Toyota’s Recall Crisis: In-Group & Out-Group Communication

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Toyota’s Recall Crisis: In-Group & Out-Group Communication
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Toyota’s Recall Crisis: In-Group & Out-Group Communication I. Introduction & Background
Toyota has iconic status in auto industry. Informed by longstanding Japanese management system, coupled by consistently confirmed vehicle quality, Toyota brand has secured an enduring, global reputation. The loss of corporate reputation could, however, be much faster and damaging. Over 2009-2010, Toyota experienced one deepest PR and communication crisis in company’s history. On August 28, 2009, a fatal crash of 2009 Lexus ES350, shown to result from replacing floor mat and hence resulting in unexpected out-of-control acceleration, initiated a series of unfortunate, if not disastrous, events for Toyota (Evans & MacKenzie, 2010). In essence, a series of lawsuits, brought forward by similar incidents or by a second defect in gas pedal, resulted in Toyota’s recalling of millions of vehicles during late 2009 and early 2010, undergoing one of company’s worst communication crisis, unusual regulatory pressure from National Highway Traffic Safety Administration (NHTSA) and, of course, a plethora of lawsuits from dealers, partners and customers (Evans & MacKenzie; “Timeline,” 2010). To make matters worse, Toyota’s reticent and slow response, coupled by leaked emails showing Toyota staff boasting about saving $100m by persuading US regulators not to implement full recall over floor mat issues (Allen & Sturcke, 2010), added more fuel to a growing crisis started as a quality issue, developed into a safety one and, ultimately, snowballed into a companywide unprecedented crisis. Only late, moreover, company’s president, Akio Toyoda, grandson of Toyota's founder, emerged and expressed his apologies over unintended acceleration problem (Allen & Sturcke).
This combination of missteps, not only by Toyota, brings forward a range of crisis communication and management issues. For current purposes, corporate communication
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management is of central focus. More specifically, emphasis is laid on Toyota’s management
system, corporate culture and communication management in order to examine a 2009-2010
recall crisis. The seminal argument in current research project is that despite company’s scale and
reputation, 2009-2010 recall crisis only highlights major communication and corporate
governance problems Toyota has informed by long-established corporate culture underscoring
Japaneseness against external stakeholders.
II. Context
The “hype” created by 2009-2010 recall crisis is, at root, a communication issue. Informed by a growing rivalry for years between US and Japanese automakers, Toyota’s recall crisis was exacerbated by internal corporate missteps brought into limelight. Initially, a car crash was clearly misplaced in a proper context. The floor mats, reportedly main cause of unintended acceleration, initiated a series of investigations, lawsuits and, not least, press coverage reports. Fueled by NHTSA’s unusual rebuke of Toyota, propelled by Congressional growing concern, and, more important, a request to NASA to investigate Toyota’s electronics (Liker, 2011), 2009-2010 recall crisis was politicized and ran out of corporate communication control. By numerous accounts, and supported by a growing body of research and reports as shown in next section, Toyota was much to blame. The lateness – and, for that matter, failure to disclose and explain properly and in detail to US regulatory bodies, press and public problem root causes and developments – by which Toyota responded to a snowballing communication crisis is, for, one, consistently identified in literature. Meanwhile, alternative views to Toyota’s corporate communication pattern, and by extension corporate governance, offer a different perspective. For
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instance, Toyota’s patient problem solving approach is, against most literature emphasizing crisis and underscoring lateness, raised into attention:
It’s hard to believe that our roads are any safer at the end of this extended saga.
For that to happen, we would have to rethink the way we deal with safety in the U.S. A first step might be the government and the media learning something from Toyota’s systematic approach to problem solving. It starts with some patience in getting all the facts, then prioritizing problems, then looking at them objectively to determine root causes, and finally developing solutions based on the real problems [initial emphasis]. (Liker)
In so doing, 2009-2010 recall crisis could be understood as a result of overlapping crisis communication missteps not limited to Toyota but extends to all involved stakeholders, particularly media and NHTSA. Then again, Toyota’s communication and corporate governance problems remain, for current purposes, central to understand what went wrong at Toyota.
From an intercultural communication perspective, Toyota can be said to have adhered to a standard in group communication playbook: in-group solidarity against actual or perceived out-group dangers. To Toyota, a Japanese company par excellence, US stakeholders (e.g. regulators, media and lawmakers) are all considered outsiders, out-groups members now posing clear and present danger to Toyota's very Japaneseness. That is, by “standing up” against US stakeholders, particularly media, Toyota exhibited a fairly common group behavior performed by social in-groups members against non-group members. In less stertorous periods, Toyota considered US stakeholders, particularly customers, reliable partners under formal, contractual relationships. The development of 2009-2010 recall crisis changed everything, however.
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Frequent incidents, inadequate response from Toyota, rapid loss of confidence in company’s
much hyped quality status and, not least, much delayed and reserved intervention Toyoda – all
contributed to greater consolidation of in-group solidarity among Japanese and Americans each
against one anther. For if Toyota chose to respond in a patient, paced style, Americans,
particularly NHTSA, chose to assert American patriotism not only by addressing Toyota in much
harsher style but, more important, in ways meant to show US customers (and US society by
extension) US Government’s unforgiving position to conduct seen as harmful to American
people (Liker). The Toyota 2009-2010 recall crisis offers, accordingly, an ideal example of how
in-group and out-group dynamics are at play under strained conditions – conditions more likely
to generate animosity.
III. Method
The 2009-2010 recall crisis initiated a growing body of literature, including in popular press, about several key aspects of Toyota’s management system, corporate culture as well as internal and external corporate communication patterns. Central to 2009-2010 recall is a substantial literature on Toyota’s (declining) reputation among customers, regulators and public at large (Fan, Geddes & Flory, 2013; Choi & Chung, 2013; Bowen & Zheng, 2015). More specifically, influenced by media reports in sync against Toyota brand (Fan, Geddes & Flory), customers exhibited historical lows in purchase intentions despite apologizes offered by key figures at Toyota (Choi & Chung) only to highlight a gap between official records, provided in Toyota’s press releases, and mass media reports (Bowen & Zheng). The perception of Toyota as a quality brand and now under increasing pressure, a growing body of research shows, resulted in decreased brand loyalty (Loureiro, Sarmento & Le Bellego, 2017). These findings are of wide
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implications and, one argues, identify major fault lines along which 2009-2010 recall crisis could be better understood. Given extant literature, including media reports, 2009-2010 recall crisis uncovers a range of deeper corporate governance, corporate culture, and crisis communication management issues.
From a corporate governance perspective, Toyota, an iconic Japanese company, is deeply rooted in longstanding Japanese management conventions. Specifically, Toyota adopts a corporate governance systems emphasizing in-group v.s. out-group control. That is, Toyota, a family company headed by company’s founder’s grandson, Toyoda, practices a corporate governance system preferring insiders, particularly Japanese, to outsiders. This aspect of corporate governance is highlighted in literature, particularly about board independence (Aronson, 2010). In contrast to modern board management and oversight practices whereby external, independent directors are common, Japanese companies, including Toyota, have fairly low, if at all, external board member. In 2009-2010 recall crisis, Toyota’s response was largely informed by internal discussions and, as shown in crisis developments, failed to address several key crisis questions raised by a growing number of stakeholders including, most notably, customers, regulators, media and public. Indeed, part of why Toyota showed a “slow” response could be attributed to a Japanese First, so to speak, doctrine. That is, suspecting external parties, including once supportive NHTSA, Toyota, under crisis, chose to self-deliberate an unfolding crisis instead of opening up and disclosing emerging details right upon final release. In so doing, Toyota did not only fail to respond properly but, more critically, created a distorted image of handling a major communication crisis further exacerbated by internal email leaks as noted above. Indeed, one might speculate, by extension, Toyota, having established Japanese
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management practices, chose not to disclose emerging internal documents showing company’s faultiness, in order to save face, more so against out-groups.
From a corporate culture perspective, Toyota’s performance in 2009-2010 recall crisis is consistent to confirmed research about disclosures in Japan. By downplaying damage, or bad news, during crisis, whilst promoting achievements pre- and post-crisis, Toyota’s practice is well aligned to a confirmed practice by Japanese companies in a growing body of literature (Aman, Beekes, Brown, 2011). This practice is, moreover, consistent to a wider culture emphasizing face saving, particularly when Japaneseness is under risk. Given 2009-2010 recall crisis developments, Toyota maintained a low profile and, indeed, adopted...