DEEP DIVE: The evolution of public relations in re-emerging markets like India

The modern day practice of public relations has its genesis in the 20th century America. Public relations literature identifies four eras of public relations evolution, driven by socio-economic-political changes. In DEEP DIVE, Noumaan Qureshi analyses the evolution of public relations in America and identifies similarities that can shape the practice in countries like India.

The sixth largest, and one of the fastest growing economies, India is moving on the free market path beginning 1991*. There is underlying social impact with the change in the economic environment. A different socio-economic-political-historical reality in India compared to US has implications for the practice of public relations.

image-Noumaan-Qureshi-DEEP-DIVE-on-Pblic-Relations-on-MediaBrief-1Unlike USA, where businesses adopted to changing social mood and expectations, changes in India seem to be driven by external agents, rather than internal adjustments to the changing milieu. The Insolvency and Bankruptcy Code (IBC) has boosted the move towards transparency and forced businesses to be open in communication, reminiscent of the ‘muckraking’ phenomenon in US. The changing scenario indicates that India from the current ‘public-be-informed era’ (second stage of public relations evolution) will leap to the fourth era of ‘mutual adjustment’.

Like global expansion and technology were catalyst for growth of public relations in USA in the fourth phase, two developments – change in workforce demography and technology penetration – will drive this change in India, and 2029 will be a transformation year.

The term ‘Public Relations’ has different meanings in public perception. For the purpose of this article, public relations implies strategic, objective driven effort to create understanding, mitigate conflict, build trust and develop a conducive environment for harmony, happiness and helping people and society realize their full potential.

(*This article is agnostic: studying the evolution of public relations in US, and the role for public relations in society, it does not take a position or propagate capitalism. Likewise the historical approach in this article has no linkage to Marx or Hegel. The Max Weber reference is only to highlight India’s business history.)

Introduction

Based on a historical understanding of finance, the emerging markets of today may better be called “re-emerging markets” (Ferguson, 2008). Max Weber, the social scientist famous for the ‘Protestant Ethic and the Spirit of Capitalism’, was intrigued: why did capitalism evolve in Europe, and not in Asia? (Kieran, 2004, p. 32). The question had a context: in 1750’s, China and India combine had 60% share of the global finished output! “India was the largest producer and exporter of textiles in the world” (Acemoglu & Robinson, 2012).

The idea of business, globalization, and private sector is not new to India. In the seventeenth century, India, Persia and China had a fairly developed business environment “in matters of credit, transfer of funds, insurance and cartels” (Kieran, 2004, p. 47). The city of Ahmedabad had fifty-two associations representing different trades; Surat was an important port, handling the bulk of India’s foreign commerce (Tripathi, 2004). In cities like Benares, Ahmedabad, etc. there was a well-developed system for “arbitration”, “market control”, “brokerage”… and above all conception of “mercantile honour” (Kieran, 2004, p. 56). For about 200 years under colonial rule, India became a supplier of raw materials and market for finished goods.

A strong indigenous business community existed even in pre-independence India, influential enough to get the Civil Disobedience Movement called off by Gandhi (Mukherjee, 1993). There were eighteen large business groups under Indian control at the end of colonial rule (Tripathi, 2004, p. 329). Post Independence in 1947, India adopted a mixed economy model, with participation of both private and public (government) sector in business. There was a socialist tinge with the adoption of five-year plans beginning 1950’s (Jethwaney, 2010).

A new economic order took place in 1991, when India adopted a liberalization policy. This journey towards a ‘free market economy’ began with the then Finance Minister, Mr. Manmohan Singh, while announcing reforms, clarifying the India scenario in his speech in the parliament: “In highlighting the significance of reform, my purpose is not to give a fillip to mindless and heartless consumerism we have borrowed from the affluent societies of the West… Our approach to development has to combine efficiency with austerity. Austerity not in the sense of negation of life or a dry, arid creed that casts a baleful eye on joy and laughter. To my mind, austerity is a way of holding our society together in pursuit of the noble goal of banishing poverty, hunger and disease from this ancient land of ours”.

The period of 1990’s was significant in world history with the collapse of Soviet Union and the opening up of many economies towards free market, which till then were under Communist influence. In this ‘transition’ period, public relations played a pedagogical role by supporting efforts to increase knowledge and enhance mutual understanding of the economic change: providing a new perspective towards “social order, worldview, style, culture, values, etc.” (Tempere, 2006).

Public Relations in the USA

The modern practice of public relations has its beginning in 20th century America, but the idea of public relations has existed from the time immemorial when people adopted to living in groups. So how does modern public relations fit into the picture? It starts from the belief that in a democracy, people have a right to know. Governments, or for that matter, businesses exist on public approval. The fundamental role for public relations is creating understanding, support, alignment; publicity is a tool, not the raison d’etre of public relations.

While the two world wars, the Great Depression, Civil Rights Movement, were important socio-political developments, they also led to the growth of public relations practice (Cutlip, Center, & Broom, 2004, p. 112). Edward Bernays, the man credited with providing the title of public relations counsel, identified four eras of public relations evolution viz. public be damned, public be informed, mutual understanding and mutual adjustment.

The pre-1900 era is characterized by ‘public-be-damned’, an attitude attributed to a railroad owner William H Vanderbilt. Businesses, unfettered by public opinion, were perceived to be indulging in exploitative behavior. The evolving fearless media brought a check on this behavior, characterized by ‘muckracking’ journalism. This led to the advent of the second era – public be informed.

‘Journalist in residence’ is how public relations literature describes the second era. Ivy Lee, a former journalist, started one of the first public relations consultancy in 1904 in New York and issued a ‘declaration of principles’ describing the consultancy’s business. Businesses started communicating their side on important actions and developments. Many professionals from the Creel Committee, formed to mobilise war support and shape public opinion during World War I, became public relations advisors after the committee’s work ended. Edward Bernays was one such veteran who eventually gave the name to the profession and its practitioners, and wrote the first book on the subject and taught a course at New York University in the 1920’s.

A strategic perspective characterised the third era – mutual understanding. The Great Depression and Second World War were important events that unfolded in American history. Organisations started listening, likewise public sentiment became more accommodative towards business, as businesses emerged as big employers.

The fourth era – mutual adjustment – became a reality and necessity post second world war, when American businesses started going global. They had to manage public sentiment both at home and in newer markets. The American society was undergoing upheavel during this time – the Cuban crisis, Vietnam war, Civil Rights Movement – and businesses had to accommodate to align with the social reality. The need and demand for public relations professionals increased to help organizations adjust in this new reality based on understanding the expectations of the publics.

Globalization, technology, activism, provided an impetus to the growth of public relations in the 1980’s. The 1990’s provided the next wave with many countries embracing the free market philosophy. With the emergence of digital media in the 21st century, public relations has entered a new phase, dealing both with mass communication and targeted, personalized communication through multiple platforms. The public is now back in public relations.

The business of business in India

Two leaders of India’s freedom movement represent contradictory economic thoughts. Mohandas Karamchand Gandhi, the Father Of The Nation, believed “machinery is evil”. Gandhi’s idea of Swadeshi was anti-industrialisation, ingrained in the development at village level and not dependent on mechanization (Mukherjee, 1993).

“Temples of modern India” is how Jawaharlal Nehru, India’s first prime minister, described factories and mechanisation. Before independence, India had a free market economy system under the British rule. Post-independence, India adopted a mixed economy model with the existence of both private and public sector – a unique confluence of two contradictory systems. Even today, in sectors like banking, engineering, manufacturing, etcetera, government entities have a strong presence.

According to business history writer Dwijendra Tripathi, “While the colonial administration with its commitment to laissez-faire doctrine for most of the time functioned as a night watchman with regard to economic development, inevitably placing a limit on the business growth, the national government with its socialist pretension and big brother posture turned out to be too watchful for the Indian businesses to realize their true potential” (Tripathi, 2004, p. 332).

The top 10 companies in the Fortune 500 (2018) list for USA and India are mentioned in Table 1. In the India list, one finds a high presence of public sector undertakings.

Rank

USA

India

1

Walmart

Indian Oil Corporation (PS)*

2

Exxon Mobil

Reliance Industries

3

Berkshire Hathway

Oil & Natural Gas Corporation (PS)

4

Apple

State Bank of India (PS)

5

United Health Group

TATA Motors

6

McKesson

Bharat Petroleum (PS)

7

CVS Health

Hindustan Petroleum (PS)

8

Amazon.com

Rajesh Exports

9

AT&T

TATA Steel

10General Motors

Coal India (PS)

Fortune 500 Companies list (2018)      *PS: Public Sector


Another feature of business in India is the dominance of promoter driven companies. Unlike the economic growth in Western countries where the technocrat entrepreneurs led the way, in India, the mercantile class established businesses. The family or groups that operated under the British regime took to setting up factories in independent India (Tripathi, 2004).

The vocation of public relations in India

Public relations professionals find jobs in four segments: government, not-for-profit/ NGO’s, in-house in private companies and PR consultancies. Post independence, government was a big employer for public relations, with its public sector undertakings (PSU) and their public relations departments. This got a major fillip in the 1970’s with the government of the period focusing on public outreach for support (Jethwaney, 2010). This trend will continue in government and public sector.

NGOs more or less are globally aligned in terms of their strategies and approach. Most global NGO’s operate in India as well and therefore have access to best practices for advocacy, highlighting causes, fund raising and volunteer engagement. It is the in-house and consultancy professionals who will witness a transformation in expectations.

While organizations in India today are responsive, like the public-be-informed era of America of the 1900’s, two shifts are happening in society that will expect PR in India to leap to the mutual adjustment phase (some industries like consumer goods are already doing it).

First, shift in demography on both workforce and management side will change the communications dynamics. The year 2029 will be an important landmark; it will be the year when the generation that entered the Indian workforce post-1991 will be at the helm. The pre-1991 workforce would have retired. Promoter driven companies will still exist, but it is already the next generation from the families that are leading the organisations. This generation next has studied business and management in Western Universities and is attuned to the need for alignment with societal expectations.

From the ‘journalist in residence’ public be informed era, PR professionals will be solicited for strategic advice and will have to play the role of social and cultural interpreters for the management. Incidentally, 2027 will be the centenary year for Arthur Page joining AT&T as Vice President and setting the principles for how corporations do their public relations.

Second, with the increased usage and penetration of technology, people now have access to information from various sources and are exposed to varied perspectives. This is impacting the relevance of mass media. Lets not forget the biggest limitation of mass media: it has severe limitations to make people think, it’s power lies in what to think about – the agenda setting. Citizen journalism, social media are already realities. Literacy is no barrier; content is more visual. Whatsapp had a tumultuous year, with fake news propagated on the platform, leading to violence and deaths. But technology is a force for good, bringing information closer and making information dissemination faster. An informed populace will demand accountability from those in power, whether government or business. This is an opportunity for PR.

The changes under way

In the book ‘Why Nations Fail’, the authors draw a comparison between the business environment in United States of America and its neighbor Mexico. Unlike free market America, the entrepreneur in Mexico deals with challenges at every level for doing business including ‘licenses’, ‘red tape’, ‘politicians’, ‘funding challenges’, etc. (Acemoglu & Robinson, 2012). ‘Licence raj’ is how the business environment in pre-1991 India is described as well.

There are changes underway in the broader environment. India has moved up in the Ease of Doing Business Index. Shareholder activism is taking shape (the Fortis deal was a testimony of it). This vibrancy and move towards greater transparency will provide confidence to investors sitting around the world.

It is difficult for investors sitting miles away to monitor what is happening in investee countries with “unreliable legal systems” and varying “accounting rules” (Ferguson, 2008). In 2018, two important developments on the policy and regulatory front took place in India. The Securities and Exchange Board of India (SEBI) accepted the recommendations of Kotak Committee on corporate governance, bringing greater accountability on Independent Directors and transparency in related party transactions. The second development was the insolvency proceedings against defaulting companies under the year old Insolvency and Bankruptcy Code (IBC).

While economy is undergoing changes, society will undergo a transformation as well. Like Manmohan Singh outlined in his 1991 speech, “Our approach to development has to combine efficiency with austerity”, the social realities of the country have to be borne in mind. This requires a narrative that weaves the economic prosperity with societal expectations and aspirations.

The India narrative should focus at the basics, not grand plans; something that Malcolm Gladwell posits in The Tipping Point – small things make a big difference. Some years back, in an informal survey with mothers of 4-14 year old’s, we asked them what was their biggest worry about the child. To our surprise, the unanimous theme emerging across castes and communities was: “how will my child grow up; what values will she/he imbibe!” This is the next generation of consumers and the workforce coming up.

Joseph Schumpeter, one of the greatest economists, writing “Will Capitalism Survive” in the middle of the twentieth century, expressed apprehension that the collapsing institution of family will pose a challenge for free market economy. In Economics, family unit forms the basis of society and economic activity, as consumers and providers of workforce. Various researches indicate businesses by Indians do better than other migrant populations in USA. India is a high context society; family-oriented, tight relationships, believe deeply in traditions, etc. (Sharma, 2012): this should emerge as the biggest comparative advantage. This is where the narrative has to start like the ‘American Dream’.

Coming back to the PR professional, what will be the ASK (Attitude Skills Knowledge) for the PR professional of the future to emerge as the social and cultural interpreter. It will be Data (basically it means research understanding), Digital (dealing with fake news and risks on the internet) and Direct Engagement (personal influence with stakeholders).

Your thoughts, please