Blogs & Comment

How cronyism can wreck your brand

Subaru Emirates may have apologised for an offensive and sexist Facebook post, but at the root of the issue is cronyism, writes Alexandra Tohme

“In many countries, crony capitalism is considered an ethical breach of market regulations. Partiality towards friends regardless of their capacity to execute the task can result in “reduced business opportunities for the majority of the population, reduced competition in the market place, inflated consumer goods prices, and decreased economic performance”.

However, is it really a practice to be shunned? Consider the example of a bank loan for a business. It would make sense for the bank to lend to people whom it knows well and with whom the managers have some relationship. This can be an effective way of reducing risk. Certainly the concept of more productivity resulting from friends rather than strangers working together is well documented.

So where is the real problem? In emerging markets like the Middle East where the marketplace for goods and services is tightly controlled by so few outfits, the spectre of crony capitalism is rather overbearing. In the short term this can alleviate unemployment, but in the long term it diminishes progress and in almost all cases it results in poor performance due to not having the right person for the job. In the end it is the consumer who suffers.

Take for example the recent Subaru social media mishap. A rather long, sexist and irrelevant post by the car manufacturer on its Facebook page was called out. Gulf News first reported that a Subaru company rep said the media contractor to whom the social media was outsourced was “a friend of a senior official”. For many, this was not a surprise.

Agencies will always be under pressure from clients to keep budgets to a minimum, but they also need to keep growing profits. One way to do this is to employ the less expensive friends and family; rather than more experienced people who will cost more.

In order to prevent unwanted behaviour, one or more of the following things need to occur: social consequences (public shaming or being ostracised from a community); legal consequences (being fined or having licences revoked); or business consequences (diminished trade).  There is no incentive for the status quo to change because everybody wins and there are no consequences. More damning is the general apathy that surrounds this practice. It’s an open secret. It’s “how the Gulf works”. Further, if Gulf News were to identify that media contractor for Subaru, they could be charged with defamation. But do they not also have a moral obligation to let us know so that no other business recruits that person in the future?

As an industry, the advertising and media sector will be the least likely to change in this regard. It will be the consumer at the end of the day who has the power to change business practices by voting with their wallet.

The Greek playwright Euripedes said “Every man is like the company he is wont to keep”, which is particularly fitting for this situation. If your subcontractors do a poor job, it is most likely an accurate representation of yourself.”

the authorCampaign Staff
Campaign ME is the Middle East edition of the UK’s leading magazine for the advertising and media industry.