Global brands and social capital

Billions of consumers and business customers, in every region of the world, from cities to remote rural areas, buy global brands. This very popularity has spurred debate about the impact of global brands on the societies in which they are marketed.

To one camp it is clear that societies benefit as global branding and marketing infuse modernity and economic progress into less-developed countries. Global brands satisfy a universal 'overwhelming desire for dependable, world-standard modernity in all things, at aggressively low prices', as Theodore Levitt1 put it in a 1983 landmark article. Marketers at Wal-Mart, Lenovo, Toyota and other global brands satisfy this drive by bringing safe, well-made products and new technologies to the global mass market. Google, which has held the top spot in global brand league tables for the past two years, serves the world's huge appetite for information. Excluding egregious practices that nearly everyone can agree are harmful (such as promoting smoking of tobacco), by democratising access to their products, global marketers improve living standards.

Proponents of global brands point to universality in customers' needs, drives and emotions that transcend cultural and national differences. However, to contemporary critics of global capitalism, democratisation of access to American brands, especially, represents a corporate invasion of emerging economies and the erosion of traditional societies and cultures. Witness brands like Nike and Starbucks appearing to command more loyalty than any political party, trade union, church or mosque. Long-held cultural and social values are displaced by a focus on materialism. The economic benefits of lower prices are outweighed by losses to local producers and retailers displaced by a Wal- Mart or Carrefour.

Marketers of global brands may be quick to dismiss such concerns, but they can agree that, taken collectively, global branding and marketing are bound to have an impact on societies where their products are sold and consumed. Particularly with entry into countries that have different types of economies and political systems – not always friendly to free-market ways of doing business – the question of societal consequences becomes more salient.

Governments may well ask: does global branding and marketing fray or strengthen the social fabric? Does it help or retard economic and political development?

To our knowledge, there has been little investigation of such questions. Clearly, the issues involved are complex. Attempts to find answers could easily get bogged down in the trap of making value judgements about various cultural or societal characteristics.

However, the concept of social capital offers two advantages: it is a reasonably value-neutral measure of societies and it is associated with national development outcomes.

SOCIAL CAPITAL

The concept of social capital captures the idea that societies are more than a collection of individuals. Social capital is generated when there is a strong social fabric where people are connected through webs of associations and networks, with shared understandings of behaviour, norms of mutual obligations and responsibilities, and high levels of trust. In fact, level of trust is a good summary measure of social capital.

Social capital comes in two important forms. Bonding social capital arises from social networks that tie together and reinforce the identity of homogeneous groups such as families or communities or ethnic groups. Bridging social capital arises from networks that link together members of different social groups. Japan and the United States are nations that have high levels of both bonding and bridging social capital, characterised by high levels of trust among relative strangers (Halpern 20052). (High levels of social capital within subgroups are not always beneficial. e.g. the Mafia or the dense social networks that enabled Bernard Madoff to pull off a $50 billion Ponzi scheme.)

What does social capital do for a nation or society? According to Robert Putnam,3 author of Bowling Alone, potential benefits include:

• promotes mutual cooperation so citizens can resolve collective problems more easily
• eases business and social transactions – mutual trust reduces the need for costly contracts, laws and regulations, and means of enforcement
• widens individuals' awareness of the many ways in which their fates are linked
• increases flows of information that help individuals and groups to achieve goals.

In addition, there is empirical evidence that nations also benefit economically: high levels of social capital (measured by trust between strangers) are associated with higher GDP per capita and rates of growth.

What factors explain the formation, and destruction, of social capital? Not surprisingly, there is no simple explanation. Social capital develops from many different sources. Conditions of individuals (e.g. socialisation experiences), communities (e.g. civic life) and nations (e.g. governmental and other institutions) interact in complex ways. The expression of more individualistic values and lifestyles, for example, appears to lessen the strength of ties to family but is made possible by bridging social capital that allows trust between strangers.

CONTRIBUTIONS OF GLOBAL BRANDING TO SOCIAL CAPITAL

Social capital is a matter of trust, cooperative norms, and bridging and bonding social networks. In the following, we hypothesise positive relationships between these elements and key aspects of 'best practice' global branding and marketing.

Trust

A brand is a promise, an assurance of consistent quality from one purchase to the next. Global brands like Microsoft, Toyota, McDonald's or Nestlé make decision-making easier. Customers may pay a little more for the branded item but the time saved and the peace of mind make the tradeoff worthwhile. Taking into account both monetary and non-monetary costs of purchase, brands reduce overall transaction costs.

Brands also create trust through helping customers to meet their needs, solve problems and live better lives. To earn trust, global brands may adapt products to suit local tastes and conditions, such as adjusting menu options at fast-food restaurants or reformulating detergents depending on local water chemistry. They sink substantial resources into providing customers with up-to-date technologies and products.

With worldwide reputations and revenues at stake, global brands have a huge incentive to prevent safety or other problems from occurring in the first place, and to redress them as quickly as possible in order to retain trust. They also have both carrot and stick incentives to actively promote corporate social responsibility. Instant global communications can spread negative facts or opinions, or news of breaches of societal values and expectations regarding responsible business practices, widely. A global brand's corporate social responsibility activity is increasingly assessed and valued by a growing segment of consumers.

Cooperative Norms

Trust in globally branded products and services extends to trust in the parent corporation. If customers can trust the corporation to treat them fairly and to act in their best interests, then such corporate behaviours establish cooperative norms that contribute to social capital.

In addition to billions of exchanges and interactions with customers, marketers of global brands participate in dense, tightly interlocked supply and distribution chains. In dealings with suppliers and distributors, global corporations generally follow unstated as well as stated rules of conduct intended to promote mutual cooperation and deter cheating. Further, although not immune to greasing the wheels with bribes or payoffs, global marketers that must answer to strict home-country standards typically act with a high level of transparency and honesty.

For global brands, even competition with competitors means playing by rules partially based on cooperative norms. Casting aspersions on each other's product, for example, can end up reducing consumer demand for both brands. In addition, firms with global brands can benefit by self-policing the industry to weed out firms that don't meet high standards. They can also benefit by supporting a national infrastructure of laws, contracts and intellectual property protection that rewards cooperative behaviours. In turn, such infrastructure and high performance standards can help to build social capital and support good governance.

Bonding

Global brands, and brands in general, play a bonding role. Members of social groups often express group identity through brand choice – whether clothing, automobiles, sports-team affiliation or beverage choice: a visible sign of in-group/out-group status.

Consumers may also forge bonds based on common brand allegiance, as when fans of a particular model of car form a club. Global brands usually try to create emotional connections with consumers, and these emotional connections tend to nourish such brand-affinity forms of association.

Global brands can also help glue together larger groups of people. People are inherently social, and often value being on the same wavelength as others. Marketers of global brands possess the resources to produce and sell millions of units of blockbuster fashions.

Increasingly, global brands are creating deeper bonds with consumers by involving them in co-creating brand meaning and brand offerings. For the British Pop Idol television reality show and its many international spin-offs, consumer contestants create a large part of the content, and the consumer audience votes on results, contributing to the huge popularity of the show.

Bridging

Global brands serve a bridging role by linking consumers across national boundaries, cultures and social groups. The young person in South America wearing a New York Yankees baseball cap may never have seen or heard a broadcast baseball game. But by wearing the brand, he expresses a desire to participate in the broader world culture – without having to relinquish valued aspects of the traditional culture.

Marketers of global brands actively play a bridging role when they add together small groups across countries to constitute a viable market niche. Serving these niches on a custom basis forges additional links across national boundaries.

Consumption of global brands appears to promote diversity and tolerance of foreign cultures and peoples. Many in the Arab world strongly disapproved of United States government policy under George W. Bush but respected US brands and individual Americans. Global marketers, from McDonald's to IBM, have worked to build goodwill through localising their brands by adapting product offerings to national preferences, promoting local managers to senior positions in overseas subsidiaries and contributing to community development in host countries.

The worldwide web, Google and social networking sites – largely funded by advertising revenues from global marketers – enable consumers to network and spread information quickly to peers in far-flung places. Likewise, in the business-to-business world, big global brands use the web to connect, in efficient and guaranteed transactions, with small buyers and suppliers scattered around the world.

GLOBAL BRANDS AND ECONOMIC PROGRESS

Following setbacks in achieving long-lasting advancements in emerging economies through economic reforms alone, institutions such as the World Bank have been exploring the linkages between social capital and economic performance. Increasingly, developmental economists see societal institutions that help to create high levels of trust as essential for achieving permanent economic, social and political gains.

Top global brands that adopt best-practice marketing sustain institutions of civil society through legal, fair, transparent and trustworthy exchanges with consumers. In tune with a commitment to corporate social responsibility, many global brands are partnering with NGOs and public-policy makers to find market and non-market solutions for recognised and emerging public needs. That could mean charging lower prices in emerging economies or developing new infrastructure. Many NGOs themselves possess highly trusted global brands that help them to leverage their efforts to solve important social problems.

Controversy over global branding practices will likely persist, despite widespread consumer liking of global brands. However, the concept of social capital suggests several important mechanisms whereby global branding and marketing may produce positive social outcomes.

SOURCES

1. Levitt, T. (1983) 'The Globalization of Markets', Harvard Business Review 61, No. 4 (May/June).

2. Halpern, D. (2005) Social Capital. Cambridge, UK: Polity Press.

3. Putnam, R. D (2000) Bowling Alone: The Collapse and Revival of American Community. New York: Simon & Schuster.