The International Power of Companies and the Rise of Corporate Diplomacy

 
When there is a new term linked to diplomacy every day, it is not surprising to learn about the emergence of corporate diplomacy.
 
The rise of corporate diplomacy could make some scholars uncomfortable, as it is not a government-led activity to achieve a foreign policy goal, e.g., traditional diplomacy. I don´t think it can pass the test proposed by Katharina E. Höne of the DiploFoundation to distinguish imposters from real diplomatic tools, as the reader will see at the end of this post.[i]
 
In previous blog posts, I wrote about this issue, "New" Diplomatic Tools: Imposter Diplomacy or the Real Deal? and Consular Diplomacy: Cinderella no more, but not yet a princess.
 
However, in the expanding concept of diplomacy, where non-state actors now participate in the international arena, the idea of businesses adopting some diplomatic practices is intriguing.
 
Two trends in the corporate world international engagement: Either too powerful or not influential
 
Currently, there are two overlapping trends regarding the engagement of corporations in global governance. On the one hand, there is the rise of the powerful tech giants,[ii] while on the other, most Multinational Corporations (MNC) do not participate directly in world affairs´ decision-making.
 
On the one hand, some argue that tech companies are very different from other types of corporations, as they “govern the spaces they control. And by developing new technologies that are deployed as platforms, they can govern entirely new spaces before national governments are even aware that a new governor has emerged.”[iii]
 
Because of the tech giant’s role as emerging influential global actors, now a few countries, such as Denmark, have named Tech Ambassadors to implement their nation´s Technological Diplomacy -TechPlomacy-.[iv]
 
An example of the growing power of tech companies is the permanent suspension of several social media accounts to a seating president, no less of the US.
 
On the other hand, some experts, like Andrew F. Cooper, Jorge Heine, and Ramesh Thakur in the introductory essay of The Oxford Handbook of Modern Diplomacy, ascertain that MNC are not a part of the global governance discussions and “deserve a seat at the table and a voice in the room commensurate with their role and influence.”[v]
 
One reason behind the businesses´ lack of international power or influence could be that no single or unifying international business organization represents all companies, from tech giants to micro-enterprises. There is a myriad of industry-wide associations across the globe that focuses solely on their home country and a few that are genuinely bilateral.
 
In some multilateral gatherings like G20 and APEC, certain business leaders attend, but they do not participate in the negotiation of central issues. Most corporate involvement in world governance is in an advisory capacity without the power to decide the outcome.
 
But, let´s not be mistaken. Companies are not powerless in the international arena. They do partake in global affairs, but via their countries´ domestic politics and their government´s involvement in international affairs. However, the corporations’ interests are not the same as the authorities´, so businesses´ power and positions in global affairs do not reflect their significance.
 
Besides, nation-states have lost the monopoly of international engagement. At the same time, companies gained a certain degree of autonomy from the “home” country and got involved in “state-like” actions such as environmental protection, community development, and even private maritime security.[vi]
 
What is Corporate Diplomacy?
 
All these circumstances have resulted in the emergence of corporate diplomacy. Not long ago, as part of the country´s commercial diplomacy, MNC worked closely with their home governments in promoting trade and investment. Nowadays, businesses engage directly with foreign officials and are adopting certain diplomatic practices.
 
In the book Diplomacia Corporativa, Manuel Alejandro Egea Medrano, María Concepción Parra Meroño and Gonzalo Wandosell Fernández de Bobadilla walk the reader through the rise of corporate diplomacy and its instruments. Their work is focused on Spain´s experiences but includes examples from other parts of the world.
 
In the book´s first section, the authors explain the growing importance of reputation and credibility in world politics and the ascent of Public Diplomacy. I enjoy reading it, and now I have a better understanding of its relevance in today´s international affairs.
 
Coming from an IR/Diplomacy background, reading Diplomacia Corporativa was very interesting because I learned about all the tools and ideas developed by business scholars and applied by corporations about the importance and value of the companies´ reputation. In part, this is what Nation-branding is.
 
John Chipman in “Why your Company Needs a Foreign Policy” indicates that geopolitical risks, power changes in the international system, and economic sanctions demand businesses to have a company foreign policy that includes corporate diplomacy and geopolitical due diligence. [vii]
 
Today, civil society around the globe is making MNC accountable for their products' sources, even when it is the supplier of the company´s provider. And a crisis can ensue in a second via social media.
 
The authors of Diplomacia Corporativa use the definition of corporate diplomacy as the

   “Instrument framed in a corporate foreign policy that allows  generating favorable setting for the company’s interests through the effective management of political influence and its repercussion on the host society, as a result of State´s diplomacy typical mechanisms that grant the company an institutional role and more legitimacy to operate,  which  leads to a competitive advantage.”[viii]
 
For IR students, corporate diplomacy could be a source of job opportunities, but they need to make sure that they understand both the private and diplomatic worlds to be successful. It is also an avenue for retired members of foreign services to share their diplomatic expertise and know-how.
 
Does corporate diplomacy is imposter diplomacy?
 
To know if corporate diplomacy is imposter diplomacy, Katharina E. Höne proposed that “in order to tell the imposter from the innovator, we need to look closely at diplomacy as a practice, its relation to the state, and the purposes of these new diplomacies.” [ix]
 
In terms of the state's participation in corporate diplomacy, there is none, except for being on the other side of their lobbying activities, as regulators. However, as mentioned above, MNC are adopting some of the government's roles, such as protecting the environment, overseeing regional development, and providing security.
 
For me, diplomacy must be conducted by the government to fulfill its role. However, it is an interesting concept with some technics that diplomats could use, especially in public diplomacy strategies.
 
Regarding the diplomatic practice, it seems that corporate diplomacy performs the traditional functions of representation, negotiation, and communication. Therefore, even if the government is not involved, it could be considered a new tool of international engagement by a non-state actor.
 
Lastly, the ultimate goal of corporate diplomacy is to gain a competitive advantage in every country the company has interests and is part of a corporate foreign policy, so it fulfills the idea that to be diplomacy has to look for to achieve a foreign policy goal. The fact that is a non-state actor´s foreign policy rather than a government is the distinction.
 
Overall, I don´t think corporate diplomacy is a real diplomatic tool, and another term should be used to define this new way for companies to engage in foreign countries. Of course, using the term diplomacy helps people to identify the activity in the international arena. Still, it could lead to confusion regarding the government´s role and the ultimate objectives of this instrument.
 
To conclude, I think that one of the most striking features of corporate diplomacy is the adoption of diplomatic practices and tools for the company to survive and thrive in a globalized world.
 
By implementing these types of activities, maybe businesses worldwide would finally have a direct seat at the table rather than go through their governments. The new international role of companies could be a good or a bad thing, depending on how it is executed and should be accompanied by seating vulnerable people at the table, which generally are the most affected by any change in the international arena and by corporates decisions.
 
I believe there should be a greater dialogue between corporations and diplomats to learn from each other and take advantage of new techniques and policies that can help both achieve their goals.


[i] Höne, Katharina E., “Would the Real Diplomacy Please Stand Up!”, DiploFoundation Blog, June 30, 2017.
[ii] The commonly referred U.S. tech giants are Alphabet (Google); Amazon; Apple; Facebook and Microsoft. Besides, there are the three Chinese tech giants Alibaba, Baidu, and Tencent.
[iii] Blumental, Paul, “Big tech companies are so powerful that a Nation sent an Ambassador to them”, Huffington Post, June 23, 2018.
[iv] See, for example Strategy for Denmark’s Tech diplomacy 2021-2023.
[v] Cooper, Andrew F., Heine, Jorge, and Thakur, Ramesh, “Introduction: The Challenges of 21st-Century Diplomacy” in The Oxford Handbook of Modern Diplomacy, 2013, p. 12.
[vi] Egea Medrano, Manuel Alejandro, Parra Meroño, María Concepción, and Férnandez de Bobadilla, Gonzalo Wandosell, Diplomacia Corporativa, 2017, p. 32.
[vii] Chipman, John. “Why your Company Needs a Foreign Policy”, Harvard Business Review, September 2016.
[viii] Authors translation from Spanish. Egea Medrano, Manuel Alejandro, Poder e influencia para operar en mercados internacionales: la diplomacia corporativa como herramienta de dirección estratégica. Tesis Doctoral, UCAM, 2016, cited in Egea Medrano, Manuel Alejandro, Parra Meroño, María Concepción, and Fernández de Bobadilla, Gonzalo Wandosell, Diplomacia Corporativa, 2017, p. 62.
[ix] Höne, Katharina E., 2017.

DISCLAIMER: All views expressed on this blog are that of the author and do not represent the opinions of any other authority, agency, organization, employer, or company

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