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Friday 20 October 2017

What do you know about corporate diplomacy? The IEI answers your questions

Corporate diplomacy is little known to the general public, often being confused with lobbying or institutional relations. Such confusion gives a very narrow view of corporate diplomacy.

In fact, it is part of a much wider perspective: corporate diplomacy means developing the political, relational and social capacity of the company so that it can interact positively and develop jointly with all the stakeholders in the country or regions in which it is located, the objective being to ensure sustainability and economic performance. From a conceptual point of view, this form of diplomacy is an emerging domain that brings together two fields that are theoretically distinct:  international relations, geopolitics, social and societal analysis on the one hand and the strategic vision of the company and its management on the other.

Therefore, we might ask ourselves, in what way does corporate diplomacy provide competitive advantage for multinational companies or those moving towards internationalisation? Corporate diplomacy aims to strengthen the company’s strategic and managerial capacity to operate on a global scale and to ensure success in each of the countries to which it commits. To ensure the company’s long-term economic performance, which is the central objective of the development and implementation of its international strategy, it is necessary to develop and maintain sustainable relationships with all the stakeholders, particularly in emerging markets or those with significant cultural, social or philosophical differences. However, this approach does not exclude markets which, because of their apparent familiarity, seem to be closer, and in which we too often neglect to take a systematic interest. The stakeholders can be of various kinds: public and parapublic authorities, NGOs, local communities, trade unions, the media, and increasingly, digital social media.

The arrival of corporate diplomacy has led to important changes in the public role of economic stakeholders. The increasing political and social role of companies in the global economy cannot be denied. They are becoming stakeholders in society among traditional forms of power such as states, or new forms, such as NGOs or virtual communities. Corporate diplomacy consists in developing and maintaining dynamic interactions not only with governments but also, and perhaps above all, with the different components of society. In this sense, one could say that companies are stakeholders in civil society.

But devising a public representation strategy requires significant resources, which small and medium-sized companies do not always have. It is true that corporate diplomacy first developed in the big groups and particularly in industries where states can intervene to a significant extent, such as energy, mineral extraction and infrastructure.
But this has changed a lot over the last few years. On the one hand, companies from a wide variety of industries are today developing genuine corporate diplomacy, as Bernard Arnault, the Chairman and CEO of LVMH, as proven recently when he went to meet Donald Trump. On the other hand, quasi-public organisations like Chambers of Commerce, professional syndicates and associations of companies are becoming aware of the necessity of helping small and medium-sized companies not just to develop a simple public representation strategy, but to adopt a genuine, meticulously prepared strategy covering their image, their reputation, their networks and their influence.

However, not everyone agrees with this view of companies. Corporate diplomacy is perhaps too often seen in France as a communications operation without any real basis, or, at the other extreme, as a means of manipulating public authorities, whereas in fact it is about strengthening a company’s ability to operate in the international environment and ensuring that it succeeds in each of the countries to which it is committed. In this respect, it should also be noted that although investors continue to judge the quality of a company on traditional commercial and financial criteria, they accord increasing importance to its ability to cope easily with complex political, social and cultural environments in order to ensure the sustainability of operations and development, even during periods of geopolitical crisis. Thus, corporate diplomacy has a great future, in France and elsewhere in the world.

 

Béatrice Collin is co-director of the International and European Institute

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