Corporate Communication Strategy:Applying Theory to Practice at Dow Corning

Paul A. Argenti, Amos Tuck School of Business Administration,Dartmouth College

ABSTRACT

This article examines the Dow Corning breastimplant controversy in the context of a theoreti-cal corporate communication framework. Itbegins with a discussion of relevant theoreticalconstructs for corporate communication strategy.It then presents a chronology of the controversy,based on field interviews and an exhaustivesurvey of relevant media coverage. The articleconcludes with insights about how corporatecommunication strategy has enabled Dow Corn-ing to deal effectively with its ongoing reputa-tional and financial crisis.

INTRODUCTION

Many people are familiar with the contro-versy over breast implants that has swirledaround Dow Corning. However, few havehad the opportunity to examine the com-pany’s communication strategy and struc-ture and its ability to deal with thecontroversy. This article begins by describ-ing a conceptual framework for dealingwith strategic issues such as Dow Cor-ning’s. I then describe our researchapproach and provide a detailed overviewof the case. I conclude by extracting someof the lessons learned and suggest avenuesfor further research.

COMMUNICATING STRATEGICALLY

Most of the theories people think abouttoday in terms of communication are basedon notions that are as old as language itselfand the beginnings of social and politicallife. In ancient Greece, the subject now

referred to as ‘communication’ was knownas rhetoric, using language to persuade thelistener. Practising the art of rhetoric washighly regarded by the Greeks. Aristotle,who lived and studied under Plato andtaught in Athens from 367–347 BC, is clo-sely associated with the development of theart of rhetoric. In one of his major works,‘The Art of Rhetoric’ (1982), we can findthe roots of modern communicationtheory. Early in that seminal text, Aristotledefines the composition of every speech:

. . . every speech is composed of three parts:the speaker, the subject of which he treats,and the person to whom it is addressed, Imean the hearer, to whom the end orobject of the speech refers.’

Assessing the communicating

organization

Munter (1997) extends Aristotle’s three-part breakdown to all management com-munications, both written and oral. Shewidens his notion of ‘the speaker’ toinclude both writer and speaker, anddescribes the ‘hearer’ as the ‘audience’, inwhich she includes both readers and listen-ers. Munter also adds the notion of ‘chan-nel choice’ or ‘medium’ (for instance, e-mail versus telephone) and the ‘culturalcontext’ to her model, presented inFigure 1.Whether an organization is trying to

develop a coherent image of itself throughcorporate advertising, to communicateeffectively with employees about health

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benefits, to convince shareholders that thecompany is a good investment, or to dealwith a controversy over its products, itmust develop a coherent communicationstrategy. This strategy involves thinkingcarefully about each of the elements inFigure 1: (1) The communicator in a cor-porate communication is the organization;(2) the audience of the communication arethe constituents (or stakeholders); and (3) thecommunications themselves are either mes-sages or images.Argenti (1998) built on Munter’s (1997)

work to articulate a framework for analyz-ing all corporate communications (seeFigure 2). The first component of an effec-tive corporate communication strategyrelates to the organization itself, and shouldaddress three issues:

— determining what the objectives are forthe particular communication

— deciding what resources are available forachieving those objectives

— diagnosing the organization’s image cred-ibility.

The framework suggests that organizationshave different objectives when communi-cating. The basis for defining these objec-tives involves asking: What does the

organization want each constituent to do asa result of the communication?Second is the resource requirement.

Deciding how to communicate aboutsomething like a new employee healthplan or about a controversy depends onwhat resources are available to the orga-nization in terms of money, personnel,and time. Most companies, unfortunately,too often err on the side of short-term,inexpensive solutions to communicationproblems because they are not looking atthe problem from the perspective of theconstituency in question. This is similarto a problem many individuals have incommunicating when they frame a mes-sage in terms of their own needs, ratherthan the needs of their audience, resultingin an inability to meet their own com-munication objective. This is due to afailure to understand the organization’sposition in terms of a comprehensive eco-nomic cost/benefit tradeoff framework(Mansfield, 1993). Since we all communi-cate continuously, it is harder to imaginecommunication as a ‘discipline’ with rulesand predictable results based on cost/bene-fit analysis and management communica-tion theory, grounded in extensiveresearch at many universities over the last20 years.

Munter’s (1997) Communication Strategy Model Figure 1

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Besides financial commitments, person-nel commitments are an important factorin determining a company’s success or fail-ure in achieving its communication objec-tives. Typically, too few people areassigned to a communication task, and alltoo often those people are inexperienced orunqualified. Finally, time, like humanresources and money, is a critical factorinfluencing the communication strategy.The allocation of time, like the allocation

of all resources, should be determined bycareful attention to what it will actuallytake to achieve the company’s communica-tion objective. In some cases, that maymean accepting a longer time line than theorganization would like. But almostalways, the organization is much better offunderstanding realistic time requirementsin advance. Correcting mistakes in corpo-rate communication can be very costly in

terms of people, time, and money. Under-standing this initially is the only way toframe the resource commitment tradeoffseffectively.In addition to setting objectives for a

communication and deciding whatresources are necessary to accomplish thoseobjectives, the organization must alsodetermine the underlying credibility it haswith the constituencies in question. Anorganization’s image credibility is based onmany factors. For example, credibility isoften based on the constituency’s perceptionof the organization rather than the realityof the organization. The degree of imagecredibility the organization has is a criticalfactor in setting a coherent communicationstrategy. For simple tasks, this is not pro-blematic. But in complex tasks, the cred-ibility, or lack of it, can make a hugedifference in the success or failure an orga-

Figure 2 Corporate Communication Strategy Model

Messages/Images

What does each constituency

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nization has in achieving its communica-tion objectives.These three elements are key building

blocks upon which all other componentsdepend. A second component in an effec-tive corporate communication strategy is acomprehensive assessment of the constitu-ents involved.

Analyzing constituencies

Analyzing constituencies involves asking:

(1) Who are the constituents?(2) What does each constituent think about

the organization?(3) What does each constituent know

about the communication?

The identity of the principal constituentmay not always be obvious. Usually, con-stituents come from a group that is pri-mary to the organization (employees,customers, shareholders, communities), buta secondary group can also be the focus ofa particular communication (eg, media,suppliers, government) (Argenti, 1996).Defining the constituency is therefore aprocess with two sub-elements. The first isthe main constituency with whom we aredirectly trying to communicate; the secondis the unintended recipient. Here, anotherimportant issue is the powerful unintendedconstituent who reacts actively and nega-tively to the communicator.The second issue involves assessing what

constituents think about the organization.It is easier to communicate with peoplewho know and like us than with thosewho do not. The same is true of organiza-tions. If a company has built up a stock ofgoodwill with a constituency, it will beeasier for the company to reach its objec-tive.The third issue to consider is the consti-

tuency’s attitude toward the communica-tion itself. If constituents are predisposed todo what an organization wants, then they

are more likely to help the organizationreach its objective. If they are not, how-ever, the organization will have difficultyin trying to achieve its goals.In summary, after an organization has set

objectives for its corporate communication(component one), it must thoroughly ana-lyze all of the constituencies involved(component two). Once these are accom-plished, the organization is ready to moveto the third and final component: deter-mining how to deliver the message mostappropriately.

Delivering messages appropriately

Communication theory posits two ele-ments of effective message delivery. Thefirst involves channel selection, the secondinvolves message construction.Channels are the distribution outlets of

communications. Determining the propercommunication channel is more difficultfor organizations than for people. An indi-vidual’s channel choices are usually limitedto writing or speaking, with some varia-tion in terms of group or individual inter-action. Organizations have many morechannels through which to deliver a mes-sage. A simple press release, for instance,might be released to either the local mediaor the national media. A multinationalcompany might also consider sending themessage to an international newswire, suchas Reuters, announce it on its home page,or even broadcast it directly to employeesvia satellite hookups.Message construction can be either direct

or indirect. Direct structure means revealingyour main point first, then explaining why;indirect structure means explaining whyfirst, then revealing your main point. Aca-demics almost always rely on indirectstructures. However, empirical studiesshow that management communicationsare often more effective when they rely ona direct structure (Munter, 1997; Minto,1983).

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A third option to direct or indirect struc-tures is no message at all. A response thatcompanies often make when problemsarise is ‘no comment.’ Contemporary com-munication theory challenges the efficacyof this option despite its widespread use(Argenti, 1998). In this case, managers areoften swayed by lawyers concerned aboutthe legal ramifications of their statements.Direct structure, however, means facingthe court of public opinion, and can bemore far-reaching.The next section applies the conceptual

framework of Figure 2 to Dow Corning’shandling of the breast implant controversybetween 1991 and 1997.

THE CASE OF DOW CORNING

To develop a detailed account of the breastimplant controversy that came to surroundDow Corning in the early 1990s, we inter-viewed managers, media participants, pro-tagonists in the suit, attorneys, and ‘publicinterest’ advocates. Among the personalinterviews we conducted over a ten-monthperiod were those of Richard Hazelton,Dow Corning’s CEO, Barie Carmichael,Vice President of Corporate Communica-tions, and ten other senior officers directlyinvolved in the controversy. The fieldresearch included interviews with BusinessWeek reporter John Byrne, ‘whistle-blower’ John Swanson, consultants atFenton Communications, and discussionswith Fortune reporter Joseph Nocera, SybilGoldrich of the Command Trust Network,lawyers at O’Quinn and Lamanack, andwomen who had been involved in the classaction suit.We also did an extensive survey of the

public record, including newspaperaccounts, and previous studies on the con-troversy. At Dow Corning, we weregiven full access to thousands of pages ofinternal company documents. Weobtained all of the videotaped broadcastson the controversy, from programs that

appeared in Australia to the centerpieceof the case study, the Oprah WinfreyShow.

Background

For the first 50 years of its existence, DowCorning was little known outside the busi-ness community. Founded in 1943, thecompany’s success was due in large part toits development of silicones. Corningbrought the basic silicone technology tothe joint venture while Dow offered bothchemical processing and manufacturingcapabilities. As a result of silicone’s resilientproperties, Dow Corning began using itfor medical devices inside the human bodyranging from shunts for draining fluidsfrom the skull to the controversial implantsdeveloped to enlarge women’s breasts orreconstruct breasts removed due to cancer.Magazine articles in the 1940s hailed sili-cone as a miraculous substance and pre-dicted that it would one day be among themost critical industrial plastics and syn-thetics in the world.Dow Corning’s first foray into silicone

was a compound used to seal ignition sys-tems on Allied aircraft during WorldWar II. It also produced the popular toy,Silly Putty, which was developed as abyproduct from a failed experiment. Bythe mid-1990s, Dow Corning had growndramatically into a company with pro-jected sales for 1995 of $2.5bn, employing8,300 people, with 8,700 products andspecialty materials used by over 45,000business customers worldwide representingvirtually every major industry. Thenature of its business had grown toinclude the development, manufacture,and marketing of materials that enhancedthe quality of other products. Its productline now included (in addition to siliconematerials) related specialty chemical mate-rials, and polycrystalline silicon for use incomputer integrated circuits (Byrne,1996).

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Dow Corning’s image

Dow Corning’s slide into bankruptcyoccurred as a result of mismanagement ofits reputation in its early years. At DowCorning, most of the top managementcame from engineering or scientific back-grounds. Many of them also grew upinside the company. This gave them aninsular view of the external environment.When the breast implant controversy hit inthe early 1990s, Dow Corning also hadvery little credibility with the public(Munter, 1997). The company’s reputationsuffered, not only from its low profile andlarge size, but from its association withDow Chemical — best known as the com-pany that had dumped Napalm and AgentOrange on Vietnam in the 1960s (Argenti,1998). In addition, Dow Corning had donelittle to build awareness for itself until afterthe breast implant controversy was wellunder way. It was, however, known for itscorporate ethics program. As it turns out,the company’s reputation before the con-troversy as a business leader in the area ofethics actually contributed to Dow Cor-ning’s problems.Throughout the 1970s and 80s, Dow

Corning had been highly regarded for itscorporate ethics programs and its BusinessConduct Committee (Byrne, 1996). It hadbeen the subject of three Harvard BusinessSchool cases. Made up of six managerswho devoted up to 15 per cent of theirtime to the task, the committee performedethics audits of each business every thirdyear and reported those audit results backto the company’s board of directors. Theguiding spirit behind the ethics effort and apermanent member of the Business Con-duct Committee was John Swanson, along-term executive at Dow Corning whohad worked in communications for mostof his career. Swanson became involvedwith ethics in 1976 when CEO Jack Lud-dington asked him and three other man-agers to form the company’s first business-

conduct committee. This came about as aresult of increased sales overseas and inter-nal concerns about whether the companywas adhering to the same values in Europeand Asia as it did in Midland, Michigan.By the late 1980s, the committee was com-pleting as many as 40 business audits ayear, worldwide. The reviews includedface-to-face meetings with executives andmanagers exploring issues such as pricing,bribes, contributions to politicians, andconflicts of interest. As a result of the com-pany’s unique emphasis, ethics had becomea key part of the corporate culture and waswidely regarded, both internally and exter-nally (Tuck Panel, 1996). Thus, Dow Cor-ning’s image credibility was based onstrong internal ethics that were fairly wellknown outside the company when thebreast implant controversy began to heatup — but mostly to specialized audiences.It was relatively unknown to the generalpublic.

The breast implant controversy

Women had looked for ways to increasethe size of their breasts externally for cen-turies by attaching materials such as glassor ivory (Angell, 1996). The first attemptto enlarge a woman’s breasts through sur-gery had occurred in Germany in the late19th century. Fat from a benign tumor ona woman’s back was transplanted to herbreasts. Experiments continued in the early20th century with paraffin and other sub-stances like petroleum jelly.Two Houston plastic surgeons came up

with the idea of designing a breast implantmade of silicone in 1961 and approachedDow Corning, the leading manufacturerof the substance, to collaborate on the pro-ject. The next year, one of the surgeonsplaced the first Dow Corning Silasticmammary implant in a woman whowanted to enlarge her breasts. In addition,the surgeons conducted two years of clini-cal trials from 1962–64 (Carmichael, inter-

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view, November 26, 1996). Now in hermid-sixties, the first woman to receiveimplants still had the original ones in placein 1995.The implants consisted of a rubbery sili-

cone bag containing the silicone gel. Thiswas an attempt to avoid migration of thesilicone into other parts of a woman’sbody. The implants were surgicallyinserted through two small incisions,usually in the crease under the breast.Some women reported problems withleaks in the bags containing silicone, othersreported shifting of the bags themselves,while others had difficulty with mammo-grams following the surgery.Dow Corning had the breast implant

market to itself for many years, but even-tually competitors appeared with innova-tions designed to deal with some of theproblems women were experiencing withDow Corning’s implants. During theperiod from 1965 to 1992, Dow Corningsold almost 600,000 implants, with 42 percent sold outside the United States (Carmi-chael, interview, November 26, 1996). Asthe market matured, Dow Corning wasselling close to 25 per cent of all implants,but making little or no money on the pro-duct. It also supplied the silicone for otherimplant manufacturers.Breast implants were classified as medical

devices, which was an unregulated industryin the mid-1960s. By the mid-1970s, how-ever, the medical devices industry, includ-ing breast implants, were subject toregulation by the Food and Drug Adminis-tration (FDA). At that time, however, theclassification for breast implants did notrequire testing as a condition for continuedsale. The lack of complaints from the mil-lion or more women with implants led tono action by the FDA throughout the1980s.Despite attempts by Ralph Nader and

others to force a ban on implants, the pro-duct was left relatively unscathed until a

sensational report appeared on ‘Face toFace’ with Connie Chung in 1990. Chung’sprogram alleged that the implants wereextremely dangerous devices beingimplanted in unsuspecting women.Chung’s CBS broadcast was the first topresent the case for a connection betweenautoimmune disease and breast implants.Within a year, in December of 1991, a

federal jury in San Francisco awarded whatwas at that time the largest verdict ever ina breast implant case — $7.34m. MariannHopkins, the plaintiff in the case, claimedthat the implants had accelerated the devel-opment of a very rare disorder known asscleroderma. Dan Bolton, her lawyer,made much of ‘secret documents’ he hadfound at the Dow Corning plant nineyears earlier while investigating anothercase.Bolton urged the FDA’s new chairman,

David Kessler, to review the documentshe had discovered by sending FDA inves-tigators to Dow Corning to search theirrecords. Kessler called for a temporarymoratorium on breast implants in early1992 while he considered the matterfurther. Dow Corning then released over800 pages of documents to the public,after pressure from the FDA. However,according to experts, such as Dr MarciaAngell (1996), executive editor of theNew England Journal of Medicine, the sig-nificance of the documents describing arange of tests on animals was unclear,since the experiments had little incommon with the ordinary use of breastimplants in women.Soon after the release of these documents

by Dow Corning, and following anothersensational program on the topic on theJenny Jones Show, the FDA’s Kesslerannounced a ban on silicone breastimplants in April of 1992. The implantscould only be used in the future forwomen who had agreed to participate inresearch studies.

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The litigation surrounding breast

implants

Following the FDA ban, a wave of litiga-tion hit the federal and state courts. Morethan 16,000 cases were filed by over one-thousand lawyers in a two-year period.Lawsuits against Dow Corning went fromaround 200 in 1991 to 10,000 by the end ofthe following year. A well-organizedplaintiffs’ bar was largely responsible forthe huge growth in litigation.By the mid-1990s, mass tort litigation

was at an all-time high in the United Stateswhere lawyers, unlike in many other coun-tries such as England, received contingencyfees for cases. According to those fightingto reform the legal system, the size andoutcome of the litigation often had little todo with the actual risk of the product. Thesubject had even become a topic for thepresidential candidates to debate in the1996 elections.Dow Corning’s chairman and CEO

claimed that the company had filed forbankruptcy primarily because it wasembroiled in an endless sea of lawsuits andlitigation (Hazelton, interview, July 29,1996). The company held that hundreds ofmultimillion-dollar judgments could resultfrom the suits brought against the com-pany.Speaking about the litigation, Hazelton

said: ‘The US legal system is out of con-trol. It has become its own business whosegoal is to get money out of our corpora-tions. There is an inherent economic incen-tive to find or create legal problems tolitigate, and this system is extremely dama-ging to corporations.’By March of 1994, implant makers and

plaintiffs had agreed on a settlement fundthat would pay $4bn to plaintiffs over a30-year period. Dow Corning agreed topay almost half, with the rest coming fromother major manufacturers such as Bristol-Myers Squibb, Baxter, and 3M. FederalJudge Sam Pointer, who was in charge of

the case, granted final approval to the set-tlement in September calling it ‘fair, rea-sonable and adequate.’By October, 145,000 women had regis-

tered for the agreement despite growingscientific evidence from researchers at Har-vard Medical School that found no linkbetween implants and connective tissue dis-order. On May 15, 1995, Dow Corningfiled for Chapter 11 bankruptcy protectionto deal with the onslaught of pending liti-gation as a result of challenges to its breastimplant products. At that time, over400,000 women had joined the class actionsuit, with separate suits still pending againstDow Corning. Judge Pointer began to rea-lize that the money set aside would not beenough to meet the demand of litigation.With over 20 per cent of all women

with breast implants involved in the litiga-tion and Dow Corning in bankruptcy, theclass action suit that had led to the agree-ment began to fall apart. All claims againstDow Corning would now be settled by abankruptcy court in Michigan. On Sep-tember 7, 1995 Judge Pointer acknowl-edged that the original settlement wasdead. Dow Corning’s communicationsdepartment would now be responsible forhelping to shape the company’s reputationas never before.

Corporate communications at Dow

Corning

When Barie Carmichael left NCR to joinDow Corning in 1990, she was the firstcommunications professional to head thefunction. Before her appointment, commu-nications had been run by chemical engi-neers who would take a tour of duty as thecorporate communications director. Shewas hired to report to an area president,Kerm Campbell, who in turn reported tothe president of the company, whoreported to the CEO.Management in general and Kerm

Campbell in particular, knew that an inter-

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nal communications problem existed atDow Corning, which led to a nationwidesearch for a communications professional.According to Carmichael: ‘There was not adialogue-driven communication process inthe company; it was more publications andtop-down oriented in the early 1990s, DowCorning needed to renew itself through astronger internal communications effort’.(Carmichael interview, November 26,1996). As a result, her job was to deal withthe internal communications problems,enhance communication with customers,and work on community relations andpublic relations.Carmichael was not completely satisfied

with the appointment because communica-tions was still not a prominent function inthe corporation. When she came to thecompany, her office was in a separatebuilding from senior management leavinglittle room for interaction with other func-tional areas. She felt, however, that itwould change in time.John Swanson, the company ethicist

who had been manager of internal com-munications at the time Barie Carmichaelwas hired, was interested in the new direc-tor of communications job when the searchwas announced. Instead, the companydecided to go outside for a fresh look atthe area. Swanson remained in an internalcommunications position reporting to Car-michael. He was also asked to serve as asenior consultant on business ethics and tospend 25 per cent of his time drafting thenew Dow Corning Code of Conduct forthe president and 75 per cent of his timereporting to Carmichael.On a functional level within the depart-

ment, marketing and corporate communi-cations were totally integrated underCarmichael. A manager responsible forexternal communications handled mediaand community relations. Swanson wouldhandle internal communications, and JanBotz was assigned to become manager of

management communications, whichwould also handle internal communicationswithin the management chain. The com-pany had a small government relations areaat the time reporting to the legal depart-ment.

Internal communications

Carmichael found the formal internal com-munications function at the time in, as shedescribed it, the ‘dinosaur era’. The mainsource of corporate communications was,as she said: ‘...an unwieldy set of companymagazines that were unapproachable anduntimely.’ (Carmichael, interview,November 26, 1996). Dow Corning dis-tributed external press releases throughinteroffice mail after most news had alreadyhit the local newspapers. ‘There was nosense of an internal audience,’ said Carmi-chael, ‘just a set of pass-throughs.’ (Carmi-chael, interview, November 26, 1996).In addition, the company held what

were termed management forums. Thesewere presentations sometimes held in alarge local theater at night. The CEO, JackLuddington, would read speeches writtenby John Swanson to what one managerreferred to as ‘an uninspired group’.Employees soon learned that these werenot critical meetings and stopped attend-ing.Carmichael sought to change the

employee communications environment byusing Dow Corning’s computer networkfor press releases and employee bulletins;streamlining ‘Update’, a company newslet-ter created to inform employees of whatwas going on in the company morequickly; and setting up less structuredemployee forums in which employeescould talk with senior management (likethe President and CEO) in the cafeteria.Jan Botz headed up the initiative, handlingthe dialog between management andemployees.Ultimately, the breast implant issue

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became both the biggest internal issue aswell as the thorn in Carmichael’s side onthe external communications front.

External communications

While the company clearly realized its pro-blems on the internal side, it seemed lessinterested in dealing with external constitu-encies. ‘We were naive,’ said Carmichael.‘This is a company in the middle of a corn-field in Michigan. The stock was not pub-licly-traded and we didn’t have to answerto public stockholders. And, we were naiveabout politics and did not fully appreciatehow Washington, DC worked, or howpolitics could affect the company. Notonly that, but most of management sawthe implant issue as a scientific issue, notone of communications.’ (Carmichael,interview, November 26, 1996).At the time Carmichael was hired, the

company did not even know about someof the more potent groups working toundermine Dow Corning’s breast implants,such as the Command Trust Network —even though this key breast implant adver-sary, headed by activist Sybil Goldrich, hadexisted since 1988. Carmichael brought inpublic relations experts from Burson-Mar-steller to help with corporate communica-tions issues related to the breast implantcontroversy. The company began to con-duct focus group research on the issue, setup a 1-800 line to handle questions, andparticipated in an ‘implant team’ in placeunder Campbell (comprised of Carmichael,the chief counsel, head scientists, and thehead of the breast implant business).In February of 1992, Keith McKennon

took over for Luddington as Chairman ina widely-reported and controversial man-agement change and had corporate com-munications report directly to him.McKennon had been an executive vice-president of Dow Chemical and a DowCorning director. He had been labeled ‘thefireman’ for his ability to handle Dow con-

troversies during his 37 years with thecompany such as Agent Orange, Dioxin,and Benedictin, a morning sickness pillmade by Merrill-Dow that allegedlycaused birth defects. By putting a high-profile executive like McKennon in chargeof Dow Corning and moving the corpo-rate communications function into theranks of senior management, the companywas in a better position to deal with thegrowing controversy over implants.

John Swanson’s role in the controversy

While the prognosis for breast implants ingeneral and Dow Corning in particularcontinued to decline, another controversywas brewing internally. John Swanson’swife, Colleen, had herself received implantsyears earlier to enlarge her breasts. As anemployee of the company and its chiefethicist, John Swanson, along with otherDow Corning colleagues and the plasticsurgeon who performed the operation, wasable to assure his wife that the implantswere completely safe (Byrne, 1996).Almost immediately following the

operation, however, Colleen’s health beganto decline. She suffered from migraineheadaches, lower back problems, numbnessin her arms and hands, extreme fatigue, aburning sensation in her chest, and unbear-able pain throughout her body. Herweight fell to a low of 89 pounds.Although she had been examined bycountless doctors and had received exten-sive medical tests, the cause of her problemwas never identified.After her daughter had watched a talk

show filled with women showing similarsymptoms who all had implants, Colleenwas convinced that she had discovered thecause of her health problems. Althoughskeptical at first, John Swanson also cameto believe soon thereafter that Colleen’sproblems were coming from the implants.As a result of his wife’s experience and

what he later described as his own ‘crisis of

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conscience’, Swanson decided in Septemberof 1991 to confront management and takehimself off any work connected with breastimplants (Byrne, 1996). Colleen had hadher implants removed earlier that summer.He chose to tell Kerm Campbell, BarieCarmichael’s boss at the time, of his deci-sion. As a result, Swanson was no longerable to work on the most critical commu-nication issue confronting the company inhis role as ethicist and communicator.Two years later, in May 1993, Colleen

settled a lawsuit against Dow Corning outof court for an undisclosed sum. Swansonretired from the company in August ofthat same year. By this time, a new CEO,Richard Hazelton, was in place and BarieCarmichael was now a vice president ofcorporate communications. The Swansonsleft Midland within a few days after Johnleft his office for the last time.Given Swanson’s position in the com-

pany and his wife’s situation, his finaltwo years in the company were a bitawkward, but not acrimonious. He haddiscussed the idea of a book before leav-ing, so it was not surprising when authorJohn Byrne approached Dow Corningabout the book in May of 1994 (inter-view, July 30, 1996).John Byrne, a senior editor at Business

Week and author of several other books,was well known for his cover stories in themagazine on executive pay as well as thefamous business school rankings. He wasworking on a book which would chronicleJohn and Colleen’s story, in conjunctionwith John Swanson, who would receivepart of the royalties from the sale of hisstory.Carmichael was at first convinced that

the company should participate in inter-views for the book. ‘They were going todo the book with or without us,’ said Car-michael, ‘so we might as well present ourside of the issue coherently.’ (Carmichael,interview, November 26, 1996).

After several months of deliberation,however, the company decided not toparticipate in the book as a result of itsnon-scientific orientation. Swanson hadstated that the science on the breast issuewas irrelevant, which ‘flew in the face ofDow Corning’s core values,’ accordingto Carmichael. ‘We did not want tolegitimize the book by putting DowCorning’s support behind it. So, in Sep-tember we refused to be interviewed forthe book.’By the following September (1995),

‘Informed Consent’ was ready for publica-tion. Publicists for the book were eager toget the controversy back on center stageonce again and Barie Carmichael wasapproached by the producer of the OprahWinfrey show to put the CEO, RichardHazelton, on with John and Colleen Swan-son as well as author John Byrne.The Oprah Winfrey Show was still the

most popular daytime talk show in theUnited States despite heavy competitionfrom a number of imitators throughout the1990s. Oprah herself had become a majorcelebrity and was reported to be makingclose to $80m from the show. Originallysensational in orientation, it now seemedtame by comparison to other daytime talkshows. While Carmichael and CEO Hazel-ton were deciding whether to participate inthe Oprah Winfrey show, Byrne’s bookhad just hit the bookstores. Its coverincluded a sentence in large type stating: ‘Astory of personal tragedy and corporatebetrayal...inside the silicone breast implantcrisis.’ The book had been excerpted in aBusiness Week cover story a few weeks ear-lier. Carmichael and Hazelton made a verycontroversial and unusual decision to go onthe Oprah Winfrey Show in October of1995. Women with complaints against themanufacturer as well as supporters turnedout for what Winfrey said was the firstappearance by a CEO on her program inten years. According to Hazelton, he

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decided to go on the program to supportbreast cancer patients whose story had beenlargely ignored. He felt that those womenwould be more likely to tell their story,which was more supportive of the com-pany, if the Dow Corning CEO were pre-sent to support them publicly. In addition,employees at Dow Corning also needed tohear top management’s position on thebook in a public forum.

Corning’s reputation begins to rise

Building and maintaining morale withinthe company throughout the controversywas a major concern for both CEOHazelton and VP Carmichael, but espe-cially following the decision to file forbankruptcy. The support from employees,however, became evident in late May.Dawn Bartell, a regulatory and women’shealth specialist for the company, decidedto respond to a grassroots desire amongemployees to show support for top man-agement (Bartell, interview, July 30,1996).She formed a committee within a few

days of the bankruptcy filing and collected$2.50 voluntarily from thousands ofemployees. They asked each employeewho gave money if they wanted to sign astatement reading: ‘To: Dow CorningExecutive Management, Your EmployeesAre Behind You 100%!’ The signatureswere placed as an advertisement in theMidland Daily News (May 31, 1995). Prideat headquarters continued to rise as a back-lash to Byrne and Swanson’s book tookhold. ‘This is a big company, but in manyways it’s small,’ said Bartell. ‘We havefierce pride in our company and its pro-ducts. Mr Swanson’s book hurt all of us alot. Midland, as a community was putdown in the book, its churches were putdown in the book, and that made mereally sad. Many of us asked why wouldhe do this?’ (Bartell, interview, July 30,1996).

Although some (including the CEOhimself) would argue that Hazelton’s per-formance on Oprah was less than stellar, itwas the first of many proactive attemptsby the company to rebuild and repositionits reputation among key constituencies.Following the Oprah show, 60 Minutes dida pro-Dow Corning piece that essentiallysupported the company’s position by refer-ring to several studies that had been pub-lished in highly regarded academic circles— especially the New England Journal ofMedicine. A piece ran soon after on Front-line that also supported the company’s caseagainst what was now being publiclyreferred to as ‘junk science’ developed andsupported by attorneys fighting against thecompany.Over the next year, the Wall Street Jour-

nal, Fortune (with Joseph Nocera’s articleson the corrupt plaintiff’s bar), and the NewYork Times all began to support the notionthat Dow Corning was essentially free ofblame in the breast implant controversy. Itwas depicted as a pawn in a game beingwon in the courts by a greedy group oflawyers working together with weak scien-tists paid off by the lawyers. They were allworking for women who were innocentbystanders looking to explain illnesses thathad nothing to do with their breastimplants.Marcia Angell’s book, ‘Science on Trial’

(1996), was also a tremendous reputationbooster to the company because of theauthor’s prominence (executive editor ofthe New England Journal of Medicine) andher position that the breast implant contro-versy was based on ‘junk science’ ratherthan the clear and valid scientific evidencepublished by reputable academic research-ers. Angell slammed the reputation of the‘junk scientists’ throughout the book. WithAngell and other highly credible academicstudies on their side, Dow Coming decidedin late 1996 to put its reputation on theline once again.

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The reorganization plan

On December 2, 1996, Dow Corningannounced that it had filed its Plan ofReorganization and Disclosure Statementwith the US Bankruptcy Court in Michi-gan. Under the Dow Corning $3bn plan,anyone with an allowed claim would bepaid in full. The plan included $1bn tocompensate commercial claims, whichwould be paid in full plus interest, and$2bn to compensate product liabilityclaims. Included in the product liabilitycompensation was a $600m fund designedto favor settlement over litigation toresolve product liability claims flexibly andefficiently. It offered five settlement choicesavailable over a multi-year period to pro-cess and resolve the claims.One of the more ingenious parts of the

plan, however, was a provision for up to$1.4bn in a contingent fund that largelydepended on the outcome of a causationtrial on whether breast implants caused dis-ease. Dow Corning obviously believed thatthe scientific evidence did not support theclaim that breast implants caused disease.However, Dow Coming stated in its pressrelease that it recognized ‘that the issue ofcausation is controversial and has proposeda causation trial as an objective, streamlinedmechanism to resolve it.’ (Dow CorningRelease 12/2/96).The reorganization forced the hand of

the ‘junk scientists’ to prove their claims incourt before the company would agree toany settlement. As a prelude to coming outof bankruptcy, Dow Corning’s move wasa brilliant strategy to rebuild its imagecredibility and put its opponents on thedefensive in terms of reputation manage-ment.

Lawyers and ‘junk scientists’ strike

back

After close to a year of rebuilding its repu-tation and managing its way slowly out ofbankruptcy, Dow Corning’s reputation

once again came under attack in late 1996.Lawyers for the opposition hired FentonCommunications to coordinate an attackagainst Dow Corning’s argument thatscience was on its side.David Fenton founded Fenton Commu-

nications in 1982 to serve a host of progres-sive causes. In the early years, the firmspecialized in no-nukes issues and Marxistregimes (Labash, The Weekly Standard,1996). Following the cold war, Fentonworked on a variety of environmentalcases, the most famous of which was theanti-Alar campaign that very successfullyattacked the apple industry.Fenton’s group created a road show that

included John Swanson, the CommandTrust Network (headed by Sybil Goldrich,a vocal opponent of breast implants), andscientists willing to argue the other side ofthe case. By December 1996, the roadshow had toured several cities in the north-east and articles critical of the main-linescientists began to show up in the nationalpress, including the Wall Street Journal. Butby the end of 1996, Dow Corning had putin place a strong corporate communica-tions function and was using its communi-cations more strategically. As a result,Fenton was unable to deter public opinion.

LEARNING FROM DOW CORNING

Fombrun (1996) shows how critical a rolereputation plays in the overall success oforganizations, from business schools tolarge companies like Dow Corning. Whatthe theoretical framework presented in thisarticle posits, however, is that organizationsalso need to look at corporate communica-tions more strategically, particularly whenfacing strategic situations such as the breastimplant controversy.There are several hypotheses that come

from applying this theory to practice. First,reputations are hard to win but easily lost(Fombrun, 1996) even in the face of scien-

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tific evidence published in top journals.The decline into bankruptcy, in spite ofJohn Swanson’s early effort at buildingDow Corning’s reputation as an ‘ethicalcompany’, serve as an example of howrapidly the tables can turn when a corpo-rate communication strategy is lacking.Secondly, the company’s failure to

articulate a corporate communication strat-egy and its denigration of the corporatecommunication function as a legitimatediscipline made it easier for the plaintiff’sbar to win over both the legal system andthe court of public opinion in the nascentstages of the controversy. It resulted inDow Corning’s descent into bankruptcyand near insolvency. Even though thecompany had subsequently begun to estab-lish a strong function and was working torebuild its image credibility, it investedresources in corporation communicationstoo late in the game.Thirdly, despite a loss of reputation,

companies can turn themselves around byusing corporate communications as a stra-tegic weapon. Attention to the specificcomponents discussed in the conceptualframework of Figure 2 helped Dow Corn-ing turn itself around. Specifically:

— By focusing on employees as a criticalconstituency following Barie Carmi-chael’s arrival, Dow Corning was ableto keep employee morale high duringbankruptcy proceedings andthroughout the publicity surroundingByrne’s book (1996). In addition,Hazelton went on the Oprah WinfreyShow specifically to defend DowCorning for its employee constituencyand for women who were happy withtheir implants.

— The company used a ‘no comment’approach in terms of message deliveryin dealing with Byrne’s book (1996).This allowed it to position Byrne andSwanson’s allegations as part of the

‘junk science’ movement, rather than aslegitimate antagonists of the company.

— The company invested heavily inresources related to corporate commu-nications including all three sub-elements: time, personnel, and money.It hired a professional to head its corpo-rate communication function andelevated the function to a vice presiden-tial level reporting directly to the CEO.It expanded the corporate communica-tions staff considerably and hiredoutside counsel to help deal with thecontroversy. The CEO and other offi-cers also invested heavily in terms oftime. The company sees time as anecessary investment for its verysurvival and a way to reposition itselfas a viable business following emer-gence from bankruptcy.

— The company clarified its communica-tion objectives. Specifically, to informall constituents that there is no scientificevidence (Angell, 1996) to support theallegations against its silicone breastimplants; that it stands by the productfor the millions who have been unaf-fected; and that it will not simply reactto the controversy, but instead will setthe terms of the debate in the court ofpublic opinion.

— The company turned the media froman early adversary into a supporter. Byopening wide its doors to the mediaand allowing access to senior manage-ment, it was able to garner supportfrom prestigious media channels such asCBS, NBC, PBS, the New York Times,Fortune, and The Wall Street Journal.

Ultimately, the Dow Corning case suggeststhat a more strategic focus on corporatecommunications can have financial impli-cations as well. As Table 1 shows, DowCorning has been able to turn itself aroundfinancially in terms of the only publiclyavailable financial measure at our disposal

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— the credit terms available to the com-pany (and a proxy for investors in thiscase) (Bloomburg, 1997). The tradingprices for the company’s revolving creditloan have continued to rise in recentmonths, much more than would be attri-butable to the modest decline in LIBORrates over the period. It indicates that WallStreet is now bullish on Dow Corning forits successful handling of the controversy.

CONCLUSION

In conclusion, this article presented a con-ceptual framework for examining corpo-rate communications. It has shown howthe framework could be applied usefully toan analysis of the Dow Corning breastimplant controversy. Practitioners have anopportunity to refine further the frame-work as they work to manage the corpo-rate communications function morestrategically. Researchers are encouraged toexamine in greater detail how each of theelements of the communication strategymodel of Figure 2 interact. An accumula-tion of other comparable cases wouldenable subsequent quantitative testing ofthe model.

ACKNOWLEDGMENT

The author wishes to thank Professor JohnShank of the Tuck School for his helpwith this article. In addition, the authorwishes to acknowledge the research sup-port of Remie Roseman, T’97, whoworked on the development of materialsand conducted interviews on the DowCorning case.

REFERENCESAngell, M. (1996) ‘Science on Trial: The clash ofmedical evidence and the law in the breastimplant case’, W. W. Norton & Company, NewYork.

Argenti, P. A. (1998) ‘Corporate Communication’,(2nd ed.), Irwin McGraw-Hill, Burr Ridge, IL.

Argenti, P. A. (1996) ‘Corporate Communication asa Discipline’, Management CommunicationQuarterly, Vol. 10, No. 1, pp. 73–97.

Aristotle (1982) ‘The Art of Rhetoric’, (with anEnglish translation by John Henry Freese),Harvard University Press, Cambridge, Mass.

Bartell, D., Dow Corning, interview, July 30, 1996.Bloomburg Financial Services, 1997.Byrne, J. A. (1996) ‘Informed Consent’, McGraw-Hill, New York.

Carmichael, B., Vice President of CorporateCommunication, Dow Corning, interviews, July29, 1996 and November 26, 1996.

Fombrun, C. J. (1996) ‘Reputation: Realizing Value

Table 1: Dow Corning’s Revolving Credit Loan Bid/Offer Prices (Bloomburg, 1997)1995–97

Day (3 month intervals) Bid Offer LIBOR*

4/20/95 68 80 6.257/17/95 80 82 5.8810/16/95 84 86 5.941/15/96 83 85 5.574/15/96 97.25 98.25 5.507/22/96 100.75 102 5.6310/14/96 103 107 5.531/13/97 109.75 110 5.594/14/97 117.5 118 5.847/14/97 120.5 121.25 5.7510/20/97 123.5 124.5 5.81

*Ninety day rates, close/bid.

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from the Corporate Image’, Harvard BusinessSchool Press, Boston, MA.

Garbett, T. F. (1988) ‘How to Build a Corporation’sIdentity And Project Its Image’, Lexington Books,Lexington, MA.

Hazelton, R., Chief Executive Officer, DowCorning, interview, July 29, 1996.

Labash, M. (1996) ‘Scaremonger’, The WeeklyStandard, 4: pp. 24–29.

Mansfield, E. (1993) ‘Managerial Economics’, W. W.Norton Company, New York, NY.

Minto, B. (1983) ‘The Pyramid Principle: Logic inWriting and Thinking’, Minto International Inc,London.

Munter, M. (1997) ‘Guide to Managerial Communi-cation’, (4th ed.), Prentice-Hall, Englewood Cliffs,NJ.

Tuck Panel (1996) The Albert G. MilbankMemorial Endowment. ‘Business Ethics andCommunication: The Dow Corning BreastImplant Controversy’, Tuck Today, Summer1996, pp. 24–26.

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