Monday, February 5, 2018

CSR to “Corporate Diplomacy”

CSR to “Corporate Diplomacy”

February 1, 2018, 3:43 PM IST  in In the name of 'Development' | India | TOI
There is an increasing shift from CSR to ‘Corporate Diplomacy’. The interplay of fame, influence and strategic control in the businesses come to the fore even as the managers employed by major corporations insist that they have “left the citadel” and joined an “Age of Conversation.”
The rise of corporate diplomacy does not signal the end of corporate social responsibility as anthropologists have come to understand it. Instead, corporate diplomacy both entrenches and makes more explicit the distinctly hierarchical social imagination that organizes extractive industry approaches to reputation and responsibility.
“Diplomacy is the business of handling a porcupine without disturbing its quills.” I love that quote because it suggests that diplomacy is about handling tough situations with tact and grace.
I understand that the “Corporate Diplomacy” focuses on the strategic choices that companies have to make in order to keep to their business agenda and retain credibility with their stakeholders and the world at large by managing conflict or by co-operation.
Multinational companies (MNCs) today are the most powerful actors in the global economy. We live in the times when the 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, MNCs 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. Increased levels of transparency due to digitisation has faded more to this.
Businesses have carved out the way in terms of “strategic business diplomacy” – involving 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.
How is CSR leveraged for “Corporate Diplomacy”?
In a survey carried out by IBM, it was found that 68% of the 250 business leaders worldwide use CSR as an opportunity and a platform for growth (Pohle & Hittner, 2008). In other words, businesses have adopted much more strategic view on CSR than philanthropy. Yet, gap exists between the intention and reality.
To be sustainable, businesses have already embraced a relatively new objective: optimising their operations to improve environmental and social outcomes in a manner that it enhances overall business performance. Businesses today are strategically transforming their corporate charities into development partnerships focusing on community development or improved stakeholder engagement.
In this era of digitisation and transparency, business couldn’t have found a better way to manage stakeholders’ expectations and ensure that their actions translate into good.
DISCLAIMER : Views expressed above are the author's own.

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