**4.3 Modelo Integrado de Reputación Corporativa (MIRC)**

The MIRC was designed to have a tool capable of organizing work related to reputational risks. The purpose of this tool is to ensure balance in *"bringing value for* 


#### **Table 2.**

*Classification of corporate reputation risks at Telefónica.*

*Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*

*all stakeholders in the long term... it is a guide to building a risk-proof reputation"* ([55]6 ). *Telefónica* recognizes a dual objective in the model: external, which benefits interest groups, and internal, which benefits society because it acts as a shield for possible risks. The MIRC is structured in three levels. The first level is the one that *Telefónica* represents and includes the four elements that represent the foundations of a company: 1) ethics (the only basis on which an organization based on trust can be built) [56]; 2) values (as the ultimate reference of the conduct of a company); 3) the vision and mission (as the ultimate goal of the company); and 4) the strategy and organization (such as the way of working and procuring resources to achieve the mission). The second level is what *Telefónica* does, through the three main elements of corporate responsibility: 1) social responsibility (social action, the social impact of activities, safeguarding the environment); 2) corporate identity; and 3) corporate governance: transparency, control, and monitoring mechanisms on the implementation of *Telefónica*'s strategies (Grant, 2006). The third level is what *Telefónica* maintains: *"Communication with all our stakeholders, coherent and transparent, is the greatest capacity of the Group to generate more value than is possible through the economic aspects"* (Trujillo, 2003). In the above description, it is noted that the source of value lies in the communication with all the companies of the group and with the whole community. Similarly, it is observed that the ability to generate value requires communication to adopt the certain characteristics of quality and effectiveness such as consistency and transparency. This is a major challenge for *Telefónica*'s communications function, and therefore, for this reason, a great responsibility. For *Telefónica*, the management of corporate responsibility (or RC, *Responsabilidad Corporativa*) presupposes that there is consistency in the three levels indicated and that there are no differences between the three postulates *"what I am, what I do and what I say I do,"* which represent the mantra of the group's basic strategic vision [57].

### **4.4 Definition of an institutional framework for the group**

*Telefónica* seeks to define a strengthened institutional framework to facilitate the development of CSR and mitigate the risks. With this objective, various projects have been implemented throughout the company: a) development of corporate values; b) code of business conduct—institutional presence; and c) the *Foro de Reputación Corporativa* (FRC). Through these large-scale projects, *Telefónica* implements strategic management, and plans, and integrated them through various actions. This management is reflected in the "discussion forums" organized over the years on CSR, and this has been one of the reasons for choosing *Telefónica* for this job as a harbinger and implementer of active and innovative strategies on corporate responsibility. The central value identified by *Telefónica* for development was the "trust," which each interest group has received and that is reflected in the choices expressed in **Table 3**.

The communication campaign carried out by *Telefónica* in 2004 had the importance of "trust" as its basic value. This means that the company, as has been found in the various media (newspapers, radio, TV, etc.), has given priority to this aspect for the implementation of the MIRC. The relationship between communication and corporate responsibility will be highlighted as an application value in all types of tools used

<sup>6</sup> Esther Trujillo is the Head of Territory Development of the Sol Meliá hotel chain but has developed much of her career in the *Telefónica* Group, where she has worked for the past 12 years, mainly in the network management and institutional participation in social responsibility initiatives and sustainable development. She has edited for the Spanish telephone group the annual reports on the management model of the RSC and the complications in its application in the value chain.


#### **Table 3.**

*The basic tools for building trust.*

by the group, including periodic reports (annual and semi-annual reporting). The reputation strategy must be established on a real basis of excellence in a service, which requires the considerable effort by the whole organization. CSR plays an important role in empowerment, and in enhancing this effort. *Telefónica*, being a telecommunications service provider, had to manage intangible (non-cumulative) aspects concerning those of the products according to their characteristics [58]. In services, reliability is a determining factor; in fact, more contracts are formalized with operators that from experience can give a better service, full of quality, and transparency. Quality can include the customer's degree of indifference to a repair, the certainty of a billing error, or the fact that the line is operational without interruption. Therefore, customer satisfaction will be the result of compliance with their expectations and the quality of service offered by the company [59]. The Corporate Code of Conduct, like other tools of its kind, is a framework for the integrity of professional relationships. It is inspired by the values of the *Telefónica* Group, which translates into principles, which in turn governs the behavior of the staff and indicates the conduct toward their main interest groups and is based on the concepts of right and duty. Therefore, it is not "compulsory" conduct, but rather, it is embodied in behavior to be followed (Trujillo, 2004). *Telefónica* has an institutional presence in numerous permanent job forums, holding important positions in them. **Table 4** shows some of the main forums in which the company participates, and the role played in each one.

The organizations listed above form the networks that promote CSR, with the different alliance relationships; in these partnerships, each organization is integrated and in close collaboration with the others and makes an important contribution to resolving the idiosyncrasies that may occur over time. The objective of the network is to develop CSR and training tools, such as the AENOR-CTN507 Technical Committee, which can monitor the added results and disseminate them through corporate communication. Looking at the sectoral forums, one observes, first, the diversity among them and their complementarity. Each forum can be defined by six characteristics (areas of implementation), and for each of these, there are two types (national and international). Furthermore, it indicates the characteristics (first column) and the possible types (second and fourth column). It also summarizes the number of holes in each feature (third and fifth column); the nine national forums are thus identified, while the remaining four are international (**Table 5**).

<sup>7</sup> Comité Técnico de Normalización 50 AENOR-CTN50 Documentación; the main functions of the committee (in the abbreviation AEN / CTN50) are the development and updating of the documentation related to UNE-EN ISO 9001 (the brand used to indicate the certifications issued by AENOR), as well as monitoring the reports on the work of technical committees on quality and safety, proposing opinions and comments through technical documents and nomination experts and national delegates participating in international meetings.

*Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*


#### **Table 4.**

*Type of participation of Telefónica S.A.*


#### **Table 5.**

*Characteristics of permanent job openings with the institutional presence of Telefónica S.A.*

It is noted that international organizations can develop subnets, to facilitate the incorporation and integration of corporate culture, so that at a centralized level and with a good information and communication service, it is possible to involve

all interested members. In the case of the *Pacto Mundial de las Naciones Unidas*<sup>8</sup> , a Spanish section has been created; for the International Chamber of Commerce (ICC9 ), there is a general manager in Paris, which represents all the countries, considered as the "voice of companies" and with a global commercial presence. The greater or lesser success of the centralized or decentralized structure depends on many factors, including finding an adequate leader in each country, or even just the idea of a strong ideology regarding these issues is very important. The two organizations mentioned are among the largest active members in the working groups and are devoting themselves to developing ISO guides. As for the homogeneity of the members that make up the association, there are two types of forums. A plurality of different agents that, in addition to companies, includes the government, NGOs, and research centers is promoted by the UN, MTAS10, AENOR, GRI, and AECA. On the other hand, it is the forums that respond to purely business problems created starting from the International Chamber of Commerce, the CEOE11, the *Foro de Reputación Corporativa*, and the Reputation Institute. It is interesting to note that there are agents from all interest groups in more than half of the forums described, which is an important sign of the necessary openness to development and awareness in research in the field of CSR. The endowment of a differentiated structure of the promoter is a very important step that organizations give to CSR. Thus, the *Pacto Mundial* has its organizational structure and operational autonomy. However, the working commissions within the International Chamber of Commerce do not have a differentiated organizational structure that allows them to be autonomous. Of the cases analyzed, five forums have their organizational structure and a certain autonomy, while eight do not. Another specific forum was then examined, the Observatory on CSR (*Observatorio de la RSC*), which can be considered the mirror organization of the Corporate Reputation Forum (*Foro de Reputación Corporativa*) mentioned above. In addition to the forums and

<sup>9</sup> An organization that strives for the global economy as a force for economic growth, job creation, and prosperity. Because national economies are so closely intertwined today, government decisions are much stronger internationally than in the past. The ICC as the only global contact states that it is more determined to express opinions on the businesses in progress. Its activities cover a broad spectrum of functions, from arbitration to dispute resolution, to promote free trade and make the market economy system transparent: from self-regulation to the fight against corruption and commercial crime. The ICC has direct access to national governments around the world through its national and international committees and is based in Paris.

<sup>8</sup> Ethical commitment initiative, intended for companies in all countries of the world that adopt the 10 principles of behavior and respect for human, labor, and environmental rights as an integral part of their strategy and conduct and are working to fight corruption. The idea of a United Nations Global Compact in the field of corporate social responsibility was launched by UN Secretary-General Kofi Annan at the World Economic Forum in Davos on January 31, 1999. In recent years, platforms and local networks in many countries of the world the principles on which the organization is based have been acknowledged and shared by all institutional and corporate members as well as by civil society [60].

<sup>10</sup> Ministry of Labour and Immigration (Ministerio de Trabajo y Inmigración de España).

<sup>11</sup> The specific interests of small- and medium-sized enterprises are represented by the Spanish Confederation of Small and Medium-sized Enterprises, a national organization and member of the CEOE. An organization for progress, the CEOE continuously analyzes the socioeconomic activities of Spain, in order to improve and propose the best competitive solutions for companies. The CEOE is active internationally through the presence of offices in different parts of the world. Another sector activity of the CEOE is that of protecting the artistic heritage and what it represents as well as the interest in the research and development of a country.

*Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*

permanent working groups mentioned, *Telefónica*'s Directorate-General on Corporate Reputation, Brand and Social Responsibility is maintaining a constant presence in the non-permanent CSR forums. This effort of participation and dialog is aimed at achieving the objective of obtaining a *"strengthened institutional framework to facilitate the development of corporate reputation,"* because in this way *"the risks will be mitigated."* Within CSR, a company aspect of interest is the performance on responsibility in one's own business [61]. So, one of the questions that telecom operators are asking is how they can help promote development and reduce the "*digital divide.*" *Telefónica* based on its experience believes that these cultural and social differences in access to information technologies can be reduced by the following:


*Telefónica*'s expansion strategy makes extensive use of elements that, as indicated, narrow this digital divide. The concept of social responsibility *"leads to the awareness that we are a powerful force for social, economic and technological development"* [62]. In these statements, the general management on social responsibility and corporate reputation of *Telefónica* highlights the importance of the workers themselves, aware of the social impact of their daily activities. In almost every forum that *Telefónica* joined, the association was already active, that is, promoted by others; only in the case of the FRC (Foro de Reputación Corporativa) did it have a promoting and founding role. This is indicative of the synergy that has been achieved in partnerships between organizations that have a common goal; the creative effort was born from some subjects, while the resulting advantage is shared by all the organizations that ally. Furthermore, the benefits of the network are greater in terms of its breadth and influence, and to this extent, its strength is often found. The relative weight of *Telefónica*'s size is the activity carried out by its representatives who are holders of a strategic position and who make a significant contribution to the policies implemented by the company, communicated through the forum. For *Telefónica*, the creation of the FRC responds to a common vision between 11 companies of the group, which makes it possible to obtain synergies through mutual collaboration. The common vision is therefore the following: *"The value of intangible assets in the company is very important and corporate responsibility is a critical component of this aspect."* The strategy to fulfill this vision consists of *"unearthing intangible assets that generate a better reputation that can increase the perceived value of the company"* [63]. Considering these statements, the actions proposed in 2010 by *Telefónica* to develop a strategy for creating a greater reputation are as follows: a) identifying the best management methodologies for RC (*Responsabilidad Corporativa*), CSR (*Corporate Social Responsibility*), and ethics, which are integral for the FRC (benchmarking); b) promoting and disseminating the knowledge and management of RC; and c) promoting the creation of a stock index (national or European) for "responsible" companies. The actions are outlined to show how large companies have implemented the sharing of experiences and knowledge

of the best management methodologies in the FRC plan, obtaining advantages from this strategic option. And in fact, the information that derives from it would seem more qualified and coherent than that obtained through external *"benchmarking,"* as used today by many companies. The second action of the FRC indicated by *Telefónica* relates to the promotion and dissemination of knowledge as well as the management of RC. It is therefore a general action for the promotion of RC on management concepts and systems. This type of generic promotion has an impact on all intangible assets, the value of which depends on widespread acceptance [64]. The third action proposed in the FRC concerns the creation of an equity index, in which the criterion of differentiation is CSR. In analyzing the impact that this index can have, it should be noted that this tool, like all those of this type, implies the following: I) the assessment of the reputation achieved by each company; II) the classification of company valuations and the reporting of the levels that need to be included in the stock index; and III) the increase in demand in the stock market and the valuation of the shares of companies that have a good score on the liability index. Once the desired results are achieved, an increase in the value of the company should be achieved through its intangible assets, which is the point of view held and shared by the companies that have implemented the FRC. It is noted that *Telefónica*, as a company committed to full immersion in this field, needs concrete results that allow it to make subsequent efforts by quantifying the results achieved. One of the most revealing findings from the analysis carried out in the previous table is that all the forums in which *Telefónica* participates develop some type of tool for the promotion of CSR. Among these, the *Pacto Mundial*, the GRI, the AENOR, and the Reputation Institute were created precisely for this purpose, or in them, the promotion of the CRS is at the center of the activity carried out. These, once involved in the analysis of the CSR, propose the measurement tools or guidelines to facilitate the implementation of strategic conduct [65]. A special case, different from the others, is the "forum of experts on corporate social responsibility" of the Ministry of Labour and Social Affairs12, which, although not aimed at developing tools, carries out an information-gathering activity that could be an advantageous opportunity to achieve, shortly, the enactment of a law on corporate social responsibility in Spain. The promotion of a stock index, such as the one described above, did not seem outlined in the previous proposals as key points of application were more general*: "Valuing intangible assets. Definition of development indicators and measurement systems for corporate reputation or related to quantifying the impact of corporate reputation policies: ethics, social responsibility, identity, brand, and corporate governance. Influence and interaction after between are the main intangible variables of corporate reputation"* [55]. These measurement objectives are aimed at verifying the effectiveness of the actions undertaken and selecting the variables with the greatest impact; they are therefore the objectives of improving the methodology before 2004 the *Telefónica Group* was included in the *Dow Jones Sustainability Index* (DISI), after having achieved a score of 75 points for its leadership with sustainability criteria. Moreover, at the European level, the minimum is 72 points and global with the minimum of 70 points and starting from 2004 with the inclusion in the

<sup>12</sup> In the Spanish government, the Ministerio de Trabajo y Asuntos Sociales is managed by the Undersecretary of Labour and Social Affairs of the Ministry of Labour and Immigration, established by royal decree on May 8, 1920.

*Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*

FTSE4Good13 index, which uses, for the selection of companies, ethical, social, and environmental criteria applied through quantitative indicators. The latter consideration is so strong that there is a negative relationship between boardroom gender diversity and a firm's financial performance. According to Ajaz et al. [66], females in boardrooms either cause negative effects or have no impact on the firm's financial performance. Similarly, there is no significant relationship between the presence of women in boardrooms and a firm's reputation.
