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OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION TRINITY TERM 2015: ISSUE 13

COMMENT 02Japan looks West Losing a good reputation for adultery Understanding brand advocates

INTHEIROWNWORDS 03Twitter co-founder Biz Stone on what matters to internet startups

THEBIGINTERVIEW 04Lady Barbara Judge – the first woman Chairman of the Institute of Directors

CASESTUDY 08Australia’s Manus Island Regional Processing Centre for asylum seekers

CONFERENCEREPORT10The first Global Corporate Governance Colloquium

RESEARCHFOCUS 11Big data text analysis

NEWSANDEVENTS 12

RESEARCHFOCUS06

Understanding your brand advocates - from P&G’s Tremor to “mommy bloggers”

Comment

Internally foCusedWhich reputations are most important to a company? The question looks unfairly loaded at first – like the classic “when did you last beat your wife?” But the reality of multiple reputations, and the dynamics at work when one reputation takes precedence over another, is something that companies do well to understand. Nowhere is this more the case than in Japan: the resignation of Toshiba’s CEO and vice-chairman (and former CEO) show the damage that can be wrought by an inward-looking and stagnant corporate culture. The duo have been deemed responsible for systematic attempts to inflate profits over a seven-year period.

While no country is immune from such activities – Tesco’s recent boosting of the bottom line through inflating supplier payments in the UK springs to mind – the Toshiba example illustrates a very particular dynamic. The Japanese culture of jobs for life, with very little movement between companies, leads to company boards being populated by insiders subject to rigid, culturally enforced hierarchies, and subordinates totally invested in doing what they are told – including cooking the books to meet unreachable profit targets. Internal reputation trumps external.

While financial wrongdoing is one outcome (as with Olympus in 2011, where an outsider on the board ended up blowing the whistle), another is exposure in the area where you can least afford it: as with the safety culture at Tepco, responsible for the Fukushima nuclear plant. These are some of the reasons the Japanese government introduced the new Companies Act this year, including the

requirement to include two non-Japanese onto the board. Our visiting Fellow Lady Barbara Judge, subject of the Big Interview (p5), now sits on two Japanese boards, including Tepco.

The pressure to maintain reputation internally can have huge ramifications, whatever the cultural context. Which reputation is the most important? Many only find out when it is too late. ■

Blown Cover“All publicity is good publicity” has long been the marketing credo for adultery website Ashley Madison, whether making advertising so provocative it is banned, or CEO Noel Biderman appearing on chat shows in front of primed TV audiences baying for his blood. All publicity, that is, save the latest: the news that the personal details of some of its 37 million users have been hacked and published online. The one reputation the company could not afford to lose was the guarantee of secrecy.

At the Centre we are preoccupied with distinguishing between the relative impacts of reputational hits against either your “character” or your “capability”. Ashley Madison has never worried much about its character – with which its users are, by definition, fully aligned - but its “capability” reputation has taken a hit from which it will be much harder to recover.

And while commentators chew over AM’s data vulnerability, they have also noticed something lurking in the small print, such as charges for those who want to delete all traces of their membership. Now Ashley Madison has had to change its terms and conditions to let members delete their membership for free, but that is a relatively trivial issue: it is the reputation for confidentiality, its key competency, by which Ashley Madison will stand or fall. ■

aGents of InfluenCeThe power that internet intermediaries wield highlights the power of networks in forming reputations. In this issue Paul Fox, Director of Corporate Communications at P&G, writes about how the firm - a pioneer in the field - identified the disproportionate influence of a few independent spokespeople within key communities in the early 2000s (see p6).

The same principles that underpinned that initiative pertain now that those communities have moved online, and our eni Research Associate Gillian Brooks writes about her research in that area on p7.

The latest figures from YouTube indicate how fast the “influencer” phenomenon is growing: viewing of videos by the top 100 brands, who increasingly partner with independent spokespeople to spread their messages on the site, were up 55 per cent to 40 billion views year-on-year, according to a recent report. From teenage “vloggers” to ”mommy bloggers”, for brands the challenge is how to make their messages resonate to maximum effect through those intermediaries. ■

Front page image: Business images/REX Shutterstock

Reputation is a termly magazine published by the Oxford University Centre for Corporate Reputation, Saïd Business School, Oxford OX1 1HP. Tel: + 44 (0)1865 288900. Enquiries to: [email protected].

©2015 Saïd Business School. No part of this publication may be reproduced or transmitted in any form without the prior permission of the publisher.

WWW.SBS.OXFORD.EDU/REPUTATION 3

In theIr own words

BizStone, co-founder of Twitter, and Associate Fellow of Saïd Business School, on startups, social networks and reputations.

INTERNETSTARTUPSHAVECHANGEDSOMUCHFROMTHEEARlYTWITTERDAYS;ISTHEGET-RICH-qUICkREPUTATIONANISSUE?I worry more about the effect it has on internal reputations with employees. Employees need to understand that you probably won’t succeed and you will probably have to change your whole plan. They can get very frustrated at the lack of structure. The whole point is that it’s scary.

HOWIMPORTANTISYOURCOMMUNICATIONSTRATEGYWITHASTARTUP?Your communication agenda should be that whatever you say internally should be the same externally, but I don’t like to share numbers, users, money raised, whatever. None of that matters. I never use it.

WASYOURTRACkRECORDANADVANTAGEINlAUNCHINGTHEAPPSJEllYANDSUPER?Notoriety is a blessing and a curse. If I launch something, I can raise money for it and people will look at it: we got more registrants [for Jelly] in 24 hours than in two years of Twitter. It zooms up and then it crashes back down again – we knew it would. We did discuss whether we could do it under the radar. You just have to come out all guns blazing. Jelly wasn¹t the success we¹d hoped after it launched, but the good thing is we kept it going while developing Super, and it became a shield for us, of non-notoriety. We’ve been underselling Super, but on every news outlet we can undersell on.

ASISMUCHDISCUSSEDINTHEMEDIACURRENTlY,TWITTERCANBEUSEDTODOGOODANDBADTHINGS.HOWFARAREITSCREATORSRESPONSIBlE?Any tool can be used for good or for harm. If you build the right tool, it’s mostly used for good because people are fundamentally

good. To a certain extent, in these large-scale systems, they are self-policing. We built ways to flag inappropriate content. I have also learnt that if we put a big notice saying this is a bad thing, [bad “actors”] will keep going. If you leave it up just for them and no one else sees it, they think, “Why is no one making a fuss?” and go somewhere else. There are safeguard mechanisms, but it’s impossible with hundreds of millions of tweets to protect everyone from words they don’t want to see.

HOWDOYOUCONVINCEINVESTORSTOINVESTINYOU?Build something, no matter how glitchy, and then explain. For consumers, don’t only build something that is fun: have some sort of meaning to what you are doing, and communicate that. This is what attracts people, and studies prove it.

WHATCARRIEDTWITTERTOSUCCESSWHEN,ASYOUSAY,THEREWEREOTHERPlAYERSWITHAMORE“PROFESSIONAl”REPUTATIONINTHATSPACE?We had a head start. The other players were mostly copycats, but they did, in some cases, have a better technology setup. We thrived because our brand had fully captured what some people call the “mindspace” of the market. Plus, we persevered at all costs. Copycats didn’t have the same emotional investment.

DOYOUTHINkSOCIAlMEDIACANBEUSEDTOIMPROVEREPUTATIONS?DOPEOPlEMISUNDERSTANDHOWTHATWORkS?Social media can certainly help improve reputation. The same things that hold true outside social media hold true inside as well. Trust can be earned by saying you’ll do something and then doing it. Goodwill can be banked by good deeds, transparency and honesty.

YOUAREClEARTHATCOMPANIESCANNOT“OWN”THEIRMESSAGING/BRANDNOW;HOWSHOUlDTHEYBETHINkINGABOUTTHISCHAllENGEINASOCIAlMEDIAAGE?A company that participates constructively in global dialogue can help to shape it in the right way. Companies can also select the right constructs, the right venues in terms of social media in which to give their customers a voice, listen to them and respond with authenticity.

WHATDOYOUCONSIDERYOUROWNREPUTATIONSTOBEANDHOWDOTHENETWORkSYOUAREPlUGGEDINTOHElPORHINDERTHEM?I choose to believe that my reputation is very good because it is one earned through trust, transparency, fairness and loyalty. I make it a policy never to speak ill of anyone, never to assume I know what another person thinks, and to always assume that the people I work with are smart and well intentioned. In Silicon Valley, your intern could end up being your boss, so it’s best to be as nice to everyone as you can.

HAVETHEREBEENUNHElPFUlNARRATIVESTHATYOUHAVEHADTOCORRECTAlONGTHEWAY?There have been many that are either confusing, bad for business in general, or just plain wrong. However, being heralded as both the king of the hill and the ultimate failure are both part of a continuing cycle that comes with success. The key is understanding that time cannot be turned backwards. Instead of trying to turn back time and reverse bad press, simply take it on the chin and move on to the next cycle. ■

Biz Stone’s latest venture, Super, is at www.super.me.

4 OXFORD UNIVERSITY CENTRE FOR CORPORATE REPUTATION

There are few more civilised places to be in London on the first properly hot afternoon of summer than sitting under an umbrella on the terrace of the garden at the Institute of Directors on Pall Mall, one of the UK’s most high profile and long-established business organisations.

In this oasis in the heart of London, a pianist tinkles away in the bar area. The only other sound to disturb the calm, metaphorically speaking, is the sound of crashing glass ceilings: I am here to interview Barbara Judge, Lady Judge, recently elected Chairman of this 34,000-member organisation, the first woman Chairman in its 112-year history.

On the day we meet, it has also been announced that the next Director-General of the CBI is to be a woman – also for the first time in its history: Carolyn Fairbairn. As we sit discussing Lady Judge’s plans for the IOD, we are interrupted by her assistant bringing her the corrected draft of a letter of congratulations to Ms Fairbairn. He brings it three times, and each time there are corrections to do, which she does meticulously with her fountain pen. “That’s my legal training, I’m afraid,” she says. “I am obsessively careful about anything that goes out in my name. My boss when I was learning the law used to make me draft documents until three in the morning. He said ‘It builds character’.” It is this appetite for detail, and an equal appetite for work, that has powered Lady Judge’s extraordinarily varied career, and that has cemented her reputation as a safe pair of hands at the top of businesses and institutions too numerous to list here.

The selected highlights run as follows: having trained as a lawyer in New York and been made partner, she was headhunted by the White House to be the youngest-ever commissioner on the Securities and Exchange Commission. With the banking credibility earned from that job, she was appointed as the first female board director of Samuel Montagu, a London merchant bank, based in Hong Kong. She later became a director of News International, a director and then Chairman of the Atomic Energy Commission, then Chairman of the Pension Protections Fund, where she will soon

complete her second and last three-year term. Her latest task is to help reinvigorate the IOD, an organisation whose influence has not kept pace with its profile in recent years. Along the way there have been many non-executive directorships that have given her a privileged view of the workings of companies, industries, governments and countries.

Rules and ethics have been a constant preoccupation since the SEC days: how far rules need to extend to ensure good corporate behaviour, and how well the definitions of rules can ensure compliance with their spirit, in different jurisdictions. She was among the teams that drafted the rules for UK corporate governance that took shape from the 1980s onwards as a reaction to, among other corporate scandals, Enron, BCCI and Robert Maxwell plundering the Mirror pension fund. They ultimately became the UK Corporate Governance Code.

“What was needed in Britain were more rules, because the codes weren’t working,” says Lady Judge. “On the other hand, we didn’t want strict rules like the Americans had because it often ends up in box ticking. In the UK, the idea was that there would be rules or principles or codes, but if you didn’t believe you should follow them, they weren’t prescriptive: you had to comply or explain” – and the reputational consequences would be bad enough to ensure you behaved properly, if your explanation was not liked by your investors.

For a lawyer, she is refreshingly aware of the human perspective and the cultural component in business. The problems in British banking originated from a clash of cultures, she says, when American companies became more active in the UK following the Big Bang in

1987. The British corporate culture was “like a club to which everyone wanted to belong. There were codes, but there was a grey area around what was considered appropriate behaviour. So the British gentlemen would not venture too close to the line, because they didn’t want to be drummed out of the club.”

The Americans, however, “are like cowboys: they ride across the range. Only when they see a fence do they stop. They ride up to the line but they don’t go over it… In the Eighties and Nineties, a lot of American companies came in and acquired British companies, and the culture was getting mixed up.” The best way to behave became confused, as the most important reputation became that of the ability to innovate to push the boundaries. (This chimes with the work of our colleague, Alan Morrison, Professor of Finance at Saïd Business School and a keen dissector of reputations, who charts where relationships in investment banking broke down in the face of transactional priorities.)

The nuclear industry was a “steep learning curve”. When she joined the Atomic Energy Authority in 2002, initially as Chairman of the Audit Committee before being appointed Chairman, the nuclear industry faced an uncertain future. With major nuclear power station decommissioning projects in prospect, those at the top of the industry’s commercial arm were convinced that nuclear power would benefit from increased energy demand, but their “antennae” were faulty: the reputation among its government paymasters was quite different. It was an unpopular industry, and it was expensive. “Nobody really wanted to take ownership of it,” says Lady Judge. “They wanted to get it off the agenda. They really didn’t want to deal with it. They wanted to be rid of it.”

Her brief when she became Chairman was “hold and fold”, but at a time when the country was rife with fears about power blackouts and brownouts, she saw an opportunity to help to persuade the Blair government to delay the sales and think again. In the delay, the prospects for nuclear and the price of those assets improved, but, ultimately, the

the BIG IntervIew

ladyBarbaraJudge’s career has encompassed some of the world’s most reputationally challenging sectors, from US banking regulation to safety in Japan’s nuclear industry. Now, as the first female Chairman of the Institute of Directors, she is pushing for fundamental change at the top of business.

“the amerICans are lIKe CowBoys – they rIde uP to the lIne, But they don’t rIde over It.”


stigma around nuclear was too great, UKAEA Ltd was sold, and Lady Judge believes that it might have been better to retain it and for the UK to become the world’s champion in decommissioning.

Her reputation as a friend of nuclear energy is what has taken her further into extremely challenging territory: as an advisor to Tepco in Japan, the company responsible for the Fukushima nuclear power station damaged in the 2011 Tsunami, and excoriated for its lax safety regime, for which she has now assumed an oversight role. “We’re winning,” she says, “but it’s been a long battle. The culture is changing, from an efficiency culture to a safety culture.”

On the day we meet it has been announced that she has also joined the board of the Japanese building materials conglomerate LIXL, which, after she accepted the post, became enmeshed in a bribery scandal in

China. These appointments put her in yet another reputational vanguard: of westerners on Japanese boards, an initiative forced on Japanese boards by a new Companies Act, introduced by the government in May to combat their troubled reputation and open them up to greater scrutiny.

She clearly has work to do there, but though UK governance is among the best in the world, UK boards are far from perfect, she says. “I’ve been on the board of three companies that are gone today as independent companies because the boards made the wrong decision for the wrong reason.” A macho culture is part of the problem. She recalls one firm, where two new directors pushed through a disastrous sale in the face of management opposition. “I have a theory that when you put in new directors

they always want to do something. They want to be active, but they don’t know the corporate culture. They’re like a cohort, and the investment bankers are just looking for fees.” The new board members voted for it, Lady Judge completed her term and then left, and the company disappeared. In another, a “bored” board voted for a nil premium merger on which she commented, “If you guys do this, you will all be out of a job within two years.” It only took one.

To combat such behaviour – and worse transgressions, with all their reputational consequences for business – in addition to her work on governance protocols, she has contributed to programmes such as the Chartered Director programme at the IOD. But there is one specific change in the boardroom that she thinks would make a huge difference: greater female representation. “I think women are a modulating influence. I think that they ask hard questions. And once women are secure in their position they’ll ask hard questions,” she says. UK boards currently have less than 25 per cent female representation.

In fact, she has a strong sense of the intractability of gender inequality, which has been sharpened in recent years. “I have to admit I only sort of woke up to it recently,” she says. “I was busy having my own career,

I never thought of myself as a woman, only as a person.” She has now converted to overt activism, having “quietly” tried to help women advance in business for years: “Ever since I’ve been going on boards I’ve been the one to put the second woman on the board.”

A few years ago she came to a realisation “that I’m sort of grown-up now and it hasn’t changed”. She does not see enough women on boards, not enough women lawyers making partner – women getting roles that have seniority, but not real decision-making power in sufficient numbers.

A key ambition in her role at the IOD, as well as opening up the institution to more young entrepreneurs, is to increase the female membership, which is currently around 15 per cent, to closer to 50/50. She favours positive discrimination in senior management – as she told the Financial Times: “I believe in quotas. I don’t like the idea in theory, but in fact I like the result. I believe sometimes you have to kick the ball in order for it to go in the right direction.” She absolutely concurs with recent research by MSCI that companies with better levels of female representation on boards behave more ethically. Further, that the broader reputation and wellbeing of business depends on greater female participation: “How can we possibly waste 50 per cent of the world’s brains?” ■

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“I thInK women are a modulatInG InfluenCe. I thInK that they asK hard QuestIons.”


At P&G, we’ve recognised the importance of what is now often referred to as influencer marketing for many decades. We created Tremor to try to understand the dynamics of word of mouth and the power that certain individuals seemed to have to create “buzz” around an event or activity. We knew it was an incredibly important factor in driving purchasing.

We wanted to probe whether it had any structure and if so, how that structure worked. We identified a very defined structure for word of mouth and I believe that dynamic still plays out in the online space. In any group, there are individuals that collect but don’t share information, and there are individuals that seek out information with the sole intention of sharing it. However, the vast majority of individuals are consumers of information and, depending on who shares it with them, they will either act on it or disregard it. Individuals are motivated in different ways. Some want to be trendsetters but will abandon a topic once they believe it has become too popular. Others want to be seen to be part of an “in-crowd” and actively promote a topic – it is these individuals that we needed to identify and enroll.

Messaging, as always, is a critical factor. Why is it that some things become viral while others wither on the vine? What makes us want to share or remember something from the mountain of information that we experience every day? Our brains simply cannot analyse, process and manage every piece of information as conscious actions. Instead, they run on autopilot for many activities, allowing us to unconsciously process information. This is known as a schema.

Not surprisingly, if we don’t think about something, the chance of retaining or being able to recall that information – a key aspect of being able to share it – is significantly reduced. To illustrate this point, we would show individuals a photograph of a burned stretch of woodland with what was clearly the remnants of an aircraft. When asked to provide any information on this scene, participants could rarely do so.

Conversely, the same group, shown a photograph of a commercial aircraft floating on a river (the 2009 Hudson River plane crash) and asked the same question, would provide an extraordinary amount of detail. The reason for this is that in the first scenario, the scene matches perfectly our schema for aircraft accidents. As individuals with no emotional connection to the actual event, we never process the information deeply and it is rarely retained.

The second scenario shatters multiple schema. Commercial aircraft are not expected to land on water. Passengers are not expected to be seen standing on the wings of aircraft. Aircraft that “crash” are not expected to be in in one piece. Once you are able to break a schema or multiple scheme, it is as though the information is indelibly burned on our consciousness and we want to share the experience. The key to creating and effectively transferring information across networks is to construct it in such a way that it breaks a schema and immediately attracts attention. We focused on identifying how to frame information so it sets itself aside from what people would expect.

How successful could we be in identifying who were the individuals that were creating and sharing content and influencing others? We looked at several topic areas to see how much conversation was occurring on these topics online and who was driving that dialogue. We identified that about 80 per cent of the content was being generated by the less than 10 per cent of the individuals. In fact, about 1-2 per cent were generating at least 70-75 per cent of content. That then allowed us to narrow our focus to concentrate

on and build a relationship with this elite and highly influential group of individuals.

For example, there are many communities devoted to parenting and childcare. Within these groups there are individuals or specific communities that either influence or create the vast majority of content. We can focus on this exclusive group to provide unique content, exclusive access or previews of new products and allow them to share as they see appropriate. When they do share, the impact is significant.

I will give you two relevant examples, where influential “mommy bloggers” made a difference: first, in launching a line extension of Swaddlers diapers. By sharing information with them, we created some momentum before the product was out; mommy bloggers started talking about it, and it was astonishingly successful.

The second example concerns the common online phenomenon of urban legend - a piece of information that is usually totally false but that also often breaks an existing schema and goes viral. In this specific case, some individuals were claiming that a new design of diaper could actually harm rather than protect babies. It was untrue but it got traction.

We invited influential “mommy bloggers” inside the business to ask questions of whomever they wanted and go wherever they wanted to establish the facts – independently. They satisfied themselves that there was no merit to the allegations and openly spread that message across their communities.

We often try to overthink the digital landscape and create new answers to questions that we have been asking and which have been answered many times in more traditional arenas. ■

Identifying and engaging with advocates for your brand or product is a powerful tool. Below, PaulFox, Director of Corporate Communications at P&G, explains how the company developed its

researCh foCus: from offlIne InfluenCers to the BloGosPhere

“what we wanted to Know was, who Is aCtually drIvInG the sharInG of InformatIon?”


The age-old Avon model of individuals selling cosmetics to groups of women that they organise within their community now encompasses a variety of products, from Tupperware to jewellery. With programmes such as Tremor (see left), companies sought to understand and influence these groups of consumers. Such initiatives were at the heart of their broader strategies. Now that many of today’s equivalent of these communities are emerging online, the challenge is on to extend that understanding: are online networks as penetrable as offline ones? Are bloggers the new community salespeople? If so, how are they affecting how consumers make their purchasing decisions?

With Vanitha Swaminathan, Professor of Marketing and Business Economics at the Katz Graduate School of Business, University of Pittsburgh, I am conducting a study examining the role of blogs in re-directing the consumer’s decision to purchase a given product, referred to by scholars as the “purchase (or conversion) funnel” or “decision journey”.

A typical consumer decision-making process involves multiple phases, including awareness, usage consideration, liking and engagement. There is considerable interest in learning how to modify the purchase funnel to suit the online context. We are currently examining

the ways in which a consumer’s use of blogs to inform their choices might interrupt this traditional journey. Specific online metrics can be used to measure the stages of awareness building, consideration, liking and purchase; for example, we might classify degree of awareness by total “impressions”, based on the number of views of a given blog post.

“Usage consideration” is a more active expression of interest in a product or brand based on how well a product can meet a

specific need. Our research examines how sentiment characteristics of blogging content influence awareness, usage consideration, liking and engagement in blog postings. We examine a broader set of sentiment characteristics than merely positive, negative, and neutral to provide more nuanced insights into the role of sentiment in influencing consumers’ decision making.

From a practitioner’s standpoint, this study promises a more in-depth understanding of how marketers can leverage the use of bloggers to affect success metrics across various stages of the purchase funnel and help guide consumers’ decision-making process. This effort extends previous research that assesses the impact of blogging quantity and quality on sales. We provide a systematic analysis of success factors of blog campaigns and examine three types of drivers - blogger characteristics, blog characteristics (e.g., the sentiment conveyed), and campaign characteristics - and their interplay to determine the success of a blog post. We consider how blog posts that highlight certain types of sentiment drive greater impressions, usage consideration, liking and engagement.

Previous research on marketing and blogging has examined different types of online

advertising, including banner advertising, search advertising and the role of traditional and new media on blog effectiveness. Other research has examined the dynamics of online word of mouth and its impact on marketing outcomes, such as sales and new product adoption, while another focus of research on social media has been on factors driving posting behaviour, including how and why emotion shapes virality. Additional studies have examined an individual’s decision to provide a product rating and investigate factors that influence this decision, including whether to contribute and what to contribute. We build on these findings by examining multiple factors that may affect the success of blogging as a social media strategy.

We are conducting analysis based on prior campaigns conducted by a leading blogging service, comprised of “mommy bloggers”. The blogging service employs hundreds of moms and conducts blogging campaigns on behalf of several leading companies. Typically, the service asks each blogger to write a blog post highlighting characteristics of the product or service being marketed. Bloggers receive free samples and are free to express their candid opinions about the product or service. Our research project uses more than 800 different blog postings generated around mulitiple campaigns, and we consider data on key metrics pertaining to the blog posts, such as awareness and liking (e.g., Facebook likes and Twitter tweets), for campaigns conducted in the past two years.

Prior research on blogging has considered blogging a social media strategy, but there has not yet been a systematic examination of how sentiment conveyed in blog posts interacts with other characteristics of the blogger and campaign to affect success metrics. Our initial findings have uncovered distinct and often counter-intuitive trends, which promise much both for furthering understanding in this evolving field and for informing practitioner approaches. ■

“In Blogs We Trust: The Interplay of Sentiment, Blogger, and Campaign Characteristics in Influencing Consumers’ Purchase Funnel” has recently been awarded a grant from the Marketing Science Institute.

Tremor programme to do just that and, below, our eni Research Associate GillianBrooks explains how her research into “mommy bloggers” is examining how relevant dynamics have evolved online.

“thIs study PromIses In-dePth understandInG of how marKeters Can leveraGe the use of BloGGers.”


From June 2013 to October 2013 the number of asylum seekers transferred by Australia to the remote Manus Island Regional Processing Centre (MIRPC), Papua New Guinea (PNG), had increased from 302 to 1,093 people. This resulted in severe overcrowding. The contract that the Australian government signed with government outsource service provider G4S Australia Pty Ltd (“G4S”) on 1 February 2013 stated that the temporary facilities at the MIRPC would accommodate up to 500 transferees. Moreover, adequate permanent facilities were not yet in place to handle the number of asylum seekers being held for extended periods of time.

G4S Australia Pty Ltd (“G4S”), a wholly owned subsidiary of UK multinational security giant G4S plc, was responsible for operational and maintenance services at MIRPC from 10 October 2012 to 28 March 2014 through an AUD 244M (USD 200M) contract with the Australian government. The contract required drawing 50 per cent of the MIRPC’s security staff from the Manus Island local population. G4S subcontracted Loda Securities PNG Ltd (“Loda”) for this purpose. Just before G4S’s contract was to end, violent riots erupted at the MIRPC on 16-17 February 2014, resulting in the death of 23-year-old Iranian asylum seeker Reza Berati, and injuries to an estimated 62 others.

A few weeks earlier, on 29 January 2014, Transfield Services Limited (“Transfield”) announced that it would manage not only the Nauru Island RPC (regional processing centre) but also the Manus Island facilities. On 24 March 2014, the Australian Government commenced a new AUD 2.11 billion (USD 1.73B) contract with Transfield’s subsidiary, Transfield Services (Australia) Pty Ltd, for the provision of “welfare services for Transferees located on Regional Processing Countries”. The contract covered the MIRPC, Nauru Island, and any other new sites established by the Australian government on

regional processing countries. Its duration was just over 19 months (24 March 2014 - 31 October 2015), and its value amounted to an estimated 255 per cent increase over the combined value of the corresponding contracts (with G4S for Manus and Transfield for Nauru) for 18.5 months (14 September 2012 - 28 March 2014). International Health and Medical Services (IHMS) contracted with the Australian government to provide primary medical care to asylum seekers at the MIRPC. As of 31 December 2014, 1,035 male asylum seekers still remained in detention at the MIRPC on Manus Island.

Background to the MIRPCThe MIRPC was established as part of the Australian government’s “Pacific Solution” - a series of border control measures in effect from 2001 to 2007, aimed at deterring asylum seekers from trying to reach Australia by boat. Through execution of regional agreements with the governments of Papua New Guinea (PNG) and the Republic of Nauru, the Australian Government intercepted vessels carrying asylum seekers, and forcibly transported them to “offshore” RPCs located on the remote Manus Island, PNG or Nauru Island, where refugees were mandatorily detained pending consideration of their status. This policy was largely dismantled during the 2007-2010 Rudd Administration. However, by October 2012, responding to the increased number of asylum seekers, the Australian Government reopened the offshore RPCs on both Manus Island and Nauru Island.

The MIRPC is located on Manus Island, over 1,000 kilometres from the Australian mainland. It is the largest island of Manus, Papua New Guinea’s smallest province, with an estimated 50,000 residents. The MIRPC is very remote, located far out on the eastern

point of the island on the Lombrum Naval Base. The island is covered in rugged jungles, analogous to lowland tropical rainforests. The weather is hot and humid.

The MIRPC is an all-male detention facility, where just over 1,000 male asylum seekers have been held without clear policies guiding their permanent resettlement in PNG. Although, as of November 2014, 104 Refugee Status Interim Determination assessments had been completed at the MIRPC, with 56 asylum seekers found to be refugees, no refugees have yet been permanently resettled on PNG. Australia refuses to offer permanent resettlement in Australia to refugees detained at the MIRPC.

According to the most recent profile provided in a December 2014 Australian Senate Report, out of a total of 1,338 asylum-seekers held in February 2014: 548 (41 per cent were from Iran, 135 were from Afghanistan, 106 were from Iraq, 105 were from Pakistan, 74 were from Bangladesh, 53 from Myanmar, 13 from Myanmar (Stateless), 48 were from Somalia, 46 were from Lebanon, 41 were considered stateless, 27 were from Sri Lanka, 19 from Nepal, and 18 from other countries).

Prior to the opening of the MIRPC the main source of livelihood for those living on Manus Island had been subsistence agriculture and fishing, and financial remittances from Manus Island residents working in broader PNG and abroad. Across PNG “poverty and social inequality are persistent, with 40 per cent of the population living on less than USD 1.25 per day” (The Guardian July 2015).

The Australian government requires companies providing services at the MIRPC to maximise employment of PNG citizens wherever possible. As of 31 May 2014, MIRPC activities had generated an estimated 1,000 jobs for the people of the Manus Province, injecting 14.5M

Lucrative public services contracts often come with a host of reputational challenges – none more so than the Papua New Guinea detention centres for asylum seekers, necessitated by the Australian government’s immigration policy. Below is an extracted version of our case study.

Case study: the manus Island reGIonal ProCessInG Centre


Papua New Guinea Kina (PGK) (AUD 6.77M, USD 5.56M) annually in labour income to the Manus Province. Manus residents are also engaged on construction work at the MIRPC. Thus, 66 per cent of all service provider staff who are employed at the MIRPC are citizens of PNG. The large investments related to the MIRPC have significantly boosted the temporary economy of Manus Island and the Manus Province. However, the benefits to the local economy are viewed as both temporary and concentrated in areas around the capital, Lorengau. Another point of conflict is the relationship between expatriates and local MIRPC employees. The local wage in PNG is significantly lower than that of Australian expatriates.

Conditions on Manus Island Inspections of the MIRPC facilities since its reopening have been limited. The United Nations High Commissioner for Refugees (UNHCR) visited the MIRPC in January, June, and October 2013, and Amnesty International visited the MIRPC in November 2013 and March 2014. A court-appointed party also visited the MIRPC on 18 March 2014, led by PNG Justice David Cannings. During this visit, “Public solicitor Frazer Pitpit told the court, asylum seekers who tried to talk to the court party were prevented from doing so by guards” – according to a report by Australian Associated Press.

Following their visits to the MIRPC in late 2013, the UNHCR and Amnesty International described the harsh conditions under which asylum seekers were held. In its October 2013 report the UNHCR concluded that the policies, operational approaches and harsh physical conditions of the MIRPC did not

comply with international standards and did “not provide safe and humane conditions of treatment in detention”. The MIRPC environment is also challenged by the high risk of malarial transmission in PNG and on Manus Island.

In addition, in a series of 2014 disclosures made to the Australian Senate Legal and Constitutional Affairs References Committee, various former MIRPC staff reported occurrences of: sexual assault, security concerns, attempted suicide, acts of violence and assault by guards and other detainees, and self-harm at the MIRPC.

On 16-17 February 2014 violent riots erupted at the MIRPC, resulting in the death of 23-year-old Iranian asylum seeker Reza Berati and the injury of an estimated 62 others. On 26 May 2014, Australia’s immigration minister Scott Morrison, upon release of the Australian Government’s review of the February riots, said guarantees of safety at the MIRPC were “difficult to provide”.

Unique problems with managing the MIRPCOn 12 June 2014 Martin Appleby, former G4S MIRPC Safety & Security Officer, provided a witness and employee view of the unique problems of managing the MIRPC and factors that he believed led up to the February 2014 riot. According to Appleby, the first problem was that there was not enough infrastructure to support MIRPC transferees. He asserted that G4S should not have agreed to take the people until there was a way to house and look after them to a decent standard. Secondly, overcrowding had a massive impact on every aspect of MIRPC life for detainees, affecting everything from access to food, medical attention, shelter, privacy and safety.

Appleby noted: “G4S was… paid an allowance by the government for each transferee they took on, so they… had an incentive to continue to take people on irrespective of whether they had space for them.” While such a paid “allowance” is not disclosed in the public version of the contract between G4S and the Australian government, the contract does disclose that G4S and the Australian government recognised that the number of transferees and MIRPC site requirements “will vary from time to time”, in recognition of which the number of transferees and site requirements would be assessed on a roster on a “fortnightly basis” that would set the level of daily rates and be used in the calculation of the Service Delivery Team Fee.

Appleby also asserted that the length of time in detention and the “lack of information they [detainees] received about when their [asylum] claims would be processed or what was going to happen to them” were central problems at the MIRPC, leading to anger, frustration and despair among detainees. Finally, he identified multiple failures in the way the facility was managed, including: issues with food shortages and water, failure to separate victims of abuse from their abusers, lack of proper security and emergency procedures, and leaving it to individual G4S [or PNG police assigned to the MIRPC in the Special Services Division] to decide whether transferees’ medical requests were passed on to the medical staff. All were key problems that in his view contributed to the outbreak of the February riot. ■

This case study was written by Mari Sako, Professor of Management Studies at Saïd Business School, and Ellen Knebel, a doctoral student at Saïd Business School. To receive a copy of the complete study, email: [email protected].

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At the beginning of June, the first Global Corporate Governance Colloquium (GCGC) took place in the Law School at Stanford University. The purpose of the colloquium is to encourage the very best academics from around the world in the fields of economics and law to present their most recent research on corporate governance and to promote an exchange of ideas between academics and practitioners. The first colloquium in Stanford was an immense success. It brought together a truly outstanding group of academics who presented papers of profound interest over a two-day period. A description of GCGC and the first colloquium can be found at www.ecgi.org/gcgc/index.php.

There is no specific theme to the colloquium; instead, academics are encouraged to present their best recent research. Nevertheless, there was a common emphasis on the importance of trust and reputation and their interaction with regulation in many of the presentations. For example, several of the papers examined periods at the end of the 19th century and the beginning of the 20th century in different countries in Europe and North America prior to the implementation of formal systems of financial regulation and corporate law, and posed the question: how did banks and companies operate in the absence of legal and regulatory requirements?

This approach is highly informative in identifying how corporations and institutions create trust amongst their investors. For example, in the absence of regulatory rules, banks at the end of the 19th century were observed to use cash and capital as ways of convincing depositors and minority shareholders of the soundness of the banks in which they were investing.

Similarly, in the absence of corporate law, how do companies allocate authority between owners, boards and managers? A study of Norway at the beginning of the 20th century before corporate law was introduced revealed the importance of shareholders in general

meetings, but that where there are problems of coordination amongst a large number of dispersed shareholders, then greater reliance is placed on the board of directors or a board of representatives of the shareholders.

The historic approach was also very revealing in identifying significant influences on the structure of financial markets that had not been previously observed. For example, one paper described how the US in the first half of the 20th century was not the dispersed shareholder economy with which we associate it today, but was dominated by large groups in the form of pyramid shareholdings with families at the top of some of the pyramids. A combination of strengthened investor protection, utility company legislation and taxation of inter-corporate dividends led to the demise of the holding companies by the second half of the 20th century. However, their existence may have allowed families to exert influence and raise finance externally without losing control.

Another way in which this is done in the US, which was also discussed at the conference, is through dual-class shares. Conventionally, dual-class shares are regarded as impediments to the efficient allocation of control in firms. However, they are widely used by such companies as Facebook, Google and LinkedIn to allow founders to retain control of their firms and ensure that

they preserve the long-term strategy and focus of their founders as they raise external equity capital. Their ability to do so rests on the trust that outside investors place in the founders to protect and promote their interests.

As another paper demonstrated in the context of the financing of innovation, the extent to which it is beneficial to confer control on outside investors as against founders and entrepreneurs depends on the knowledge and wisdom of investors. The ability of investors to contribute relevant information as well as finance to the investment process is an important determinant of the extent to which financing should confer control on outside as against inside entrepreneurs and managers.

By bringing together academics in a truly interdisciplinary environment from economics and law and putting them together with a highly informed group of practitioners, the colloquium is destined to provide fundamental new insights into the way in which corporations and financial markets are evolving and their implications for governance, reputations, trust and regulation in the future. ■

Colin Mayer is Peter Moores Professor of Management Studies, Saïd Business School, and Chairman of the Board of the Global Corporate Governance Colloquium.

ColinMayer introduces a new initiative, supported by Saïd Business School, that brings business and academe together to explore principles of good governance.

ConferenCe rePort: the GloBal CorPorate GovernanCe ColloQuIum

About the GCGCThe GCGC is a partnership of 12 leading universities and three (prospectively six) practitioner partners. The universities are: Columbia, Harvard, Stanford, Yale, the Goethe University Frankfurt, the London Business School, Oxford University, the Swedish House of Finance, Peking University, Seoul National University, National University of Singapore and Tokyo University. The practitioner partners are the European Investment Bank, the Japan Exchange Group and the zurich Insurance Company. Each year a conference is hosted by one of the academic partners with the location rotating between the three continents.


Big data, the power of computational analysis to organise, codify and make sense of information sources on a vast scale, has the potential to unlock answers to both new research questions and to longstanding investigations that have reached theoretical conclusions, but have been awaiting the tools to provide empirical validation. It is opening the doors between different disciplines to provide answers to previously inaccessible problems. One example is in the research of reputation formation and “shocks”.

Organisational theory has been concerned with “collective meaning” in many forms since the origins of sociology. As a sociologist researching the nature of reputations, status, stigma and similar phenomena within different societal contexts, computational linguistics and natural language processing using big data offers me the chance to produce measurable insights into large databases of text that have previously existed in a “fuzzy” field of understanding.

Identifying the right subject, where the field of study has well-defined boundaries and the outcomes are directly traceable through artefacts (such as newspapers) is one major challenge. The MP’s expenses scandal of 2009 provides an ideal case. “Stigma” - so widely evident in this case – may just be based on being negatively associated with “bad actors”, an effect familiar to those engaged in reputation management.

Institutions have their own formalised knowledge structures and processes, but people outside those organisations or institutional regimes bring a different set of judgments to bear, in this instance with information predominantly provided through the Telegraph newspaper. We are using big data to track the impact of those influences. When you try and sharpen the focus in a granular way on reputation formation, you need scale to unpick connections.

Big data allows us to track patterns through very large structures of meanings so that we can penetrate the embedded social codes and see the actual dynamics of meaning formation in real time. We can start to scope, draw boundaries and make inferences across cases. One of the appeals of text is that it is a somewhat naturalistic artefact: any form of text analysis needs to take account of the subtext, the context and the text itself. The question is, how can we do more than just counting keywords?

The essence of the method is that texts are built like frames, and within those frames there is framing of meaning. Once you have established the primacy of certain words, and you map the relationships between them, and relate them to outcomes (as in the scale of repayments or the likelihood of losing their seats, as in the MP example), both reputational premiums or deficit begin to show themselves embedded in dynamics of the media and the public.

Big data in this way can move the focus away from models of specific stakeholder concerns to the consideration of social cognition, because it is the phenomenon of reputation we are interested in, not the construction of an ideal model.

In a project on judicial reputations, with Ken Okamura, Departmental Lecturer in Finance at Saïd Business School and a former Research Fellow at the Centre for Corporate Reputation (“Big Wigs: The Reputations Of UK Judges By Citation Analysis”), we are considering how reputation influences the evolution of the law. When the UK legal field was smaller, reputations of judges could be transmitted through “gossip” within the professional “closed” network. However, when the law gets sufficiently large as an institution, and especially over time, these networks may be insufficient for transmitting reputational signals. We consider how the profession uses documents as cultural

artefacts in a system of social cues. With English common law, these artefacts include the judgments on which precedent is built. With big data text analysis, we can consider the importance of these artefacts for their reputational content.

Nowadays, we increasingly depend on ranking systems. In the absence of those systems, there are other ways that organisations make sense of reputation. In the case of the law, hierarchies of status are well defined, but reputations are not so clear. When lawyers make a case, they need to draw on the best jurisprudence. In that sense what they are doing is building on good writing of high reputation. A lawyer is continually having to make social valuations on the reputations of judges of the past.

If you are in a particular area of common law – and remembering that reputations are specific, with someone for something – that area will have a series of judgements that are embedded. Lawyers have to be aware not only of judgements but also who said them. We are designing algorithms to identify variations in citation styles to identify what is considered “quality” (we often think of reputation as being close to quality). The words people use are key to that. They become codes and they carry value.

We are exploring several hypotheses and big data is allowing us to consider 10 years of case law and analyse 10,000 cases. But ultimately it is not the scale that is of paramount importance, so much as the precision of the tools that allow us to explore granular questions. Once you combine the two, you start to realise interesting possibilities. ■

Tim Hannigan is a Research Fellow at the Centre for Corporate Reputation. In September he takes up the post of Assistant Professor of Organizational Theory and Entrepreneurship at the University of Alberta.

Research Fellow TimHannigan explains how big data and computational text analysis can be used to unlock complex questions about how reputations are formed.

researCh foCus: BIG data text analysIs

ContaCt usWe welcome your feedback. Please send any comments to: [email protected]. The Oxford University Centre for Corporate Reputation is an independent research centre which aims to promote a better understanding of the way in which the reputations of corporations and institutions around the world are created, sustained, enhanced, destroyed and rehabilitated. For full details of our research and activities, see: www.sbs.oxford.edu/reputation.

• In April, eni Research Associate GIllIANBROOkS attended the International OFEL Conference on Governance, Management and Entrepreneurship in Dubrovnik, Croatia, where she presented a paper, “The News Identity Crisis: Online News Organizations in the Field of Journalism”.

• OurDirector,RUPERTYOUNGER,spokeattheUniversityofNavarraattheBuildingUniversities’ReputationInternationalConference2015.Hewaslaterfeaturedinthe TimesHigherEducationSupplement,regardinghiscritiqueoftopuniversities,theirfallingvictimto“highstatuseffect”,andtheirfailuretoaddressthefragilityofreputation(seehttp://tinyurl.com/nrv762u).

• In May, Research Fellow TIMHANNIGAN attended the Princeton Text Analysis Workshop, where he co-presented a conference paper, “Meanings at the Heart of a Scandal”. He also presented this work at the Medici Summer School at the University of Bologna, Italy.

• TheCENTREco-hosted,withSaïdBusinessSchool’sCentreforProfessionalServicesFirms,aProfessionalServicesFirmsandReputationWorkshopforinvitedinternationalacademics,asthebasisfordevisingsessionstoincludeatour2016ReputationSymposium.

• At the beginning of June, theCENTREFORCORPORATEREPUTATION was one of the supporters of the first Global Corporate Governance Colloquium (GCGC), which was held at the Law School at Stanford University. See p10 of this issue for more details.

• GIllIANBROOkS attended the International Symposium on Media Innovations in Brussels, where she presented a paper, “Innovating the Industry: How Offline Interactions are Transforming and Legitimizing the Field of Online Media”.

• ResearchFellowJONMACkAYpresentedtwopapers:“leaders,Factions,and

NetworksofInterests:PartisanInfightingamongHouseRepublicans”,atthePoliticalNetworksConference2015inPortland,Oregon;and“ObservingAdvantage:theRoleofCognitionintheMarketplaceforSyndicatedloans”,attheXXXVSunbeltConferenceoftheInternationalNetworkforSocialNetworkAnalysis(INSNA)inBrighton.

• In July, GIllIANBROOkS, TIMHANNIGAN and Research Fellow BASAk

YAkIS-DOUGlAS attended the EGOS (European Group of Organizational Studies) conference in Athens. Gillian presented a paper entitled “Digital natives: The creation and legitimation of online media organizations”; Tim and Basak presented their joint paper, “Rumors as Contributors to Openness in Organizations”.

news and events

awards and aPPoIntmentsNICHOlASSABIN has joined the Centre as a Research Associate, having completed his DPhil in Management Studies at Saïd Business School. He is also a Research Fellow at the CABDyN Complexity Centre at Oxford University. His research interests include microfinance and complex systems. He has worked in the US financial services industry as a strategy professional, and in the microfinance field, serving as a Kiva Fellow in Sierra Leone, West Africa. He holds an MSc in Management Research (Distinction) from Saïd Business School, a Bachelor of Science in Systems Engineering from the University of Pennsylvania, and a Bachelor of Science in Finance and Management from the Wharton School.

eni Research Associate GIllIANBROOkS has been awarded a grant of USD 6,800 by the Marketing

Science Institute, with co-author Vanitha Swaminathan, to help further research into their project “In Blogs We Trust: The Interplay of Sentiment, Blogger, and Campaign Characteristics in Influencing Consumers’ Purchase Funnel” (see her summary on p7 of this issue).

TIMHANNIGAN, who has been a Research Fellow at the Centre for the past two years, will take up the post of Assistant Professor of Organizational Theory and Entrepreneurship at the University of Alberta in September. His work is wide-ranging, but at its core is text analysis using big data tools (see p11): current projects and papers include work on the formation of scandals, specifically with reference to the UK MPs’ expenses scandal of 2009; and identifying the structural antecedents of the emergence of new product categories, specifically how “unstructured information” from online media helps to shape a nascent market.

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