Abstract
This paper delves into the manner in which some Multinational Corporations (MNCs) manage corporate diplomacy as a catalyst of their political, social, and cultural influence in foreign markets. Once the related literature is reviewed, the qualitative Focus Group technique is applied by creating two teams of nine business internationalization experts, chosen amongst university professors; representatives of institutions and organizations, such as Chambers of Commerce or embassies; MNCs’ executives and lobbyists; and high-level representatives of Spanish state diplomacy. This contribution verifies that corporate diplomacy is known and clearly distinguished from other similar functions within the company in Spain; nevertheless, it is admitted that, in the case of Spanish MNCs, the arrival of corporate diplomacy is delayed. Secondly, we present the four key instruments to exert influence and, in turn, the most necessary ones to implement corporate diplomacy strategies: networking with external stakeholders, competitive intelligence, corporate reputation, and lobbying actions. Additionally, this paper shows that some MNCs coexist with other types of diplomacy—e.g., state or political, public and commercial diplomacy, although most do not yet do so autonomously, especially the Spanish MNCs. However, MNCs foster the perception that they assume, in a certain way, the role of the nation-states. This paper’s contribution is to establish that the current cross-border relational framework requires corporations to develop a true foreign policy and acquire a diplomatic know-how to strategically manage their influence in the countries where they operate so that they can obtain a “social license to operate” and generate favorable business environments. Finally, a short discussion about possible connections between corporate diplomacy and cyclical dynamics of open innovation is included, where engagement of external stakeholders and culture understanding are the main points in common identified.
Highlights
Market globalization granted enormous power to Multinational Corporations (MNCs), whose influence keeps growing in international politics (Ordeix-Rigo, 2009 [1], Molleda, 2011 [2]), in parallel to their contribution to the GDP of the countries where they invest. (Today, the COVID-19 pandemic is “a supply, demand and policy shock for Foreign Direct Investment (FDI)”, the recentUNCTAD’s -United Nations Conference on Trade and Development- World Investment Report 2020 states
“remain too focused on the bottom line. They think bolt-on CSR (Corporate Social Responsibility) strategies are sufficient [and] do not understand the need for autonomous and interacted strategies for the analysis and management of geopolitical risk (e.g., Non-commercial)”, because they usually assume that their country of origin will rescue them when the time comes, or that “a couple of retired diplomats on the board will cover it”
One of the participants believes that this lack of interest in the autonomous management of their influence is characteristic of the Spanish MNCs, which
Summary
Market globalization granted enormous power to Multinational Corporations (MNCs), whose influence keeps growing in international politics (Ordeix-Rigo, 2009 [1], Molleda, 2011 [2]), in parallel to their contribution to the GDP of the countries where they invest. (Today, the COVID-19 pandemic is “a supply, demand and policy shock for Foreign Direct Investment (FDI)”, the recentUNCTAD’s -United Nations Conference on Trade and Development- World Investment Report 2020 states. Market globalization granted enormous power to Multinational Corporations (MNCs), whose influence keeps growing in international politics (Ordeix-Rigo, 2009 [1], Molleda, 2011 [2]), in parallel to their contribution to the GDP of the countries where they invest. (Today, the COVID-19 pandemic is “a supply, demand and policy shock for Foreign Direct Investment (FDI)”, the recent. UNCTAD’s -United Nations Conference on Trade and Development- World Investment Report 2020 states. FDI flows are forecast to decrease by up to 40% in 2020 from their 2019 value of $1.54 trillion; this would bring FDI below $1 trillion for the first time since 2005. FDI is projected to decrease by a further 5% to 10% in 2021 and to initiate a recovery in 2022, the report says.) Yes, MNCs’. Impact is bigger today, but so are the responsibility and risks, especially in an international business.
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