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Journal of Marketing Communications

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Stakeholder theory and internal

marketing communications: a
framework for analysing the influence
of new media
a b c
Nigel M. De Bussy , Michael T. Ewing & Leyland F. Pitt
a
School of Marketing , Curtin University of Technology , GPO Box
U1987, Perth, WA 6845, Australia
b
Department of Marketing , Monash University , PO Box 197,
Caulfield East, Victoria 3145, Australia
c
8 Bretby Close, Carine, Western Australia 6020, Australia
Published online: 17 May 2010.

To cite this article: Nigel M. De Bussy , Michael T. Ewing & Leyland F. Pitt (2003) Stakeholder
theory and internal marketing communications: a framework for analysing the influence of new
media, Journal of Marketing Communications, 9:3, 147-161, DOI: 10.1080/1352726032000129890

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 JOURNAL OF MARKETING
STAKEHOLDER THEORY COMMUNICATIONS 9 147–161 (2003) 147

Stakeholder theory and internal marketing

communications: a framework for analysing
the influence of new media
NIGEL M. DE BUSSY
Downloaded by [University of Tennessee, Knoxville] at 07:56 22 December 2014

School of Marketing, Curtin University of Technology, GPO Box U1987, Perth, WA 6845,
Australia

MICHAEL T. EWING
Department of Marketing, Monash University, PO Box 197, Caulfield East, Victoria 3145, Australia

LEYLAND F. PITT
8 Bretby Close, Carine, Western Australia 6020, Australia

Effective two-way communication is widely viewed as an essential component of successful

internal marketing strategies, yet little research has so far been conducted on the relative merits
of different communication media in an internal marketing context. Since the mid-1990s
Internet technologies have revolutionized internal communications in many organizations.
However, the impact of these new forms of electronic media on internal marketing communi-
cation remains relatively unexamined. This paper draws on stakeholder and communication
theories to provide a framework for understanding the dimensions of effective internal
marketing communications and presents the results of an empirical study on the relationship
between these dimensions and the use of new media in the workplace.
KEYWORDS: Stakeholder theory; internal marketing communications; new media; intranets;
dialogic communication

INTRODUCTION
The services marketing literature clearly identifies one of the key drivers of growth and profit as
customer loyalty, which, in turn, is a direct result of customer satisfaction (Heskett et al., 1995).
Thus, developing a ‘service culture’ among customer service personnel with a view to improving
employee–customer interactions and, as a consequence, customer satisfaction is a key issue
(Deshpande and Webster, 1993). The practice of internal marketing can assist in the development
of a customer-conscious organizational culture (Cahill, 1995). The need for effective internal
marketing strategies goes beyond ‘front-line’ customer service staff alone. Even those employees
who do not interact directly with customers may impact upon perceived service quality because
they directly influence the service providers (George, 1990). Nor is the importance of internal
Journal of Marketing Communications ISSN 1352–7266 print/ISSN 1466–4445 online
© 2003 Taylor & Francis Ltd http://www.tandf.co.uk/journals
DOI: 10.1080/1352726032000129890
 148 DE BUSSY ET AL.

marketing confined to the service sector alone. It remains a key issue for all organizations including
those in the manufacturing, non-profit and government sectors (Cahill, 1995).
The importance of communication in the implementation of internal marketing programmes
has long been recognized (e.g. Hartley and Lee, 1986; Morgan, 1990; Gummesson, 1991). Varey
(1995) argued that internal marketing should be a two-way communication process between
employees and management. One recent study found that the communication climate plays a
central role in employee communication, mediating the impact of communication content
(Smidts et al., 2001), whilst another concluded a positive relationship exists between effective
internal communications and employee commitment to and perceptions of their firm (Unzicker
et al., 2000). Whilst a variety of educational and motivational activities designed for encouraging
customer-conscious behaviours amongst employees have been suggested in the literature (e.g.
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Gummesson, 1991; Piercy and Morgan, 1991; Rafiq and Ahmed, 1993) scant attention has as yet
been paid to the relative merits of different communication media in facilitating internal marketing
communications.
The need for more research on the implementation of internal marketing communications has
been made even more urgent by the widespread adoption of new communications technologies
over the past decade. Since the mid-1990s there has been a dramatic shift towards the use of new
forms of electronic media, specifically Internet-related technologies, in employee communication
programmes (Gordon, 1998). At the same time the sheer volume of both targeted communication
and general information, much of it of limited immediate relevance, to which employees are
exposed in the workplace has increased exponentially (Sanchez, 1999). The need for adopting a
strategic approach to internal communications has never been greater (Gordon, 1998). Intranets
or internal Internets have emerged as a major tool of management–employee communication. In
order to encourage employee intranet usage, the Ford Motor Company went so far as to offer
its American employees free personal computers: 90% of them accepted (Anonymous, 2001).
Murgolo-Poore et al. (2002) recently identified the dimensions of intranet effectiveness and developed
a scale for measuring them, but the impact of Internet technologies in general on the internal
communications climate as yet remains unexplored.
In recent years the stakeholder concept has become a central theme in the related literatures
of management, business and society and business ethics (Donaldson and Preston, 1995). A
stakeholder in an organization is any group or individual who can affect or is affected by the
achievement of the organization’s objectives (Freeman, 1984). Jones (1995) comprehensively
expounded the potential benefits of adopting a stakeholder orientation from a theoretical
perspective. As the author himself pointed out, his argument boils down to the statement ‘ethics
pays’ (Jones,1995). Where conditions of trust, trustworthiness and cooperativeness exist between
organizations and their stakeholders, opportunistic behaviour is minimized and the contracts
between the parties may be executed more efficiently, thereby reducing costs and creating a
source of competitive advantage. There can be little argument that employees are a key
stakeholder group for any organization (Ewing et al., 2002). The application of a stakeholder
perspective to internal marketing thus provides a promising avenue for research. The extent to
which conditions of trust, trustworthiness and cooperativeness exist between management and
employees offers a potential framework for operationalizing the internal marketing construct.
Scholars in the public relations field draw similar conclusions about the centrality of ethics to
effective two-way communication, albeit adopting differing terminology in many instances.
Drawing on relevant communication theory, Pearson (1989) suggested that business ethics can be
studied as a series of questions about how a business organization communicates with the individuals,
groups and other organizations with which it has relationships, i.e. business ethics is a question
 STAKEHOLDER THEORY 149

of communication ethics. Pearson (1989) went on to suggest that ethical communication is closely
related to the idea of dialogue. Botan (1997) differentiated between monologic communication –
the currently predominant but ethically perilous mode of public relations practice – and dialogic
communication, which he claimed is both ethically and practically superior. Botan (1997) argued
that dialogic communication is characterized by a relationship in which both parties have a genuine
concern for each other. In contrast, monologic communication is more manipulative in nature:
communicators say whatever suits their short-term goals even if this results in deception or has
other adverse consequences for those with whom they communicate.

INTERNAL MARKETING
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Day and Wensley (1983) long ago argued that the role of the marketing function should be to
initiate, negotiate and manage exchange relationships between the internal and external constituencies
of the firm (emphasis added). The notion of internal marketing, in which companies are considered
as markets and employees as internal customers, emerged during the 1980s (Berry, 1981). As
Ambler (2001) pointed out, in many businesses, particularly service businesses, the first customers
are the company’s own staff. Consumers may be the ultimate customers, but employee brand
equity comes first (Ambler, 2001). Kotler (1991) defined internal marketing in terms of successfully
hiring, training and motivating able employees to serve the customer well. Thus, in some respects
internal marketing mirrors elements of good human resources management practice (George and
Gronroos, 1990). Just as external customer loyalty is driven by customer satisfaction (Heskett et al.,
1995) so too is employee (internal customer) loyalty. Jobs can be viewed as products that must
attract, develop and motivate employees, thereby satisfying the needs and wants of these internal
customers while addressing the overall objectives of the organization (Gronroos, 1990, 1993).
Service encounters – or ‘moments of truth’ – involving employees and customers can have a
major impact on future buying behaviour. Such ‘moments of truth’ can occur between both
‘front-line’ service personnel and external customers and staff and their internal customers
(Gummesson, 1987; Czepiel, 1990). What Nordic scholars (e.g. Gummesson, 1993) have referred to
as ‘functional quality’, i.e. pertaining to customer experiences during service encounters, is as appli-
cable to supplier–internal customer relationships as it is to supplier–external customer relationships
(Kotler, 1991). Internal marketing implies the existence of an internal supply chain, comprising
internal suppliers and customers (Foreman and Money, 1995). Managing all possible service
encounters or moments of truth is a requirement for service quality (Singh, 1990). Another phenom-
enon of relevance is the existence of so-called ‘part-time’ marketers, i.e. staff whose primary role
is not marketing yet who are involved in providing some manner of service to internal or
external customers (Gronroos, 1990; Gummesson, 1991). All marketers, whether full or part-time,
require training and ongoing communication in order to perform their tasks in a fashion likely
to enhance customer relationships.

FROM CUSTOMER SATISFACTION TO STAKEHOLDER SATISFACTION

Over the past decade the term ‘stakeholder’ has gained increasing popularity in both scholarly
and practitioner literature. It can be heard regularly in business schools, in boardrooms and in
political rhetoric (Ewing et al., 2002). In terms of corporate governance, the stakeholder concept
implies the existence of a fiduciary duty to all groups and individuals with a legitimate ‘stake’ in
the activities of the firm, not merely to the shareholders and other investors who own the
enterprise in the financial sense (Ewing et al., 2002). In answer to the question for whom should
 150 DE BUSSY ET AL.

business corporations be run, adherents of the marketing concept would answer the customer
on the grounds that customer focus is the best way of maximizing organizational success in the
long run. Ultimately, internal marketing matters to marketers because it enables the firm to serve the
needs of customers better (Kotler, 1991). Followers of the stakeholder concept would respond
that all organizational stakeholders, including customers and employees, have legitimate rights,
which corporations must respect and indeed reflect in formulating policy. Both the marketing and
stakeholder concepts have strong normative and instrumental assumptions: normative in the sense of
this is what corporations should do and instrumental in that corporations following the prescribed
approach will, other things being equal, ultimately enjoy greater success, including financially,
than those narrow-mindedly focusing on short-term shareholder returns (Ewing et al., 2002).
As yet stakeholder theorists (generally affiliated to the management discipline) have paid insuf-
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ficient regard to potentially relevant marketing theory. Possibly this is another example of
researchers failing to take notice of work being published in separate but related academic
disciplines (De Bussy and Ewing, 1998). As discussed above, the marketing and stakeholder
concepts have much in common: indeed the former can be viewed as a somewhat narrower
version of the latter. Both the marketing and stakeholder concepts analyse organizations in terms
of relationships with key groups on whom they depend for success or failure. Operating within
a marketing perspective, Duncan and Moriarty (1998) developed a communication-based
marketing model for managing relationships with multiple stakeholder groups including employees,
suppliers, channel partners, the media, shareholders, government regulators and the community,
in addition to customers. The potential for fruitful cross-fertilization between stakeholder and
marketing theories is clear and, as yet, apparently under-explored.
Jones (1995) aimed to construct a testable foundation for an instrumental theory of
stakeholder management, namely that a subset of ethical principles (trust, trustworthiness and
cooperativeness) can result in significant competitive advantage. His approach views corporations
as a ‘nexus of contracts’ (Jensen and Meckling, 1976) between the firm and its stakeholders and
uses three theoretical frameworks for analysing these contracts: agency theory (Ross, 1973;
Jensen and Meckling, 1976), transaction cost economics (Coase, 1937; Williamson, 1975) and
team production (Alchian and Demsetz, 1972). Contracting problems can occur under all three
headings, e.g. agents may pursue their own interests at the expense of principals, sellers of
resources may misrepresent their value to consumers, consumers of resources may ‘hold-up’ their
producers and team members may engage in ‘free-riding’ (Jones, 1995). Jones (1995) went on to
formulate nine research propositions, each fundamentally positing that firms adopting ethical
standards of conduct in relation to stakeholders will outperform those who do not.

THE CONCEPTUAL FRAMEWORK

This exploratory study investigates the impact of new media, specifically Internet-related tech-
nologies, on internal marketing communications. As discussed above, despite the significance of
effective two-way communication to internal marketing (Hartley and Lee, 1986; Morgan, 1990;
Gummesson, 1991; Varey, 1995), scant attention has been paid to the relative merits of differing
channels of communication in an internal marketing context nor to the dimensions of the
internal marketing communication construct itself. The potential for new media enhancing
communication with stakeholders, specifically what public relations scholars (e.g. Pearson, 1989;
Botan, 1997) refer to as dialogic communication, has been noted (Botan, 1997; Kent and Taylor,
1998). The advent of the Internet is changing the nature of an organization’s communication
with its stakeholders. Stakeholder communication is no longer unidirectional and, as stakeholders
 STAKEHOLDER THEORY 151

increasingly communicate with each other (either about the organization or not as the case may
be), this communication becomes infinitely more complex (De Bussy et al., 2000). This paper
examines the relationship between new media and communication with one particular stakeholder
group (employees). Thus, the use of and attitudes towards new media (the Internet, intranets
and e-mail) in the workplace form the independent variables in this study (see Fig. 1).
Both stakeholder and communication/public relations theories – as well as marketing theories –
have been drawn on in identifying the dimensions of effective internal marketing communications.
Of paramount importance from a stakeholder theory perspective are the questions of ethics and
trust (Jones, 1995). A similar perspective can be found in the communication/public relations
field. Public relations scholars have emphasized the ethical and practical superiority of dialogic as
opposed to monologic communication (Pearson, 1989; Botan, 1997). Dialogue is about commu-
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nication spirit or orientation rather than specific methods, techniques or formats (Pearson, 1989).
Communication spirit refers here to a commitment to open, two-way communication – a
willingness to listen and change practices where appropriate in the interests of achieving consensus.
Victor and Cullen (1988) developed the concept of ethical work climates within organizations
in the management literature. Ruppel and Harrington (2000) recently used Victor and Cullen’s
(1988) ethical work climate instrument for measuring perceptions of the ‘right’, ‘just’ and ‘fair’
treatment of employee stakeholders in an attempt to test Hosmer’s (1994) model linking
the ethical treatment of stakeholders with trust and innovation in organizations. Strong support
was found for Hosmer’s (1994) model (Ruppel and Harrington, 2000). These results are
consistent with the recent study by Smidts et al. (2001) on employee communication, which
stressed the central role of the communication climate – a concept closely related to the ethical
climate. The importance of trust has already been referred to above in relation to stakeholder
theory (Jones, 1995). Relevant marketing theory, specifically relationship marketing, has also
emphasized the centrality of trust (Morgan and Hunt, 1994). Thus, perceptions about ethical
work climates and the degree of mutual trust within organizations have been identified as
two key dimensions of effective internal marketing communications. Hence, the following
propositions are suggested.
P1: The use of new media in the workplace is positively related to the perception of an ethical work
climate within the organization.
P2: The use of new media in the workplace is positively related to the perception of mutual trust
within the organization.

FIGURE 1. The conceptual framework.

 152 DE BUSSY ET AL.

A third dimension theorized to be of importance to the internal marketing communication

construct is innovation. As discussed above, Ruppel and Harrington (2000) recently examined
the relationships between communication, the ethical work climate, trust and innovation from a
stakeholder theory perspective. Slater and Narver (1995) emphasized the importance of maximizing
organizational learning in the marketing literature through the creation of the right culture and
climate. Innovation is seen as critical to the proper implementation of market orientation (Slater
and Narver, 1998). Thus, the following proposition is suggested.
P3: The use of new media in the workplace is positively related to organizational attitudes towards
innovation.
Finally, the question of organizational consensus must be considered. Slater and Narver (1995)
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identified three stages in the organizational learning process, namely information acquisition,
information dissemination and shared interpretation: the third stage of ‘shared interpretation’ is at
issue here. According to Slater and Narver (1995) there must be a consensus on the meaning of
information and its implications for the business for organizational learning to occur. A key
objective of information dissemination is to achieve shared interpretation (an aspect of effective
internal communications). For the purposes of this study, shared interpretation has been examined
in relation to shared goals, i.e. are the goals of individual employees aligned with those of the
organization and do employees understand how they are supposed to contribute personally to
the organization’s priorities? Hence, the following proposition is suggested.
P4: The use of new media in the workplace is positively related to the degree of alignment between the
goals of individual employees and those of the organization.
The overall construct of effective internal marketing communications is thus hypothesized to
comprise the four dimensions of ethical work climate, mutual trust, attitude to innovation and
employee/organizational goal alignment. Hence, the following proposition is suggested.
P5: The use of new media in the workplace is positively related to effective internal marketing
communications within organizations.

MEASURES AND DATA COLLECTION

Ruppel and Harrington (2000) drew on a number of extant instruments including Victor and
Cullen’s (1988) ethical work climate instrument, Rempel et al.’s (1985) trust scale and Yeung et al.’s
(1991) competing values instrument in relation to innovation and development. The instrument
used in the present study either adopts or adapts a number of the items used by Ruppel and
Harrington (2000) for measuring the underlying dimensions of the ethical climate, trust and
innovation. The items related to the ethical climate and trust have particular relevance to the
notion of dialogic communication (Botan, 1997). As discussed above, dialogic communication
demands more than effective two-way communication alone. True dialogue requires an atmosphere
of mutual trust: participants must have a genuine concern for the needs and interests of the
other parties involved. Hence, items such as ‘this organization is always concerned with how
others will be affected by its operations’ and ‘the atmosphere within this organization can best
be described as one of mutual confidence and trust’ are specifically intended to tap the dialogic
communication construct.
The items relating to the alignment of employees’ personal goals with those of the organization
were developed specially for this study. Items were also developed for ascertaining usage patterns
and attitudes towards new media in the workplace, specifically e-mail, the Internet and intranets.
 STAKEHOLDER THEORY 153

In order to help establish content validity three items that asked directly about two-way commu-
nication within the organization were included. A number of demographic questions were also
included in the instrument in order to help classify the responses. An early version of the instrument
was pre-tested using a convenience sample of 21 financial officers within Western Australian
private sector organizations. This resulted in the refinement of the instrument and the deletion of
certain items with apparent validity or reliability problems. Apart from the demographic questions,
all items were presented in the form of seven-point Likert-type scales anchored by strongly
disagree (1) and strongly agree (7).
In order to gain an accurate understanding of internal marketing communications within the
organizations sampled, it was decided not to target either ‘front-line’ customer service personnel
or specialist marketing/public relations/communications staff as respondents. It was felt these
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groups of employees might have perceptions of the communication climate within their organi-
zations that are untypical of other staff. It would be expected, for example, that specialist
marketing and public relations personnel would have a heightened awareness of communication
within their companies. Scholars such as Gummesson (1991) have drawn attention to the critical
importance of ‘part-time’ marketers in delivering quality service outcomes to customers. George
(1990) noted that even those employees who do not interact directly with customers may
impact upon perceived service quality because they directly influence the service providers.
Consequently, financial officers were chosen as the respondents within each organization sampled.
All organizations, whatever their size or industry, employ personnel within the finance/accounting
area and such staff do not fall into the excluded groups identified above. It was also decided to
sample companies in a diverse range of industries, not just ‘traditional’ service-oriented organiza-
tions. The authors of this paper agree with Cahill (1995) that internal marketing is a key issue for
all organizations.
The final instrument was administered by mail to a national sample of 2000 Australian companies
selected at random from the Dun and Bradstreet database. The questionnaires were mailed to
senior financial managers but a covering letter requested that these executives pass the question-
naire on to a junior-to-middle-ranking employee within their department for completion. This
strategy was adopted for two reasons. The first was in order to gain an understanding of the
perceptions of rank-and-file personnel. The significance of internal marketing communications
lies in its ability to reach and motivate lower level employees within organizations. It could be
expected, for example, that senior executives would be aware of the goals of the organization
and how they personally are expected to contribute to their fulfilment. The real question is
whether that type of knowledge and awareness permeates lower down the organization.
Secondly, it was believed this strategy would deliver a good response rate. It is possible to address
senior managers by name and it was felt an instruction from an executive to a departmental staff
member to complete the questionnaire would elicit the desired response. The respondents were
provided with a reply-paid envelope and also given the option of faxing the completed
questionnaires back to the researchers. In the event 485 valid responses were received by the
cut-off date, an effective response rate of 24.25%.

DATA ANALYSIS AND RESULTS

Australian and New Zealand Standard Industrial Classification codes were used for identifying
the industry types represented in the sample. The largest sector was manufacturing (24%),
followed by property and business services (18.2%). The next most represented categories were
finance and insurance (7.2%), construction (6.4%), the wholesale trade (6.2%), retail trade
 154 DE BUSSY ET AL.

(5.6%), mining (5.4%) and cultural and recreational services (5.4%). The broad spread of industries
represented suggests that non-response bias was not a major concern. The median organization
size was 70 employees and 66.8% of the respondents fell into the junior-to-middle level employee
ranking according to job title, with the remaining 33.2% holding job titles indicating more senior
positions. The median period of time the respondents had been employed by their organizations
was three years. Seventy percent of the respondents were male, while 71.9% held tertiary educational
qualifications. The modal age range represented in the sample was 35–44 years.
The means and standard deviations for items included in the internal marketing communications
and new media scales are shown in the Appendix. Principal components factor analysis using
Varimax rotation was performed on the internal marketing communications and new media
scales, resulting in two-and three-factor solutions accounting for 58.98% and 71.47% of the variance,
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respectively (see Tables 1 and 2).

TABLE 1. Principal components factor analysisa (internal marketing communications

scale)

Internal marketing communications Innovation/Goal Ethical

alignment climate/trust

Colleagues reliably keep commitments – 0.737

Atmosphere of mutual trust – 0.821
Employees at all levels contribute to decision making – 0.674
Clear guidelines on acceptable behaviour provided – 0.615
Concern for how operations will affect how others – 0.627
Personal standards never compromised – 0.597
Willing to try new technologies to improve efficiency 0.723 –
Emphasis on being first with products and services 0.746 –
Dynamic and entrepreneurial: willing to take risks 0.694 –
Aware of organizational priorities 0.730 –
Understand how supposed to contribute personally 0.734 –
Personal work goals consistent with the organization 0.694 –
a
For clarity factor loadings below 0.5 have been excluded.

TABLE 2. Principal components factor analysisa (new media scale)

New Media Intranet e-mail Internet

e-mail increasingly used – 0.876 –

e-mail increases efficiency – 0.838 –
Internet readily available to employees – – 0.640
Internet a vital source of information – – 0.839
WWW sites brought to my attention at work – – 0.814
Intranet increasingly important 0.625 – –
Regular training on the intranet 0.833 – –
Intranet regularly updated 0.811 – –
Can find vision and mission on the intranet 0.775 – –
a
For clarity, factor loadings below 0.5 have been excluded.
WWW, Word Wide Web.
 STAKEHOLDER THEORY 155

The exploratory factor analysis of the internal marketing communications scale undertaken
indicates two underlying dimensions of the construct rather than the four originally hypothesized.
Ethical work climate and trust appear to be one dimension rather than two, as do attitude to
innovation and employee/organizational goal alignment. The three-factor solution obtained
following exploratory factor analysis on the new media scale was as expected, identifying e-mail,
the Internet and intranets as underlying dimensions.
Reliability analysis was conducted on both scales. The construct means, standard deviations
and standardized α-coefficients (Cronbach, 1970) are reported in Table 3. The scales for each
construct have α-coefficients greater than 0.7 and are therefore acceptable (Nunnally, 1978).
Bivariate correlation analysis was performed in order to help establish the content validity of
the internal marketing communication scale. The relationships between the scale and three separate
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items, which asked directly about two-way communication within the organization, were examined.
The items in question were (a) management in this organization is prepared to listen to ideas
from employees, (b) I am regularly provided with information on organizational goals and (c)
employees are kept aware of issues of concern facing my organization. The resulting bivariate
correlation matrix is reported in Table 4.

TABLE 3. Construct means, standard deviations and α -coefficients

Construct Number of items Mean SD α

e-mail 2 11.24 2.94 0.8160

Internet 3 13.68 4.04 0.7249
Intranets 4 15.78 6.19 0.8318
Ethics/Trust 6 30.10 6.02 0.8452
Innovation/Goal alignment 6 30.84 6.32 0.8657
Internal marketing communications 12 60.88 11.34 0.9047

TABLE 4. Bivariate correlation matrix

Item A Item B Item C Internal marketing

communications

Item A
Pearson correlation 1.000 0.485* 0.515* 0.718*
Significance (two-tailed) – 0.000 0.000 0.000
Item B
Pearson correlation 0.485* 1.000 0.667* 0.614*
Significance (two-tailed) 0.000 – 0.000 0.000
Item C
Pearson correlation 0.515* 0.667* 1.000 0.614*
Significance (two-tailed) 0.000 0.000 – 0.000
Internal marketing communications
Pearson correlation 0.718* 0.614* 0.614* 1.000
Significance (two-tailed) 0.000 0.000 0.000 –

* Correlation is significant at the 0.01 level (two-tailed).

 156 DE BUSSY ET AL.

Given the results of the exploratory factor analysis on the internal marketing communications
scale, it was possible to test propositions 1–4 in a modified form only. In effect P1 and P2 were
combined, as were P3 and P4 and are restated as follows.
P1/2: The use of new media in the workplace is positively related to the perception of an ethical work
climate and mutual trust within the organization.
P3/4: The use of new media in the workplace is positively related to organizational attitudes towards
innovation and the alignment of personal work goals with those of the organization.

Multiple regression analysis was performed in order to test the revised propositions and
proposition 5. The results are presented in Table 5.
Revised propositions P1/2 and P3/4 as well as proposition P5 are all supported.
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Finally, a stepwise multiple regression analysis was performed to estimate which of the new
media independent variables – e-mail, the Internet or intranets – exerts the greatest influence on
effective internal marketing communications. As reported in Table 6, e-mail and the Internet
were excluded from the resultant model leaving intranets as the most influential element in the
new media mix.

DISCUSSION AND MANAGERIAL IMPLICATIONS

The starting point for this study was an attempt to identify the underlying dimensions of effective
internal marketing communications and the impact on it of the widespread adoption of new media
as a key channel of internal communication over the past half decade. Stakeholder management,
communication/public relations and marketing theories were used as a framework for conceptu-
alizing the internal marketing communications construct. The results indicate that, as hypothesized,
the use of new media, particularly intranets, in the workplace does impact positively on effective

TABLE 5. Results of the multiple regression analyses with ‘e-mail’, ‘Internet’ and ‘intranet’
as the independent variables

Dependent variable Research proposition(s) Adjusted R2 F

Ethics/Trust P 1/2 0.072 11.505*

Innovation/Goal alignment P 3/4 0.093 14.696*
Internal marketing communications P5 0.094 14.820*

* p < 0.01.

TABLE 6. Results of the stepwise multiple regression analysis with ‘e-mail’, ‘Internet’ and
‘intranet’ as the independent variables

Independent variable Dependent variable Adjusted R2 F

Intranets Internal marketing communications 0.083 37.326 *

The e-mail and Internet variables were excluded from the model.
* p < 0.001.
 STAKEHOLDER THEORY 157

internal marketing communications. Other writers have suggested that the interactive nature of
Internet-related technologies offers considerable scope for enhanced two-way (or dialogic)
communication with key stakeholders (Botan, 1997; Kent and Taylor, 1998). This study appears
to lend empirical weight to those claims, at least as far as employee stakeholders are concerned.
e-mail and the Internet are often accused of contributing to information overload (Sanchez,
1999) but they also appear to be facilitating effective two-way communication within organizations.
Insofar as new media use contributes to dialogic communication, resultant improvements in internal
marketing effectiveness can be expected. Internal marketing requires employees be treated with
respect as ‘internal customers’. The notions of dialogic communication and internal marketing
are closely aligned.
Arguably Internet communication technologies empower employees and contribute to the
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democratization of the workplace. Control of traditional channels of internal communications,

for example employee newsletters, was highly centralized in the hands of the few. This was an
inevitable consequence of the technology involved in their production processes and helped to
maintain the political status quo within organizations. The new media are entirely different in this
respect. Using the Internet stakeholders can communicate interactively both with organizations
and with each other (De Bussy et al., 2000) in a manner previously impossible. Managers serious
about enhancing customer satisfaction through implementing the internal marketing concept
must consider how best to use new media in their organizations. Equally, a more widespread
recognition of employees as key stakeholders in their own right offers the potential for greatly
enhanced organizational effectiveness. Employees cannot be expected to deliver quality service to
internal and external customers, thereby engendering satisfaction and loyalty, unless they them-
selves are treated with respect. The stakeholder imperative for creating an ethical organizational
climate and a concomitant atmosphere of mutual trust is highly relevant in this regard. Effective
two-way communication cannot take place without the satisfaction of those preconditions
(Pearson, 1989; Botan, 1997). Attitudes to innovation (Slater and Narver, 1998) and the importance
of ‘shared interpretation’ as conceptualized by Slater and Narver (1995) also seem to be values
those charged with managing internal marketing communication can ill afford to ignore.

LIMITATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

This research, which was exploratory in nature, has a number of limitations. Particular concep-
tualizations of internal marketing communication and new media practices were used which may
not be adequately articulated. In retrospect, the merging of the ethical climate/trust constructs
was perhaps not surprising. However, the failure to discriminate between the innovation and
shared goals dimensions is harder to explain. Conceptually, it should be possible to differentiate
between them. The sample size was adequate for research of this nature but there appeared to
be a bias towards more highly educated male employees. This perhaps reflected the demographic
composition of the organizational department selected as the subject of study, as well as the
possible predisposition of those with a tertiary education to respond to questionnaires of this
nature. Even though this was a confidential survey, some respondents may have given what they
imagined to be a ‘socially desirable’ response to some questions. There is scope for further
research on the underlying dimensions of effective internal marketing communications. The
potential for further cross-fertilization between the marketing, stakeholder management, public
relations/communication and business ethics field is also considerable. This study did no more
than make a start and attempt to highlight the possibilities. More research is also needed on
precisely how new media are used in the workplace and which practices contribute most to
 158 DE BUSSY ET AL.

increased internal marketing communications effectiveness. Of particular interest, in the opinion

of the authors of this paper, is the interaction between traditional and new media. Which
channels are preferable for different communication situations and types of employees? For
example, taking the 12-item internal marketing communications scale developed in this paper as
the dependent variable, it would be possible to devise an experimental research design for
measuring the impact of communicating key corporate and human resources information via
different types of media.

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BIOGRAPHIES
Nigel de Bussy is a senior lecturer in public relations in the School of Marketing, Curtin Business
School, Perth, Western Australia. He holds an MA from the Queen's College, Oxford. His current
research interests included the PR/marketing interface, the impact of new communication technology,
and stakeholder management. He has published in the Journal of Marketing Communications, International
Journal of Advertising, Journal of Communication Management and Journal of General Management.
Michael Ewing is Professor of Marketing in the Faculty of Business and Economics at Monash
University, Melbourne, Australia. Dr. Ewing's current research interests included advertising and
web site evaluation, e-marketing strategy, cross-cultural measurement equivalence agency-client
relations and brand management. He has published more than sixty articles in refereed journals.
Amongst others, his work has appeared in Journal of Advertising Research, Journal of the Academy of
Marketing Science, Journal of Business Research, International Journal of Advertising, Business Horizons,
Industrial Marketing Management and Public Relations Review. He serves on the editorial board of six
journals, including the Journal of Advertising Research.
Leyland Pitt holds appointments as Professor of Marketing in the Rotterdam School of
Management, Erasmus Graduate School of Business, The Netherlands and as Adjunct Professor
of Marketing in the Division of Industrial Marketing, Lulea University of Technology, Sweden.
His work appears in such journals as Journal of Advertising Research, MIS Quarterly, Journal of the
Academy of Marketing Science, Sloan Management Review and Information Systems Research.
 STAKEHOLDER THEORY
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APPENDIX: DESCRIPTIVE STATISTICS FOR ITEMS USED IN THE STUDY

Item Mean SD

e-mail is increasingly being used for communications between employees and management in this organization 5.85 1.63
e-mail has made communications within this organization more efficient 5.39 1.59
The Internet is readily available to employees in this organization 5.39 1.80
I find the Internet to be a vital source of information when performing tasks at work 4.66 1.61
My work colleagues often bring to my attention Internet sites that I may find useful 3.62 1.64
This organization’s intranet (internal Internet) plays an increasingly important role in internal communication 4.88 1.88
This organization provides regular training to employees on using our intranet 3.15 1.64
My organization regularly updates information on our intranet 4.19 1.88
I know where to find this organization’s vision and mission statements on our intranet 3.60 2.20
I can rely on my work colleagues to keep the commitments they make 4.87 1.16
The atmosphere within this organization can best be described as one of mutual confidence and trust 4.88 1.33
Employees at all levels of the organization have a valuable contribution to make at the decision-making level 4.79 1.39
This organization provides clear guidelines on acceptable workplace behaviour 5.26 1.36
This organization is always concerned with how others will be affected by its operations 4.93 1.35
I have never felt that my standards have been compromised when working in this organization 5.39 1.38
This organization is always willing to try new technologies if they will improve efficiency 5.49 1.34
There is an emphasis in this organization on being first with products and services 4.76 1.51
My organization is a very dynamic and entrepreneurial place: people are willing to stick their necks out and take risks 4.38 1.55
I am always aware of the priorities of this organization 5.16 1.31
I understand how I am supposed to contribute personally to the organization’s priorities 5.57 1.22
My personal work goals are consistent with the goals of this organization 5.50 1.24

161