Int. Journal of Business Science and Applied Management, Volume 9, Issue 2, 2014

Strategic change: a journey towards new meaning? Semantic

analysis of corporate communication

Malin Olander Roese

Lund University, Department of Design Sciences, Division of Packaging Logistics

Box 118, 221 00 Lund, Sweden

Telephone: +46 46 222 9701

Email: malin.olander@plog.lth.se

Sverker Sikström

Lund University, Department of Psychology, Cognitive Division

Paradisgatan 5, 221 00 Lund, Sweden

Telephone: +46 70 361 43 33

Email: Sverker.Sikstrom@psychology.lu.se

Abstract

Strategic change, infused with new data, perspectives and concepts may change the inherent meaning of the

central tenets in an existing strategy. It taps into the cognitive aspects of a journey where language, in verbal and

written form, aids in the process of communicating, understanding and creating new meaning. Hence, it comes

as no surprise that communication is argued to be an important means of forming and executing strategy,

particularly if that strategy involves change. Thus far corporate communication has been the objective of

extensive and predominately qualitative analysis of written content, with a focus on identifying and

demonstrating strategic intent or reorientation. The objective here is to take a different route, not yet explored in

the field of strategic management and change. Leaning on a previously conducted, longitudinal and qualitative

case study of strategic change the aim is twofold: Firstly, to propose a method for quantitative analysis of

semantic content of texts and statistically test the semantic development over time in the same case. Secondly, to

evaluate and discuss the results of a quantitative semantic analysis in relation to previous and qualitative

findings. By applying latent semantic analysis (LSA), we quantified the semantic content of annual reports and

press releases between 2001 and 2010, derived from a case study of one company in the paper packaging

industry. Using this method, we statistically analysed significant changes in semantic content across the ten-year

time period studied. The results indicate interesting avenues for continued and wider use of quantitative

semantic analysis in contributing to the understanding of semantic development and strategic change.

Keywords: strategic change, communication, cognition, latent semantic analysis, paper packaging industry

Acknowledgements: The authors would like to express their gratitude to BillerudKorsnäs: for facilitating the

research and for allowing our findings to be communicated. We would also like to extend a warm thank you to

the anonymous reviewers for their constructive comments on how to improve earlier versions of this paper.

Finally, we would like to acknowledge the Bo Rydin Foundation for financing the research.

Int. Journal of Business Science and Applied Management / Business-and-Management.org

1 INTRODUCTION

Strategic change is a challenging endeavour requiring everything from a new organisational structure to

underlying culture (Mintzberg & Quinn, 1992; Markides, 1997). Communication is one suggested lever, argued

to be important in the formulation and implementation of strategy and strategic change (Simons, 1995; Porter,

1996; Quinn, 1996; Higgins & Mcallaster, 2004). Communication plays a role both in terms of manipulation

and control, and for creating new meaning and practice (Brown, Collins, & Newman, 1989; Hartelius &

Browning, 2008; Rogers, Gunesekera, & Yang, 2011). The use of a common, and preferably unpretentious

language is, for example, argued to facilitate in closing the strategy-to-performance gap, and to enhance

learning, change and strategic innovation (Pfeffer & Sutton, 1999; Marshak, 2002; Jacobs & Heracleous, 2005;

Mankins & Steele, 2005). Communication and dialogue are likewise argued to be integral parts of strategic

control through interactive control systems, and for discussions on performance, risk, and business ethics

(Simons, 1995; Quinn, 1996; Melnyk, Hanson, & Calantone, 2010).

The value and use of rhetoric, dialogue, narratives and metaphors in verbal and written communication in

this context are well explored from multiple perspectives. Language, being one of our most important means for

communication, influences and is influenced by situations, negotiations and activities within an organisation and

its surrounding environment (Brown et al., 1989; Györi, 2002). Reflective dialogue is considered to be a

prerequisite for changing mental models, and an enabler of strategic change and innovation (Markides, 1997;

Jacobs & Heracleous, 2005). A necessary first step for critically reviewing mental models is to render them

visible through the use of language and metaphors: “During such inquiry, a collective language is likely to

emerge. It is through this common language that emergent, new mental models can take shape” (Jacobs &

Heracleous, 2005, p. 347).

At the other end of the communication spectrum are written artefacts such as employee magazines,

corporate brochures, press releases, annual reports and more. These are in turn important tools for forming an

organisation’s identity and managing perceptions and expectations in relation to internal and external

stakeholders (Fiol, 1995; David, 2001; Prasad & Mir, 2002). An organisation’s language, made up of its choice

of words expressed in verbal or written forms, is an important cultural artefact in itself. Homburg and Pflesser

(2000) found that an organisation aspiring to be market oriented will not exhibit behaviours to this end without a

market-oriented language.

Given that language is an important marker of cognitive and cultural change, how can it be studied and

measured in relation to strategic change? Thus far, the growing interest in communication and rhetoric in the

management literature is often dealt with in relation to manipulation and control: “Specifically, rhetorical

studies and management are concerned with power as it relates to language” (Hartelius & Browning, 2008,

p.14). Previous studies in the area and in relation to strategy are predominately qualitative, applying content

analysis and word frequency counts to interview transcripts and public documents. For example, Landrum

(2008) shows how strategic intent and posture are revealed in letters to shareholders using a qualitative narrative

analysis. Rutherford (2005) examines rhetorical ploys and Pollyanna effects by studying narratives in corporate

annual reports using word frequencies as a tool of analysis and a linguistic based approach.

The aim here is to take a different route, which to the authors’ knowledge has not yet been explored in the

field of strategic management and change. Seeing the importance of language as a tool for communicating

strategy or a new strategic direction, and a potential marker of certain behaviours, we address the question of

how language, and more specifically the semantic content in an organisation’s written communication, can shed

light on the understanding of a strategic change process. We applied a quantitative analysis method for

measuring semantic content, which is the underlying meaning of words and narratives. We did this based on

findings from a longitudinal case study of strategic change, and the notions put forth in the literature that an

organisation’s language is a tool as well as a result of a cognitive processes (such as strategic change).

The aim was twofold: Firstly, to propose a method for quantitative analysis of semantic content of texts and

statistically test the semantic development over time in one organisation. Secondly, to evaluate and discuss the

results of a quantitative semantic analysis in relation to qualitative findings of the same organisation.

We start with a theoretical discussion on strategic change, the role of communication and how different

methods are used for studies thereof. Then we briefly present previous findings from a qualitative case study,

followed by a description of the methods used here. The results from the quantitative semantic analysis are

presented and discussed in relation to previous qualitative findings. This is followed by conclusions,

implications for theory and practice and suggestions for the continued use of similar methods in contributing to

the understanding of semantic development and strategic change.

Malin Olander Roese and Sverker Sikström

2 STRATEGIC CHANGE, COMMUNICATION AND RESEARCH APPROACHES

Normann (2001) argues that “The core process of a company in the long term is to form new ‘dominating

ideas’” (ibid., p. 149). Describing the evolution of strategic paradigms, Normann (2001) shows how the

competitive dominance or edge has moved from the industrial economy where resource transformation,

standardisation and production were at the heart of business logic and management, to an economy where the

crucial competence is to organise value creation where the customer is not only an important source of business

but regarded as a co-producer. Simons (1995) similarly describes the differences between ‘old’ and ‘new’

strategic paradigms from ‘top-down strategy’, ‘standardisation’ and ‘according to plan’ to ‘customer/market-

driven strategy’, ‘customisation’ and ‘continuous innovation’ Simon goes on to argue that a shift or co-existence

between the old and the new reflects a deeper tension between basic philosophies of management and control.

For industries that originate from the industrial economy, this may imply a dramatic conceptual and real change

in how customers are viewed and how value is created.

According to Mintzberg and Quinn (1992) the most difficult challenge in managing strategic change is the

move from a familiar domain to one that is less well-defined. It can take place through continuous and

incremental improvement, or through a more radical renewal of the business (Quinn, 1978; Normann, 2001).

This is a process that in turn can be reactive or proactive, temporal (different phases of stability and change) and

spatial (separated from the rest of the organisation) (Baden-Fuller & Volberda, 1997; Normann, 2001). The

process of forming new ‘dominating ideas’, or changing mental models underlying the strategy paradigm of an

organisation is foremost a cognitive challenge (Markides, 1997; Normann, 2001; Jacobs & Heracleous, 2005).

For an organisation going through strategic change, new perspectives, competencies, tools and models may

come in the form of new concepts with new meaning that has to be addressed. For example, an organisation

aiming for a competitive advantage through a strategy of ‘differentiation’, coming from one of ‘cost’ (Porter,

1985; Porter, 1996), or heading for a ‘Blue Ocean’ (Kim & Mauborgne, 2005), will instil new meaning (and

practice if successful) in relation to terms like ‘value’, ‘customer orientation’, and ‘innovation’.

Johnson (1992) argues that “…a change in emphasis from control of costs to an emphasis on monitoring

effective customer service, is not simply a means for monitoring the progress of a changing strategy, it is also a

major signal of a change in corporate culture” (Johnson, 1992, p. 35). Corporate culture where language

systems and metaphors are central ingredients in forming an organisation’s value systems and norms, are in turn

important levers in strategic change. As put by Higgins and McAllaster (2004): “If strategy and cultural

artifacts are not aligned, then employees are uncertain which messages are real – the old familiar, comfortable

ones supported by lots of well-known cultural artifacts, or the new messages about a new strategy that are in

conflict with the old, still in place cultural artifacts”. Homburg and Pflesser (2000) show that a market-oriented

language, being a cultural artefact, is a prerequisite for market-oriented behaviour.

Seeing that language plays an important role in conveying and creating new meaning and behaviour, it is

not surprising that communication is argued to be an important ingredient in leadership and strategic

management in general and for change and innovation in particular (Porter, 1996; Markides, 1997; Mankins &

Steele, 2005; Jacobs & Heracleous, 2005; Groysberg & Slind, 2012).

Thus far research has provided important insight into the relationship between corporate communication,

language and control as well as rhetorical choices for communicating strategic intent and posture (Landrum,

2008). Bryman (1989) points to the increasing interest in studying language in the organisational context and

how communication is used and the consequences thereof. In a recent qualitative study by Rogers et al. (2011),

they examined textual components in strategic statements over time, showing how managers may use language

to articulate shifts in strategy. However, according to Rogers et al. (2011) there is limited research on the

linguistic development within an organisation over time. There is equally, to our knowledge, no quantitative

research on the semantic content of an organisation’s communication, over time, contributing to this field.

Public documents like annual reports and executive statements are important media by which companies

communicate with their shareholders, the stock market and society at large (Fiol, 1995; Prasad & Mir, 2002).

Prasad and Mir (2002) argue that “…the texts of annual reports and letters to shareholders contain important

symbolic meanings that need to be unveiled through interpretation” (ibid., p. 110). Even though these may be

written in a way to convey a certain intentional message, Fiol (1995) argues that future research comparing

different forms of communication is important.

Applying a quantitative semantic analysis in an organisational context offers another potential route. By

addressing the need for increased understanding of how shifts in strategy are reflected in language, we wanted to

measure if and how the semantic content of an organisation’s written communication changes over time by

applying latent semantic analysis (LSA). LSA is a mathematical method for computer modelling and simulation

of the meaning of words and passages by the analysis of representative corpora of natural text. It is also a

method for analysing the underlying semantic content. It has primarily been used so far in cognitive science and

educational research (Landauer & Dumais, 1997). A few recent organisation and management studies have used

LSA to examine verbal communication in design teams, showing how semantic coherence within teams creates

shared understanding, and how this computational tool can be used to detect how teams function (Dong, 2005;

Int. Journal of Business Science and Applied Management / Business-and-Management.org

Yang & Helander, 2007). Wallemacq and Jacques (2009), albeit not using LSA, introduce the software Evoq to

visualise the semantic meaning of words drawn from qualitative texts.

As a strategic change process progresses, one could assume that a new language is used and developed not

only in lexical terms (i.e. new vocabulary) but also in semantic terms (i.e. the inherent meaning of words and

narratives) hence leading to less semantic coherence over time measured in quantitative terms. Given the

inherent meaning of, and link between, strategy, market orientation and innovation (Frambach, Prabhu, &

Verhallen, 2003; Dobni, 2010) and the cognitive and cultural aspects of strategic change (Homburg & Pflesser,

2000; Normann, 2001; Dufour & Steane, 2006) – it could be assumed that an organisation pursuing strategic

change towards increased market orientation and innovation will develop a new and measurable semantic

content expressed through language.

Hence, our research is based on the notion that strategic change; such as moving from an old’ towards a

‘new’ strategic paradigm, requires cognitive change where communication (use of language) is vital. We raise

the question how language and more specifically the semantic content in an organisations corporate

communication can shed light on the understanding of a strategic change process over time. Given the role of

communication and language in strategy and strategic change, and the successful application of quantitative

semantic analysis in other areas, we hypothesised that: an organisation going through strategic change will

display a change in language and more specifically a significant change in the semantic content – the underlying

meaning of words or narratives – over time.

3 STRATEGIC CHANGE IN PRACTICE – FINDINGS FROM A QUALITATIVE CASE STUDY

The study presented here is linked to a longitudinal qualitative case study (Olander-Roese & Olsson, 2007;

Olander-Roese, 2008; Olander Roese & Olsson, 2012). A brief introduction of the study and prior findings is in

place.

One company in the Swedish forest and paper packaging industry was studied between 2004 and 2010 with

the overarching purpose to explore and contribute to the understanding of strategic change, and the link between

strategy, customer orientation and innovation. The research, based on a qualitative and interpretive approach

(Alvesson & Sköldberg, 1994; Gummesson, 2000; Patton, 2002), focused on challenges and enablers of

strategic change, the process in itself and the related managerial actions, decisions and organisational reactions.

The data collection consisted primarily of in-depth interviews, observations and participation as well as studies

of the company’s written material.

The company, a manufacturer of paper packaging material named Billerud (now BillerudKorsnäs), was

formed in 2001 through a merger of three existing Swedish paper mills and introduced on the Stockholm Stock

Exchange. The Swedish forest industry, of which the paper packaging industry is central, is one of Sweden’s

most important primary industries and makes up 12% of the nation’s GDP. It is characterised by capital intense

processes and products with high knowledge content. Efficient production processes, volume output and cost

focus have been at the core of the forest industry paradigm. After the formation in 2001, Billerud spent the first

three years streamlining the activities of the founding mills and developing a strategy. In 2004 Billerud revised

their strategy and the next step was to be taken. An increased market orientation and new product development

were central themes of the strategy. In 2005, the founding CEO was replaced, followed by a review and change

in the company’s objectives, financial targets and strategy. This time around an increased focus was placed on

the direction set out in 2004, combining world class process efficiency and customer focused development.

Processes for innovation and market learning were developed, the organisation restructured, new ventures

launched, and the ‘offering’ extended beyond the physical product (Olander Roese & Olsson, 2012). In

summary, the journey of strategic change studied between 2004 and 2010 can be described as a move from a

production oriented, cost-focused business towards a more market and customer oriented one. The new financial

targets set in 2006 were reached in 2010.

In Table 1, the introductory words of CEO statements as communicated in annual reports further depict the

strategic journey from 2001 to 2010 along with turnover and margin statistics. One could conclude, when

comparing the fluctuating financial developments over the years with the qualitative findings thus far, that the

financial results are limited. However, given the importance of communication and language in strategy and

strategic change suggests measures for other outcomes beyond profit maximisation, such as semantic

development (See e.g. Whittington, 1997; Dufour & Steane, 2006). This inspired the present study.

Malin Olander Roese and Sverker Sikström

Table 1. CEO statements, turnover and margin between 2001 and 2010 (Billerud, 2011).

YEAR

CEO STATEMENT IN ANNUAL REPORTS 2001-2010

Introduction (text in bold by author)

TURNOVER

Net sales, Msek

MARGIN

2001

“The new Billerud – The past year was dominated for Billerud by the merger of the three

mills at Gruvön, Karlsborg and Skärblacka. Extensive work was required to co-ordinate

production and find models for co-operation between the mills. During the year we have

also formed functions for the head office and established a sales organisation with offices

in seven European countries”.

6910

19%

2002

“The past year was Billerud’s first full year as a listed company. While work in 2001 was

dominated by efforts aimed at creating an efficient business, our focus in 2002 was on

realising the plans made when we formed the company. As we have worked to establish

ourselves on the market we have seen confirmation of the fact that the Billerud brand,

thanks partly to its long tradition, is a strong name in the forest industry. Together with our

strategy of focusing on niches where we are already strong, the name has undoubtedly

contributed to the large interest shown in Billerud both by the market and by investors”.

7067

17%

2003

“At the formation of Billerud we produced a plan for the first three years where the focus

was on establishing the company and consolidating our business. During this first phase

our work has focused on creating procedures for our working methods and on realising the

opportunities for organic growth and increased efficiency that were created through the co-

ordination of three mills within a single company. Now that this phase is over I can state

that Billerud is well established on the market and as a listed company. We have created a

strong base, both financially and as an organisation, for the next phase of Billerud’s

development”.

6992

16%

2004

“During its first years since formation Billeurd has co-ordinated the activities of its three

Swedish mills and thereby created a niche business and established listed company focus

on packaging paper. Synergies have led to increased production capacity, which has meant

a significant rise in deliveries. Following the successful start it is now time to move to the

second phase, in which the focus will be on increased market orientation. This will enable

Billerud to meet new demands from customers and end-users. Increasing efficiency within

the business will be equally important, and this will be done by cutting costs”.

7159

11%

2005

“A renewal has begun. Billerud’s results were disappointing. Continued weak economic

conditions and the dramatic rise in costs for energy, raw materials and chemicals affected

us negatively. We have now implemented strong measures to transform our results and

build a more modern, more efficient company”.

6823

-3%

2006

“Billerud undergoing change. After several years of faltering profitability, Billerud’s

earnings trend was turned around in 2006. Prices could be raised slightly higher than costs

increased. Combined with greater efficiency this meant a strong improvement in profits”.

7369

2007

“The hard work continues. In 2007 we worked very hard and successfully to develop

markets, customer relationships and products, to reduce costs and improve efficiency. Over

the past 12 months we have raised prices and reduced our energy costs. However, increases

in wood costs and currency changes impacted negatively on earnings. We will continue

working intensively on our chosen course to make improvements”.

7758

2008

“A changed reality. Billerud’s positive development continued at the start of 2008. We

were successful on the market and our customers appreciated our new business concepts

and products. In the middle of the year a weakening in the industrial business cycle became

more obvious, and by the end of the year the financial crisis had struck and the downturn

was a fact. We were forced to face up to further challenges”.

7792

2009

“The resurgence. Describing 2009 in brief is almost impossible. We were plunged into a

financial crisis and an economic slump with falling demand, plummeting prices and a

financial market that practically stopped working all together. However, we handled the

situation and bounced back very strongly at the end of the year. I think that in 2009 we

really showed Billerud’s inherent strength”.

7760

2010

“Strong position for Billerud. I am pleased, happy and impressed with the progress that we

made in 2010. Demand for our products rose very strongly over the year, resulting in an

operating margin of 12%. I interpret that as proof of how strong our customer offering is”.

8828

12%

Int. Journal of Business Science and Applied Management / Business-and-Management.org

4 METHOD

The data analysed for this paper was retrieved from the Billerud company and consist of the written content

of annual reports and press releases from the period 2001 to 2010. The semantic content was assessed

quantitatively by applying latent semantic analysis (LSA). LSA generates a high dimensional semantic

representation (semantic space) from a large corpus of natural language using information of co-occurrence

words. The texts are then inserted into this space, so that the statistical tests can be applied to the semantic

representation that is associated with the texts. The method is described below. The analyses were conducted

using SemanticExcel, a web-based software for scientific and statistical analysing of semantic representation

(www.semanticexcel.com).

4.1 Creating a semantic space

Semantic spaces are generated by applying computational methods to large text corpora. This space is a

representative frame of reference for the meaning of different words (Landauer & Dumais, 1997). For this

paper, an English semantic space was created. The texts generated by the subjects (i.e. the annual reports and

press releases) were not sufficiently large to construct a high quality representation. Instead we collected a

corpus based on 1.6 GB of English news articles from 2007. The latent semantic analysis was generated by the

Infomap software (http://infomap-nlp.sourceforge.net/), using the following parameters settings: the number of

words in the space (15k), the number of context columns (20k), the context size (±15 words), the number of

SVD iterations (500), and the number of dimensions in the semantic representation (100). The result of this

analysis was a semantic quantification of the 120k most frequent words in the corpus, where each word is

described by a 100 dimensional vector. Words that are semantically similar (synonyms) have similar

representation in this semantic space.

4.2 Empirical data – texts to be analysed

The empirical data consisted of written expressions in the form of annual reports and press releases from

the years 2001 to 2010, in total ten annual reports and 194 press releases in English. The particular organisation

was selected based on a previous qualitative and longitudinal case study of strategic change (Olander-Roese,

2008; Olander Roese & Olsson, 2012). With the limited reference to similar studies and applications of LSA, it

was important to choose an object of study where we could relate to data and findings beyond the ones in focus

here in order to evaluate and discuss the results of LSA. The material for analysis – annual reports and press

releases – was selected based on public access and to ensure representation of comparable texts for all years.

The annual reports cover (excluding financial statements): statements from the CEO/president, a summary of the

year’s major events and descriptions of business concepts, vision, strategy, targets, markets and trends,

production, product and business areas, human resources, environmental issues, production and investments,

risk analysis, etc. The press releases include communications of financial reports and market outlook, product

launches and changes in production or number of employees, etc. As already noted, the annual reports and other

public documents are an important means for corporate communication. One limitation put forward by Fiol

(1995) in addition to the potential of formulations aimed at conveying a certain and particular positive image of

the events, is that annual reports are often produced by external consultants. Nevertheless, the information and

language employed should, to our knowledge and personal experience, adhere not only to legal requirements but

also the voice of the organisation and the people interviewed for content.

4.3 Data preparation and procedure of analysis

Annual reports (10) and press releases (194) from the years 2001 to 2010 were downloaded from the

website of the case company or sent as PDFs from the company. All documents were transferred to unique text

files (txt.), 204 files in total, and prepared for analysis by removing financial statement tables, figures, images

and data such as contact information, telephone numbers and links to other documents. Each file was named

with the corresponding date.

The analysis encompassed three steps: First, each document (i.e. text file) was transformed to a semantic

representation. This was done by adding the semantic representation of the words that were presented in each

document, and by normalising the length of the resulting vector to one. This generated one semantic

representation for each document, with the same number of dimensions as the original semantic space.

Second, we created a semantic scale spanning two sets of documents. This semantic scale measures how

semantically similar one document is to two sets of documents. The scale spans from -1 (maximally similar to

set 1) to +1 (maximally similar to set 2), and where a value of zero indicates that it is equally similar to both

sets. We summarised each set of documents by aggregating all semantic representations in the set, and

normalised the resulting vector to one. Then we created a “difference” vector, where the vector representing the

second set was subtracted from the vector representing the first set, and where the resulting vector was

normalised to one. Finally, we measured the semantic similarity between the difference vector and the vector

representing a document that we wanted to measure on the semantic scale. The semantic similarity between the

Malin Olander Roese and Sverker Sikström

vectors is measured as the cosine of the angle of the vectors. Since the lengths of the vectors were normalised to

one, the cosine of the angle was calculated as the sum of the pairwise multiplication of each semantic

dimension. Hence, if the vectors were identical the value was +1 and if exactly opposite the value was -1, and if

unrelated, zero. Thus, 1 signifies extremely high similarity/relatedness, and 0 signifies no relatedness. However,

while calculating the difference vectors, we removed the document that we wanted to measure on the semantic

scale. This was necessary to avoid bias that otherwise would occur when the document to be measured was

included in the difference vector. Thus, the difference vector was slightly different for each document that was

measured. The semantic scale of each document was simply the semantic similarity between this document and

the difference vector, where a positive value indicate a resemblance to set one, and a negative value a

resemblance to set two.

Third, we calculated the appropriate statistic on the semantic scale. To measure whether the two sets of

documents differed in the semantic scale we used a two tailed t-test, where p < 0.05 indicated a significant

result. To measure the size of the difference we calculated z-values (z), by subtracting the mean value of the

second set from the mean value of the first set and dividing the resulting value by the pooled standard deviation.

5 RESULTS AND DISCUSSION

The following results are presented and discussed: first, the semantic similarity between annual reports and

annual summaries of press releases respectively, comparing all pairwise years and the consecutive development;

second, the identification and measurement of significant keywords of pairwise years.

5.1 Semantic similarity of annual reports

In analysing the annual reports we used words rather than documents as the underlying unit of analysis

simply because statistics could not be based on a single data point as only one report is related to each year. For

example, if year 2005 consisted of 10,000 words then a set of data (e.g. set 1) consisted of the 10,000 semantic

vectors representing these words. The results are presented by all pairwise combinations of years (Figure 1) and

by changes across consecutive years (Figure 2).

First, the results show that the semantic similarity scores (s) diminish gradually over time between the

annual reports (AR) from 2001 to 2010, indicating a change in the semantic content (i.e. inherent meaning of

words and narratives) across time. Figure 1 illustrates the semantic similarity score of each year in relation to the

preceding and following years as well as in relation to itself (s=1.0). The semantic content of annual report 2001

(AR 2001) is identical to itself (s=1.0), highest in similarity to AR 2002 (s=0.9990), and lowest in similarity

compared to AR 2010 (s=0.9958). The results show high significance. The similarity score between 2001 and

2010 rendered a p-value of 0.000 and z-value of 86.697. The analysis further shows that the semantic similarity

between directly preceding or following years is the highest: AR 2004 is most similar to AR 2003 (s=0.9994)

and 2009 to 2010 (s=0.9991). The semantic content in annual reports between 2001 and 2004 have the lowest

similarity to AR 2010, and the annual reports between 2005 and 2010 have the lowest similarity with AR 2001

(i.e. the semantic distance becomes greater relative to the first year and progressively closer to the last year).

Figure 1: Semantic similarity scores (s) of annual reports (AR) 2001-2010

Int. Journal of Business Science and Applied Management / Business-and-Management.org

Second, Figure 2 shows that changes in semantic content across consecutive years differ. The semantic

similarity scores between years can be seen as a measure of semantic change, sometimes called “coherency”

(Foltz, Kintsch, & Landauer, 1998). Figure 2 illustrates the semantic similarity of consecutive years, where each

year is related to the following year. Hence, the semantic similarity score between 2001 and 2002 is s=0.9990,

between 2002 and 2003 is s=0.9995, etc. The results show a higher semantic similarity between 2002-2003

(s=0.9995) and 2007-2008 (s=0.9995), and lower similarity between 2004-2005 (s=0.9989) and 2006-2007

(s=0.9989). The lowest similarity score is between 2008 and 2009 (s=0.9985), which shows a significant value

(p=0.000; z=38.5).

Figure 2: Semantic similarity scores (s) of consecutive years, annual reports (AR) 2001-2010

In summary the semantic development in annual reports yielded a gradual variation of the semantic content

ranging from s=0.9958 to 1.000. If we compare the results of the quantitative latent semantic analysis (LSA)

with the findings from interviews and documentation in the qualitative study (see brief summary, section 3) the

low semantic similarity between 2001 and 2010 (as shown in Figure 1) and gradual shift (Figure 2) may not be

surprising. The semantic distance does become greater relative to the first year and progressively closer to the

last year. Seeing the company’s semantic development over the years, also considering the financial results, this

could be interpreted as a continuous or incremental strategic change.

An examination of the actual content of the annual reports reveals that there is a notable difference in terms

of themes, expressions and highlights that are in line with the results of the consecutive development (Figure 2).

The three lowest points of semantic similarity between the years shown in Figure 2 are of interest (see 2005,

2007 and 2009). Firstly, in 2004 in line with the revised strategy, ‘market orientation’ was emphasised for the

first time with a separate chapter in the annual report on ‘Customer focus’. In the following year, 2005, a new

CEO arrived and the company experienced a decrease in turnover and negative margins. This indicates that the

lower similarity can be explained by the difference in semantic content between the years (and the ‘dip’ in

2005). It could also be interpreted as the focus on ‘market orientation’ becoming secondary in times of

organisational changes and financial turbulence. 2006 (similar to 2004) was characterised by the introduction

and communication of a new strategy with an increased emphasis on customer-focused development. The

following year’s annual report, 2007, communicated the efforts to implement the new strategy, with an

increased focus on environmental and sustainable development issues and new business initiatives. The low

similarity with 2006 was therefore surprising; however, a closer look revealed the equally continued

concentration on production efficiency and cost reductions, which are prerequisites, but not drivers for market

orientation per se in terms of customer focused language. Finally, 2009 is the year after the 2008 financial crisis,

and the time when the company communicated their vision and sustainability targets for the first time, as well as

launching a new product, which was much communicated.

5.2 Semantic similarity of press releases

We measured the semantic scale between all pairwise combinations of press releases aggregated over a

year (i.e. 2001-2010), where the press releases were the unit of analysis. The results are presented in Figures 3

and 4. The preferred level of analysis for conducting the statistical analysis was on the level of press releases

because it answers the question whether the results can be generalised across units of press releases. In the

annual report analysis described above, it was not possible to use annual reports as the underlying units of

analysis because there is only one annual report available each year, so that the pooled variance in the t-test

could not be calculated.

Malin Olander Roese and Sverker Sikström

First we illustrate the semantic similarity score between the years based on the press releases for each year

in relation to the preceding and following years as well as in relation to itself (Figure 3). Hence, the results show

the semantic content of press releases 2001 (PR 2001) is identical to itself (s=1.0), highest in similarity to PR

2002 (s=0.9024), with the lowest similarity to PR 2009 (s=0.1627). The similarity score between 2001 and 2009

rendered a p-value of 0.000 and z-value of 9.099. In summary, the years 2001 and 2002 appear to be exceptions

in semantic content compared to the other years. PR 2003 through PR 2010 all show the lowest similarity score

in comparison with 2001 with appropriate levels of significance. Where the annual reports showed a gradual and

limited change of semantic content over the years, the differences indicated through the press releases were

more dramatic, considering also the greater variance of actual similarity scores ranging from s=0.1627 to 1.000

(compared to s=0.9958 to 1.000 for annual reports).

Figure 3: Semantic similarity scores (s) of press releases (PR) 2001-2010

The semantic similarity between consecutive years based on press releases yields an equally more varied

picture (Figure 4) than the corresponding development in annual reports (Figure 2). As shown in Figure 4, there

is a significant change in semantic similarity between 2002 and 2003 (s=0.69, z=2.52); however no other

consecutive years show statistically significant differences. 2002 and 2003 were also statistically different from

all subsequent years (2004-10). Finally, 2003 differed from 2007, 2009, and 2010, and 2004 differed from 2009

and 2010.

Figure 4: Semantic similarity scores (s) of consecutive years, press releases 2001-2010

In summary the semantic changes in press releases across years shows a significant change between 2002

and 2003, and there were no differences between other subsequent years (Figures 3 and 4). These results could

not be directly compared with the results from the annual report, because the statistics in the annual reports were

based on words as the underlying unit of observation.

Int. Journal of Business Science and Applied Management / Business-and-Management.org

However, studying the actual content of the press releases yielded a difference in themes and highlights, in

line with the results of the consecutive development (Figure 4). The significant dip in 2003 with a low semantic

similarity compared to 2002 can be understood through the sole focus on financial communication in the two

preceding years. While financial communication is aimed for the (financial) market, the language is restricted in

the sense that it has to adhere to the format for financial communication of a listed company. In 2003, an

acquisition and product launch contributed to differentiating the semantic content. Interestingly, there is no dip

in the consecutive semantic development in annual reports (Figure 2). A potential explanation for this is the

differences in content and purpose of annual reports and press releases. Press releases are predominately

financial statements, interim reports or related messages (128 out of 194 in the study) and limited in text aimed

at relevant stakeholders, particularly on the financial market. The annual reports on the other hand allows for

more elaborate descriptions and an opportunity to, in retrospect, prioritise areas to highlight with the exception

of fulfilling legal requirements for the financial reporting. It is aimed at a broader audience. Furthermore, press

releases are bound to show greater variance given that they are more event driven whereas annual reports

provide summaries. The dip in 2007 (i.e. low semantic similarity with 2006), even if not significant, corresponds

with that of the annual report. The consecutive similarities between the years (2007 to 2010) are notable in that

they show an increased number of press releases communicating product and service launches, alliances, co-

operation projects with customers and product awards and personal statements compared to previous years.

5.3 Significant keywords across the years

A further analysis of the semantic content in annual reports was made by identifying significant keywords

of pairwise years. This was done by first making a frequency count of the words in the annual reports and then

comparing these frequencies to words in the corpus used for generating the semantic representation (i.e.

constituting a norm of word frequencies). We selected the 100 most overrepresented words in the annual

reports, by making a chi-square test for each unique word, and where all the selected words were significantly

overrepresented following Bonferroni corrections for multiple comparisons. These 100 keywords were selected

as a set of words to compare text related to one year in relation to another year (see Table 2). This analysis was

carried out using the chi-square test with the Bonferroni correction method just described. Hence, the analysis

was limited to the 100 most overrepresented words, rather than all words in the reports. Table 2 (to be read

horizontally) shows all significant words for 2001 compared to 2010, 2005 compared to 2001 and 2010, and

finally 2010 compared to 2001 and 2005.

Comparing the significant keywords across the years provides a further indication of the semantic

development. From significant keywords of ‘turnover’, ‘investments’, ‘segments’, ‘tonnes’, ‘production’ in

2001, to ‘customer’ entering in 2005, albeit still communicating cost-reduction measures and investments in

production processes through ‘electricity’, ‘wood’, etc. The keywords for 2010, in relation to previous years, are

primarily related to the company’s offering, the market and sustainability positioning, which can be seen as a

result of the strategic change initiated in 2004 and in 2006.

Table 2. Significant keywords of pairwise year and their chi-square test scores with Bonferroni correction

AR 2001

AR 2005

AR 2010

AR 2001

n/a

turnover

investments

segments

tonnes

production

currencies

stora

enso

kraft

22.2

19.9

15.9

15.2

13.4

11.8

10.5

9.1

AR 2005

costs

electricity

wood

sacks

boilers

customer

32.0

24.1

23.0

12.9

10.2

9.8

costs

boilers

electricity

turbines

investments

reductions

coated

43.7

20.0

19.1

15.5

14.8

10.9

AR 2010

packaging

solutions

sustainable

fossil

sustainability

renewable

54.3

13.2

13.0

11.8

10.8

demand

packaging

sustainability

sek

17.9

13.1

10.6

9.8

Malin Olander Roese and Sverker Sikström

Summarizing the presentation of results and discussion thereof, the results provided some surprises in

relation to the qualitative findings. One example is the difference between the years 2006 and 2007 (Figure 2).

Where the qualitative study (based on document analysis and interviews) concluded that the revised strategy in

2006 was followed by similar expressions and development of product and service launches and new business

initiatives in 2007, the LSA pointed to an equal emphasis on a continued focus on process efficiency and cost

reductions hence showing less semantic similarity than was first concluded. Moreover, the overall trend of the

semantic development – where the semantic distance becomes greater relative to the first year and progressively

closer to the last year – is equally interesting from the perspective of strategic change indicating a gradual and

continuous change, or logical incrementalism (Quinn, 1978). This development is further enhanced given the

resulting significant keywords, based not only on frequency but also on the semantic representation of these

words. At the same time, given the inherent meaning of these words (Table 2) equally raises the question of a

more revolutionary change (Hamel, 1996) given the particular industrial setting and strategic change at hand.

Applying LSA to annual reports and press releases, which yielded somewhat different results that required

different levels of analysis (i.e. words and document level), draws the attention to the different nature and

purpose of corporate communication. Comparing the evolving semantic content between the two sources

(Figures 2 and 4) begs the question whether these artefacts of corporate communication, and their semantic

content, communicate change (i.e. are an effect of a strategic change) or if they influence change explicitly

(aimed communication) or implicitly (through communication that might be required legally). Where the

semantic content in annual reports in this particular case could be seen as an effect of strategic change, and a

gradually developing one, the press releases may qualify as a representative of both. As noted in the literature,

both are tools for corporate communication, written in adherence with legal and stock exchange requirements

and/or with the aim to communicate a predetermined message to relevant stakeholders (Fiol, 1995; David,

2001). However, annual reports allow for more elaborate descriptions of important events, prioritised focus

areas and more. Press releases are shorter in form, often event driven for reasons of legal of financial reporting

requirements and/or with the objective to communicate a new product launch or collaboration.

6 CONCLUSIONS, EXTENDED DISCUSSION AND SUGGESTIONS FOR FUTURE RESEARCH

Summarising the presentation and discussion of results, a number of issues are of particular interest in

relation to the aims of the study. Firstly, by quantifying the semantic content of the annual reports and press

releases we have examined and statistically evaluated the semantic development, with several significant results.

Secondly, having used LSA for the first time in this particular setting and study of strategic change we have

demonstrated that it can be a helpful method in further analysing and contrasting qualitative findings in case

study research. It can also serve as a starting point for a longitudinal qualitative study of strategic change,

providing indications of variations to consider on both an aggregated level and in relation to significant

keywords and/or particular time periods.

We conclude that in this particular case the semantic content changed significantly over the time period

covered, expressed through texts, and that an LSA as a quantitative method can be a complementary guide in a

longitudinal qualitative study of strategic change. However, given the limited variation in semantic similarity

scores over the years in annual reports (Figures 1 and 2), albeit statistically significant, indicate that strategic

change may be limited expressed through the semantic content of corporate communication. Further and

comparative research between actors and cases are important for future references.

Discussing the findings one step further, the theoretical implications of this study are related to the field of

strategic management (i.e. strategic change) and case research. Firstly LSA opens up new ways of measuring

strategic change. For example, testing and measuring an organisation’s relative emphasis on market and non-

market oriented cultural artefacts, such as customer-focused language and employee narratives as suggested by

Homburg and Pflesser (2000) could yield novel answers to how strategic change is managed over time. This is

of particular relevance given the traditional ways of measuring strategic change. While the rational and classical

approaches to strategy and strategic change build on efficiency and achievement of objectives of (financial)

profit maximisation, the processual or political approach (see e.g. Dufour & Steane, 2006; Whittington, 1997)

acknowledge pluralistic outcomes (i.e. other than profit max). Through these perspectives, other ways of

measuring strategic change towards for example increased market orientation and innovation can be argued for.

Homburg and Pflesser (2000) argue the importance of cultural artefacts (e.g. customer focused language) as an

important prerequisite for translating new norms for market orientation to actual market oriented behaviours.

Hence, applying LSA in studies of strategic management and change provides new possibilities for identifying

new findings and for operationalising and testing previous qualitative findings as well as provide opportunities

for triangulation and validation in otherwise qualitative case study research. From the perspective of cognition

and learning (Argyris, 1989; Brown et al., 1989), a measure of the semantic development over time may be an

indicator of whether an organisation learns and adopts a new intended strategy and it’s market oriented (or

other) language, or just “learns about it”.

Int. Journal of Business Science and Applied Management / Business-and-Management.org

For practice and management, the findings indicate that the use of LSA can serve as a complementary

quantitative measure to for example financial results to measure the cognitive change (expressed through

language), argued necessary in strategic change. The application of LSA could thus provide a benchmark to

financial reports which does not capture and on-going cognitive change in an organisation. Furthermore, LSA

could serve as a tool to measure the degree of coherence and/or non-coherence between individuals in

management groups and other teams in relation to strategy implementation and innovation through

operationalising the findings by Kellermans et al. (2011) and adding to the findings by Dong (2005) and Yang

Helander (2007).

It should be noted that the study was limited to one case and the type and amount of data found in annual

reports and press releases. This is why continued research using LSA in the areas of strategy and change is

recommended. We welcome similar applications of LSA as the one performed here, as well as studies

encompassing larger amounts of data. Even though our results were largely significant, statistical methods

benefit from more data.

Hence, beyond corporate communication, other written material, interview transcripts and media clips may

be used. The number of actors can naturally also be extended, opening for comparative case studies within and

between industries as well as studies at group and individual levels. One example would be to apply LSA to

management teams similar to studies performed by Dong (2005) and Yang and Helander (2007). A possible

avenue could be to further develop the notions suggested by other authors, such as Kellermans et al. (2011), who

argue that a high degree of strategic consensus in management groups improves strategy implementation.in

stable environments, with the likelihood of opposite effects in dynamic business environments. In applying LSA

one could measure the semantic similarity between verbal expressions of individual actors (management team

members) in relation to the strategic intent and with regard to the external environment.

Seeing that strategic change taps into the assumption and need for cognitive change, continued use of LSA

would be most interesting to increase the understanding of how, if, why and when change occurs measured

through semantic content of verbal and written, internal and public communication and documentation.

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