Managers and diplomacy

Citation

Ali, A.J. (2009), "Managers and diplomacy", International Journal of Commerce and Management, Vol. 19 No. 4. https://doi.org/10.1108/ijcoma.2009.34819daa.001

Managers and diplomacy

Article Type: Editorial From: International Journal of Commerce and Management, Volume 19, Issue 4

Recently, Intel Corp. filed an anti-trust appeal in the EU. The company claimed that a billion-euro antitrust fine imposed by the EU's regulator violated its human rights. Apparently, the size of the fine is the issue and the company representatives, among many others, believe that their case should be heard in a court instead of an administrative body. Irrespective of the fine amount, the question is, “Are corporations entitled to human rights protection?” The answer to this question is and will be a debated subject for years to come.

In a similar venue, but with different implications, Ottaway (2001) made an argument that corporations have no business preaching human rights. She indicated that when executives of MNCs lecture developing-country officials on human rights and democracy, they evoke an image of colonization and superiority. Instead, she advises MNCs and their officers not to behave as agents of civilization but to become more moral and civilized by cleaning up their acts.

Whether or not we agree with either Intel's or Ottaway's propositions, the fact of the matter is that both issues underscore the reality of corporate diplomacy in an increasingly interdependent world where business, cultural, and political affairs are blurred. In fact, in today's world, executives of both large and small corporations interface with politicians and influential people in and across nations. More importantly, these executives have increasingly found that their involvement in human rights matters or global crisis, in general, positively serves economic stability and furthers business interdependence.

In her visit to India (July, 2009), Secretary of State Hillary Clinton met with influential Indian businessmen. She discussed with them a wide range of issues including climate change and their business with Iran. Such a meeting, by the Secretary of State, conveys recognition of the role of executives in enhancing business relationships between the two countries and their valuable input in tackling non-business issues. Whether they reside in India, China, or the USA, CEOs are in the center of global affairs. They are instrumental in easing business transactions and in bridging the gap of misunderstanding; be it economic, political, or cultural. Their role, by necessity, far exceeds their typical business function.

Herter (1966) of Mobil Oil made a powerful argument that corporate and political diplomacy are indistinguishable. He asserted that corporate diplomacy is a fact that has two objectives: establishing relationships abroad to enhance commercial success and achievement, and building an enduring feeling of good will for the USA, its people, its economic system, its business organizations, its political institutions, and the vitality of its culture. The second objective is broad and is not typically addressed in the business classroom or textbooks. In today's global business environment, corporate diplomacy encompasses an additional element – mediating bilateral problems and or international conflict. This new element takes on an added value due to the acceleration of global interdependence, connectivity, and the increasing public interest in having a market environment conducive to business growth and to protecting human dignity while maintaining environment sustainability.

The core of corporate diplomacy is the senior executive's role in international affairs. This role is not new but has become much broader than serving immediate corporate business interests. That is, corporate diplomacy means the active involvement of senior executives in mediating conflicts and advancing business interest by negotiating and forging networking with key players in the global market including government officers, religious and labor leaders, and influential non-governmental organizations. The role has social, political, moral, and business dimensions. These roles and involvement have differed across various stages of corporate diplomacy. In the early days of colonial expansion (specifically in the seventeenth century) several European nations established charter corporations. Those who were in charge of managing them were granted political, military, and business power. For example, on June 3, 1621, The States-General of the United Netherlands issued the charter of the Dutch West India Company. The charter gave the company the right to:

[…] contracts, engagements and alliances with the limits herein before prescribed, make contracts, engagements and alliances with the princes and natives of the countries comprehended therein, and also build any forts and fortifications there, to appoint and discharge Governors, people for war, and officers of justice, and other public officers, for the preservation of the places, keeping good order, police and justice, and in like manner for the promoting of trade; and again, others in their place to put, as they from the situation of their affairs shall see fit.

By the early nineteenth century, new types of corporations emerged, especially in countries which were militarily and economically powerful. These corporations were mostly in manufacturing and were not the outcome of a political decree. Rather, they were primarily a response to emerging market opportunities. Nevertheless, they followed the flag and many of them took advantage of their own government protection, and assistance. Senior executives, though exercised influence upon their own governments to advance their business deals abroad, they were instrumental in promoting the interest of the home country. Therefore, executives were not expected to engage in activities, which were not sanctioned by the home country. Corporate diplomacy was essentially limited in nature and more likely in the service of the political goals and interest of their own government.

The global political landscape in the late 1960s witnessed an acceleration of decolonization and, subsequently, most developing countries achieved independence. Indeed, in the last 40 years, the world has experienced a profound change in the political environment and, in many parts of the world, colonization has become history. Consequently, today's MNCs are no longer burdened by a colonial legacy and in fact increasing numbers of MNCs have never been associated with world powers or colonization. Furthermore, globalization and trade openness has allowed executives to act freely on a wide range of political and social issues thus widening the arena of corporate diplomacy. This development, coupled with the emerging view across the globe that MNCs are social and political actors which contribute to global welfare far beyond their usual economic role, has situated their executives to play a significant role in world affairs. Increasingly, many executives have found it rewarding to mediate and negotiate various issues which impact society.

Arguably, this emerging role is not in conflict or competition with the traditional role of politician and international affairs experts. In fact, it often complements, facilitates, and eases the work of politicians. For example, Hyun Jeong-eun, Chairwoman of South Korea's Hyundai Asan Corporation, visited North Korea in August 2009 and secured a meeting with the North's leader Kim Jong Il. She not only successfully persuaded President Jong Il to release Hyundai Asan executive Yu Seong-jin, who was in custody for four months, but also helped in easing the rising tensions between the North and the South and managed to negotiate commitment for the renewal of a number of North-South ventures (Achin, 2009).

The above event demonstrates that business executives can play pivotal roles in narrowing misunderstandings between and among nations. Likewise, it conveys a message that neutral actors often achieve, efficiently, what otherwise appears to be difficult, if not impossible tasks, for politicians. The event, too, underscores that collaboration between senior business executives and politicians becomes an imperative for reducing tensions and minimizing friction in world affairs.

Back in 2000, we stated that there were some who might suggest that managers' roles should be confined to their firms, and that managers should not engage in culturally partisan politics or global missions. These same voices are still found both in academia and the business world. Furthermore, politicians look with suspicion at senior executives' taking a leading role on the global stage. Be they critics or speculators of the new manager's role, these individuals overlook the fact that in recent years managers have displayed two qualitative aspects: distancing themselves from nationalistic attachments and refraining from imposing their views on others. The first represents significant progress in management thinking that is in the line with the globalization imperative and logic. The second constitutes a realistic understanding of what the world should be – a place where the use of force and torture, at the national and international levels, is not welcome. This reflects a conscious stance that diversity in thinking is an asset that must be nurtured and cultivated in order to maintain human dignity. Today's senior executives are confident in their ability to positively shape sociopolitical issues and lead the way to enhancing world peace and economic integration. This will ultimately solidify their role as effective mediators and negotiators on issues related to sociopolitical affairs.

Many corporations and government agencies appear to recognize the importance of corporate diplomacy. On April 9, 2007, the US Department of State, in cooperation with 18 major US-based firms, had a summit which was aimed at raising “awareness of how the private sector – particularly business leaders – can help improve America's image around the world and in doing so create an environment of cooperation, respect and understanding among nations.” Then Secretary of State, Condoleezza Rice, stated that the challenges of the twenty-first century are “not going to be met by government alone. They come from all sectors of American society working together, and that means a close and vital partnership between government and the private sector.”

Hence, the issue becomes not whether senior executives should play a role in global politics and cultural dialogue. Rather, the question should be, “Are senior executives effective in dealing with world issues, be they political or social?” Primarily, senior executives are responsible for their business affairs and by necessity they deal with various issues which may affect their businesses. They are not expected to devote much of their time to non-business issues. The latter, however, have become increasingly indistinguishable from economic concerns. Senior executives often find themselves in the middle of sociopolitical issues and they have either to take a stance or a lead in addressing them.

Since any world issue requires negotiation and deliberation, actors often develop their own narratives. Each narrative, however, is shaped by internal and external forces, making divergence an inevitable reality. In fact, dealing with competing narratives requires broader and inclusive perspectives. Because of their training, experience, and outlook, business executives display flexible attitudes and by necessity they are more likely to be in tune with the logic and spirit of globalization (e.g. prosperity, cooperative conduct, and peace). Furthermore, many of today's senior executives are neither imperialists nor relativists. Therefore, they are relatively at ease with cultural and political diversity.

Indeed, senior executives, free from extreme nationalism and the urge for domination, are capable of strengthening collective actions and advancing common goals. Engaging them makes it possible for infusing business and cultural perspectives in politics and international affairs. Executives, however, in their diplomatic activities, need to focus on long-term sustainable relations rather than on short-term goals. This is especially true when dealing with developing nations. Policymakers and executives in these nations may not have the resources and experience to negotiate effectively. In that case, executives should avoid any temptation to take advantage of rising opportunities at the expense of the developing countries. Not only might such actions backfire, but also they may lead to situations where there is little knowledge transfer, learning, or innovation occurring.

In the years to come, corporate diplomacy will be an integral element of senior executives' tasks. Therefore, policymakers should appreciate the role that corporations might play in international affairs. Free of ethnocentrism and narrow allegiances, senior executives can add doses of realism and flexibility to global negotiation and dialogue.

Abbas J. Ali