Collapsed Buffer, Reputation, Instrumental CSR:

Toyota’s Crisis 2010

Nobuyuki Chikudate, Ph.D. Professor

Department of Management StudiesGraduate School of Social Sciences

Hiroshima University

Overview of Toyota’s Recall Crisis in 20102007 starting mechanical complaints in U.S.2009 rise of complaints against Toyota cars in U.S.

TV coverage of a horrific crash involving a California highway patrolman

2010 Jan.-Mar. floods of issuing recalls by ToyotaFeb. Jim Lentz (Toyota Motor Sales U.S.A.), Yoshifumi Inaba (CEO of Toyota U.S.A.), & Akio Toyoda (grandson, president of Toyota) testified at Public Hearings, US congress.Toyota paid a record fine of $16.4 millions.groups of lawsuits against Toyota

2011 Feb. Ray Lahood of NHTSA announced, “We feel that Toyota Vehicles are safe to drive.”

Lessons for CSR Communicators1. Reconsidering relations among CSR communication, corporate

reputation, and crisis management/communication

ideal model

practical model

CSR com. as normative- activities of honored and responsible corporate citizens green, philanthropies, etc.

CSR com. as instrumental- managing/controlling of interactions with particular stakeholders lobbying, political contribution, advocacy advertising, etc.

reservoir of goodwill

corporate reputation

preventing interference with internal operations

influencing stakeholders’ attitudes/opinions

buffering during crises

defending corporate image

In fact, Toyota have done both in global communities. However, as for Toyota, these methods failed in U.S. I analyzed how Toyota failed in crisis communication as for CSR communications.My analytical frameworks

corporate communications

adequate responses to critical situations

inadequate initial responses to crisis

influencing

amplifying

leading

ideal model

diagnostic model

2. Pathologies surrounding corporate communication

adequate responses to crisis

reality construction of critical situations by Toyota’s executives

influencingcertain perceptions shaped by intersubjective lifeworld among Toyota executives

delaying/disturbing

collective myopiathe situation in which members of certain communities or organizations are able to make sense and give sense in each context in which they live but are not able to monitor the emerging order or patterns as a whole created by themselves

stagnation of sensemaking in view of external events even in emergent, changing, and critical situations of corporate crises

collective hyperopiaPeople try to make sense of something external, aloof, and general by ignoring the reality of internal, immediate, and concrete contexts.

-”Being far” means external stakeholders/general advocacies, and “being near” means internal stakeholders– U.S. employees

As for Toyota, these pathologies compounded and led inadequate responses to the crisis

Symptoms of pathologies

Collective myopia“As I look at where we were in the past, what had become…with our success… as a company, we had a little bit of an attitude. Arrogance is probable the best explanation.” (Jim Lentz)

Collective hyperopia“…I am personally angry. Somewhat with the newspapers but largely with private TV stations… Shall I retaliate? To be honest, the big corporations would not let [pundits who criticize what we did] appear on TV. It is obvious that the sponsors of such TV programes are not big corporation (such as Toyota)…” (Hiroshi Okuda, former CEO & President of Toyota: from Asahi Shimbun Morning Issue, 13 November 2008)

“We are willing to do political donation…” (Hiroshi Okuda, : from Asahi Shimbun Morning Issue, 28 May 2003)

the feudal warlord from a little province of Mikawa, Japan

Toyota might have wondered such an attitude and strategic CSR communication worked to prevent criticisms against Toyota during its crisis in U.S.

▶huge political donations toward U.S. congress-persons▶hiring former inspectors of NHTSA

▶ crashing the formal negotiations with NHTSA ▶ neglecting initial responses to public criticisms ▶ Reckless public speeches by Toyota’s two executives angered Japanese

public. (unprepared Crisis Communication)

▶ no political supports from Japan (LDP → DPJ) ▶mid-term elections in U.S. ▶ sensationalism seeking U.S. media

+

It’s too expensive for Toyota to learn lessons about CSR communication.

Toyota’s instrumental CSR communication activities in U. S.

But, these were not effective, Because there were uncontrollable factors.

The only option left for Toyota was corporate apologia.