the extent that they live up to these covering principles for ethical organizational communication. Failures to promote external accountability inevitably lead to unethical interorganizational communication. Any organizational activity that endangers the environment decreases the organization’s external accountability and violates implicit contracts between the organization and its publics. Organizational activities such as falsifying public records, withholding infor- mation about potential or current dangers, causing harm to the environment through pollution, and discriminatory employment practices are all instances of low external accountability. The best organizations engage in external organizational communica- tion practices that promote external accountability. For example, McDonald’s has begun providing nutrition information about all the foods it sells so consumers can make good choices about the foods they choose to eat. The company is not required to provide this nutrition information but decided to do so to help its customers make healthy food choices and to demonstrate its external accountability to customers.

To enhance the ethics of interorganizational communication, clear moral standards for organizational behavior must be established and maintained by organizational leaders as important themes of organizational cultures. The covering principles for ethical organiza- tional communication (honesty, avoiding harm, and equity) should be used as guidelines for directing and evaluating interorganizational communication. Organization members, especially boundary spanners, should strive to develop honest, culturally sensitive, and trusting relationships with representatives of the interorganizational field. Clear, sensi- tive, and ethical communication between organizational representatives can facilitate the development of effective implicit contracts and meaningful interorganizational rela- tionships. For example, Walgreens Pharmacies enacted a new policy to make pharmacist advisers available in all their stores to help customers learn about the risks and benefits of prescribed medications, as well as to explain the correct use of medications. This program demonstrates the company’s concern for customer safety and also helps to establish good working relationships between pharmacists and patients. Similarly, the personal banker strategy used by several banks to advise consumers about good investment options is a way these banks are building personal relationships between bank personnel and customers.

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Case Study Feeling the Pinch at Jet Airfreight

Jet Airfreight was a successful midsized international airfreight forwarder that helped companies around the world ship goods by air quickly and easily to many different countries. It specialized in responsive service and quick shipments for customers who wanted to move materials, equipment, and products quickly to international locations. Although Jet Airfreight did not own or operate any of its own airplanes, it worked with many different airlines to carry freight for them. Jet Airfreight was basically a middleman that made all of the needed arrangements to move freight from one point to another, making sure the freight was picked up and delivered in a timely, safe, and efficient manner.

Jet Airfreight operated a network of 15 offices located near large airports in major cities across the United States. Most of the offices were small operations with a few managers, staff members, truckers and warehouse workers; but the New York and Los Angeles offices had large operations staffs. The company’s domestic operations headquarters was located in the Los Angeles office, and international operations headquarters was located at the New York office. There were active lines of coordination between L.A. (domestic) and New York (international) freight activities, since a lot of freight originating in small markets was flown domestically to larger airport cities (typically New York or Los Angeles) for international flights. Similarly, international goods going to smaller domestic locations were flown out of New York or L.A. In addition, Jet Airfreight contracted with a network of small international freight forwarders in large cities around the world to pick up and deliver their international shipments. Jet Airfreight also operated a number of vans and small trucks at each of the company’s 15 domestic offices to pick up and deliver freight to the airports. However, Jet Airfreight contracted with several different trucking companies to pick up originating freight from their customers to bring to the Jet Airfreight offices and also to deliver the arriving freight from their offices to the freight’s ultimate destination.

As part of their process, Jet Airfreight would pick up freight from customers, package the freight, prepare the needed international customs paperwork for shipping the freight, and make arrangements with appropriate air carriers to fly the freight to the desired destinations. The company delivered the freight to the airlines, made sure the freight passed through international customs at the airports, monitored the movement of the freight on the flights carrying the goods, picked up the goods once they arrived at the destination airport, and then delivered the goods to the ultimate destination. It would also provide its customers with updates about the movement and delivery of freight.

Customers contracted with Jet Airfreight because the company saved them a lot of time and money. Jet Airfreight could actually ship freight for a lower cost than the customers could get from the airlines if they shipped the freight by themselves. The company was able to negotiate special advantageous shipping rates with the airlines due to the large amount of freight it shipped. It was also able to combine shipments from different customers into large containers, which received discounted shipping rates from the airlines. Once the containers arrived at the destination airports, Jet Airfreight would break down the containers and arrange to have the individual shipments delivered to their ultimate destinations.

Things were going very well for Jet Airfreight until the economy began to tighten. As the price of gasoline began to increase, the airlines began to raise their rates, even the discounted rates they offered to Jet Airfreight. Similarly, the trucking companies began to charge a premium on top of their regular delivery rates to cover their increasing costs for fuel. Jet Airfreight’s cost of operating its own vans and small trucks was also increasing with the rising costs for fuel. The company was forced to accept these increased operating costs from the airlines and the trucking companies, even though federal regulations limited how much Jet Airfreight could charge its customers for shipping. (continued)

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CHAPTER 10Summary

Summary

Traditionally, the primary focus of organizational communication study has been on internal communication. However, there is another side to organizational commu- nication that bridges organizations to the larger world: external organizational com- munication. Such external activities include public relations, lobbying, marketing, and advertising. Further, these activities involve a variety of other stakeholders, including firms that supply raw materials to the organization, government agencies and profes- sional associations that regulate organizational activities, consumer groups, competing organizations, unions, and organizational partners. Communicating with all of these

This made it difficult for Jet Airfreight to compete with some of the larger airfreight companies who operated their own airplane and trucking operations. The leadership at Jet Airfreight applied to the federal transportation agency to increase the rates that it could charge its customers for shipping, but the federal agency was reluctant to raise rates and increase expenses for struggling companies. Shippers were also feeling the pinch of the tight economy and did not want to pay more for airfreight services. The margin of profit for Jet Airfreight was rapidly shrinking, and their leadership was considering declaring bankruptcy.

Critical Thinking Questions

1. What are the different internal and external communication activities being conducted at Jet Airfreight? How effectively are these internal and external activities being coordinated?

2. Who are the key organizations (and individuals) within the interorganizational field with whom Jet Airfreight has to coordinate activities and exchange information? What kinds of information does the company need from these sources? How effective is the company at gathering relevant information from these sources?

3. To whom in the relevant environment does Jet Airfreight need to provide information? What kinds of information does the company need to provide to them? How effective is the company at providing information and eliciting cooperation?

4. From an open systems theory perspective, identify multiple levels of organizing at Jet Airfreight. What are the subsystems within the company? What organizations comprise the suprasystem? Is Jet Airfreight able to maintain a homeostatic balance in relations with other organizations within their suprasystem (interorganizational field)?

5. How well does Jet Airfreight transform organizational inputs into desired outputs? What could be improved in this organization’s transformation processes?

6. How well does Jet Airfreight balance internal and external organizational communication activities? What could be improved in balancing internal and external communication?

7. What strategies could be used by leaders from Jet Airfreight for building effective cooperative relationships with representatives of their interorganizational field? Who should perform the boundary-spanning organizational roles?

8. How well does Jet Airfreight use external communication activities such as marketing, public relations, advertising, and advocacy? How could the company improve the use of these forms of external organizational communication?

9. What lobbying activities could be used by Jet Airfreight to help address their increased operating costs?

10. What communication strategies do you suggest the leadership at Jet Airfreight use to improve profitability and efficiency of operations to resist going into bankruptcy?

Case Study (continued)

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CHAPTER 10Summary

constituencies requires good information gathering and the ability to craft messages using smart strategies. In the realm of marketing and advertising, the “five Ps”—product, price, place, promotion, and positioning—reflect the most common strategic concerns.

With advanced technologies, the small world phenomenon has moved these communica- tion imperatives to a global scale. From a systems perspective, the boundaries for orga- nizations have expanded to the entire planet, making all of these communication issues more critical and more complex. Learning how to effectively span the various boundaries among groups requires relationship development and meaningful training, along with an abiding concern for the ethical dimensions of external organizational communication.

Discussion Questions

1. Are the organizations that are a part of your life better at internal communication (communication within the organization) or external communication (communication with the larger world)? How and why would you make that determination?

2. Sometimes public relations, as a field of study, is viewed with some apprehension and cynicism—after all, those in PR are often seen as “spin doctors” who manipulate and twist the facts. However, how could public relations be defended as a highly ethical aspect of organizational communication?

3. Corporate lobbyists, and those in public affairs in large organizations, are by definition in the business of influencing the type of legislation that is passed at the state and national levels. Do you believe that there are any ethical limits to such influence efforts? For example, should corporate lobbyists be involved with such issues as gay marriage or stem cell research if they have no direct connection to their operation and corporate mission?

4. The “five Ps” are discussed in this chapter as a framework for doing marketing and advertising. The last “P” involves positioning a product or service in a way that makes it attractive to a specific segment of the marketplace. If you were the head of marketing in a firm that made laptop computers, what might be three different ways that you could position such a product?

5. With the proliferation of social media (such as Facebook) and websites (such as Yahoo!), how do you suppose organizations now do their research differently? How has “mining for data” become a different organizational activity in the last 20 years?

6. The Internet has also quite radically accelerated the pace at which information, news, and rumors fly around the planet. Given instant messaging, 24-hour news cycles, scores of different cable networks, and videos that can get 100,000 views on YouTube in just a few hours, how can organizations attempt to stay on top of the curve when there’s “breaking news” which deals with them and what they do?

7. It is argued in this chapter that “For interorganizational communication to be ethical, organizational communicators have to strive to be honest.” Nonetheless, can you think of situations—real or hypothetical—where complete honesty by an organization might be considered unethical.

8. One could argue that organizations should be ethical in their dealings with others simply because it is “the right thing to do”—but how might high ethical standards also be financially profitable? Can an “ethical” organization benefit economically by doing the right thing? If so, how and why?

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CHAPTER 10Summary

Key Terms

Advertising Involves the development and implementation of creative communi- cation strategies to promote organizational products and services.

Advocacy advertising When organiza- tions align themselves with important social causes—such as health promotion, environmental protection, and human rights issues—to demonstrate ways that the organization gives back to the community.

Ethical organizational communica- tion Governed by three covering prin- ciples: honesty, equity, and avoiding harm.

External organizational communica- tion Targets a varied group of external constituents (including suppliers, buyers, shareholders, community members, and so on), and involves a broad range of interre- lated organizational activities.

Externally accountable The extent to which organizations live up to these cover- ing principles for ethical organizational communication.

Homeostatic balance A systems theory concept suggesting that different system components (subsystems that exist within each level of the system) must coordinate activities by using feedback loops (communi- cation patterns between subsystems). These feedback loops are used to coordinate the exchange of information and materials needed to achieve organizational goals.

Information-gathering activities Some- times referred to as intelligence gathering, research, or due-diligence functions. They occur when boundary-spanning organiza- tional actors use their interorganizational connections to keep abreast of changes within the environment that are relevant to their organizations.

Information-giving activities Sometimes referred to as publicity, lobbying, or sales functions. They occur when boundary- spanning organizational actors provide strategic information to key representa- tives of external organizations within the environment to elicit support and coordi- nation for their own organizations.

Interorganizational field Includes all the organizations that are relevant to a particu- lar organization.

Lobbying Activities that involve the development of influential relationships between organizations and relevant policy makers, such as representatives from legislative bodies, regulating agen- cies, accrediting organizations, consumer groups, media outlets, and government organizations.

Market research A critical part of effective marketing, this involves researching the needs, attitudes, and preferences of key audiences for organizational products and services.

Marketing Developing communication strategies for positioning organizational products and services to meet audience demands.

Marketing mix Popularly known as the 5 Ps (product, price, place, promotion, and posi- tioning). This involves developing commu- nication strategies to increase understand- ing about organizational products, pricing those products so they are attractive to key audiences, placing messages about organi- zational products and services on commu- nication channels that will capture audience attention, promoting products with motivat- ing messages, and positioning products and services as attractive options for audiences within the marketplace of similar and com- peting products and services.

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Open systems theory Stresses the impor- tance of interorganizational communica- tion by suggesting that organizations and their environments have mutual influences on each other.

Public relations An integral area of orga- nizational communication, used to coor- dinate interactions between organizations and key audiences (publics). Sometimes known as public affairs communication.

Relevant environment All the factors external to the organization’s boundary that have direct influences on the organiza- tion and its members.

Strategic organizational communica- tion External communication activities grouped together within an organization, sometimes along with internal organiza- tional communication functions.

Systems hierarchy The interdependent relationships between organizations shar- ing similar environments. Every system is composed of hierarchical levels of organization that follow similar system processes.

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