RUMORSAND

RUMOR CONTROL

LEA's Communication SeriesJennings Bryant/Dolf Zillmann, General Editors

Selected titles in Public Relations (James Grunig, Advisory Editor) include:

Dozier/Grunig/Grunig Manager's Guide to Excellence in PublicRelations and Communication Management

Fearn/Banks Crisis Communications: A Casebook Approach, SecondEdition

Grunig/Grunig/Dozier Excellent Public Relations and EffectiveOrganizations: A Study of Communication Management in Three

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Lerbinger The Crisis Manager: Facing Risk and Responsibility

Mickey Deconstructing Public Relations: Public Relations Criticism

Parsons A Manager's Guide to PR Projects: A Practical Approach

For a complete list of titles in LEA's Communication Series, please contactLawrence Erlbaum Associates, Publishers at www.erlbaum.com

RUMORSAND

RUMOR CONTROL

A Manager's Guideto Understanding

and Combatting Rumors

Allan J. KimmelESCP-EAP, European School of Management

LAWRENCE ERLBAUM ASSOCIATES, PUBLISHERS2004 Mahwah, New Jersey London

Figures 4.3,4.4, 4.5,4.7, and 6.1 are from Marketing Communications, ChrisFill. Copyright Prentice Hall Europe 1995, reprinted by permissionof Pearson Education Limited.

Copyright 2004 by Lawrence Erlbaum Associates, Inc.All rights reserved. No part of this book may be reproduced in anyform, by photostat, microfilm, retrieval system, or any other means,without prior written permission of the publisher.

Lawrence Erlbaum Associates, Inc., Publishers10 Industrial AvenueMahwah, New Jersey 07430

Cover design by Sean Sciarrone

Library of Congress Cataloging-in-Publication Data

Kimmel, Allan J.Rumors and rumor control : a manager's guide to understanding and

combatting rumors / Allan J. Kimmel.p. cm.

Includes bibliographical references and index.ISBN 0-8058-3875-9 (cloth : alk. paper)ISBN 0-8058-3876-7 (pbk. : alk. paper)1. Communication in management. 2. Rumor. 3. Crisis management.

I. Title.HD30.3.K55 2003659.2dc21 2003044095

CIP

Books published by Lawrence Erlbaum Associates are printed on acid-freepaper, and their bindings are chosen for strength and durability.

Printed in the United States of America1 0 9 8 7 6 5 4 3 2 1

This book is dedicatedto my father, Donald Kimmel,

and to the memoryof my mother, Helen Kimmel.

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Contents

Preface

PART I UNDERSTANDING RUMORSAND RUMOR TRANSMISSION

1 Introduction: Identifying Rumors and Related Forms 3of Communication

2 Understanding Rumor: The Dynamics of Rumor 32Transmission and Belief

3 Commercial Rumors and Organizational Grapevines 59

4 How Information Spreads: Word-of-Mouth, Opinion 88Leadership, and the Media

PART II COMBATTING RUMORS IN THE MARKETPLACEAND WORKPLACE

5 Managing Commercial Rumors: How Can Marketplace 123Rumors Be Prevented?Rumors Be Prevented?

6 Managing Commercial Rumors: Strategies and Tacticsfor Neutralizing Rumors

7 Managing the Organizational Grapevine

157

203

VH

Viii CONTENTS

References 233

Author Index 247

Subject Index 253

Preface

Whatever words we utter should be chosen with care for people will hearthem and be influenced by them for good or ill.

Siddhartha Gomo or Buddha

In this new millennium, the expression information age has been used so fre-quently to describe the modern era that to cite it here may be seen as belabor-ing the obvious. Yet, what better terminology to characterize an era in whichnewly emergent technologies allow us to communicate with one anotherwith far greater facility than at any other time in history? Unlike previous peri-ods, we are now as likely to exchange information with total strangers as withpeople we know. The information available to each of us at any particular timehas also expanded exponentially over the years. As Richard Saul Wurman(1989) pointedly observed in his book Information Anxiety, "a weekday editionof The New York Times contains more information than the average person waslikely to come across in a lifetime in seventeenth-century England" (p. 32).This is perhaps nowhere more evident than in the business world. If you wereto look at a Reuter's financial market screen for 10 minutes, you would see 10times the information you would ever need.

In this context, with any desired bit of information instantaneously avail-able with a click of a computer mouse, we might expect that rumors, whichtraditionally have flourished during periods of news blackouts and informa-tion famines, would be a thing of the past. Ironically, the opposite seems tobe the case. In contemporary society, rumors circulate like the air webreathe; more and more, they seem to arise not from a lack of information,but within a context of information overload. This apparent contradictioncan be traced in large part to the public's seemingly insatiable need to know.As demands for greater access to news and instantaneous communicationcontinue to grow, the reliability of any one piece of information has becomethat much more difficult to assess. Indeed, the veracity of much publicly cir-culating information has become progressively more suspect as the capacity

IX

X PREFACE

for its rapid and widespread flow has expanded. In many cases we do notknow whether the facts have been verified and often we do not even knowwhere the information originated. Lacking the identity of the true source,we are left with the thorny task of discriminating reality from fiction, truthfrom nontruth, and fact from rumor.

With respect to the questionable truthfulness of information, the stakesare perhaps nowhere higher than in the contemporary business world. At noother time have rumors represented such an imposing competitor in the mar-ketplace of information exchange. Rumors can tear at the heart and soul of abusiness and the fight to control them ultimately engages most managers atone time or another. Given that there are alternative explanations for the evo-lution and spread of rumors, in addition to the complex dynamics of the ru-mor process, it would be naive to expect that one approach to rumor controlwould be feasible in all situations. In fact, most rumor specialists advocate theuse of multiple rumor control tactics within any business setting to optimizethe chances that rumors will be identified and addressed early, before theymanage to wreak much damage.

Although it is essential that each company formulate an approach for deal-ing with the rumor problem, there is no foolproof plan for preventing or neu-tralizing rumors that can guarantee success for different kinds of companiesor varying circumstances. Although the stakes clearly are on a smaller scale,the fight against commercial rumors shares much in common with the ongo-ing international war against terrorism. In both cases, the specific enemy andtiming of the strike are not known until it is too late to avoid potentially direconsequences. Even the strongest prevention efforts cannot successfully wardoff every single blow. Yet there are measures that can be taken to reduce thelikelihood of attack and the severity of damage inflicted once the battle hasbeen joined.

When I first set out to write this book, I had two objectives in mind: (a) toshed light on the often perplexing phenomenon of rumor by integrating dis-parate approaches from the behavioral sciences, marketing, and communica-tion fields; and (b) to offer something of a blueprint for going about theformidable tasks of attempting to prevent and neutralize rumors in businesscontexts. In essence, these objectives reflect the two faces of this book, one ofwhich is theoretical and the other applied. Social psychologist WilliamMcGuire (1965) once adroitly commented that application without regard totheory is "as inelegant and inefficient as trying to push a piece of cooked spa-ghetti across the table from the back end" (p. 139). Similarly, we can say that ef-forts to cope with the rumor problem in the marketplace and workplacewithout an appreciation of what has been learned to date about the multifac-eted and elusive nature of hearsay are ultimately doomed to failure. Withthese dual goals in mind (one theoretical, the other applied), I am hoping that

PREFACE XI

this book will be of equal interest to academics and managers in a wide rangeof professional contexts.

The world is a much different place now than it was when this book wasfirst conceived. Events such as the September 11 terrorist attacks in the UnitedStates and the collapse of Enron have done little to deflate the problem of mar-ketplace rumors. On the contrary, by raising public anxieties, uncertainty, andskepticism, these events have served to exacerbate the very forces that under-lie the generation and spread of rumors. The challenges for product and brandmanagers, public relations specialists, employers, and behavioral scientistshave never been greater. Companies must be prepared to ward off competingcampaigns of misinformation by revealing rather than concealing the truth,reducing uncertainties, and proactively establishing and maintaining trustamong their various publics. It is hoped that this book can serve as one tool to-ward achieving such daunting tasks.

My interest in the psychology of hearsay dates back to my early days as agraduate student at Temple University. It was there that I met and began towork with one of the key crusaders in the investigation of rumor, RalphRosnow, who one September afternoon in 1976 invited me to contribute an ar-ticle about gossip for a special issue of the Journal of Communication he was ed-iting. Little did I realize at that early stage in my professional career (my firstmonth in graduate school!) that I was about to embark on a fascinating jour-ney that would culminate in the writing of this book. It now has been morethan 25 years since that article (coauthored with Jack Levin) was published andI have remained actively engaged in the study of rumor ever since.

Allan J. KimmelParis, France

ACKNOWLEDGMENTS

In one way or another, the ideas and views presented in this volume werestrongly influenced by several colleagues with whom I have crossed paths overthe years as we mutually pursued the elusive truths about rumors, marketplacecommunication, and consumer behavior. Foremost among these individualsare Fredrick Koenig (Tulane University), Jack Levin (Northeastern University),Elyette Roux (ESSEC), Michael Roller (Phillips University Marburg), RobertKeefer (Mount Saint Mary's College), Elisabeth Tissier-Desbordes (ESCP-EAP),and, especially, Ralph L. Rosnow (Temple University). I also am indebted to theLEA editorial staff for their faith in this project and their painstaking efforts tobring the book to fruition. Most importantly, I thank my wife, Marie-Ange, forher continued patience, unflagging support, and divine inspiration.

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Parti

Understanding Rumors and Rumor Transmission

Rumour is a pipeBlown by surmises, jealousies, conjectures

And of so easy and so plain a stopThat the blunt monster with uncounted heads,

The still-discordant wavering multitude,Can play upon it ....

William Shakespeare, Henry IV

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CHAPTER ONE

Introduction:Identifying Rumors and RelatedForms of Communication

Rumor. Think about this word. Say it out loud. Rumor. It has such ugly con-notations, doesn't it? A statement that cannot be proved or disproved. Ru-mor. Rhymes with tumor.

La Monica (1999a)

Whether one chooses to equate it with a malignant growth, a poisonous vapor,or an information virus, the underlying message is clear: Rumor spreads rapidly,is difficult to control, is invisible yet nearly impossible to ignore, and can havedamaging and perhaps even deadly consequences. We know it is probably badfor us, and we know it can hurt those around us, but we often find it hard to re-sist becoming active participants in the rumor-spreading process.

Rumors have been a basic element of human interaction for as long as peo-ple have had questions about their social environment. Yet, despite its obviousnegative connotations, a rumor has the capacity to satisfy certain fundamentalpersonal and social needs, and in this sense can be beneficial to those who par-ticipate in its transmission. To a great extent, rumors are communicated as aneffort after meaning; in other words, they help people make sense of what isgoing on around them. Rumormongering is a way of trying to explain what ishappening and whywhether it be a crime in the neighborhood, a politicalcrisis, or a change in a company's management. Spreading rumors becomes ameans by which people try to get the facts, to obtain enough information sothat it reduces their psychological discomfort and relieves their fears.

RUMORS IN THE MARKETPLACE

Despite the positive aspects of rumors, in the business environment, un-founded assertions and speculation can be especially potent and undeniably

4 CHAPTER 1

dangerous. In fact, for many contemporary managers, rumors often representan imposing competitor in the marketplace of information exchange. Virtu-ally every type of company is plagued from time to time by the spread of un-verified stories and questionable information about its operations. Most ofthese stories are relatively harmless, drawing little serious attention andquickly fading away before developing into something more formidable.However, sometimes the situation festers and takes on a life of its own, andwhat may have started out as a seemingly innocuous assertion about some as-pect of the company's activities evolves into a full-blown whispering cam-paign that spreads quickly and uncontrollably throughout the company'svarious publics. In such cases, rumors can strike at the very heart and soul of abusiness. They can severely damage company and brand images, underminecorporate credibility, stimulate consumer boycotts, adversely affect employeejob performance and satisfaction, and have far-reaching effects on financialmarkets. Although most rumors have a discernible life cycle, contemporarycommunication media have the potential to speed up the process dramati-callyin fact, some rumors cause damage overnight and disappear immedi-ately; others are more persistent and can have insidious effects over the longterm, appearing and reappearing along with changes in the social or psycho-logical climate.

Many managers have learned the hard way that a failure to react quicklyand effectively to false rumors can have devastating consequences. This issomething that the corporate executives and brand managers at Procter &Gamble (P&G), one of the world's most successful consumer goods manufac-turers, are all too well aware of. P&G has been the target of negative rumorcampaigns off and on over the past two decades, and there is little reason to ex-pect that the trouble will not reemerge again in the future. The P&G case rep-resents one of the longest, most widely publicized, and most expensiveconfrontations with rumor in the consumer marketplace. Accordingly, it canserve as a useful starting point in efforts to fulfill the basic objectives of thisvolume: to dissect the nature of rumor, understand its dynamics, and developstrategies for coping with it. Following a detailed description of the P&G storyand some related examples, the remainder of this introductory chapter tack-les the thorny and often elusive issue of what a rumor is, identifying its charac-teristics and properties, and distinguishing the concept from related forms ofcommunication with which it is often confused.

Procter & Gamble and the Man in the Moon

The beginning of trouble for P&G has been traced back to early 1979, whenrumors began to circulate that the company was secretly controlled by theReverend Sun Myung Moon's Unification Church (so-called Moonies). As weconsider in greater detail later, it typically is very difficult to pinpoint the exact

INTRODUCTION 5

origins of a rumor and the P&G case is no exception. Nonetheless, it has beensuggested that the onset of the Moonies rumors could have had something todo with the Unification Church's purchase of property in Florida (Koenig,1985). This action caused a general sense of uneasiness in the local populationthat may have been transferred back to the American Midwest by tourists whospent their winter holidays in the South. The strange image of the man in themoon in P&G's logotype, which appeared on more than 70 household prod-ucts at the time, may have served to link the company and the church for anx-ious consumers (see Fig. 1.1).

The Moonie rumors first became apparent to P&G officials when the com-pany's Public Affairs Division received inquiries from a handful of reportersand consumers in Florida about ownership by the Unification Church(Koenig, 1985). Shortly thereafter, telephone calls from around the countrybegan to trickle in to the Consumer Services Department, whose toll-freetelephone number was printed on every product package. In each case, thecallers said that they had heard that the company had been acquired by the fol-lowers of the Reverend Sun Myung Moon. By the end of 1980, hundreds oftelephone calls, cards, and letters were arriving each month, compelling thecompany to deny the allegations by writing to news organizations in the statesthat apparently were most affected. Eventually, however, many of the inqui-ries began to focus on P&G's involvement with witchcraft and the devil, with agrowing number alleging that the company's century-old trademark, a circlewith a design depicting the man in the moon and 13 stars representing theoriginal American colonies, was a symbol of Satanism. The situation ap-peared to have died down following P&G's unequivocal denials, until late 1981when a deluge of Satanic-related queries suddenly beset the company. DuringDecember 1981 alone, 1,152 inquiries were received, mainly from the WestCoast (Salmans, 1982). At that time, the Moonie ownership rumors appearedto fade away as the Satanism rumors became more specific and elaborate,

FIG. 1.1. Procter & Gamble'smoon and stars logo. Reprintedwith permission of The Procter& Gamble Company.

6 CHAPTER 1

quickly spreading across the country. Many callers reported hearing that acompany executive (often identified as the "owner") had appeared on a na-tionally popular television program and admitted a Faustian pact with thedevil to gain success for the company. Interestingly, a nearly identical story hadcirculated about the McDonald's Corporation a few years earlier.

It was now becoming apparent that what had started out as a more or lesslocalized story about company ownership was rapidly evolving into a nationalcrisis situation for P&G. This case predates the Internet, but a formidableword-of-mouth network was constructed through the use of more traditionalmedia, including newsletters, circulars, and face-to-face interactions. Anony-mous fliers, usually misspelling the company's name, began to appear at su-permarkets, alleging that the company was donating 10% of its earnings tothe Church of Satan and urging shoppers to boycott P&G products. For exam-ple, in one anonymous flier, the call to boycott took the following form: "Doyou realize, that if all the Christians in the World would stop buying Proctorand Gamble [sic] Products this Company would soon be out of business?"(Such urgings for consumers to boycott a company at the center of a ru-mor-generated controversy are frequent; see Box 1.1). There were reports thatthe ministers of some small fundamentalist churches were also attacking thecompany and urging parishioners to boycott its products. Church newslettersdistributed throughout the Southeast Bible Belt, Texas, and Oklahoma reiter-ated the Satanism claims, detailing the alleged television program and eventu-ally adding a new twist regarding the P&G logo. The fliers described how thelogo included the figure "666"the sign of the Beast according to the Book ofRevelation. This additional indication of devil worship was apparent when the13 stars were connected and also could be seen in the curls of the man in themoon's beard when the logo was held up to a mirror (see Fig. 1.2). By thespring of 1982, P&G was receiving 12,000 queries monthly about the devil ru-mors and there was little to encourage the company that the rumors wouldsoon go away on their own.

Coping: Procter & Gamble Fights Back

In an attempt to cope with a growing crisis that threatened the company'sstrong leadership position in several product categories, P&G officials initiallyfeared that going public to fight the rumors would add fuel to the fire andbring the stories to the attention of people who were not already aware ofthem. There is nothing unusual about this concernit is a typical reaction ofmany companies that are put in the position of dealing with hearsay abouttheir operations or marketplace offerings. After a second mailing to news or-ganizations on the West Coast had little apparent impact, and as there was lit-tle to suggest that the Satanism rumors would die a natural death, P&G'spresident enlisted the cooperation of conservative religious leaders, including

INTRODUCTION

Box 1.1. Marketplace Rumors and Consumer Boycotts:From "Xeroxlore" to "Cyberlore"

A number of commercial rumors that have plagued well-known con-sumer products companies have been accompanied by calls for a consumerprotest or boycott of products and brands (cf. Friedman, 1999). Such de-mands typically are targeted at companies that raise concerns or fearswithin certain groups about unethical business practices or unsafe productofferings (so-called conspiracy or contamination rumors; see chap. 2), andtraditionally have been spread through the use of anonymous, printed leaf-lets and fliers. In the past, such media represented one of the most efficientmechanisms for conveying a lot of information. For example, in the case ofthe P&G rumors, leaflets and fliers were required to list all of the company'smany products and brands so that they could be boycotted (Kapferer, 1990).Further, in contrast to rumors that are transmitted orally throughword-of-mouth, those that appear in printed form often seem more authori-tative and credible, especially when they are accompanied by the signaturesof influential people. According to Kapferer (1990), the tendency for the in-dividuals involved in the rumor-spreading process to simply photocopy anddistribute large numbers of leaflets in mailboxes or public settings has led tothe emergence of a category of rumors called "Xeroxlore."

In recent years, with the emergence of the Internet, a new form ofXeroxlore has begun to take shape in cyberspace. Rather than engaging in thetedious task of physically providing hundreds of consumers with photocopiedrumor leaflets, a word-processed version of the flier can now be sent out tothousands of e-mail boxes within a few minutes. Given the steady rise of spam(or electronic junk mail) in cyberspace, it remains to be seen whether "e-maillore" or "cyberlore" will turn out to be as persuasive as the more traditional fli-ers and leaflets in adding fuel to the rumor-spreading process. A recent exampleof false rumors about Nike and Coca Cola and accompanying calls to boycottthe companies turned up in the e-mail in-box of one of my students. Excerptsof the crudely written message appear here, with the accompanying photos:

My Dear Muslim this is Symbol Qyamat (Dooms Day). Wakeup my dear(lyman waloo). Go through the mention below message and photograph.BOYCOTT COCA COLAAttention all Muslim Media's and Muslims of the World!!!!Last year famous Jew's shoe making company "NIKE" designed shoes withwritten ALLAH using the art of Calligraphy. Now once again they are back byusing the art of calligraphy but with very internationally well known beverageproduct Coca Cola. In normal we read Coca Cola but actually its reversed cal-ligraphy art and if u read it, it means "NO MOHAMMAD NO MAKKHA".... please ask Muslim Ummah to Boycott drinking Coca Cola and should askCompany official to immediately change their monogram ...

(continued)

CHAPTER 1

DO NOT DRINK !

Oc* C*ta:

If you read it from left to rigta (mirror oriektation)zaeWriysty*: "NO MOHAMMAD NO MEKKAH1fearakfc fetters*

".. mikhatre4 kasabrady if pethefc- hearts comceal is fcr wne

r Atr mtuthK Wkat> Qvra

Jerry Falwell and Billy Graham, who prepared letters strongly avowing thatthe company was not associated in any way with Satanism or devil worship.The letters were mailed to 48,000 Southern churches, but appeared to have lit-tle effect in killing off the rumors. By June 1982 more than 15,000 monthlyqueries were reaching the company about the trademark (Salmans, 1982).

On July 1 P&G executives decided to fight fire with fire by publicly attack-ing the rumors with an all-out crisis management offensive. The company's

INTRODUCTION

FIG. 1.2. Allegedreferences to Satanin the P&G logo.Source: Rumor in theMarketplace,Fredrick Koenig.Copyright 1985by Auburn HousePublishing Com-pany. Reproducedwith permission ofGreenwood Pub-lishing Group, Inc.,Westport, CT.

public relations department, advised to forget earlier cautions, mounted athree-pronged attack consisting of mass mailings to churches, denials to themedia, and lawsuits against persons known to be spreading the rumors. Thelitigation was intended as a forceful means of generating publicity (Salmans,1982). Underlying this offensive were the goals of reaching as many people aspossible with the antirumor campaign as many times as possible (called reachandfrequency in the advertising trade). It was believed that this approach wouldcurtail the spread of the false, malicious rumors and forestall their future reap-pearance. As with most public relations campaigns, P&G also hoped to influ-ence public opinion to accomplish the broader objective of protecting thecompany's reputation and that of its many products (see Box 1.2).

As a result of this aggressive strategy, calls about the rumors quickly fell offby half and it appeared that the rumors were on the way to being successfullyquashed. The lawsuits filed against seven individuals believed to have spreadthe rumors were especially effective in generating a flurry of publicity and call-ing attention to the company's seriousness in combatting the whispering cam-paign. The initial lawsuits, which were filed against distributors of competinghousehold products and a lay minister, all were resolved out of court when thedefendants publicly apologized and stated that the rumors were untrue.

By the spring of 1983, the situation seemed to have calmed down, but asP&G soon learned, its battle against rumors was hardly over. As this case illus-

10 CHAPTER 1

Box 1.2. The Public Relations Transfer Process

As the term suggests, public relations (PR) is a mass-promotion techniquethat involves a company's attempts to develop good relations with its variouspublics by obtaining favorable publicity, building a good corporate image, andmanaging any unfavorable events or crises that threaten its reputation or cor-porate earnings (Kotler, Armstrong, Saunders, & Wong, 1999). When un-founded, negative rumors about a company's operations, products, orservices begin to receive widespread attention, the situation can become a PRnightmare that threatens to rapidly spiral out of control. The negative public-ity generated by increasing media attention to the story typically requiressome sort of carefully managed response by the company concerned.

PR experts Jefkins and Yadin (1998) developed a simple conceptualizationof the PR process that is quite useful to our understanding of the importanttasks at hand when a firm is confronted by rumors and forced to respond tothem. In their public relations transfer process, Jefkins and Yadin suggested thatthe classic PR situation requires the conversion of four negative states intofour positive ones. The basic aim of this transfer processin fact, the principalaim of PRis the creation of understanding, which comes about fromknowledge provided through the company's PR efforts. In short, a companyor its specific marketplace offerings (e.g., a brand, an advertising campaign, asales promotion, a trademark design, a retail outlet) may be subject to one ormore of the negative states depicted in the left box of the model.

Negative Positive

HostilityPrejudiceApathyIgnorance

SympathyAcceptanceInterestKnowledge

The PR transfer process: Knowledge leads to understanding (Jefkins & Yadin, 1998;Reprinted with permission of Pearson Education Limited).

For example, we might imagine that members of certain religious groups,on hearing of P&G's alleged relationship with Satan, would be outraged bythe company's practices. This hostility, which might be accompanied by someof the other negative attitudes in the box (e.g., prejudice and ignorance),could be expected to lead to a variety of actions that would be potentiallyharmful to the company, such as the boycotting of its products, vandalism to-ward the firm, and the repetition of malicious rumors. P&G's PR challengewould be to launch a communication campaign to successfully convert thehostility into sympathy, such as by convincing consumers that the company isthe innocent victim of clearly false and unfair rumors. (See chaps. 5 and 6 formore details about how this conversion could be accomplished.)

INTRODUCTION 11

trates, some rumors never die, and instead periodically return to do furtherdamage. This is precisely what happened with the Satan rumors, which reap-peared with rejuvenated force in late October 1984. At that time there was anetwork radio news report that the company was again being victimized, andthe problem was reiterated the next day in the Wall Streetjournal. According toa front-page story in that week's Advertising Age, queries about the Satan con-nection had increased to about 3,000 in October. Although the problem didnot appear to be as widespread as it had been 2 years earlier, this time a differ-ent network of rumor transmitters seemed to be involved. P&G responded lo-cally to outbreaks of the rumor in areas of the country where Catholic nunsand priests were putting notices in newsletters and church bulletins urgingpeople to boycott the company's products. Apparently, these members of theCatholic clergy had not been reached by the national media campaign thathad been launched 1 year earlier.

Following another serious flare-up of the Satan rumor across several mid-Atlantic states in early 1985, P&G announced that it would be removing themoon-and-stars trademark from its product packages as each package under-went routine redesign. It was believed that the removal of the trademark, inuse since 1850, would help counter the belief that it represented a symbol ofSatanism. At the time of the announcement, a company spokesperson ex-plained, "The bottom line is the move is being made because there appears tobe little advantage to having the trademark on product packages. At the sametime, it will remove one part of those false and malicious stories" ("R&G.Drops Logo," 1985, p. Dl).

During previous outbreaks of the Satanism and Moonie rumors, P&G hadfirmly rejected suggestions that it simply remove the controversial symbolfrom its packages. This decision was a contentious one, perhaps bolstering thesuspicions of some consumers. However, internal company research had re-vealed that customers generally did not notice the trademark on productpackages and assigned little meaning to it ("P.&G. Drops Logo," 1985). Indeed,on some products, the trademark had been reduced for design purposes toonly one-eighth of an inch in diameter. Also, one must bear in mind that themoon-and-stars symbol was a readily identifiable company logo that had beenassociated with P&G's numerous products for more than 100 years (see Fig.1.3), including such well-known brands as Crest toothpaste, Tide laundry de-tergent, Ivory soap, and Pampers disposable diapers. At the time of its adop-tion, the man in the moon profile was a fad, much like the happy face of morecontemporary times, and the company founders took a liking to it. In retro-spect, although it can be argued that the removal of the logotype should havebeen accomplished much earlier, this represented a tough decision for thecompany. Ultimately, the company settled for a compromise, eliminating thelogo from its product packages while maintaining its use on corporate letter-heads and publications (Wilcox, Ault, & Agee, 1989).

12 CHAPTER 1

FIG. 1.3. Evolution of the Procter & Gamble logo. Reprinted with permission of theProcter & Gamble Company.

For the next 10 years, the combination of antirumor strategies imple-mented by P&G appeared finally to succeed in pushing the rumors thatplagued the company for so long into the background, although not killingthem entirely. During that time, there apparently was a small but persistentgroup of Americans who still believed that P&G was linked with the devil andwho periodically circulated poorly copied fliers. The company continued toreceive up to 20 calls per day about the Satanic rumors and initiated additionallawsuits, one against a Kansas couple who worked as distributors for Amwaya P&G competitor, which resulted in a $75,000 judgment ("Trade Mark of theDevil," 2000). In 1991 the elements rumored to represent the Satanic number666 were removed from the trademark.

The P&G rumors have made more than one major comeback in recentyears, most notably in 1994 and 1999. In each case, the stir was precipitated bythe recycled tale alleging that the company president had announced on a pop-ular television program that he was a Satanist and his company associatedwith the Church of Satan. One added twist to the 1994 version was the asser-tion that a Satanic ram's horn symbol would start appearing on the company's

INTRODUCTION 13

products, bearing the number 666 ("Trade Mark of the Devil," 2000). Over thecourse of its rumor troubles, P&G has filed 15 lawsuits against individualsidentified as making false and defamatory statements linking the company toSatanism, 6 of which have been initiated against Amway distributors. Try asthey might to kill the rumors, they invariably spring to life again.

The Consequences: Tallying the Damages

Just who was responsible for the P&G rumors? Although it might be suspectedthat rival companies were behind the rumor campaigns launched againstP&G, no evidence has ever emerged suggesting that competitors pushed theircirculation or that the campaigns were economically inspired (Salmans, 1982;"Trade Mark of the Devil," 2000). Despite the involvement of some overex-uberant Amway distributors in the rekindling and spreading of the rumors,much of the problem appears to have come from the activities of religiousgroups unhappy about P&G's sponsorship of controversial television pro-grams. In fact, an Amway spokesperson emphasized that his company had"bent over backwards to help Procter & Gamble stop this rumor," and addedthat P&G had handled the problem badly from the start from a public rela-tions perspective, allowing the Satanism rumors to spread far and wide(Franks, 1999). In Chapter 2 we consider some other plausible explanations forthe rumors and why they have been so difficult to eliminate completely. How-ever, before leaving the P&G case, it is instructive to consider the extent of theimpact of the rumors on the company.

As is often the case, the costs and effects of a rumor on a business enterpriseare difficult to gauge accurately. It goes without saying that unfounded ru-mors have been a major source of irritation for P&G officials and have entailedconsiderable unanticipated expenses. By the time the decision was made to re-move the trademark from product packages, a company spokesperson esti-mated that $100,000 had been spent fighting the Satanism rumors ("P.&G.Drops Logo," 1985). Resources were diverted in various ways to deal with theproblem, including the hiring of additional staff to respond to consumer let-ters and telephone calls. The lawsuits, which represented an additional ex-pense in terms of time and money, also posed a significant risk, because a lostcase would considerably damage the image of the company. Finally, it is im-possible to assess to what extent P&G sales were affected by consumers whoheeded the various calls to boycott its products. However, one estimate of theimpact on purchasing was obtained during an early point in the crisis by theSRI Research Center, which was commissioned by the publication AdvertisingAge to conduct a nationwide survey ("Procter & Gamble Rumor," 1982). SRIobtained the responses of more than 1,200 American adults during the sum-mer of 1982 and found that of those who believed the Satanism rumors orwere unsure about their veracity, 17% said they were reducing their purchases

14 CHAPTER!

of P&G products. Of those who were aware of the rumors, only 5% (or 1.6%of all respondents) claimed to be buying fewer products, and 1% said theywere buying more. The authors of the survey concluded that the rumors didnot seem to be having much of an adverse impact on sales, a point further sup-ported by the finding that 79% of the people surveyed could not identify anyof P&G's products. Of course, for company officials, any loss of sales attrib-uted to factors outside the spheres of economic influences or product integ-rity was no doubt a matter of serious concern.

Marketplace Rumors: Some Additional Examples

Like P&G, numerous other corporations have had to fight unfounded rumorsin the consumer marketplace. In fact, the major corporation that has not beentargeted by external rumors of one sort or another is clearly an exception inthe contemporary business environment. As mentioned earlier, the McDon-ald's restaurant chain also had to fight off a rumored link to the Church of Sa-tan a few years before P&G was victimized by the very same rumor. Some ofthe same elements were apparent in the McDonald's case: the reported televi-sion appearance by the company owner to publicly admit his pact with thedevil, the involvement of some members of the clergy in the perpetuation ofthe rumor, and the numerous inquiries to the company from concerned or an-gry consumers. Briefly, the general strategy of McDonald's was to respond toeach flare-up of the rumor locally by enlisting the support of ministers andtelevision producers of the programs on which the company's owner actuallyhad appeared. These respected individuals prepared letters attesting to the fal-sity of the rumor and to the Christian integrity of the company's owner, andverbatim transcripts of the television appearances were made available. Eachtime this approach was effective in putting out the fire in one part of the coun-try, the rumor quickly reappeared elsewhere. Eventually, the story was pickedup by the mass media and rapidly spread across the nation 1 year after its initialonset. However, just as the P&G Moonie accusations quickly faded when an-other rumor appeared, the Satanic rumor ended suddenly for McDonald'swith the emergence of a potentially more damaging whispering campaign.This time the rumors concerned the contents of McDonald's hamburgers,which allegedly contained red worms to boost their protein levels.

Like the Satanic rumor, the worm allegation is another example of a falsestory that had been around for a while, most notably targeting Wendy's, an-other American hamburger chain, before moving on in 1978 to cause substan-tial damage for McDonald's. Company officials at McDonald's were wary ofthe worm rumor even before it affected their company, but were too dis-tracted at the time fighting the Satanic rumors to take preventive action(Koenig, 1985). The specific details of the McDonald's response to the wormrumor are described in Chapter 6, but in brief the company went on the offen-

INTRODUCTION 15

sive immediately, issuing denials, sending out letters, and distributing presskits to franchise owners attesting to the high quality of their hamburgers' in-gredients. Before long, however, the rumor had spread like wildfire across thecountry, with many consumers reporting that they had heard it and believedit. The McDonald's Corporation quickly began to suffer substantial losses, se-riously affecting sales in certain areas that represented hotbeds of activity forthe worm rumor (Esposito & Rosnow, 1983). Toward the end of the year,company officials held a national press conference during which they emphat-ically denied the rumor about "protein additives," and a follow-up advertisingcampaign reiterated the facts. Shortly thereafter, the McDonald's rumor wasbeaten (only to be briefly revived once again in the Philippines in 1996).

The P&G and McDonald's rumors represent two of the most noteworthyexamples in the annals of commercial rumors. Both cases involved the sponta-neous emergence of ultimately damaging falsehoods, although the natureand alacrity of response taken by the companies differed, with varying conse-quences. Although commercial rumors have been around since the turn ofthe 20th century, only in recent decades have they become one of the mostprominent forms of rumor in circulation. A quick search of the World WideWeb typically reveals numerous marketplace rumors in circulation at anygiven time (see Box 1.3).

ORGANIZATIONAL GRAPEVINE RUMORS

To this point, our focus has been limited to rumors that appear in the con-sumer marketplace. By their very nature, such rumors represent a very publicform of hearsay, whereby various mass-mediated communication channelsmay or may not be intentionally complicit in the transmission of an unverifiedstory. Marketplace rumors are passed along through interpersonal and elec-tronic networks that function outside the companies that are targeted andmay be of interest even to people who are not current customers of the com-panies involved. By contrast, within organizations, rumors represent an every-day aspect of corporate life that is much more private in nature and far lesslikely to interest persons who are not members (or their friends and relatives)of the organizations themselves. Such rumors spread through a discerniblecommunication chain known as the grapevine, the informal information sys-tem that flourishes in every company.

Perhaps the key aspect of the organizational grapevine is its informal nature.Unlike the formal network of communication within an organization, which in-volves the more structured transmission of information through channels suchas memos, company newsletters, official notices and reports, and staff meetingsand conferences, grapevine interactions may consist of casual conversationsthat take place in lunchrooms, carpools, around water coolers, through e-mail

16 CHAPTER 1

Box 1.3. Commercial Rumors and the World Wide Web

The Internet and other emerging communication technologies are partic-ularly well suited to serve as conduits for the spread of marketplace rumors,providing for the instantaneous transmission of unverified information to aglobal audience. In many cases, what often starts as a localized whisperingcampaign quickly expands into a nationwide (and, at times, international)spread of falsehoods as the unfounded hearsay provides the grist for Internetchat groups, discussion forums, and message board postings.

The following sampling of false rumors, which were reported on TheSan Fernando Valley Folklore Society's Current Urban Legends and Netlore(www.snopes.com) site during April 2000, are representative of the sorts ofstories regularly circulating in cyberspace:

The energy drink Red Bull contains a dangerous stimulant originallycreated by the U.S. government to keep soldiers motivated in Viet-nam.

Pantene shampoo contains an additive that, when injected, will getthe user high.

A mixture of Enfalac baby formula and dog food causes a baby's stom-ach to explode.

Flesh-eating bacteria on Costa Rican bananas will ultimately kill15,000 Americans, an "acceptable number" according to the Food andDrug Administration.

Kentucky Fried Chicken became KFC after the government ruledthat the genetically altered poultry KFC uses could no longer becalled "chicken."

The U.S. Congress or Canadian government is to impose a 5-cent sur-charge per e-mail.

A comprehensive listing of links to current netlore are available on theurbanlegends.com Web site. The following marketplace-related exampleswere included in the listing during May 2001:

EMI/Time Warner Merger Giveaway GeoCities Is Closing Down! Gerber Savings Bond Giveaway "Good Samaritan" Killer at the Mall Harry Potter Turns Kids to Satanism HIV Needles on Gas Pumps (variations include needles in movie the-

ater seats, pay phone coin slots, and vending machines) Honda Car Giveaway KFC Uses Mutant Chickens McDonald's Donations to Palestinians Injured in Uprising Microwaved Water Explodes in Man's Face "Progesterex"New Date Rape Drug Rat Urine on Soda Pop Cans Is Lethal

INTRODUCTION 17

Shampoo Cancer Warning Snakes Kill Child in Burger King Ball Pit Tommy Hilfiger Made Racist Statements on Oprah Toxic Sponges From P&G

messages and phone conversations, and the like (see Box 1.4). Because of its in-formal nature, the information that is transmitted through the grapevine tendsto be undocumented and thereby susceptible to variation and interpretation.Further, there is the potential for communication among all participants in anorganization and information tends to flow rapidly through the grapevine. Be-

Box 1.4. A Universal Water Cooler?

We have described how the Internet has become a growing force as a con-duit for the emergence and spread of marketplace rumors. Now we find thatmuch the same can be said with regard to this medium's role in the transmis-sion and sharing of organizational grapevine content. Enter the ElectronicWatercooler (www.vaultreports.com), an online network of uncensored bul-letin boards for more than 800 American companies that displays office ru-mors, complaints about work hours and pay, and responses to job applicants'queries about salary and worklife. The site, created in March 2001 by the NewYork employment service Vault Reports, is intended to expand globally on theage-old natural tendency for employees to engage in informal small talkabout their jobs at the proverbial water cooler (Rosenberg, 1999).

During its initial period on the Internet, the Watercooler site was attract-ing more than 1,000 postings per week from employees of such companiesas Andersen Consulting, Morgan Stanley, Dean Witter, Merrill Lynch &Co., Microsoft Corp., and P&G. Of course, transferring the company watercooler to the Internet in the form of (typically) anonymous message post-ings poses some potential risks to both employees and job applicants. Be-cause of the anonymity it provides, there is nothing to prevent the postingof a misleading or outright fictional message from someone posing as acompany employee or competitor. Additionally, if employers are able to de-termine which of their employees are conveying damaging messages, thereis not much that could be done to stop the company from taking action.

According to one employment expert, the electronic version of the orga-nizational grapevine is an imperfect equivalent that probably should not betaken too seriously. Like the bar across street from the workplace, it involvesnot only current company employees, but also former employees and totalstrangers, and there is no way to verify that the discussants have the insiderinformation that they claim to have. Nonetheless, the concept represents apotentially useful tool for employees and job seekers with informationneeds that cannot be satisfied through more formal channels.

18 CHAPTER 1

cause of these characteristics, the organizational grapevine represents a fertilebreeding and testing ground for rumors.

When rumors are spread through a company's informal communicationnetworks, their content tends to involve topics that deeply affect employees,such as job status and organizational change. Typical forms of organizationalrumors are those involving turnover (e.g., a top-level manager will leave thecompany to join a competitor), management-union relations (e.g., employ-ees are considering a strike action; contract talks are underway), hierarchicalstatus (e.g., a colleague is maneuvering to win the promotion promised tosomeone else), job security or job quality (e.g., a production plant will close,resulting in massive layoffs; employees can expect a large end-of-year bonus),organizational change (e.g., a major restructuring), and costly errors or safetyconditions (e.g., a faulty computer software program resulted in the loss of animportant account; Davis, 1953, 1969; Esposito & Rosnow, 1983). Such ru-mors may serve a variety of functions, such as to fill information gaps, to influ-ence decisions, to vent feelings, or to signal status or power.

Because it operates as an informal network for interpersonal speculation,the grapevine is also a conduit for the spread of more titillating organizationalhearsay, such as speculation about the sexual exploits or predilections of anemployee or the assertion that two coworkers are romantically involved. Inthis case, the hearsay is more likely to be labeled as gossip, although the dis-tinction between rumor and gossip is often a difficult one to make, particu-larly when the communication spreads through the office grapevine. In onehighly publicized example, the former chief executive officer (CEO) of theBendix Corporation was said to be having an affair with the company's vicepresident of strategic planning. Their repeated denials only seemed to fuel thescandal, which ultimately led to the resignation of the vice president. Despitethe denials, the two were married less than 2 years after the story first broke(Cole, 1985).

As suggested by the Bendix case, much hearsay information transmittedthrough the grapevine ultimately turns out to be true. This statement mightseem somewhat surprising at first glance, given the informal nature and accel-erated speed by which information flows through grapevine pathways. Thesecharacteristics of information transmission would suggest that messages be-come increasingly inaccurate as they are transmitted from person to person,given the lack of time any one individual may have to critically assess the mes-sage content. However, it turns out that much of the information transmittedthrough the grapevine ultimately turns out to be accurate. In one study of aparticular company's grapevine efficiency, Walton (1961) reported that 82%of the information communicated on a single occasion was accurate. Accord-ing to other estimates, more than 80% of the specific "bits" of a rumor thatwork their way through an organization's grapevine prove to be accurate (Ar-nold, 1983; Davis, 1969).

INTRODUCTION 19

An overabundance of grapevine rumors undoubtedly can be taken as a signof organizational disfunctioning, reflecting a loss of confidence in the com-pany's hierarchy, excessive secrecy and fear, and political problems within thecompany (Kapferer, 1990). Nevertheless, as a source of highly sought infor-mation that is not forthcoming through more formal channels of communi-cation (e.g., during closed negotiation sessions), the grapevine can actually beseen as a healthy sign that people within the organization are talking to eachother. Thus, it rarely is in the best interest of company officials to attempt tocompletely shut down the company's internal grapevine. However, it is noless important than in the case of public marketplace rumors for companies toadopt mechanisms for managing the spread of information through organiza-tional networks, to whatever extent possible. In the corporate setting, this isespecially important during times of organizational change, when uncertain-ties and fears among company personnel are likely to be most acute.

Grapevine Rumors and Organizational Change

Some companies take great pains to assure that the communication of organi-zational change is carried out as timely and efficiently as possible to offset theemergence of potentially destructive hearsay. The importance of doing sowas highlighted by a study of change in 43 organizations, which revealed thatwhen a change effort resulted in failure, it was likely to have been caused byone of the following three reasons (Semeltzer, 1991): (a) the presence of inac-curate and negative rumors, (b) the fact that employees learned of the com-pany's plans through outsiders, and (c) management's reliance on impersonalcommunication channels (e.g., memos) rather than face-to-face interactionswith employees. These findings point to the fact that it is of primary impor-tance for management to communicate effectively with its employees duringtimes of change, rather than placing greater priority on informing the publicand stockholders of its plans.

Various strategies that can be taken to effectively communicate organiza-tional change are described in Chapter 7, along with recommendations formanaging the grapevine to minimize the potential damaging effects of falserumors and misinformation. However, at this point, a brief description of thecommunication techniques employed by Delta Airlines during a major re-structuring can serve as a useful example of how a company can offset theemergence of harmful hearsay during transitional periods.

The Delta restructuring effort, known as Leadership 7.5, began in 1994 toimprove the company's standing in a rapidly changing and increasingly com-petitive industry. Almost from the outset, it was evident that Delta, which pre-viously had a strong reputation for retaining its workers, would have to lay offseveral thousand employees. As we will see in subsequent chapters, this is justthe sort of situation that fosters the emergence of organizational rumors due

20 CHAPTER 1

to the high levels of anxiety and uncertainty it entails. To counter the enor-mous amount of fear likely to be generated by the planned program and to es-tablish a sense of security within its workforce, Delta's management created adetailed communication plan (Richardson & Denton, 1996). At the outset,they put into place a toll-free telephone hotline to provide current updates onthe change effort and respond to employee comments and questions. Linkedto the in-house company newsletter, The Delta Newsline, more than 6,000 callswere received on the day news of the restructuring program was presented tothe employees; by the end of the week, that number had risen to more than14,000. Further, to respond to information requests from managers and super-visors, a special communication center was established.

Another strategy employed by Delta was for management representativesto maintain direct personal contact with the company's workforce to conveythe perception of openness and to further reduce any sense of insecurity. Thiswas done by having a senior manager appear in an airplane hangar withinhours of the initial restructuring announcement to provide detailed informa-tion and respond to questions in an open forum, and by arranging periodic vis-its by senior management at various Delta facilities around the country duringthe ensuing weeks. Another important aspect of the communication pro-gram was a systemwide management conference, held on the day after the an-nouncement, during which the restructuring and related program were fullyexplained. A video presentation of the conference was then distributed to allpersonnel (Delta Air Lines, 1994).

The two elements of Delta's communication program that stand out asparticularly key to its ultimate success were speed and accuracy. That is, seniorcompany officials appeared eager to provide the workforce with as much in-formation as possible, in the most prompt and accurate fashion possible. In sit-uations in which employees are confronted by the possibility of a majorchange in their employment situation, this approach goes a long way towardrestoring confidence, reducing anxiety, and maintaining trust. It also repre-sents an effective strategy for reducing the flow of misinformation through-out the company grapevine.

DEFINING RUMOR

The foregoing discussion was intended to provide the reader with some pre-liminary insight into the nature of rumors and some of the various kinds ofrumors that might emerge in business settings. One point that should be clearfrom the examples is that whether a rumor pertains to events unfolding in themarketplace or within an organization, it tends to have something to do withthe need for people to know what is happening and why in situations in whichthey are implicated. Before we can shed greater light on the psychological andsocial dynamics of rumor generation and transmission, it is essential that we

INTRODUCTION 21

have a clearer understanding of what a rumor isits characteristics and prop-ertiesand how it differs from related forms of interpersonal communica-tion, such as gossip and news.

There is general agreement that a rumor is a story or statement in general cir-culation without confirmation or certainty as to facts (Box 1.5). Rumors arepublic communications, usually embellished by allegations or attributionsbased on circumstantial, unverified evidence, that reflect people's assumptionsor suspicions about how the world works. Historically, the understanding wasthat rumors circulate as a function of what has been referred to as the "talk fac-tor," or everyday word-of-mouth conversations (Wilson, 1994), as reflected bythe phrase "passed along from person to person, usually by word-of-mouth"from Allport and Postman's (1947) classic early definition. Of course, now it isclear that many rumors are either given birth or reinforced by print and elec-tronic media, including the Internet. Although they have not supplanted the im-portance of word-of-mouth communication in the rumor transmissionprocess, the mass media represent a direct source of rumor content and a formi-dable intermediary in the spread of rumors (Rosnow, 2001; Zerner, 1946).

A critical element of rumor is that there is a lack of certainty as to the valid-ity of its message; that is, it is an unconfirmed proposition. The fact that thereexists some degree of uncertainty regarding the truthfulness of a rumor is not

Box 1.5. Defining Rumor

Although there are differences in the precise terminology used, theretends to be general agreement among rumor experts as to the sorts of com-munications that can be classified as rumor. Some representative defini-tions, dating back to the 1940s, include the following:

1. A proposition for belief of topical reference disseminated without of-ficial verification (Knapp, 1944).

2. A specific (or topical) proposition for belief, passed along from personto person, usually by word-of-mouth, without secure standards of ev-idence being present (Allport & Postman, 1947).

3. An unverified account or explanation of events circulating from per-son to person and pertaining to an object, event, or issue of publicconcern (Peterson & Gist, 1951).

4. A proposition that is unverified and in general circulation (Rosnow &Fine, 1976).

5. The emergence and circulation in society of information that is ei-ther not yet publicly confirmed by official sources or denied by them(Kapferer, 1990).

6. An unverified proposition for belief that bears topical relevance forpersons actively involved in its dissemination (Rosnow & Kimmel,2000).

22 CHAPTER 1

meant to imply that all rumors are untrue. The key is that the rumor mayeventually turn out to be true or false, but until that time, the communicationis subject to the dynamics of rumor. A story in widespread circulation that hasbeen officially verified as false may nevertheless be considered a rumor, solong as there is a suspension of disbelief in the story's content. Should the ru-mor turn out to be true (or verified), its content then becomes subject to thelimitations presented by the facts at hand.

To clarify these distinctions, consider the following example. Let us say thatone day I overhear a couple of English-speaking tourists on the Paris metrodiscussing how the British retail chain Marks & Spencer is about to announcethe closure of all of its stores in continental Europe, including those in France.As a loyal Marks & Spencer shopper, I may find this story difficult to believe(let's say because I recently read that the French stores are very profitable andevery time I shop in the Paris outlets they seem to be doing a very brisk busi-ness), but unsettling nonetheless because it could be true. Perhaps the people Ioverheard had some inside information; maybe they were friends or relativesof company officialswhatever the reason, they apparently had heard some-thing that I had not. Because in my mind there was some doubt about the cred-ibility of the story I overheard, it would constitute a rumor whether I wasaware of that fact or not (e.g., I may simply consider it as a piece of uncon-firmed news). Should I repeat what I had heard to the friend I was meeting in acafe later that day, I would have become an active participant in the rumortransmission process.

As it turns out, Marks & Spencer did publicly announce on March 30, 2001that it would be shutting down its operations in a number of overseas settings,including France, to cope with declining profits (Cowell, 2001). Once the an-nouncement was reported by a number of news outlets, the story was con-verted from a rumor (assuming that there previously had been speculationabout store closures) to news. Had I read about the company's decision in theWall Street Journal Europe shortly after it was announced, or learned about itthrough some other credible news source, my fears would have been confirmedand the story I overheard in the metro would no longer constitute a rumor (forme, at least). My friend from the cafe, however, might not have been keeping upwith the news around that time and, as a result, she might have continued toconsult others about a rumor she had heard. In short, a communication can beclassified as a rumor when it is in widespread circulation, it is unverified, and itbears topical relevance for persons actively involved in its dissemination.

Rumor Versus News

As the preceding example shows, rumor and news are two forms of communi-cation that are closely related, but distinguished on the basis of the presence orabsence of secure standards of evidence. Unlike news, which is presumed to

INTRODUCTION 23

be based on fact, rumor is always unconfirmed. The recognition that rumormight be thought of as unconfirmed news moved sociologist TamotsuShibutani (1966) to refer to it as "improvised news." Thus, it is not surprisingthat the line between rumor and news often blurs. This might explain in partwhy much rumor-related content often is not directly identified as such. Be-cause of the rush to "scoop" competitors at a time in which many news storiesare reported instantaneously, with minimal prior fact checking, we now findthat more and more unconfirmed stories are reported as if they were veri-fiedthat is, as news. The fact that rumors have increasingly begun to resem-ble (or be mistaken for) news also can be attributed to some extent to the newtechnologies that exist for the transmission of interpersonal messages. Oncelimited to localized discussions with people they know, consumers now canbroadcast information to total strangers around the world through Internetdiscussion groups, personal or company Web sites, and the like (Rosen, 2000).

Because of the frequently negative connotation of rumors, people oftenare reluctant to acknowledge that a communication is, in fact, a rumor. Suchacknowledgment highlights the possibility that the transmitted informationcould be false and that the bearer is irresponsibly communicating misinforma-tion (Kamins, Folkes, & Perner, 1997; Rosnow, 1991). Moreover, as communi-cation technologies have accelerated the pace by which news and informationare transmitted to the public, there is an increasing tendency for communica-tions to be based on unverified content, although they may readily be acceptedas verified news by a public craving clarification regarding matters of currentor local concern. Perhaps nowhere is this tendency more pronounced than inthe financial marketplace.

One recent example of how an unconfirmed story can be reported as newsinvolved a false report that was intentionally planted about the financial stand-ing of Emulex, the California computer networking equipment manufac-turer. On August 25, 2000 a bogus press release appeared on Internet Wire, aWeb-based news dissemination service, and was immediately picked up andtransmitted by leading financial news wires, including Bloomberg News andDow Jones Newswires, as well as the cable news channel CNBC and numer-ous Web sites (Goldstein & Carrel, 2000). The original press release reportedthat Emulex was under federal investigation by the Securities and ExchangeCommission (SEC), that it was revising its quarterly earnings to show a loss,and that its CEO had resigned. The story about the SEC investigation, in par-ticular, spread like wildfire on online message boards and, not surprisingly, thefalse reports had a devastating impact on Emulex's stock, causing it to plum-met as soon as markets opened. The impact of the unconfirmed news wasswiftEmulex stock plunged more than 50% within 15 minutes of the storyhitting wider distribution. Specifically, the company's shares fell as much as$68, or 61%, which represented a loss of $2.45 billion in market value (see Fig.1.4). By afternoon, trading was halted once news of the hoax was discovered

24 CHAPTER!

FIG. 1.4. The im-pact of the Emulexhoax in the financialmarketplace. FromGoldstein & Carrel(2000). Reprintedwith permission ofSmartMoney, 2000.

and the company mounted a public relations campaign and issued denials in adesperate attempt at damage control. Although the stock recovered much ofits losses by day's end as exposure of the fraud received widespread media cov-erage, Emulex shares nonetheless had fallen 6.5% on Friday (the day the hoaxappeared) and another 5.9% on Monday ("Echoes of a Hoax," 2000).

The origins of the Emulex hoax were traced to Mark Jakob, a 23-year-oldAmerican college student who previously had been an employee of InternetWire. The hoax was initiated by an e-mail message he forwarded to InternetWire containing a release from a fake public relations company describingEmulex's supposed difficulties. The e-mail included phrases commonly usedby the wire service suggesting that the contents of the story had been verifiedearlier and, as a result, the Internet Wire staff did not feel it was necessary tofurther check the story's accuracy. Apparently motivated by a desire to recoupmoney he had lost after suffering major losses trading Emulex stock and at thesame time attain some measure of revenge on the company, Jakob earnedclose to $250,000 in profit on the day of the hoax, but he was arrested the fol-lowing week by the Federal Bureau of Investigation (FBI) and charged with se-curities and wire fraud (Becton & O'Harrow, 2000). Such a crime in the UnitedStates could result in a prison sentence of up to 15 years.

Ironically, some financial analysts concluded that Emulex was not substan-tially harmed by the hoax and actually may have benefited from it as a result ofthe national exposure the company received in its aftermath. However, this casehighlights the growing influence of information technologies and the competi-

INTRODUCTION 25

tive nature of public relations and news wire services. Despite controls, in theirrush to beat the competition with apparent breaking news, the financial infor-mation services in this case failed to verify the accuracy of the false news release.Unlike the P&G rumors, which were generated largely through the distributionof crudely prepared fliers distributed by religious groups, the bogus press re-lease about Emulex's market difficulties was instigated by a single individual,but spread instantaneously through the Internet and other electronic media.The stark differences in the life cycles of these two cases reflects the rapidlychanging nature of communication in business and financial contexts.

According to one assessment, the Emulex story "underscores the high stakesand potential dangers of real-time financial journalism, in which unconfirmedreports can blow a large hole in a company's stock before the truth catches up"("Echoes of a Hoax," 2000, p. 17). In fact, the Emulex hoax was not an isolatedcase; there have been several similar incidents in which fake press releases wereposted directly to online message boards (Goldstein & Carrel, 2000). One yearearlier, PairGain Technologies was subject to a fake Internet news story devel-oped by a disgruntled former employee suggesting that the company was aboutto be taken over ("Hoax Sends," 2000). In this case, PairGain's stock jumpedmore than 30%, demonstrating how false rumors of this sort can cause stocks tosoar. The fact that this does not happen more frequently has to do with the con-trols that are used by established news wire services. We cover more about thesecontrols and additional steps that can be taken to regulate and prevent thespread of unconfirmed news reports in later chapters.

A fair question that can be asked with regard to the sorts of Internet hoaxesdescribed here is whether or not they actually constitute examples of rumors.Because these stories spread and had their effects prior to official verification,this would suggest that they do fit the definition of rumor presented here.However, unlike more traditional rumors, which have a clearly defined life cy-cle (see chap. 2), Internet rumors often come and go with amazing alacrity. Infact, the Internet has begun to spawn its own hearsay terminology, providingsomewhat varying interpretations of what constitutes a rumor in cyberspace.For example, David Emery's "Urban Legends and Folklore" Internet site dis-tinguishes between rumor ("anecdotal claims; may be true, false, or in-be-tween") and three related categories of Web-based messages: hoax ("false,deliberately deceptive information"), urban legend ("a popularly believed nar-rative, typically false"), and junk ("flotsam and jetsam of the Net"). Collec-tively, the four message forms are referred to as netlore.

Rumor Versus Gossip

Now that we have considered some of the differences that exist between ru-mor and the sort of significant (and confirmed) information content that con-stitutes news, we next turn our attention to the other end of the spectrum toconsider how rumor can be distinguished from nonessential small talk, or gos-

26 CHAPTER 1

sip. Informal talk about people is often speculative and, as a result, the line be-tween content that may be considered either rumor or gossip often is a fuzzyone. This was suggested earlier when we pointed out that some of the inter-personal exchanges that flow through the organizational grapevine can moreaccurately be referred to as gossip than as rumor, such as when it pertains tothe romantic comportment of employees.

The terms rumor and gossip are often used interchangeably, yet there areclear differences between them, often based on the situation in which thecommunication occurs (Hannerz, 1967). Gossip invariably pertains to peo-ple, whereas this is not an essential characteristic of rumor. Further, unlikerumor (which is never verified) or news (which is confirmed), gossip mightor might not be supported by facts. Once described as "intellectual chewinggum" (Lumley, 1925), in common parlance, gossip refers to idle or appar-ently trivial conversation about the private, personal qualities or behaviorsof others (see Box 1.6).

Box 1.6. The Cardinal Rules of GossipMuch of the informal information system that flourishes in organiza-

tions consists of small talk about the personal and professional characteris-tics of coworkers and employers. Popular psychologist Perry BufFingtonsuggested that the sort of gossip that flows through the company grapevinecan be typified by 10 predictable characteristics and principles, which hesummarized in his so-called "cardinal rules of gossip." Although some of hispoints have yet to be empirically validated, most are consistent with every-day observations of human exchange.

1. Everyone gossips. Even if you've just stood around listening, it's tan-tamount to gossiping.

2. No one ever asks if the information is true. Everyone assumes that it is.3. The greater the potential damage, the faster the gossip travels.4. The more you try to tell people that the gossip is not true, the more

they will believe it is.5. Major decisions have been based on gossip. When the decision turns

out to be bad, gossipy rumors arise to explain the bad decision.6. Of all forms of communication, gossip is the most easily distorted.7. Men gossip just as much as women, and gossip is filtered through so-

cioeconomic strata by both genders.8. People gossip to protect their own reputations. When the focus is on

someone else, one receives a momentary reprieve.9. The more demeaning or hurtful the gossip, the longer it takes for the

victim to hear about it.10. Gossip thrives in an atmosphere of secrecy and competition. It tends

to thrive most where there is too much secrecy and where advance-ment is based on overcompetition. (Cole, 1985, p. 13)

INTRODUCTION 27

A more studied consideration of the nature of gossip suggests that it repre-sents a form of interpersonal communication that is more amorphous and su-perfluous than rumor and, in many ways, more directly identified by thecontext in which it occurs. Gossip typically takes the form of conversationalcontent that emerges spontaneously in informal social situations. Although itis likely to be treated with apparent indifference (or even disdain) by the partiesinvolved in the discussion, its purpose or ulterior motive may be substantial(Rosnow, 2001).

As an example, let us assume that rather than overhearing a couple of tour-ists on the Paris metro (as described in a previous example), I instead was privyto a discussion involving two businesspeople, apparently associates at thesame company, who were on their way back to work following their lunchbreak. Imagine that they were casually discussing a mutual acquaintance, suchas a client, in rather unflattering terms. Maybe it was a function of the winefrom lunch or the opportunity to unwind following a stressful morning, butthey seemed very relaxed and none too concerned about the implications ofwhat they were discussing. The conversation proceeded the way many of oureveryday exchanges with close friends or colleagues might, with a lot of jump-ing around from one topic or anecdote to another and with accompanyingnonverbal behaviors, such as chuckles, groans, and outright guffaws. Appar-ently, the recently divorced client who was the focus of much of this interac-tion had been seen at a local nightclub, where he drew attention to himself bytelling off-color jokes and making inappropriate passes at some single women.He also appeared to have a rather odd sense of color coordination when itcame to his selection of clothing. Of course, there was no way of knowingwhether any of these points were true, but as they did not concern me, I didnot really care one way or the other. In my view, this was just idle chatter be-tween two colleagues. Although it appeared nonessential in the context inwhich it was taking place, it clearly was not neutral, but rather had a distinctlyevaluativein this case, negativeorientation and tone. It suggested certainbehaviors or personal quirks that were considered to be morally wrong or as-sessed as illegitimate in the social context and inappropriate conduct for an im-portant business professional. Additionally, putting down a business associatein this way perhaps enabled the two discussants to bolster their own self-imagewhile tightening the bond they shared with each other.

In this example, the key defining characteristics of gossip should be clear:Gossip typically is packaged as idle talk, but it has a normative or evaluative es-sence that serves particular social and psychological functions. Gossip may bepositive in nature, but it usually bears a pejorative connotation and is morelikely to involve negative references to an absent third party. As suggested, italso is determined by the context in which it appears. If a conversation hadcome up about the client's inappropriate professional conduct during anin-house meeting with the company director, it surely would not be viewed as

28 CHAPTER 1

gossipeven though the target of the discussion was absentbut rather as alegitimate element of a business discussion, perhaps influencing decisionmaking regarding whether or not the company should drop undesirable andpotentially unprofitable clients. This "legitimacy factor" represents a key waythat gossip diverges from rumor. According to Rosnow (2001), "what counts isnot simply that the message is of a personal naturemany rumors also focuson personal affairsbut that the news is 'nonessential' in the context of the ex-change" (p. 211). Rumor, on the other hand, pertains to message content thatis significant to the parties involved in its transmission.

To say that gossip is nonessential is somewhat misleading when one recog-nizes its potential for either direct or indirect consequences in organizationalcontexts and the consumer marketplace. Clearly, whether gossiping about a col-league on a subway train, in a washroom in the workplace, or during an execu-tive board meeting, word inevitably could get out across the grapevine andirreversibly harm an individual's chances for a promotion or pay raise. Numer-ous other examples no doubt come to mind when one considers the potentialfor idle talk to harm careers, relationships, and social status. Now that "happytalk" about the successes and foibles of well-known persons, including businesspersonalities, has become a mainstay of mass media reporting, much gossipingis transformed from a private form of admonishment to a public one, so its po-tential consequences can be even more severe and immediate than in the past.

Less obvious are the consequences of gossip in the consumer marketplace.After all, one could hardly gossip about a laundry detergent or DVD player.Nonetheless, in a fascinating recent book about marketplace "buzz"that is,the totality of comments or word-of-mouth that is exchanged among peopleat any given time about a certain brand or product-Emanuel Rosen (2000)suggested that gossip may be inextricably linked with consumer products andservices offerings. This becomes clear when we recognize that our everydayconversations about products and services often focus on the people we asso-ciate with them. For example, word-of-mouth about restaurants often focuseson the people who eat or work there; book buzz often consists of talk aboutthe characters; and movie or TV buzz tends to involve talk about the actors,the filmmaker, and the persons we shared the viewing experience with. In thisvein, Rosen suggested that the enormous popularity of the American cabletelevision series The Sopranos could be attributed to the buzz generated by anintelligently written program about colorful and unusual characters (New Jer-sey mobsters and their relations). Similarly, one might imagine that small talkabout a retail shop's salespersons, neighbors who recently purchased a prod-uct, and celebrities or characters who promote certain brands can be seen asan indirect form of marketing buzz relating to a company. It is no wonder thatsome businesses, such as the clothing retailers Benneton and Kookai, activelyattempt to stimulate buzz about their product offerings through the develop-ment of controversial promotional campaigns (see Box 1.7).

INTRODUCTION

Box 1.7. Creating Marketing Buzz Through Controversial PromotionalCampaigns

One way for companies to break through the advertising clutter in thecontemporary marketplace is to launch controversial campaigns that aresure to capture attention and stimulate consumer discussions. The clothingfirm Benetton has been a pioneer in this regard. Oliviero Toscani, the com-pany's creative director from 1981 until recently, created a number of riskyBenetton advertisements that appeared in magazines and billboards, includ-ing news photos of the blood-soaked Army fatigues of a Croatian soldierkilled in Bosnia, a dying AIDS patient, a Catholic nun and priest kissing, but-tocks bearing the stamp "H.I.V positive," and a bloody newborn baby withumbilical cord intact. Although critics of these campaigns arguably out-number their supporters, one thing is certain: The campaigns successfullycreated buzz for the firm.

In recent years, more and more companies have followed in the footsteps ofBenetton by developing promotional campaigns that have little to say aboutproducts and brands, but are primarily intended to get people talking about thecompany. This was seen in a recent French campaign by Kookai, a women'sclothing firm, which has run attention-getting mass media and outdoor adver-tisements depicting miniaturized men at the mercy of dominant women.

30 CHAPTER 1

Characteristics of Rumor: Summary

The foregoing discussion indicates that whether or not a communication con-stitutes a rumor depends on the extent to which it possesses certain identifyingproperties, the foremost of which involve (a) the significance or interest of themessage content, and (b) the extent to which the message is supported by evi-dence. By considering two additional properties(c) whether the communi-cation deals with people and (d) is positive or negativeit is possible to moreclearly identify rumor and to differentiate it from related forms of communi-cation, such as gossip and news (see Table 1.1).

To summarize, we have found that rumor is significant to message recipi-ents and transmitters, but is never supported by evidence. It might or mightnot concern people and might or might not be negative. According to Table1.1, the basic way that rumor differs from news is in its lack of confirming evi-dence. By contrast, rumor can be more clearly distinguished from gossip inthat the latter is likely to involve message content that is deemed trivial to thegossips (although probably not to the gossip target), always pertains to people,and is more likely than rumor to have a negative connotation. Figure 1.5 usesVenn diagrams to represent the unique and overlapping properties of thesethree forms of communication. The diagrams underscore why rumor, gossip,and news frequently seem to blend and be confused with one another, yet theyalso help us recognize that the three types of exchange clearly are not identicalforms of communication.

The overlap among these various forms of communication is even morestriking when one considers the functions that they serve for their publics. Inone way or another, all three types of communication serve to inform, al-though here the essential nature of news and rumor stand in contrast to thetypically nonessential content represented by gossip. All three types of mes-sages also may serve to influence, to satisfy social or psychological needs, andto entertain, although in varying degrees, depending on the circumstances in-herent in the social context and the personal characteristics of the individualsinvolved in the exchange.

TABLE 1.1Properties of Rumor, News, and Gossip

Property

SignificantEvidential basisPeople-orientedConnotation

Rumor

Yes

No

Yes or no-or +

NewsYes

Yes

Yes or no-or +

GossipNo

Yes or noYes

-

Note. Adapted from Kimmel, Moore, Rind, and Rosnow (1992).

INTRODUCTION 31

FIG. 1.5. Venn diagrams illustrate the shared and unique properties of rumor,news, and gossip (as noted in Table 1.1). Rumor is represented by horizontal lines,gossip by vertical lines, and news by diagonal lines. From Kimmel, Moore, Rind, andRosnow(1992).

CONCLUSION

This overview of rumor has revealed that it is an amorphous and somewhat slip-pery subject, hard to get hold of because of its seemingly elusive nature. Oncepretty much limited to ordinary social conversation, in contemporary societiesrumors now proliferate and in many cases are fueled by the media. Additionally,emerging communication technologies such as the Internet have sped up theprocesses by which rumors are transmitted and have damaging effects on theirtargets. As we will see in subsequent chapters, these media also represent poten-tial mechanisms by which rumors can be effectively combatted.

In business settings, as our examples revealed, rumors can pertain to a com-pany's personnel or product and service offerings. Whereas some companies,such as Procter & Gamble, have become unfortunate targets for rumor-mongers over a long term, others have been more successful at dodging therumor bullet through either good fortune or sound management and market-ing practices. In later chapters we focus in depth on these practices, by consid-ering the steps that companies can take to control the often unwieldy flow ofrumors through consumer word-of-mouth networks, the company grape-vine, and the mass media, to limit their negative effects on corporate profits,brand image, employee satisfaction, and the like. First, however, in Chapter 2we continue with the dissection of the nature of rumors by focusing on the so-cial and psychological dynamics that give rise to rumor generation and spread.

CHAPTER TWO

Understanding Rumor:The Dynamics of RumorTransmission and Belief

In our highly industrialized, increasingly denatured culture, the indelicatesights and sounds of the slaughterhouse are kept far from the public eye,perpetuating the consumer fantasy of a shrink-wrapped, bar-coded prod-uct that was made, not born. The corporatization and globalization of thefood industry have alienated us from the meat on the ends of our forks, andthere's a creeping unease about the dirty details. Most of us would rathernot know how that McDonald's Happy Meal began its life, and what hap-pened to it on the way to our plate.

Dery (1999, p. 134)

In his book Rumor in the Marketplace, social psychologist Frederick Koenig(1985) pondered the reasons why the majority of rumors in contemporary so-ciety are related to the marketplace. It is true that one can find examples datingback to the 1930s that bear much resemblance to the sorts of rumors that arenow so familiar to us. For example, one cigarette company was rumored toemploy a leper in the plant where the brand was packaged, and another wasbelieved to be associated with the Vatican. Soft drinks were occasionally ru-mored to contain undesirable ingredients. However, without the prominenceof electronic journalism and the media sensationalism that characterizes to-day's reporting of marketplace events, these early rumors tended to below-key, restricted to local communities, and relatively short-lived. As Koenigobserved, it was not until the late 1970s that the commercial rumor emergedas the dominant form of present-day hearsay.

Dery's quote at the beginning of this chapter represents a good startingpoint for understanding why commercial rumors are so pervasive in modernsociety, and his comments reflect the conclusions that Koenig (1985) reachedin his book. Much of the answer lies in the fact that despite dramatic techno-32

THE DYNAMICS OF RUMORTRANSMISSION AND BELIEF 33

logical, scientific, and medical advances in recent decades, our modern worldhas, in many respects, become a scarier and more dangerous place than everbefore. It is those very advances that increasingly have given rise to consumeranxieties, including those associated with the mass production of food prod-ucts, genetically modified fruits and vegetables, cloning, globalization, corpo-rate mergers, and the like. In T