A Diplomatic Incident - The Political Risk of Corporate Diplomacy and the Implementation of Corporate Diplomacy Strategy Concepts within Scrutinized Industries

Abstract

The geopolitical environment of multinational corporations (MNCs) is increasingly volatile. For the purpose of mitigation, many MNCs are trying to strengthen their corporate social responsibility programs. Nevertheless, corporations are often faced with harsh stakeholder increased criticism, scrutiny and even sheer hostilities. Corporate diplomacy concepts are addressing these problems by engaging in dialog with unwanted stakeholders since, amidst the geopolitical conflicts around the world, corporations still need to grow their business operations. However, even in countries in which market orientated economic policies predominate, MNCs are today often in disputes with host governments, while additionally new political activist movements are building up political pressure, amplifying accumulated social concerns regarding the negative environmental impact of corporations. In the future, it will be increasingly important for companies to protect their business operations from government interference and other unwanted stakeholders. However, concepts and strategies of corporate diplomacy need to be reviewed, in terms of practical applicability under changing sociopolitical and geopolitical circumstances. Especially in industries that are under heavy stakeholder scrutiny, current corporate diplomacy concepts are difficult to implement. This research illustrates the political risks of corporate diplomacy and suggests where the current concept of DIPLOM needs revision by attempting to apply this established theoretical concept to a corporation operating in a challenging business environment.