Business Diplomacy in an Era of Global Legitimacy Challenges for International Companies

INTRODUCTION TO THE THEME:

Multinational entreprises (MNEs) experienced ‘golden days’ during the 1990s and 2000s, they expanded globally and were major players in globalization. Today they have become powerful actors in the global economy. CEOs of international businesses are welcomed by heads of state as their counterparts, they are invited by governments to help solve global issues such as climate change and poverty, and they are facing dilemmas comparable to those of other international actors.

However, MNEs are facing global legitimacy challenges. They are suspected of tax avoidance, using low wage countries for corporate benefits only, disrespecting privacy regulations, abusing consumer data, violating local community rights, exploiting natural resources, ignoring basic human rights, and employing too many lobbyists targeting national and international political decision-making processes for their own corporate interests.

Although many of these challenges are not new, they have resurfaced and become more apparent during the past couple of years, partly due to the economic recession that many developed economies have faced and to the broader awareness of increasing global inequality and the importance of sustainability.

BUSINESS DIPLOMACY

Business diplomacy seems to be more relevant than ever to deal with these challenges. Business diplomacy involves developing strategies for long-term, positive relationship building with governments, local communities, and interest groups, aiming to establish and sustain legitimacy and to mitigate the risks arising from all non-commercial or exogenous factors in the global business environment.

Business diplomacy is different from lobbying or strategic political activity; it implies an (strategic / holistic) approach of an international business to look at itself as an actor in the international diplomatic arena. Representation, communication and negotiation are key in such an approach.

One of the consequences is that MNEs are able to operate in and show respect for an international business environment that consists of multiple stakeholders. This demands a strategic perspective and vision on the sector and the business environments in which the company wants to operate, and requires a specific set of instruments, skills and competences.

Doing business internationally means facing a complex international business environment; global companies, large, medium or small, need to manage and ‘survive’ in a rapidly changing political and economic business environment that requires them to interact with multiple stakeholders such as host governments and NGOs. To operate successfully among all these complexities, international business will need to develop business diplomacy competences and knowhow more than before.

Yet not many international companies recognize the importance of business diplomacy. Instead of training their managers in business diplomacy, most multinational corporations (MNCs) hire political diplomats and rely on their experience in managing complex relationships with host governments. MNCs need to anticipate stakeholder conflicts, communicate with non-business pressure and interest associations, influence host-government decision-making and maintain constructive relations with external constituencies. Therefore, they cannot rely on advisors only, but should develop their own business diplomacy competences.

It is argued that by engaging in business diplomacy, corporations can increase their power and legitimacy. Firms that are involved in business diplomacy have chosen to satisfy a social public demand rather than only a market demand. Scholars emphasize that it is important for modern corporations to respond to the expectations of various stakeholders in order to obtain a “license to operate”, and therefore the importance of enacting business diplomacy in today’s business environment is stressed.

In the international management literature the term business diplomacy is not widely recognized and has received (too) little scholarly attention.

AIM OF THE BOOK

This book aims at shaping the debate on business diplomacy in multinational corporations (MNCs). It will deal with questions such as:

What exactly is business diplomacy?

How is business diplomacy in MNCs related to (political) corporate diplomacy?

To what extent do MNCs engage in business diplomacy and how?

How can business diplomacy help to deal with the global legitimacy challenges that MNCs face?

What strategies, tactics and instruments in enacting business diplomacy?

Which existing theories can be applied to understand the international business-as-an-diplomatic actor perspective?

New theory development to understand business diplomacy, and what are directions for research on business diplomacy?

Specific topics that chapters can address:

International Business and global legitimacy challenges

International Business, Business diplomacy and the OECD guidelines

International Business, Business diplomacy and mitigating risks

International Business, Business diplomacy and sustainable development

International Business, Business diplomacy and the impact and potential of digitalization

International Business, Business diplomacy and fragile states

International Business as international political actors

MNEs, business diplomacy and tax avoidance schemes

International Business, business diplomacy and ethical dilemmas

EDITOR: Huub Ruël, Phd – Professor of International Business – Windesheim University of Applied Sciences (The Netherlands).

EDITORIAL TEAM: Raymond Saner (CSEND, Diplomacydialogue, University of Basl, Science Po (Paris)), Jan Melissen (Netherlands Institute for International Relations Clingendael, University of Antwerp), Shaun Riordan (Netherlands Institute for International Relations Clingendael), Donna Lee (University of Bradford), Doudou Sidibe (Novancia Business School, Paris), Jennifer Kestelyn (Ghent University).

SUBMISSIONS:

Submissions to this new book in the Emerald Advanced Series in Management are welcomed.

Submission deadline of draft chapters/extended chapter proposals: November 15th 2015

Acceptance notification: December 15th 2015

Full chapter submission: January 31th 2016

Authors must follow the author guidelines of the Emerald Advanced Series in Management.

Send submissions to: hjm.ruel@windesheim.nl or h.j.m.ruel@utwente.nl