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C H A P T E R T W O

Managing Public Issues and Stakeholder RelationshipsBusinesses today operate in an ever-changing external environment, where effective management requires anticipating emerging public issues and engaging positively with a wide range of stake-holders. Whether the issue is growing concerns about climate change, health care, safety at work or in our schools, social equality, or consumer safety, managers must respond to the opportunities and risks it presents. To do so effectively often requires building relationships across organizational boundaries, learning from external stakeholders, and altering practices in response. Effective man-agement of public issues and stakeholder relationships builds value for the firm.

This Chapter Focuses on These Key Learning Objectives:

LO 2-1 Identifying public issues and analyzing gaps between corporate performance and stakeholder expectations.

LO 2-2 Applying available tools or techniques to scan an organization’s multiple environments and assess-ing stakeholder materiality.

LO 2-3 Describing the steps in the issue management process and determining how to make the process most effective.

LO 2-4 Identifying the managerial skills required to respond to emerging issues effectively.

LO 2-5 Understanding the various stages through which businesses can engage with stakeholders, what drives this engagement, and the role social media can play.

LO 2-6 Recognizing the value of creating stakeholder dialogue and networks.

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A 2016 study from the Public Affairs Council found that many major corporations are feeling increased pressure to speak out on social issues, ranging from discrimination and human rights to environmental sustainability and quality education. Among companies with more than $15 billion in annual revenue, more than three in four said expectations for engagement had risen. Most of the pressure to engage in social issues, said the companies, has come from their own employees.1

Legislative battles in North Carolina, Tennessee, Mississippi, and Georgia prompted business leaders to take a stand favoring rights for transgender individuals. Dow Chemical, Alcoa, and Northrup Grumman lobbied elected officials and publicly condemned measures seen as discriminatory. Monsanto lead the fight in Missouri against a bill that would allow businesses to deny certain services to same-sex couples as a matter of religious freedom. In response to North Carolina’s state legislature passing a law that blocked antidiscriminatory protections at the local level, Deutsche Bank, the German financial institution with signifi-cant business in the United States, said it would freeze its plans to add jobs in North Caro-lina. PayPal announced it would halt its plans to open a new global operations center there.

While some thought these issues had little to do with business, executives pointed out these discriminatory state laws could harm local economies and hamper business’s ability to recruit and retain bright young workers. In the past few years, businesses have employed a number of measures to voice their views. These have ranged from joining coalitions, to issuing press releases, to engaging in lobbying at the state or local governmental levels. Experts believe that these efforts had some impact, such as in North Carolina where com-pany protests contributed to the state legislature’s repeal of a law that discriminated against gays and lesbians. Public reaction has been generally positive to these business actions. A Global Strategy Group poll found that 78 percent of Americans supported corporate engagement in social issues such as discrimination, human rights, and equality.2

In this case, emerging social issues focused on individual rights prompting various busi-nesses and their executives to become engaged and take action. This will likely improve the communities where these firms hire employees, operate, and sell their products. Yet, as this chapter will show, companies sometimes also ignore or mismanage public issues.

Public Issues

A public issue is any issue that is of mutual concern to an organization and one or more of its stakeholders. (Public issues are sometimes also called social issues or sociopolitical issues.) They are typically broad issues, often impacting many companies and groups, and of concern to a significant number of people. Public issues are often contentious—different groups may have different opinions about what should be done about them. They often, but not always, have public policy or legislative implications.

The emergence of a new public issue often indicates there is a gap between what the firm wants to do or is doing and what stakeholders expect. Scholars have called this the performance–expectations gap. Stakeholder expectations are a mixture of people’s opin-ions, attitudes, and beliefs about what constitutes reasonable business behavior. Managers and organizations have good reason to identify emergent expectations as early as possible. Failure to understand stakeholder concerns and to respond appropriately will permit the

1 “Taking a Stand: How Corporations Speak Out on Social Issues,” Public Affairs Council, 2016.2 “Why Companies Are Getting More Engaged on Social Issues,” Public Affairs Council, August 30, 2016, pac.org; “Big Busi-ness Speaks Up on Social Issues,” The Wall Street Journal, April 17, 2016, www.wsj.com; and “Seeking End to Boycott, North Carolina Rescinds Transgender Bathroom Law,” Reuters, March 30, 2017, www.reuters.com.

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performance–expectations gap to grow: the larger the gap, the greater the risk of stake-holder backlash or of missing a major business opportunity. The performance–expectations gap is pictured in Figure 2.1.

Emerging public issues are both an opportunity and a risk. On one hand, correctly anticipating the emergence of a public issue can confer a competitive advantage. However, they also are a risk because issues that firms do not anticipate and plan for effectively can seriously hurt a company, as the following example shows.

The Italian–U.S. automobile maker, Fiat Chrysler, became aware of a serious prob-lem involving more than 11 million vehicles, including older Jeeps with rear gas-oline tanks that were linked to numerous fatal fires. Yet, Fiat Chrysler was slow to respond to the increasing expectations of its customers and regulators, the National Highway Traffic Safety Administration (NHTSA). The NHTSA accused the firm of misleading and obstructing regulators tasked with overseeing the resolution of many consumer complaints, inadequate and lagging repairs authorized through their dealerships, and failing to notify car owners of the recalls in a timely manner. The firm agreed to a consent agreement that included a fine of $105 million and an unprecedented buyback option covering hundreds of thousands of vehicles, whose owners can receive a trade-in or a financial incentive to get their vehicles repaired. Fiat Chrysler also agreed to submit to an independent monitor’s audit of its recall performance over the following three-year period.3

Understanding and responding to changing stakeholder expectations is a business neces-sity. As Mark Moody-Stuart, former managing director of Royal Dutch/Shell, put it in an interview, “Communication with society. . . is a commercial matter, because society is your customers. It is not a soft and wooly thing, because society is what we depend on for our living. So we had better be in line with its wishes, its desires, its aspirations, its dreams.4

3 “U.S. Auto Safety Regulators Fine Fiat Chrysler Record $105 million,” Reuters, July 26, 2015, www.reuters.com.4 Interview conducted by Anne T. Lawrence, “Shell Oil in Nigeria,” interactive online case published by www.icase.co.

FIGURE 2.1The Performance–Expectations Gap

Time

ExpectedCorporate Performance (What stakeholdersexpect)

ActualCorporatePerformance(What actuallyhappens)

Performance–ExpectationsGap

High

Low

Perf

orm

ance

(Soc

ial a

nd E

cono

mic

)

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Every company faces many public issues. Some emerge over a long period of time; others emerge suddenly. Some are predictable; others are completely unexpected. Some companies respond effectively; others do not. Consider the following recent examples of public issues and companies’ responses:

∙ Sexual harassment: An often well-kept secret vaulted into the public spotlight in 2017: accusations of sexual harassment in the corporate boardroom, executive suite, and workplace. Numerous high-profile business leaders were accused, including Fox News host Bill O’Reilly, film producer Harvey Weinstein, television show host Matt Lauer, Fox News CEO Roger Ailes, Ford Motor Company president for North America Raj Nair, CEO of the Humane Society of the United States Wayne Pacelle, and billionaire and casino executive Steve Wynn, along with many others. These executives resigned or were fired amidst sexual harassment accusations.

∙ Consumer safety: The Centers for Disease Control and Prevention declared separate E. coli outbreaks that sickened hundreds of customers at two different Chipotle Mexican Grill restaurants in the Pacific Northwest in 2015. These incidents followed other occur-rences where customers became ill from a salmonella outbreak involving tomatoes in Minnesota, as well as an outbreak of norovirus in California and Massachusetts. Chipotle tried to counter the negative publicity by pledging $10 million to help local growers meet new food safety standards and invited its 50,000 employees nationwide to tune in to a broadcasted meeting with executives at their Denver headquarters.

∙ Protection of personal information: Instances of the illegal acquisition, or hacking, of individuals’ personal identification and financial information have become common occurrences. Yahoo, Equifax, Delta Airlines, FedEx, England’s National Health Ser-vices, Merck Pharmaceuticals, Forever 21, Target, and many more organizations expe-rienced data breaches that compromised and exposed personal data of its customers or employees. These breaches may have reflected managers’ failure to keep abreast of the latest techniques used by sophisticated cybercriminals.

Whether the focus is sexual harassment in the workplace, consumer safety, or the pro-tection of personal information, society has increased its demands that businesses take on important public issues and become more involved in addressing them. Another critical public issue that caught the attention of many business organizations after a school shoot-ing in Florida—gun violence and school safety in America—is discussed in the case at the end of this chapter.

A survey of Millennials (people born between 1977 and 1994) was conducted in 2014 and found that four out of five Millennials “need (not just want) business to get involved in addressing social issues and believe business can make a greater impact.” One Millennial from China explained: “Compared to governments, businesses have the potential and the possibility to make real change in society happen faster and more efficiently. Businesses have the resources—from financial means, collective intelligence to technology—to con-tribute and make a difference.”5

Environmental Analysis

As new public issues arise, businesses must respond. Organizations need a systematic way of identifying, monitoring, and selecting public issues that warrant organizational action because of the risks or opportunities they present. Organizations rarely have full control of

5 The Future of Business Citizenship, People’s Insights Magazine, www.scribd.com.

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a public issue because of the many factors involved. But it is possible for the organization to create a management system that identifies and monitors issues as they emerge.

To identify those public issues that require attention and action, a firm needs a frame-work for seeking out and evaluating environmental information. (In this context, environ-mental means outside the organization; in Chapters 9 and 10, the term refers to the natural environment.) Environmental analysis is a method managers use to gather information about external issues and trends, so they can develop an organizational strategy that mini-mizes threats and takes advantage of new opportunities.

Environmental intelligence is the acquisition of information gained from analyzing the multiple environments affecting organizations. Acquiring this information may be done informally or as a formal management process. If done well, this environmental intelli-gence can help an organization avoid crises and spot opportunities.

According to management scholar Karl Albrecht, scanning to acquire environmental intelligence should focus on eight strategic radar screens.6 Radar is an instrument that uses microwave radiation to detect and locate distant objects, which are often displayed on a screen; law enforcement authorities use radar, for example, to track the speed of passing cars. Albrecht uses the analogy of radar to suggest that companies must have a way of tracking important developments that are outside of their immediate view. He identifies eight different environments that managers must systematically follow. These are shown in Figure 2.2 and described next.

∙ Customer environment includes the demographic factors, such as gender, age, marital status, and other factors, of the organization’s customers as well as their social values or preferences, buying preferences, and technology usage. For example, the explosion of social media has created opportunities for creating new marketing approaches that provide potential consumers with coupons or sales information on their smartphones as they leave their car and walk toward the retail store.

∙ Competitor environment includes information on the number and strength of the orga-nization’s competitors, whether they are potential or actual allies, patterns of aggres-sive growth versus static maintenance of market share, and the potential for customers to become competitors if they “insource” products or services previously purchased from the organization. (This environment is discussed further in the next section of this chapter.)

∙ Economic environment includes information about costs, prices, international trade, and any other features of the economic environment. The severe recession that hit the world’s economy in the late 2000s greatly shifted the behavior of customers, suppli-ers, creditors, and other stakeholders, dramatically impacting decision making in many firms.

∙ Technological environment includes the development of new technologies and their applications affecting the organization, its customers, and other stakeholder groups. Faster access to information through cell phones, tablets, and other handheld electronic devices changed how people around the world were alerted to the devastation of natural disasters or terrorist actions and how they could be contacted regarding new job open-ings or the launching of innovative consumer products.

∙ Social environment includes cultural patterns, values, beliefs, trends, and conflicts among the people in the societies where the organization conducts business or might

6 Adapted from Karl Albrecht, Corporate Radar: Tracking the Forces That Are Shaping Your Business (New York: American Management Association, 2000).

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conduct business. Issues of civil or human rights, family values, and the roles of spe-cial interest groups are important elements in acquiring intelligence from the social environment.

∙ Political environment includes the structure, processes, and actions of all levels of government—local, state, national, and international. Awareness of the stability or insta-bility of governments and their inclination or disinclination to pass laws and regulations is essential environmental intelligence for the organization. The emergence of strict environmental laws in Europe—including requirements to limit waste and provide for recycling at the end of a product’s life—have caused firms all over the world that sell to Europeans to rethink how they design and package their products.

∙ Legal environment includes patents, copyrights, trademarks, and considerations of intel-lectual property, as well as antitrust considerations and trade protectionism and organi-zational liability issues. China’s commitment to triple its patent filings from nearly one million in 2013 to three million by 2020 sent shock waves through the global business community.

∙ Geophysical environment relates to awareness of the physical surroundings of the orga-nization’s facilities and operations, whether it is the organization’s headquarters or its field offices and distribution centers, and the organization’s dependency and impact on natural resources such as minerals, water, land, or air. Growing concerns about global warming and climate change, for example, have caused many firms to seek to improve their energy efficiency.

FIGURE 2.2 Eight Strategic Radar Screens

Source: Adapted from Karl A. Albrecht, Corporate Radar: Tracking the Forces That Are Shaping Your Business (New York: American Management Association, 2000).

CustomerEnvironment

SeekingEnvironmental

Intelligence

SocialEnvironment

GeophysicalEnvironment

LegalEnvironment

PoliticalEnvironment

TechnologicalEnvironment

EconomicEnvironment

CompetitorEnvironment

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The eight strategic radar screens represent a system of interrelated segments, each one connected to and influencing the others.

Companies do not become experts in acquiring environmental intelligence overnight. New attitudes have to be developed, new routines learned, and new policies and action pro-grams designed. Many obstacles must be overcome in developing and implementing the effective scanning of the business environments. Some are structural, such as the report-ing relationships between groups of managers; others are cultural, such as changing tradi-tional ways of doing things. In addition, the dynamic nature of the business environments requires organizations to continually evaluate their environmental scanning procedures.

Competitive IntelligenceOne of the eight environments discussed by Albrecht is the competitor environment. The term competitive intelligence refers to the systematic and continuous process of gathering, analyzing, and managing external information about the organization’s competitors that can affect the organization’s plans, decisions, and operations. (As discussed in Chapter 1, competitors may be considered a nonmarket stakeholder of business.) The acquisition of this information benefits an organization by helping it better understand what other compa-nies in its industry are doing. Competitive intelligence enables managers in companies of all sizes to make informed decisions ranging from marketing, research and development, and investing tactics to long-term business strategies. “During difficult times, excellent competitive intelligence can be the differentiating factor in the marketplace,” explained Paul Meade, vice president of the research and consulting firm Best Practices. “Companies that can successfully gather and analyze competitive information, then implement strategic decisions based on that analysis, position themselves to be ahead of the pack.”7

However, the quest for competitors’ information can also raise numerous ethical issues. Businesses may overstep ethical and legal boundaries when attempting to learn as much as they can about their competitors, as the following example shows.

Today, Deloitte is one of the world’s largest accounting firms, employing 245,000 people in 150 countries and providing various accounting and consulting services. But, in the mid-2000s, the firm wanted to dramatically grow its federal security consulting services from a $300 million to more than a billion dollars in annual revenues. Deloitte formed a competitive intelligence unit (CIU). “Our job was to spy on Ernst & Young, PriceWaterhouseCoopers, KPMG, and some of the consulting competitors,” said a CIU employee. “We were trying to steal their pricing models, how they determined discounts, and especially new product lines or service lines.”

One example of how the CIU conducted its business occurred in 2007 when they learned that BearingPoint, a consulting firm, was struggling financially and had called an emergency meeting to determine its fate. Deloitte’s CIU agents traveled to the meeting location and spent several days stationing themselves at a bar, picking up scraps of conversation from distraught BearingPoint partners. Others spent time in bathrooms. “You can’t believe what people will say while they’re in there,” said a CIU agent. The best source for information was a Bearing Point meeting room the agents discovered. They entered the meeting room, found notes and other docu-ments left behind, and brought this information back to Deloitte’s CIU. According to one Deloitte CIU employee, “There were accounts that would have taken years

7 See Best Practices report at www.benchmarkingreports.com/competitiveintelligence.

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for Deloitte to develop relationships at the Department of Defense, the Department of Homeland Security, and other institutions. It was a huge opportunity.” A few years later, Deloitte was able to take advantage of an opportunity to buy BearingPoint’s North American public services unit for $350 million as Bearing-Point worked through a bankruptcy.

As the example above indicates, the perceived value of intellectual property or other information may be so great that businesses or their employees may be tempted to use unethical or illegal means to obtain such information. Although questionable, Deloitte employees did nothing illegal. Competitive intelligence acquired ethically remains one of the most valued assets sought by businesses. A business must balance the importance of acquiring information about its competitors’ practices with the need to comply with all applicable laws, domestic and international, and to follow the professional standards of fairness and honesty. Disclosure of all relevant information prior to conducting an inter-view and avoidance of conflicts of interest are just a few of the ethical guidelines promoted by the Strategic and Competitive Intelligence Professional’s code of ethics.8

Stakeholder MaterialityAfter the many environments are scanned, a company needs to evaluate and prioritize the impact that its stakeholders and their issues may have on the company. The importance attributed to a stakeholder is often referred to as materiality. Stakeholder materiality is an adaptation of an accounting term that focuses on the importance or significance of some-thing. In this case, it describes a method used to prioritize the relevance of the stakeholders and their issues to the company.

Sonoco, a global provider of packaging products and services, completed its first stakeholder materiality assessment of economic, environmental, and social issues in 2014. The company began by identifying potential stakeholders and created a list of nine stakeholders: customers, suppliers, peers, shareholders, non-governmental organizations, community leaders, government regulators, employees, and lead-ership. The company then searched various sources for information on each stakeholder, such as websites, corporate social responsibility reports, mission statements, and 10-K filings to create a list of issues. They used a four-point scale to rate each stakeholder from low to high based on the significance of the issue to the stakeholder. This scoring system enabled Sonoco to identify highly influential stakeholder groups as having the greatest potential impact on the company’s strategic objectives or those stakeholders most influenced by the company’s operations.9

After the information is collected, it needs to be analyzed and placed on a matrix that shows the importance of the issue for the stakeholder and the importance of the issue assigned by the company. This evaluation allows the company to prioritize their attention on issues in the quadrant showing issues of importance to stakeholders AND the company. An example of such a matrix representing stakeholder materiality at Nestlé is shown in Figure 2.3. Nestlé assessed the degree of stakeholder importance for an issue, as well as the potential impact of the issue on Nestlé. This combination enabled the company to place a higher, or lower, priority on many public issues.

8 For information about the professional association focusing on competitive intelligence, particularly with attention to ethical considerations, see the Strategic and Competitive Intelligence Professionals’ website at www.scip.org.9 Information from Nestlé’s website, www.nestleusa.com/csv/what-is-csv/materiality-and-stakeholder-engagement.

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The Issue Management Process

Once a company has identified a public issue and detects a gap between society’s expec-tations and its own practices, what are its next steps? Proactive companies do not wait for something to happen; they actively manage issues as they arise. The process of doing so is called issue management. The issue management process, illustrated in Figure 2.4, has five steps or stages. Each of these steps is explained below, using the example of the poul-try industry’s response to concerns over antibiotics in chickens.

Identify IssueIssue identification involves anticipating emerging concerns, sometimes called “horizon issues” because they seem to be just coming up over the horizon like the first morning sun. Sometimes managers become aware of issues by carefully tracking the media, experts’ views, activist opinion, and legislative developments to identify issues of concern to the pub-lic. Normally, this requires attention to all eight of the environments described in Figure 2.2. Organizations often use techniques of data searching, media analysis, and public surveys to track ideas, themes, and issues that may be relevant to their interests all over the world. They also rely on ongoing conversations with key stakeholders. Sometimes firms are com-pletely unaware of the issue before it emerges and must attempt to respond to mounting public pressure by activists or government regulators.

Consumer-health groups and the U.S. Food and Drug Administration (FDA) called on animal-breeding farms in the United States to reduce the use of antibiotics in

FIGURE 2.3 The Stakeholder Materiality Matrix

Source: Nestlé

Over- andunder-nutritionHuman

rightsWater

stewardship

Food andproductsafety

Climatechange

Food andnutrition security

Women’sempowerment

Water, sanitationand hygiene

Responsible sourcingand traceability

Fair employmentand youthemployability

Employee safety,health, and wellness

Moderate

Low

Sta

keho

lder

Inte

rest

Hig

h

Significant

Environmental sustainability Our people, human rights, and complianceWaterRural developmentNutrition

Impact on Nestlé

Major

Natural resourcestewardship

Rural development andpoverty alleviation

Animalwelfare

Business ethics

Responsiblemarketing

and influence

Resource e�ciency, (food)waste, and circular economy

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their feed for cattle, hogs and chickens. Many poultry producers, for example, used antibiotics in their chickens’ feed since it increased their weight and prevented out-breaks of illnesses. But the consumer groups and the FDA charged that overuse of antibiotics also increased the development of potentially deadly bacteria that antibi-otics could not kill. These antibiotic-resistance bacteria could be transferred to peo-ple who ate the meat (or consumed the milk or eggs) of treated animals. Although the health risks were small, public outcry increased dramatically, and consumers called for action by the animal producers.10

The concern over increased health risk from antibiotics caught poultry producers by surprise, and many firms began an immediate investigation into the issue.

Analyze IssueOnce an issue has been identified, its implications must be analyzed. Organizations must understand how the issue is likely to evolve, and how it is likely to affect them. For each company, the ramifications of the issue will be different.

Understanding how the use of antibiotics could affect the health of humans con-suming chickens was complex. On one hand, the company was concerned about the public’s safety, and did not want customers to become ill if they consumed chickens raised with antibiotics. On the other hand, antibiotics were a mainstay for most poultry producers in the United States. Bigger, healthier chickens trans-lated into greater profits. Poultry producers were unsure of the consequences of removing antibiotics for their companies, both in terms of their chickens’ health but also the firms’ profitability. One outbreak of illness could quickly spread throughout their entire flock of chickens, resulting in devastating costs for the

10 “Tyson Seeks Lead in No-Antibiotics Poultry,” The Wall Street Journal, February 21, 2017, www.wsj.com.

FIGURE 2.4The Issue Management Process IDENTIFY

ISSUEANALYZE

ISSUE

GENERATEOPTIONS

TAKEACTION

EVALUATERESULTS

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firm. Yet, they could not ignore the rising outrage over the use of antibiotics in the raising of chickens.11

Generate OptionsAn issue’s public profile indicates to managers how significant an issue is for the organi-zation, but it does not tell them what to do. The next step in the issue management process involves generating, evaluating, and selecting among possible options. This requires com-plex judgments that incorporate ethical considerations, the organization’s reputation and good name, and other nonquantifiable factors.

Many of the poultry producers started to investigate if there were alternatives avail-able to them to replace the use of antibiotics. Firms explored the use of organic and antibiotics-free production practices that could keep the flocks healthy and robust, while also keeping pace with the changing consumer demands. The use of probiotics—beneficial, plant-based bacteria that can strengthen immune systems—appeared to be a viable alternative.

Selecting an appropriate response often involves a creative process of considering vari-ous alternatives and rigorously evaluating them to see how they work in practice.

Take ActionOnce an option has been chosen, the organization must design and implement a plan of action. Sometimes there may be unintended consequences from the actions undertaken by the company.

Purdue Farms, the third-largest U.S. poultry producer, addressed emerging con-sumer concerns about antibiotics by announcing its “no antibiotics ever” policy. The firm stated it would eliminate, by June 2016, antibiotics in all chicken products sold in supermarkets across the United States. Other poultry producers quickly followed. Tyson Foods, the country’s largest poultry producer, announced in February 2017 that it would eliminate antibiotics used in its chicken products, including breasts, wings, and nuggets. “We believe our responsibility is to grow and grow responsibly,” said Tyson’s CEO Tom Hayes.12

Evaluate ResultsOnce an organization has implemented the issue management program, it must continue to assess the results and make adjustments if necessary. Many managers see issue manage-ment as a continuous process, rather than one that comes to a clear conclusion.

Although specific results from the switch to chickens raised without antibiotics had not yet been fully studied, experts made some predictions. Some argued that the likelihood of serious illness, even death, caused by ingesting antibiotic-resistant bacteria would be reduced. Others argued that more medical research jobs would be created to study probiotics and other alternative treatments to keep poultry and livestock healthy and growing.

11 Ibid., The Wall Street Journal, February 21, 2017, and “Perdue to Eliminate Antibiotics in Some Chicken Products,” The Wall Street Journal, February 26, 2016, www.wsj.com.12 Ibid., The Wall Street Journal, February 21, 2017, and “Adjuncts and Alternatives in the Time of Antibiotic Resistance and in Feed Antibiotic Bans,” Microbial Biotechnology, June 22, 2017, onlinelibrary.wiley.com.

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This example illustrates the complexity of the issue management process. Figure 2.4 is deliberately drawn in the form of a loop. When working well, the issue management process continuously cycles back to the beginning and repeats, pulling in more informa-tion, generating more options, and improving programmatic response. Such was the case with the concern over the use of antibiotics in animals. Poultry producers stated they were committed to addressing the issue and knew that they needed to monitor the progress being made with the development of technologies and new medicines to fully address an emerg-ing public issue.

Contemporary issue management is truly an interactive process, as forward-thinking companies must continually engage in a dialogue with their stakeholders about issues that matter, as Purdue Farms, Tyson Foods, and other firms have learned. New challenges may emerge from anywhere in the world and at any time. Managers must not only implement programs, but continue to reassess their actions to be consistent with both ethical practices and long-term survival.

Organizing for Effective Issue Management

Who manages public issues? What departments and people are involved? There is no sim-ple answer to this question. Figure 1.5, presented in Chapter 1, showed that the modern corporation has many boundary-spanning departments. Which part of the organization is mobilized to address a particular emerging issue often depends on the nature of the issue itself. For example, if the issue has implications for public policy or government regula-tions, the public affairs or government relations department may take a leadership role. (The public affairs department is further discussed in Chapter 8.) If the issue is an environ-mental one, the department of sustainability or environment, health, and safety may take on this role. Some companies combine multiple issue management functions in an office of external relations or corporate affairs. The following example illustrates how one com-pany has organized to manage emerging public issues.

At Publix, the largest employee-owned grocery chain in the United States with revenues of over $34.6 billion in 2017, the coordination of public issues is handled by six different, yet related, teams: corporate communications, customer care, government relations, media and community relations, social media, and special projects. The corporate communications team handles a wide array of internal communications, including an eight-page monthly newsletter, Publix News. When customers contact the company with a potential public issue, the customer care team responds to resolve customer concerns and answer customer questions. If the public issue has a governmental element, then the government relations team is organized to communicate with federal, state, and local officials regarding matters affecting the company’s ability to effectively compete in the marketplace. Each division within the company has a media and community relations team who interacts with the news media and the communities served by the company to address any public issue. A social media team at Publix uses Facebook, Twitter, and other channels to monitor and handle any emerging public issues. And, finally, the special projects team preserves and promotes the company’s history as an important part of the Publix culture. The company relies on its tradition to guide responses to public issues as they arise.13

13 See the Publix Company website at corporate.publix.com.

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Public affairs professionals help companies and nonprofits manage their operations by anticipating governmental concerns and actions, understanding how stakeholders influence a firm’s license to operate, and helping their organization deal with emerging threats and opportunities. The Foundation for Public Affairs (FPA) reported in 2017 that “when politi-cal risk and economic uncertainty are high, . . . the public affairs function becomes even more indispensable.”14 FPA survey data showed that 56 percent of companies had increased their public affairs budgets in the previous three years and only 26 percent had experienced a decrease. And CEOs are increasingly getting involved in public affairs, with 57 percent engaged moderately or extensively and only 9 percent not engaged at all. One example of an exemplary corporate response to an important public issue is described in Exhibit 2.A.

What kinds of managers are best able to anticipate and respond effectively to emerging public issues? What skill sets are required? The European Academy of Business in Society (EABIS) undertook a major study of leaders in companies participating in the United Nations Global Compact. (This initiative is a set of basic principles covering labor, human rights, and environmental standards, to which companies can voluntarily commit.) The researchers were interested in the knowledge and skills required of what they called the “global leader of tomorrow.”

They found that effective global leadership on these public issues required three basic capabilities. The first was an understanding of the changing business context: emerging environmental and social trends affecting the firm. The second was an ability to lead in the face of complexity. Many emerging issues, the researchers found, were surrounded by ambiguity; to deal with them, leaders needed to be flexible, creative, and willing to learn from their mistakes. The final capability was connectedness: the ability to engage with external stakeholders in dialogue and partnership. More than three-fourths of executives polled said that these skills were important.15

14 Quotation from “The State of Corporate Public Affairs,” Foundation for Public Affairs, 2017.15 European Academy of Business in Society, Developing the Global Leader of Tomorrow (United Kingdom: Ashridge, December 2008). Based on a global survey of 194 CEOs and senior executives in September–October 2008.

Coca-Cola Sets Recycling Goals

For many years, Coca-Cola was the target of environmental activists because the firm produced billions of plastic bottles that often ended up in landfills and oceans. In January 2018, the company announced an ambitious sustainability goal: it would collect and recycle the equivalent of all the packaging it put out into the world by 2030. The program was called “A World Without Waste” and included investing in more efficient packaging, local recycling programs, and consumer education. The program was announced shortly after Greenpeace, an environmental advocacy group, identified Coca-Cola, PepsiCo, and Nestlé as some of the world’s worst polluters. Greenpeace was also critical of Coca-Cola’s new sustainability initiative. “The plan failed to include any reduction of the company’s rapidly increasing use of single-use plastic bottles globally, which now stands at well over 110 billion annually,” according to a Greenpeace press release. Coca-Cola CEO James Quincey disagreed. “If we recollect all the bottles, there is no such thing a single use bottle. Every bottle comes back and every bottle has another life.” Rather than tackle the difficult task of collecting every bottle it produced, Coca-Cola aimed to collect an equivalent number of bottles. But, Quincey admitted that the biggest challenge for his company’s plan would be in developing countries that did not have modern systems of waste collection. “That’s clearly going to be a lot of groundwork with a lot of other organizations and the governments to start building that infrastructure.”

Source: “Coca-Cola, Criticized for Plastic Bottles, Sets Recycling Goals,” The Wall Street Journal, January 19, 2018, www.wsj.com.

Exhibit 2.A

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Stakeholder Engagement

One of the key themes of this book is that companies that actively engage with stake-holders do a better job of managing a wide range of issues than companies that do not. The term stakeholder engagement is used to refer to this process of ongoing relationship building between a business and its stakeholders. In the animal-breeding farms example presented earlier in this chapter, the companies’ challenge was to engage with its various stakeholder groups, consumers, the media, government agencies, suppliers and others, in addressing an emerging issue of food product safety. This section will further explore the various forms the business–stakeholder relationship takes, when stakeholder engagement is likely to occur, what drives this engagement, and the expanding role assumed by social media in stakeholder engagement.

Stages in the Business–Stakeholder RelationshipOver time, the nature of business’s relationship with its stakeholders often evolves through a series of stages. Scholars have characterized these stages as inactive, reactive, proactive, and interactive, with each stage representing a deepening of the relationship. Sometimes, companies progress through this sequence from one stage to the next; other companies remain at one stage or another, or move backward in the sequence.16

∙ Inactive companies simply ignore stakeholder concerns. These firms may believe—often incorrectly—that they can make decisions unilaterally, without taking into con-sideration their impact on others. Executives at Home Depot failed to listen to their employees’ concerns about potential breaches of the company’s data security systems and later experienced the theft of detailed consumer information from 56 million credit and debit cards. Their inactive response was costly: according to some estimates, the information from the stolen cards could be used to make $3 billion in illegal purchases.

∙ Companies that adopt a reactive posture generally act only when forced to do so, and then in a defensive manner. For example, in the film A Civil Action, based on a true story, W. R. Grace (a company that was later bought by Beatrice Foods) allegedly dumped toxic chemicals that leaked into underground wells used for drinking water, causing illness and death in the community of Woburn, Massachusetts. The company paid no attention to the problem until forced to defend itself in a lawsuit brought by a crusading lawyer on behalf of members of the community.

∙ Proactive companies try to anticipate stakeholder concerns. These firms use environ-mental scanning practices to identify emerging public issues. They often have special-ized departments, such as those at Publix, described earlier in the chapter. These firms are much less likely to be blindsided by crises and negative surprises. Stakeholders and their concerns are still, however, considered a problem to be managed, rather than a source of competitive advantage.

∙ Finally, an interactive stance means that companies actively engage with stakeholders in an ongoing relationship of mutual respect, openness, and trust. For example, in an effort to address continuing high unemployment rates, Starbucks teamed with Opportu-nity Finance Network, a group of community development financial institutions, to launch “Create Jobs for USA.” Donations from Starbucks customers, employees, and others were pooled into a nationwide fund to promote community business lending. The

16 This typology was first introduced in Lee Preston and James E. Post, Private Management and Public Policy (Englewood Cliffs, NJ: Prentice Hall, 1975). For a more recent discussion, see Sandra Waddock and Andreas Rasche, Building the Responsible Enterprise: Where Vision and Values Meet Value (Palo Alto: Stanford University Press, 2012).

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focus of this program later expanded to include veterans with a goal of employing 10,000 veterans and active duty spouses by 2018.17

Firms with this approach recognize that positive stakeholder relationships are a source of value and competitive advantage for the company. They know that these relationships must be nurtured over time.

Drivers of Stakeholder EngagementWhen are companies most likely to engage with stakeholders, that is, to be at the interac-tive stage? What drives companies to go beyond an inactive or reactive stage to a proactive or interactive stage of stakeholder engagement?

Stakeholder engagement is, at its core, a relationship. The participation of a business orga-nization and at least one stakeholder organization is necessary, by definition, to constitute engagement. In one scholar’s view, engagement is most likely when the company and its stake-holders both have an urgent and important goal, the motivation to participate, and the organi-zational capacity to engage with one another. These three elements are presented in Figure 2.5.

Goals

For stakeholder engagement to occur, both the business and the stakeholder must have a problem that they want solved. The problem must be both important and urgent (the concept of stakeholder materiality was discussed earlier in this chapter). Business is often spurred to act when it recognizes a gap between its actions and public expectations, as discussed earlier. The company may perceive this gap as a reputational crisis or a threat to its license to operate in society. For their part, stakeholders are typically concerned about an issue important to them—whether child labor, animal cruelty, environmental harm, or something else—that they want to see addressed.

Motivation

Both sides must also be motivated to work with one another to solve the problem. For example, the company may realize that the stakeholder group has technical expertise to help it address an issue. Or, it needs the stakeholder’s approval, because the stakeholder is in a position to influence policymakers, damage a company’s reputation, or bring a law-suit. Stakeholders may realize that the best way actually to bring about change is to help a

17 These programs are profiled in Starbucks’ Global Responsibility Report at globalassets.starbucks.com/assets/.

FIGURE 2.5Drivers of Stakeholder Engagement

Source: Adapted from Anne T. Lawrence, “The Drivers of Stakeholder Engagement: Reflections on the Case of Royal Dutch/Shell,” Journal of Corporate Citizenship, Summer 2002, pp. 71–85.

Company Stakeholders(s)

Goal To improve corporate reputation; to earn a license to operate; to win approval of society

To change corporate behavior on an issue of concern

Motivation Needs stakeholder involvement because of their expertise or control of critical resources

Governmental campaigns, protest perceived as inadequate to change corporate behavior

Organizational capacity Top leaders committed to engagement; well-funded department of external (stakeholder) affairs

Experienced staff; core group of activists committed to dialogue with business

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company alter its behavior. In other words, both sides depend on each other to accomplish their goals; they cannot accomplish their objectives on their own. (Theorists sometimes refer to this as interdependence.)

Organizational Capacity

Each side must have the organizational capacity to engage the other in a productive dia-logue. For the business, this may include support from top leadership and an adequately funded external affairs or comparable department with a reporting relationship to top exec-utives. It may also include an issue management process that provides an opportunity for leaders to identify and respond quickly to shifts in the external environment. For the stake-holder, this means a leadership or a significant faction that supports dialogue and individu-als or organizational units with expertise in working with the business community.

In short, engagement is most likely to occur where both companies and stakeholders perceive an important and urgent problem, see each other as essential to a solution, and have the organizational capacity to interact with one another.

The Role of Social Media in Stakeholder EngagementSocial media plays an increasingly important role in businesses’ effort to address public issues and engage stakeholders. Beyond the common use of social media as an advertising tool, many companies now use social networks to identify and solve problems faster, share information better among their employees and partners, and bring customers’ ideas for new product designs to market earlier.

Experts argue that corporate social networking has its advantages and its disasdvan-tages. Some studies show that many employees enjoy creating a corporate social networking page that is separate from their public social networking profile. While adding work colleagues and supervisors to a public social networking group is pos-sible, many people prefer to keep their social lives separate from their work lives. In addition, creating internal blog posts, commenting on projects, and keeping up with work-related news is advantageous to some workers, supporting the building of social network pages at work.

Yet, experts also point out that a corporate social network can cost thousands of dollars to build. In order to erect an internal networking platform to house the employees’ social network pages, numerous specialists must be hired. Once a platform is con-structed, employees must spend the time to create profiles, maintain updates, and net-work within a corporate social networking group, generally all occurring on company time. Many employees do not want to spend the time or effort building a corporate net-working page. Since employees cannot access an internal social networking group after leaving a job, many employees feel as though spending time working on a networking page is futile. In addition, any information posted to a corporate social networking page remains the property of a company. Thus, most employees looking to gain recognition with new customers and new employers will not spend time building an internal social networking page.18

Despite some of the reservations voiced by employees, businesses and their public affairs managers have increasingly turned to social media platforms to engage with mul-tiple stakeholders, resulting in communication that has become faster and more effective.

18 Adapted from “What Is Social Networking?” Wisegeek, n.d., www.wisegeek.com.

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Stakeholder Dialogue

The process of engaging with stakeholders can take many forms, but it often eventually involves dialogue with stakeholders. One management theorist has defined dialogue as “the art of thinking together.”19 In stakeholder dialogue, a business and its stakeholders come together for face-to-face conversations about issues of common concern. There, they attempt to describe their core interests and concerns, define a common definition of the problem, invent innovative solutions for mutual gain, and establish procedures for imple-menting solutions. To be successful, the process requires that participants express their own views fully, listen carefully and respectfully to others, and open themselves to creative thinking and new ways of looking at and solving a problem. The promise of dialogue is that, together, they can draw on the understandings and concerns of all parties to develop solutions that none of them, acting alone, could have envisioned or implemented. A power-ful, global example of stakeholder dialogue leading to action is described in Exhibit 2.B.20

Stakeholder NetworksDialogue between a single firm and its stakeholders is sometimes insufficient to address an issue effectively. Corporations sometimes encounter public issues that they can address effectively only by working collaboratively with other businesses and concerned persons and organizations in stakeholder networks. One such issue that confronted Nike, Inc., was

19 William Isaacs, Dialogue and the Art of Thinking Together (New York: Doubleday, 1999).20 This section draws on the discussion in Anne T. Lawrence and Ann Svendsen, The Clayoquot Controversy: A Stakeholder Dialogue Simulation (Vancouver: Centre for Innovation in Management, 2002). The argument for the benefits of stakeholder engagement is fully developed in Ann Svendsen, The Stakeholder Strategy: Profiting from Collaborative Business Relation-ships (San Francisco: Berrett-Koehler, 1998).

Merck and Access Accelerated

Around the world, approximately 400 million people lack access to effective and affordable health care. According to the World Health Organization, low- and middle-income countries bear about 90 percent of the world’s disease burden. Merck, a German-based multinational chemical, pharmaceutical, and life sci-ences company, began a global partnership program, Access Accelerated, to tackle this complex challenge by researching innovative solutions, developing new approaches, and improving existing programs to help people at the point of care. At the 2017 World Economic Forum, Merck convened with 21 other leading pharmaceutical companies and dozens of multilateral organizations, government agencies, and NGOs, as well as academic institutions, health industry associations, and experts from the private sector. They began a dialogue to explore accessing information on the world’s most pressing health issues and to design how to best launch global initiatives to focus on improving both treatment and prevention of noncommunicable diseases in low- and middle-income countries. By 2018, Merck and its business partners had joined the Kenya Ministry of Health, the World Bank Group, and AMPATH, a Kenyan hospital, to launch the first noncommunicable disease (NCD) county pilots. The pilots integrated NCD services into primary health care in two Kenyan counties: Busia and Trans Nzoia. In another effort, Celgene Corporation, a business partner in Access Accelerated, announced the launch of Celgene Cancer Care Links, a new grant program designed to support and enhance patient cancer care in resource-constrained countries.

Source: See Merck’s Corporate Responsibility Report at reports.emdgroup.com/2016/cr-report/products/access-to-health.html and the Access Accelerated website, accessaccelerated.org

Exhibit 2.B

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a growing demand by environmentally aware consumers for apparel and shoes made from organic cotton.

Cotton, traditionally cultivated with large quantities of synthetic fertilizers, pesti-cides, and herbicides, is one of the world’s most environmentally destructive crops. In the late 1990s, in response both to consumer pressure and to its own internal commitments, Nike began for the first time to incorporate organic cotton into its sports apparel products. Its intention was to ramp up slowly, achieving 5 percent organic content by 2010. However, the company soon encountered barriers to achieving even these limited objectives. Farmers were reluctant to transition to organic methods without a sure market, processors found it inefficient to shut down production lines to clean them for organic runs, and banks were unwilling to loan money for unproven technologies. The solution, it turned out, involved extensive collaboration with groups throughout the supply chain—farmers, cooperatives, merchants, processors, and financial institutions—as well as other companies that were buyers of cotton, to facilitate the emergence of a global market for organic cot-ton. By 2015, 88 to 90 percent of Nike’s cotton-containing apparel used at least 5 percent organic cotton. Nike reported in its 2014–2015 sustainable business report that they are committed to their goal of “100% of our cotton more sustainably (certified organic, licensed to the Better Cotton Standard System for recycled cotton) across NIKE, Inc. by the end of calendar year 2020.”21

In this instance, Nike realized that in order to reach its objective, it would be necessary to become involved in building a multi-party, international network of organizations with a shared interest in the issue of organic cotton.

The Benefits of EngagementEngaging interactively with stakeholders—whether through dialogue, network building, or some other process—carries a number of potential benefits. Managers increasingly rec-ognize the critical nature of this corporate strategy as the number of stakeholders and the complexity of the issues involving stakeholders are increasing significantly, as one busi-ness consulting organization reports.22

In an era of hyper-transparency and intensifying political and social disruptions, companies are re-evaluating their purpose in society and the benefits of engaging with multiple stakeholders. There are growing calls from government and civil society for corporations to become partners in supporting a more inclusive econ-omy and sustainable environment and these expectations will only increase. More than ever before, companies face competitive pressure to integrate new ideas and voices into their work. These changes are adding significant value to the business and the communities in which they operate.23

Companies deeply engaging in stakeholder partnerships bring a number of dis-tinct strengths. Stakeholder groups are often aware of shifts in popular sentiment before

21 Nike’s description of its sustainability targets and measures are provided in Nike’s Sustainable Business Report, 2014–2015 found at about.nike.com.22 For an overview of stakeholder engagement, see Michael Yaziji and Jonathan Doh, NGOs and Corporations: Conflict and Collaboration: (Cambridge, UK: Cambridge University Press, 2009), ch. 7, “Corporate-NGO Engagements: From Conflict to Collaboration,” pp. 123–45.23 “The Future of Stakeholder Engagement,” BSR, October 2016, p. 3.

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companies are, and are thus able to alert companies to emerging issues. For example, as described earlier in this chapter, Purdue Farms’ and Tyson Foods’ engagements with consumer-activist groups and government agencies helped raise its awareness of concerns about their antibiotic use in animals. Stakeholders often operate in networks of organi-zations very different from the company’s; interacting with them gives a firm access to information in these networks. As introduced at the beginning of this chapter, businesses took action against various social issues, joining social activist and community groups in protest of the government’s actions. Community groups raised important issues about gun violence and gun control after a school shooting in Florida, causing businesses to re-think their positions on these social issues, as discussed at the end of this chapter.

Firms are learning that their engagement with stakeholders is of critical importance to the organization and need to address multiple levels of engagement. This engagement should include both internal, as well as external, stakeholders and emphasize issues that directly affect corporate strategy. As the BSR report on stakeholder engagement points out, there are five drivers fueling a change in stakeholder engagement: communication, indi-vidual empowerment, automation of work, climate change and other sustainability issues, and supply chain impact.24

Companies are learning that it is important to take a strategic approach to the manage-ment of public issues, both domestically and globally. This requires thinking ahead, under-standing what is important to stakeholders, scanning the environment, and formulating action plans to anticipate changes in the external environment. Effective issue management requires involvement both by professional staff and leaders at top levels of the organiza-tion. It entails communicating across organizational boundaries, engaging with the public, and working creatively with stakeholders to solve complex problems.

24 Each of these drivers of stakeholder engagement are discussed in detail in “The Future of Stakeholder Engagement, Ibid.

∙ A public issue is an issue that is of mutual concern to an organization and one or more of the organization’s stakeholders. Stakeholders expect a level of performance by busi-nesses, and if it is not met a gap between performance and expectation emerges. The larger the gap, the greater risk of stakeholder backlash or missed business opportunity.

∙ The eight strategic radar screens (the customer, competitor, economic, technological, social, political, legal, and geophysical environments) enable public affairs manag-ers to assess and acquire information regarding their business environments. Manag-ers must also assess the importance or materiality of public issues to the firm and its stakeholders.

∙ The issue management process includes identification and analysis of issues, the gener-ation of options, action, and evaluation of the results.

∙ In the modern corporation, the issue management process takes place in many boundary- spanning departments. Some firms have a department of external affairs or corporate relations to coordinate these activities and top management support is essential for effective issue management.

∙ Stakeholder engagement involves building relationships between a business firm and its stakeholders around issues of common concern and is enhanced by understanding the goals, motivations, and organizational capacities relevant to the engagement. Social media is playing a more expansive role in stakeholder engagement.

∙ Stakeholder dialogue is central to good stakeholder engagement, supported by network building or partnerships.

Summary

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Discussion Case: Businesses Respond to the Movement for School Safety

The quiet community of Parkland, Florida, was rocked in 2018 when a 19-year-old former student entered Marjory Stoneman Douglas High School with a duffel bag containing an AR-15-style rifle, a vest with additional magazines for the weapon, and a semi-automatic version of the M16 rifle used by the U.S. military. Within minutes, he had shot and killed 17 people, and the nation mourned another tragic school shooting.

In response, Parkland students launched the #NeverAgain movement and protested con-tinuing gun violence, especially in schools; the lack of gun control measures; and a mental health system that had allowed someone with a troubled history to purchase an assault rifle. A month later hundreds of thousands of people—children, parents, politicians, and celebrities—gathered for “The March For Our Lives” in Washington, DC, jamming onto Pennsylvania Avenue from the White House to the U.S. Capitol in what may have been the biggest rally for tighter gun control in American history. Other similar marches and pro-tests were held that day in nearly every major U.S. city. Many called on Congress to take action and pass strict gun control legislation, as had also occurred after prior mass shooting incidents in Las Vegas, Newtown, Orlando, and other cities and towns.

Some protesters simply called for a ban on assault rifles and more thorough back-ground checks for gun purchasers. Others specifically targeted the National Rifle Asso-ciation (NRA), an advocacy organization that had vigorously opposed any restrictions on gun ownership. In response to the Parkland students, NRA’s CEO Wayne LaPierre told an audience at the Conservative Political Action Conference that “as usual the opportunists wasted not one second to exploit tragedy for gain,” adding that gun control

Internet Resources

www.wn.com/publicissues World News, Public Issueswww.nifi.org National Issues Forumwww.un.org/en/globalissues United Nations, Global Issueswww.issuemanagement.org Issue Management Councilwww.scip.org Strategic and Competitive Intelligence Professionalswww.wfs.org World Future Societywww.globalissues.org Global Issuesmillennium-project.org The Millennium Projectwww.cfr.org Council on Foreign Relationspac.org/fpa Foundation for Public Affairs, Public Affairs Council

Key Terms stakeholder engagement, 38stakeholder dialogue, 41stakeholder materiality, 32stakeholder network, 41

competitive intelligence, 31environmental analysis, 29environmental intelligence, 29issue management, 33

issue management process, 33performance–expectations gap, 26public issue, 26

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advocates and the media “hate the NRA, they hate the Second Amendment [to the U.S. Constitution, which states the right of the people to keep and bear arms], [and] they hate individual freedom.”

In the wake of the Parkland shootings and subsequent protests, several companies broke their relationship with the NRA and its members. MetLife, a large insurance company, announced it would stop providing discounts for auto and home insurance for NRA mem-bers. “We value all our customers but have decided to end our discount program with the NRA,” the company announced in a press statement. The cybersecurity firm Syman-tec stopped its discount program for NRA members who purchased its LifeLock identity theft protection service and Norton antivirus software. SimpliSafe, a home security ser-vices company, ended its NRA promotions. Numerous rental car companies, including Hertz, Enterprise (which also operates Alamo and National), and Avis Budget, ended their NRA-membership discount programs.

The First National Bank of Omaha was among the first banks to end a Visa credit card with NRA branding that offered cardholders 5 percent cashback on gas and sporting goods purchases. Bank of America said they would no longer lend money to manufactur-ers of military-inspired firearms that civilians could use, such as AR-15-style rifles. Delta and United Airlines, two of America’s largest passenger airline carriers, cut ties with the NRA after a call to boycott the NRA became a top trend on Twitter. Both airline compa-nies ended discount programs for NRA members through their group travel programs, including United’s program to offer discounts to NRA members traveling to the NRA’s annual meeting. “Bank and other companies are sensitive to being on the wrong side of a social media campaign, which can spread pretty quickly these days,” said University of Michigan marketing professor Erik Gordon. “They don’t want to risk having people march or boycott.”

The NRA was quick to fire back. In an official statement, the organization said, “Some corporations have decided to punish NRA membership in a shameful display of political and civic cowardice. In time, these brands will be replaced.”

Some businesses experienced a backlash to their actions. Senator Michael Crapo, the head of the Senate banking committee, sent blistering letters to top executives at some major banks accusing them of using their market power to manage social policy. He warned them against developing ways to monitor gun transactions through their payments systems. The Georgia state legislature removed a provision in a tax bill which would have given Delta Airlines a $40 million airline fuel tax exemption. Analysts calculated that only 13 NRA members actually had used Delta’s group travel discount, resulting in a cost to Delta of more than $3 million per NRA passenger served. Delta’s CEO responded, “The decision [to cancel the NRA discount] was not made for economic gain and our values are not for sale.” Others argued that the so-called liberal reaction by businesses to join the gun protesters galvanized conservative groups, deepening their support of the NRA and their resolve to protect their right to bear arms.

Sources: “NRA-Affiliated Businesses Shed Ties after Parkland, Florida, School Shooting,” USA Today, February 23, 2018, www.usatoday.com; “Firms Reassess Involvement in Gun Industry in Wake of Florida Shooting,” The Wall Street Journal, February 25, 2018, www.wsj.com; “Banks Tried to Curb Gun Sales; Now Republicans Are Trying to Stop Them,” The New York Times, May 25, 2018, www.nytimes.com; and, “Only 13 NRA Members Used Delta’s Discount, It Cost the Airline a $40 Million Tax Break,” Washington Post, March 3, 2018, www.washingtonpost.com.

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Discussion Questions

1. What was the public issue facing the companies in this case?2. Describe the “performance–expectations gap” found in the case. What were the stake-

holders’ (community and school students) expectations, and how did they differ from businesses’ performance?

3. If you applied the strategic radar screens model to this case, which of the eight environ-ments would be most significant, and why?

4. Apply the issue management life cycle process model to this case. Which stages of the process can you identify?

5. In your opinion, did businesses respond appropriately to this issue? Why or why not?6. If you had been a manager of one of the airlines or banks discussed in the case, what

would you have decided to do (or not do) in the face of emerging public concern about gun violence in schools?

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