Abstract
While corporate diplomacy is discussed as stakeholder engagement allowing multinational companies to manage relationships, engagement approaches to public relations suggest that organizations, through interaction with their stakeholders, create social capital. This study integrates both approaches, exploring how corporate diplomacy develops social capital. Based on in-depth interviews with public relations executives (N = 25) in the United Arab Emirates (UAE), our results indicate that corporate diplomacy in the UAE relies heavily on stakeholder engagement, particularly with governmental institutions, and consequently builds on dialog and collective decision-making. While governmental engagement is mainly conducted through personal relationship cultivation, engagement with other multinational corporations is based on more distant relationships. However, both approaches appear to create social capital and provide social resources, including loyalty and trust. We conclude that by employing different engagement strategies, corporate diplomacy supports both the corporation and various stakeholders in the host country, and close by discussing implications and future research directions.
Highlights
In today’s globalized world, multinational companies (MNCs) are part of a worldwide community, facing multiple social demands from various host country societies
While corporate diplomacy is discussed as stakeholder engagement allowing multinational companies to manage relationships, engagement approaches to public relations suggest that organizations, through interaction with their stakeholders, create social capital
Based on in-depth interviews with public relations executives (N = 25) in the United Arab Emirates (UAE), our results indicate that corporate diplomacy in the UAE relies heavily on stakeholder engagement, with governmental institutions, and builds on dialog and collective decision-making
Summary
In today’s globalized world, multinational companies (MNCs) are part of a worldwide community, facing multiple social demands from various host country societies. MNCs negotiate and enter into collective decision-making processes with their host country stakeholders to contribute to societal issues, referred to as corporate diplomacy (Mogensen, 2017). The current paper applies an engagement approach to PR (e.g., Johnston & Lane, 2018), according to which the role of PR is to enable engagement processes and, in this regard, involves an ongoing interaction and exchange between an organization and its environment in order to identify and integrate different views in organizational decision-making (see Everett, 2018; Johnston, 2018a; Taylor, 2018). As Kochhar (2018) noted, MNCs depend on mutual relationships with a wide range of stakeholders as these relationships facilitate the creation of stakeholder capital, a specific form of social capital that emerges from the “level of mutual recognition, understanding and trust established by the firm with its stakeholders” (Dorobantu, Henisz, & Nartey, 2012). Besides noting that CD is stakeholder engagement and that MNCs depend on stakeholder capital (Kochhar, 2018), scholars have not yet examined CD as engagement and its relation to social capital
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