How Culture Influences Public Responses to the Toyota Crisis

Abstract

Organizations face public relations crises that affect consumer perception of a brand and its products’ sales. During Toyota’s recall crisis in 2009, the company experienced negative reviews from the media and the public, leading to revenue loss in the post-recall period. Toyota took measures to recover from the catastrophe by applying different strategies to meet the needs of their regional consumers (Zhao & Flynn, 2013). The firm’s strategies and the brand’s performance before the crisis affected how the brand’s name recovered among consumers and employees from different cultures. The similarities and differences in the opinion of individuals from various cultures could affect the firm’s financial performance at the regional level (Heller & Darling, 2012). The present paper will investigate how people from different cultures view the Toyota crisis and the company’s responsibility in the crisis. The findings of this research will help global organizations understand how to recover in different markets and identify the strategies applicable to maintain consumer support during a crisis (Fan, Geddes, & Flory, 2013). The researcher will survey questionnaires involving individuals from China and the United States to gauge their knowledge and opinions about the Toyota crisis. Additionally, the study will include interviews with consumers or employees at Toyota from both countries to identify their views on the issue. Through a comparative analysis of the data collected from the surveys by the potential consumers or employees, the findings of this research will be valuable in determining how the recall crisis influenced the company’s brand reputation among consumers from different cultures.

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Overview

Multinationals operate and serve consumers across the world.  They have to handle variations in cultures in their communication and marketing efforts. Cultural diversity affects the way people receive information from companies. Consequently, organizations have to design their communication to meet the public’s needs and expectations (Stieglitz & Krüger, 2011). In most instances, executives communicate to the public differently depending on culture and context. Consumer perceptions and expectations of a brand will influence the most appropriate corporate behavior to meet customers’ needs.

Chinese and American cultures vary in aspects of communication, particularly in the context of how companies operate. Businesses are expected to conform to the norms of society and meet people’s needs (Piotrowski & Guyette Jr., 2010).  But what happens in a crisis that transcends many countries and cultures? How do organizations tailor their crisis communication to global audiences with divergent cultural frameworks to interpret the crisis?

Purpose

The research aims to explore how the Toyota crisis was influenced by the legal and cultural contexts in the two largest markets in the world—China and the United States. The research is informed by the need to understand culture’s influence on public responses to crises. Potentially, due to the differences in cultural responses to crisis, companies might have to adopt different communication channels and models to appeal to customers in different regions. The study will be based on a review of the literature on various theories explaining the role of communication in companies operating across cultures. Toyota’s success in communicating with stakeholders in different cultures affected its recovery from the crisis.

Literature Review

The review focuses on the theories relating to culture and communication to explain their influence on the way Toyota overcame the crisis to regain its trust among stakeholders, including customers. The analysis will discuss various theories that can explain the initiative made by the company to solve the issue and the potential gaps in the approaches and strategies the management undertook. Hofstede’s Cultural Dimension Theory relates to the influence of culture on various aspects of a company, including response to the crisis and the channels used to communicate in such circumstances. The theory explains how the organization would communicate differently, targeting people from diverse cultures. Two approaches, uncertainty reduction and uncertainty avoidance explain how the company could communicate to the audience in different cultures to address the crisis. The literature review discusses uncertainty avoidance as one of the dimensions in Hofstede’s Cultural Dimension Theory. Besides the theories that explain the role of culture in crisis and communication, the literature review describes how culture affects communication strategy and possible outcomes in different markets.  

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Hofstede’s Cultural Dimension Theory

Various theoretical frameworks explain the role of culture in communicating during a crisis since the differences inform the reception of a message and the way people respond. One such model is Hofstede’s cultural dimension theory. It explains why different cultures react differently to the crisis and the communication strategy used by the company to address it. A company should understand the various aspects of culture before deciding how to communicate with target customers (Hofstede, 2001). The theory has five dimensions, as discussed below.

The first aspect is the power distance index (PDI) measures the distance between societies with different cultures. It considers the proximity of the members of a culture from different power statuses and their willingness to recognize the distance (Hofstede, 2001). It also deals with the fact that all people in society are not equal and the prevailing attitude towards differences. The disparity influences the way individuals accept and react to challenges and opportunities.

Cultures differ in terms of the power distance index. For example, China’s index is 80, while that of the United States stands at 40 (Hofstede, 2001). In China, inequality is mostly acceptable, with highly polarized subordinate-superior relationships. The dimension determines the acceptability of abuse by superiors in every culture, and in China, the defense against such acts is minimal. Unlike the Chinese, Americans are close to the centers of power and tend to influence how the country runs. The culture is mostly against inequality in society and encourages equitable aspirations among people. The dimension plays a vital role in understanding and appreciating differences.

The two countries would differ in how they responded to the Toyota crisis and their communication efforts to address it. The Chinese would be more accepting of visible efforts to address the issue, while Americans would be more skeptical because of the power distance index (Xiumei & Jinying, 2011). The U.S., unlike China, allows room for questioning authorities because of the perceived right to social protection. Therefore, companies should consider such aspects when designing crisis communication strategies. 

Countries differ in terms of individualism or collectivism levels. The individualism versus collectivism (IDV) index measures the extent to which a nation is an individualist or collectivist. States where people focus on individual interests, are considered individualistic, while countries concentrating on the general social good are collectivist (Hofstede, 2001). These characteristics play a vital role in how a company approaches different people.

Countries differ in relation to the level of interdependence they maintain among citizens. This indicator considers the “I” or “We” of identity within a society. China scores 20, while the United States has 91 in individualism (Hofstede, 2001). Individualist societies encourage their members to mind their interests and those of their immediate family. In collectivist cultures, in contrast, people belong to communities and care about each other’s interests. The United States is an individualist, while China is a collectivist society.

Cultures perceive communication differently depending on individualism or collectivism (IDV) measures. Therefore, marketers should understand the communication strategy that appeals to people in a specific society, depending on whether they have collectivist or individualistic ideals (De Mooij, 2015). For example, in China, communicators must appeal to the collective needs of society, while in the United States, they must communicate and convince individuals. Therefore, the dimension reveals the importance of developing customized communication strategies to address a crisis depending on the needs of a particular market.

Some cultures tend to be more masculine than others. The masculinity dimension (MAS) refers to the degree of power as well as assertiveness within a society (Hofstede, 2001). Furthermore, the dimension is associated with role distribution within society. The aspect determines how information is acted upon by different community sectors, depending on culture, after receiving it. Highly masculine societies are characterized by increased competition and focus on achievement and success. More feminine countries tend to care for others and their quality of life.

The United States scores almost the same as China in terms of the masculinity dimension (MAS). At 62 (U.S.) against 66 (China), the two countries are most likely to be driven by competition and aspirations (Costa, Crawford, & Jakob, 2013). The masculinity dimension is higher in paternalistic societies. These roles are demarcated and determine society’s reactions to issues affecting it (Hofstede, 2001). Men are more likely to be vocal compared to women.

Companies should understand the masculinity dimension (MAS) to develop effective communication strategies targeting different markets or societies. From the perspective of the United States and China, the two would be motivated to achieve positive results even when faced with a crisis (Bakir, Blodgett, Vitell, & Rose, 2015). Therefore, marketers should strive to address crises effectively to outdo the competition and appeal to consumers in highly competitive masculine markets. After all, countries are driven by the need for success in all their operations.

While some societies make long-term decisions, others tend to be short-term oriented. Long-term or short-term orientation (LTO) is the frugality, perseverance, and the necessity of ordered relationships in a culture (Hofstede, 2001). Countries that rate high in long-term orientation tend to maintain some connections with the past while addressing present and future challenges. At 87 against the United States 26, China is more long-term oriented and prefers to resolve issues to ensure future success. The Chinese also create measures to counter emerging problems that might affect them in the short and long term. Conversely, the United States maintains time-honored traditions and norms when addressing crises (Atchley, Shi, & Yamamoto, 2014). Therefore, in such situations, communicators should consider the differences to create effective strategies that appeal to a particular culture.

Marketers should understand the dimension when communicating, especially during a crisis. For example, China is a highly pragmatic culture, believing in the value of the truth depending on the context, situation, and time (Atchley, Shi, & Yamamoto, 2014). Therefore, companies should be honest when communicating during crises. They should strive to adapt their communication strategies to the needs of the particular market.

The fifth dimension considers the reality that the future can never be certain. The uncertainty avoidance index score (UAI) shows the level of tolerance for uncertainty in a culture. Some cultures are more capable of accepting uncertain situations than others (Hofstede, 2001). The more tolerant cultures can adapt to changes better than less tolerant cultures.

Countries score differently in their capability to deal with the uncertain future. Uncertainty causes anxiety, but societies have developed different ways of dealing with it. The United States is more likely to accept uncertainty since it scores higher (46) compared to China (30) in this dimension (Hofstede, 2001). Therefore, China is more likely to create beliefs and institutions to avoid ambiguity (Rieger, Wang, & Hens, 2014). The measures play a role in dealing with anxiety and unknown outcomes of a crisis.

The theory explains why people are likely to respond to issues such as the Toyota crisis. Companies should understand the nature of society and its ability to deal with challenges to create effective communication strategies addressing anxiety. For example, China is more likely to prefer the truth than the United States, especially when faced with a crisis, because loyalty is rated highly in the country (Karahanna, Williams, Polites, Liu, & Seligman, 2013).  The understanding of the differences between the markets should inform crisis communication strategies.

Uncertainty Avoidance Theory

Uncertainty Avoidance Theory emerges as a critical dimension measured by Hofstede (2001). The theory relates to the level of tolerance of uncertainty within a culture, including measures to avoid the ambiguity that causes anxiety. Like uncertainty reduction theory, it reveals people’s responses to such situations. However, while uncertainty avoidance theory considers actions taken to avoid uncertainty, uncertainty reduction explains measures such as information seeking that enable people to deal with such issues. Uncertainty avoidance also refers to the way a social group reacts to uncertainty or ambiguity. According to Hofstede’s study, the U.S. scores 46 in the dimension, which is low uncertainty avoidance. The score means that the U.S. highly accepts new ideas and innovations (Hofstede, 2001). Therefore, cultures can either be uncertain avoiding by putting measures, including rules and regulations, to prevent such situations. Some will seek the absolute truth in all situations.

The case of Toyota presents a typical example of an uncertain situation. Thus, the reaction of the people depends on whether the society is tolerant of uncertainty. The company would be better at dealing with the crisis when operating in cultures that are more comfortable with uncertain or ambiguous situations. Communication is the most effective method to help consumers to deal with uncertainty (McCormack & Ortiz, 2017). However, acceptance of the message depends on the level of tolerance of ambiguity within the culture. While some cultures implement means to reduce uncertainty, others seek ways such as adequate information to reduce the impact of uncertain situations.

Uncertainty Reduction Theory

Rather than seeking approaches to avoid uncertainty, some people and cultures assume means to reduce its impact. Uncertainty reduction theory explains the role of information in achieving the reduction objective. Charles Berger and Richard Calabrese developed the model in 1975. They indicate that people seek information when communicating to understand the second party and reduce uncertainty (Berger & Calabrese, 1975). During communication, individuals attempt to learn about each other and use this knowledge to reach a conclusion. One of the essential aspects of the theory, particularly in a business environment, is that learning about other people’s behavior shows how they are likely to act.

According to the theory, reducing uncertainty makes it easier to understand how individuals react to different situations and make the best choices. For instance, when a company invests in learning about the nature of its consumers, it can better respond to news about the firm (Bowen & Zheng, 2015). Reducing uncertainty is critical in improving different entities’ capacity to make appropriate business decisions. Clear communication is one of the ways of preventing uncertainty in business. Another related theory that applies to the uncertainty caused by the crisis is uncertainty avoidance.

Cultural Effects of Communication Strategies and their Impact

Culture is important in how companies define communication strategies to appeal to their audience. The aspect is particularly significant in a crisis because the effectiveness of information sharing determines the success of addressing the situation and the reaction of stakeholders (Ulmer, Sellnow, & Seeger, 2017). The communication strategy designed during such situations is aimed at controlling the environment depending on the cultural aspects of the target market (Olsson, 2014). Therefore, Toyota needed to understand the cultural differences and how different people receive and process information to successfully share information about the recall to mitigate the effects of the situation. Consumers’ reaction to the recall was necessary for the company’s future operations in two leading global markets, the United States and China.

Research Questions

               RQ1.  How did the differences in cultural dimensions (Hofstede) affect the Toyota crisis in two of the largest markets in the world—China and the United States?

               RQ2. How did culture affect the crisis communication strategy of Toyota to restore its image after the recall crisis with the Chinese and American public?

RQ3.  How did culture affect the consumer response to the recall and market performance henceforth?

 

References

Atchley, P., Shi, J., & Yamamoto, T. (2014). Cultural foundations of safety culture: A comparison of traffic safety culture in China, Japan, and the United States. Transportation Research Part F: Traffic Psychology and Behaviour26, 317-325.

Bakir, A., Blodgett, J. G., Vitell, S. J., & Rose, G. M. (2015). A preliminary investigation of the reliability and validity of Hofstede’s cross-cultural dimensions. In H. E. Spotts & H. L. Meadow (Eds.), Proceedings of the 2000 Academy of Marketing Science (AMS) Annual Conference (pp. 226-232). Cham: Springer.

Berger, C. R. & Calabrese, R. J. (1975). Some exploration in initial interaction and beyond: Toward a developmental theory of communication. Human Communication Research, 1(2), 99-112.

Bowen, S. A., & Zheng, Y. (2015). Auto recall crisis, framing, and ethical response: Toyota’s missteps. Public Relations Review41(1), 40-49.

Costa, B. A., Crawford, A., & Jakob, K. (2013). Does culture influence IPO underpricing? Journal of Multinational Financial Management23(1-2), 113-123.

De Mooij, M. (2015). Cross-cultural research in international marketing: Clearing up some of the confusion. International Marketing Review32(6), 646-662.

Fan, D., Geddes, D., & Flory, F. (2013). The Toyota recall crisis: Media impact on Toyota’s corporate brand reputation. Corporate Reputation Review16(2), 99-117.

Heller, V. L., & Darling, J. R. (2012). Anatomy of crisis management: Lessons from the infamous Toyota Case. European Business Review24(2), 151-168.

Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Thousand Oaks, CA: Sage Publication.

Karahanna, E., Williams, C. K., Polites, G. L., Liu, B., & Seligman, L. (2013). Uncertainty avoidance and consumer perceptions of global e-commerce sites: A multi-level model. Drake Management Review, 3(1), 12-47

McCormack, S. & Ortiz, J. (2017). Choices and connections: An introduction to Communication. 2nd ed. Bedford: St.Martins.

Olsson, E. K. (2014). Crisis communication in public organisations: Dimensions of crisis communication revisited. Journal of Contingencies and Crisis Management22(2), 113-125.

Piotrowski, C., & Guyette Jr, R. W. (2010). Toyota recall crisis: Public attitudes on leadership and ethics. Organization Development Journal28, (2), 89-97.

Rieger, M. O., Wang, M., & Hens, T. (2014). Risk preferences around the world. Management Science61(3), 637-648.

Stieglitz, S., & Krüger, N. (2011, November). Analysis of sentiments in corporate Twitter communication–A case study on an issue of Toyota. In Proceedings of the 22nd Australasian Conference on Information Systems (ACIS).

Ulmer, R. R., Sellnow, T. L., & Seeger, M. W. (2017). Effective crisis communication: Moving from crisis to opportunity (4th ed.). Thousand Oaks, CA: Sage Publications.

Xiumei, S. H. I., & Jinying, W. A. N. G. (2011). Cultural distance between China and US across GLOBE model and Hofstede model. International Business and Management2(1), 11-17.

Zhao, X., Li, Y., & Flynn, B. B. (2013). The financial impact of product recall announcements in China. International Journal of Production Economics142(1), 115-123.

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