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The complexity of the ecosystem in which companies operate requires a new relational agenda, whose objective will be to facilitate the most favourable environment for the fulfilment of their business objectives.
CorporaTe DiplomaCy:
Rafael Cabarcos and Carlos S. Ponz
A new exeCutive MAnAgeMent tool foR geneRAting vAlue by MeAnS of RelAtionAl CAPitAl
Contents
1. Acknowledgements 4
2. Research Methodology 6
3. Introduction: The Change of Role in the Current Organization 8
4. A New Relational Reality 10
5. Corporate Diplomacy: Key Principles 12
6. The Legitimization of the Organization as an Influential Player 14
7. New Mechanisms for Relating to the Environment in which Companies Operate 18
8. A Cross-functional Approach 24
9. A New Risk Panorama 30
10. Traditional Approach to Business Diplomacy vs. New Approaches 34
11. Skills and Competences of the Corporate Diplomat 42
12. The Major Challenges for Corporate Diplomacy 46
13. Conclusions 48
14. Bibliography and Sources Used 50
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1.acknowledgements
i
The authors would like to express their thanks for the cooperation of all the
professionals who have made this study possible. in particular, we would
like to thank Javier Garilleti from the ey Foundation and Francisco Navarro from the ie Global Corporation Center because, without their
vision, commitment and endeavour, this work could not have gone ahead.
We would like to thank Valentina Moreno, Rafael Mira and Leticia Soberón, for their constant support and excellent contributions, and the
enthusiastic participants in the Collaboratorium platform: Ángel Alloza, Luis Abril, Miguel Mira, Goyo Panadero, María Teresa Aranzábal, Eugenio Martínez, Antonio Camuñas, Felipe González Abad, Giuseppe Tringali and Gustavo de Aristegui.
in the field work, we cannot forget Adolfo Aguilar, Belén Bueno, Javier Cantera, Elena Dinesen, Plácido Fajardo, Ramón Gascón, Ignacio Gasset, Iñigo Luis, Jesús Marrodan, Luis Truchado and Miguel Angel Zuil.
and finally, our thanks for the constantly brilliant input from Jorge Cachinero, Eduardo Diez Hochleitner, Manuel Egea, Fernando Fernandez, Rafael Gómez Jordana, María Lorenzo, Juan Luis Manfredi, Guillermo Muñoz, Carlos Olave, Juan Prieto and Ignacio Santillana.
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TECHNICAL DATA SHEET
The Global Corporation Center, in partnership with the Company institute
and the ey Foundation, decided to conduct a study on the emergence of
Corporate Diplomacy (CD) in the business world. This is a new discipline
which, over the last decade, has attracted the attention of the academic
world and has gradually made its way into the business world, with the aim
of meeting the needs of its increasingly complex relational framework. in
order to do so, it set out to gather the opinions of executives and experts from
different disciplines and to describe the form it takes when incorporated by
various organizations. The primary aim was, therefore, to ascertain the current
status of this discipline in the business field and to analyse its relevance. in
addition, the purpose was to identify the areas involved in the management
of this issue, as well as the competences required for performing it properly.
Upon the basis of this information, this report’s research team was able to
draw some useful conclusions.
in order to conduct this study, four field work paths were used:
Collaboratorium, the collaborative and knowledge-enhancement platform,
designed by the DontKnow team, questionnaires, interviews and workshops
with experts.
The work on the collaborative platform was envisaged by means of challenges
to experts focused on specifying content, fields, fitting into the organization
and the organization’s functions and competences.
The questionnaire which was conducted consisted of the compilation
of a set of quantifiable indicators with regard to the relevance Corporate
Diplomacy has to the professionals interviewed in their organizations, as well
as its importance within current business strategies. The data were collected
between December 2015 and may 2016.
The quantifiable indicators were grouped together under six headings,
each of which included a set of options with which the participants had to
indicate the extent to which they agreed or disagreed. as a general rule,
satisfaction was measured, as appropriate, on a scale from 1 (totally disagree/
not important at all) to 5 (totally agree/highly important) in relation to the
statement contained in the item.
2. research methodology QueStionnAiRe: “CoRPoRAte DiPloMACy – new oRgAniZAtionAl SKillS?”
The questions referred to:
• The incorporation of Corporate Diplomacy into best practice strategies
• The real impact of CD on an organization’s financial statement
• The company departments which are related to CD
• The concepts to which CD is most directly related
• The positioning of the organization with regard to the most critical issues
• The main objective of a lobbying strategy in an organization
The questionnaires were distributed in two ways: by email and by hand to the participants in the various workshops held in madrid. each of the attendees
invited took part by filling in a document, with their confidentiality guaranteed at all times. 83 professionals from different organizations with the following
profiles took part: Chairmen, managing Directors, Human resource managers, Business managers, Communication managers and Corporate Social
responsibility policy managers.
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3. Nowadays, global organizations have to compete in a new and highly-volatile
environment, full of fluctuating elements, in which uncertainty has become the norm.
The interconnection between the elements of the system acts as an accelerator of
events and impacts, adding rapid conFiguretions of opportunities and risks to the
complex scenario, which require real-time reactions with the appropriate capacity
for analysis.
This is a state of affairs full of risks of very different kinds which are difficult to manage,
with disruption in terms of both technological proposals and social trends, which pose
a demanding challenge for companies and require flexible organizations with business
models which can rapidly adapt to change. regardless of the industry country or the
markets in which a company operates, its decision-making framework is affected by
economic, political and social factors on a worldwide scale, to which it has to react. The
severe economic crisis is causing a rapid reshuffle of political priorities in response to
the complex imbalances it is generating, especially in terms of geographical mobility,
impact on employment and social inequalities.
This new paradigm can be explained by means of four crucial factors, which have had
a significant impact on the current reality, in which the speed of change is challenging
our ability to adapt to it:
the ChAnge of Role in the CuRRent oRgAniZAtion
introduction
• TheTendencyTowardshyper-Transparency.
The integration of technology into everyday life has increased the public’s submission to it, with the gradual loss of people’s privacy along the way in favour of an unlimited social universe. Within this context of the ultra-fast digitization of the planet, in which the possibilities of social manipulation become simpler, companies have to open their doors wide so that the air can circulate. The options of silence or absence in the face of the public’s demands increase suspicion and lead to adverse sensations in public perception.
• IncreaseInTheInfluenceofTheregulaTor.
The level of social pressure which has arisen in the 21st century requires the State to play a more active role in the supervision and control of business activity. There is a tendency towards hyper-regulation, arising from social mistrust of the system and political processes distinguished by weak and fragmented leaderships and the short-term approach of their actions. At the same time, however, this phenomenon contrasts with the growing need for the public sector to increase cooperation with the second and third sectors.
• TheacceleraTIonofglobalIzaTIon.
The ratification of the Trans-Pacific Partnership (TPP) and the progress in the negotiations concerning the European TTIP will not only generate business opportunities and exchanges at all levels, but will also act as catalysts of companies’ internationalization dynamics. Relational capital management will become an essential asset of the organization.
• TheTechnologIcalTrIgger.
The disruptive developments of information systems have a substantial influence on this global framework by increasing the exposure of organizations to public opinion. The public has progressively removed the barriers which, until recently, separated it from other stakeholders. Now, hyperconnectivity is promoting a profound change of habits, reflected in the demand for the greater social involvement of organizations and the immediacy of their response, among other things.
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4. a new relational reality
in this unprecedented global economic system, the forum for dialogue has expanded
for organizations, and it is no longer enough to include the traditional stakeholders in the
conversation – it is now essential to include all the groups, organizations and people who may
be in some way affected by business decisions, and who ultimately have to give their approval
to the operations.
Corporate Diplomacy addresses this new relational reality, seeking not only to contribute to
the defence of the reputation, credibility and good image of the organization, but also, to
continuously construct and strengthen fluent and stable communication channels with all the
social agents, in the interests of proactivity in the transmission of content and the need to find
common ground favouring all the parties involved.
it is a tool designed for the generation of value by means of the management of relational
capital, by which we mean a company’s tangible and intangible resources that represent the
value of its relationship with its environment, and are capable of forming ties with stakeholders
ranging from customers, employees, regulators, suppliers and competitors, to social agents, the
media, public bodies, shareholders and other players in society at large.
Therefore, Corporate Diplomacy is becoming a
management tool of an inter-disciplinary nature
incorporating global objectives and analyses
with regard to companies’ positioning, with the
input offered by their various business units. it is
a task which is far from simple, bearing in mind
that the organization’s current-day Corporate
Diplomacy agenda is spread over multiple foci,
without managing to provide an integrated
solution.
Nowadays, the 20th-century company model
which exclusively addressed an economic-
financial reality has become outdated and
is no longer sustainable in the long term.
organizations, as prominent social agents, are
extending their responsibility to what Cachinero,
manfredi and Bermejo have cheerfully called the
“quintuple financial statement” 1, in order to
forge their social commitment.
This dialogue, however, must reconcile the
autonomy of the operational units with
harmonization within the global corporate
discourse. all the conversations must be perfectly
interwoven within the totality of business actions.
This multiplicity of actions, agents and scenarios
suggests, at the very least, a revision of the
organization’s internal mechanisms for relating
with the environment and emphasizes the
relevance of Corporate Diplomacy. paradoxically,
this discipline, which has not yet received sufficient
attention from either the business or academic
world, is recovering its protagonism due to its
potential to offer high-level management of a
global and integrated relational agenda.
1 T h e e m e r g e n c e o f t h e quintuple financial statement is related to the transformation of the business model of o rganizat ions , which are progressively incorporating a multi-scale model into their management systems, which moves from a first economic-f inancial dimension, on to a second, which answers the needs of governance, ethics and leadership; a third, incorporating responsibility for the impact on the environment; a fourth: a financial statement related to people management and talent development and, finally, a fifth: a financial statement connected to social interdependence and the contribution which, like any other citizen, companies make to the society in which they conduct their activity. Cachinero, J., Bermejo, M. and Manfredi, J.L. Leadership in the Society of Change: Corporate Diplomacy, Reputation and Business Schools (Developing Ideas , Llorente & Cuenca, Madrid, 2013),
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Corporate Diplomacy was conceived as a result of the process of worldwide
economic globalization, which has led to more and more companies
fragmenting their production processes, and simultaneously performing
varied activities and tasks in different countries which make up their global
value chain. The progressive reduction of tariff and border constraints in
the international arena has led to numerous and rapid changes which,
together with other effects (greater competition, new, mainly asian, players
and technological breakthroughs, to mention just a few) has forced
multinational companies to develop new global-scale relational strategies,
such as becoming the direct interlocutors with various regulators and public
administrations, for which reason they have established ambitious plans in
order to maximize profits from their investments on behalf of and in defence
of their own interests.
as mentioned above, Corporate Diplomacy addresses this new relational
reality of a company, constantly building and enhancing links and partnerships
with the various stakeholders, in the interest of transparency, proactivity in
the transmission of content and the need to continuously find points of
convergence.
The increasingly necessary and intense cooperation between the public and
private sectors is generating a new dynamic of understanding between them
while demanding a more fluent framework of collaboration and mutual
support. Business diplomacy is once again playing an important role, relating
private interests with action on behalf of the common good.
on an internal level, the person who occupies the position of corporate
diplomat should not base their strategy of action (nor, therefore, their
messages to stakeholders) on strictly financial parameters, but must also
bear in mind other matters of a political, commercial or social nature if they
want to be successful in achieving their strategic objectives. all the above
unfolds within a global context, in which each region/country/environment
has different regulations, with clearly different concerns and legislative
priorities on the part of the regulator.
5.Corporate Diplomacy: Key principles
The capitalization of external relations and knowledge of the idiosyncrasies of every market are key elements for achieving success.
With these elements on the table, we can identify the following key points with regard to the reasons for and purposes of Corporate Diplomacy in today’s world:
1. CollAboRAtive intelligenCe
The complexity of today’s world makes
it essential to develop associative and
collaborative policies to ensure the survival
of any entity. The visibility of a brand or the
possession of irreproachable reputational
values is no longer sufficient; it is now necessary
to forge partnerships, establish networks and
enter into collaboration with the different
stakeholders if goals are to be met.
2. effeCtive MAnAgeMent of CoRPoRAte ReSPonSibility
Today, more than ever, the social aspect of
a company is present in public opinion. its
image, its ideological positioning on sensitive
issues, the rights of its workers and its code of
conduct are critical factors in the generation
of financial value and trust in the eyes of the
different stakeholders. public authorities are
looking more and more closely at companies’
CSr policies, making them very costly in
terms of the constant efforts to reap positive
returns for a company and very liable to
undergo negative impacts in the face of the
different imponderable factors of day-to-day
management. Corporate Diplomacy must
be able to faithfully convey its objectives and
achievements, which will very often constitute
the best letter of recommendation to the
outside world for an organization.
3. CReDibility AnD PoSitioning
Being present in today’s world means
actively working on daily positioning and
gaining credibility with all those concerned.
a company’s reputation becomes one of its
main intangible assets. Silence on different
topics or absence from relevant forums are
interpreted as negative elements and content
(narrative, transparency, responsibility, ethics,
commitment) is as important as the channels
used. Having this constant presence on the
different levels of the scale facilitates the
establishment of positive dialogue, as well
as the conducting of fruitful negotiations on
essential elements of company strategy.
4. PRevention AnD AntiCiPAtion
The purpose of Corporate Diplomacy is to
overcome obstacles in order to facilitate
companies’ business activities. Therefore,
the longer the period during which that
facilitating occurs, the more effective it will
be. its main tasks include the development
of business intelligence (information sources,
partnerships, competition and trend analysis),
analysis of the potential risks in the prevailing
climate (geopolitical risks) and the derivatives
of regulatory risk.
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6. in order to learn more about the discipline, an initial compilation
of the definitions of CD given to date by the academic and
business consulting worlds was conducted. once those which
were regarded as most relevant for the purpose of the study were
filtered, an initial analysis was conducted, so as to highlight key
concepts. Subsequently, these concepts and content were matched
to the areas of the organization whose tasks directly included the
management of these responsibilities.
in total, 19 definitions of the term in the academic and professional
worlds were identified, conveying 30 key concepts related to 25
functional departments of a company. The terms to which these
definitions refer are represented in figure 1:
The legitimization of the organization as an influential player
Recognition as a corporate/brand agent
Relational framework
Representation of interests
Stakeholders
Influence
Corporate responsibility
Public-private convergence
Value for the shareholder/High-level business objectives
Public authorities
Business Intelligence
Responsible leadership
Negotiation
Reputation
Anticipation
Conflicts and crises
Public Relations
Perception and image
Partnerships
Political Risk
Institutional Relations
Communication
Public Opinion
Source: Internal.
Figure 1. League Table of Concepts Mentioned in the Definitions (%)
0 1 0 2 0 3 0 4 0 5 0 6 0 7 0
whAt iS MeAnt by CoRPoRAte DiPloMACy
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The experts pointed to the strong identity component of
Corporate Diplomacy (63.2%), suggesting the need for a
company to legitimize itself as a distinctive and influential
player in the eyes of its stakeholders. in order to negotiate,
the player has to be recognized as such by their counterpart
and diplomatic ability is a significant factor.
Secondly, the definitions refer to the complex framework of
relationships (57.9%) in which organizations operate, and to
where the main field of CD action lies, representing companies’
interests (52.6%) to their stakeholders (52.6%).
The analysis of the definitions also provided an interesting
perspective which confirms the declaration made by Basque
businessman Josu Ugarte 2, referring to a company’s ability
to interact effectively with external stakeholders, especially for
the protection of investments and for business development
at C-level.
1. sTraTegy Corporate Diplomacy fis part of corporate strategy.
It is an appendix or a tool for a company whose purpose is to “execute” or “implement” corporate strategy “beyond” a company’s borders in terms of its relationship with stakeholders.
Companies in this complex, worldwide framework of relations (I) develop a policy of strategic partnerships that promote collaboration in smart networks, thereby developing models of collective intelligence, (II) strengthen their capacities on a global scale based on the generation of knowledge and the acquisition and retention of outstanding talent, among other things, (III) strengthen their ability to anticipate risks, with increasingly sophisticated handling of big data and (IV) take good care of their relationships with their stakeholders.
The vast majority of experts stated that the management of the
Corporate Diplomacy agenda is the responsibility of a company’s
Senior management. in particular, it is clear that, in the Global
versus local business strategies, the figure of Country manager
also plays an important role in its management.
To sum up the analysis of all these definitions, it can be stated that Corporate Diplomacy is the instrumental development of a company’s influence strategy, with the aim of guaranteeing a favourable environment for its interests.
The selected definitions shared common elements, which can
be summarized in the following points:
1) Strategy
2) influence
3) external (and internal) stakeholders
4) Satisfying companies’ goals and interests
5) Creating value for companies
5. creaTIngValueforcompanIes Ultimately, a company’s goal is to “create value” for its
shareholders and internal stakeholders. What impact does it have on an oil company when it take years to obtain permission to drill in a certain area because local players are discussing the terms before giving us their approval? The more effective the Corporate Diplomacy is in obtaining the above permission, the more value it will generate for the company.
4. saTIsfyIngThesTakeholders’goalsandINTERESTS
If we are able to understand our stakeholders, we will be in a position to manage their goals and interests. This is the best way of obtaining their “permission” or “social licence” to operate, by means of a kind of “win-win” agreement in whic
3. exTernalandInTernalsTakeholders Corporate Diplomacy operates on the totality of
stakeholders whom Corporate Diplomacy must identify, get to know, and understand in order to plan its action. In an open system, there are as many interlocutors as there are stakeholders and it is necessary to get to know each and every one of them, in order to understand their motivations, interests and expectations.
2. Influence One of the intermediate objectives of Corporate
Diplomacy is to “gain influence”, to “create or gain space” so that companies can reach their ultimate goals. Being regarded as a valid interlocutor means being taken into account. A corporate diplomat can only manage to achieve their objectives from this position.
2 Bankinter Debate: Conversation between Josu Ugarte and José María O´Kean, 29 October 2015. http://blog.bankinter.c o m / b l o g s / b a n k i n t e r /archive/2015/ 10/29/debate-bankinter-cara-a-cara-entre-jose-maria-okean-josu-ugarte.aspx
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Business closing NGO’s long-held lead in trust
NGOS BUSINESS MEDIA GOVERNMENT
7. Nowadays, the economy is characterized by the simultaneous impact of different factors of change which are technological,
competitive, spatial, cultural and organizational. it is a complex society that is difficult to deal with and predict, one which is
full of contradictions and uncertainties. it is an “era of intangibles”, in which the creation of knowledge-based value entails the
gathering of information, and the processing of that information is its most essential feature.
Within this context, companies act as living organisms which co-exist within an environment. in fact, they are described as
the most dynamic institutions of post-industrial society (omil, 1997)3. Their strategy is chiefly conditioned by the environment
in which they operate.
Contemporary companies adapt to the complexity of today’s world by recognizing that, in a globalized world, their attitude
cannot be exclusively self-referential, but rather needs to be relational, in other words, an open system in which it interacts
with the market and the different stakeholders, in a constant search for an exchange of proposals. in this process, recognizing
one’s position as a social agent entails acquiring a more active role.
in spite of the growing disaffection of society towards their institutions, companies and entrepreneurs still instil, in the opinion
of respondents (edelman Trust Barometer, 2016), greater trust than the State apparatus as agents of change, able to solve
some of the biggest problems faced by today’s society. in specific terms, taking into account the opinion of the public, 53%
declare that they trust companies (5 points more than in last year’s study). Taking into account a more informed public, this
percentage rises to 63%, 12 points more than that of governments, as shown in figure 2:
New mechanisms for relating to the environment in which Companies operate
3 Omil , J . ( 19 97) . Bus ine s s Management : Foundations in an Open and Dynamic Environment. Madrid. Ediciones Pirámide.
Source: Edelman Trust Barometer, 2016
Figure 2. Trust Rising. Percent trust in the four institutions of government, business, media and NGOs, 2015 vs. 2016
Informed Public
General Population
2015
2016
+4
+4
+6
+5
+6
+2
+3
+1
67 63 57 51
55 53 47 42
63 57 51 48
51 48 45 41
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in this new domain, citizen-consumers have become an essential part of the chain, and are obliging organizations to take an active position with regard to the
issues which concern them the most, including critical and sensitive topics like the environment, human rights, business ethics and transparency, to name but
a few examples. Citizens openly express their opinion that companies should be actively involved in social debate. according to the same Trust Barometer, 8
out of 10 respondents think that Ceos should have greater social profiles and be present and take positions in the debate on social issues.
Nowadays more than ever, companies need to consider their stakeholders when it comes to making decisions and planning their operations. Not only should
those from institutional (government, state agencies) and sectoral (suppliers, competitors, distribution channels) fields and the media be highlighted. employees,
consumers and customers are acquiring new perspectives and concerns of very different natures relating to social and environmental issues, human rights,
ethics, transparency and solidarity. The expectations of these stakeholders are also conditioned by their respective environments, as illustrated in edelman’s
above-mentioned study (figure 3):
Figure 3. Societal Expectations Vary. Percent who agree each is an important issue for business to address
Source: Edelman Trust Barometer, 2016
U.S
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Improving access to education and training
81 82 94 88 85 84 84 82 89 89 88 87 81 78 76 85 86 86 87 82 63 82 84 82 85 76 87 89
Improving access to food, potable water and housing
79 82 93 85 83 73 82 84 89 89 80 84 75 76 77 81 85 82 86 85 65 76 83 78 78 72 82 89
Reducing poverty 76 81 95 85 82 81 83 83 93 90 84 84 77 74 75 85 84 85 83 86 74 80 85 77 81 74 82 88
Protecting and improving the environment
80 84 94 89 82 80 86 87 88 89 84 84 76 82 80 84 87 85 87 87 76 87 81 81 82 73 83 88
Creating and maintaining a modern infrastructure 80 80 90 89 83 81 85 81 85 85 85 79 80 76 81 84 84 83 87 87 71 84 80 82 81 73 82 88
Supporting human and civil rights 83 84 93 85 81 81 84 81 88 90 84 87 82 84 70 79 83 86 84 82 64 79 82 80 79 68 80 86
Improving the access to healthcare 85 81 93 85 83 79 85 84 90 90 84 85 83 79 77 86 89 85 89 82 72 78 83 80 80 76 84 85
Addressing income inequality 79 82 91 84 78 83 83 86 88 90 87 85 79 79 71 77 85 85 82 85 76 84 79 83 81 72 82 85
Addressing climate change/ global warming
71 77 92 84 79 74 84 81 88 87 82 81 67 75 53 77 80 80 82 82 67 77 79 77 77 73 76 84
Addressing gender inequality 75 78 91 79 76 74 78 83 80 83 79 74 59 74 47 78 81 75 82 80 68 79 78 76 75 67 73 84
Developing better solutions for immigrants, refuge and migrant workers
67 66 89 80 71 62 66 55 75 78 75 71 53 64 50 77 69 77 81 78 58 66 75 67 71 58 70 81
Maintaining geo-political stability 68 69 86 83 75 69 75 71 77 79 71 71 72 64 67 79 75 77 83 81 60 72 78 74 73 69 79 79
• Internationalization and globalization of activities, but with the increasing importance of understanding
and adapting to the sensitivities of each geographical
area. according to Carol a. adams (monash University) 4,
companies of the future will do business differently because
they will understand the value of their relationships and the
resources and services provided by their natural environment.
They will be very different from today’s companies. They
will have to be more integrated into civil society and not
remain isolated and focused on the pursuit of their own
benefits. This integration will need to be both physical (in
the ecosystem) and ethical (with social values).
• Technological development and the impact of new information systems, which will increase exposure to
public opinion (social media), the need for transparency
and immediacy in response to requests from stakeholders.
Companies can no longer afford to be absent from the
various forums: this is interpreted as something negative in
the eyes of the public.
• in this regard, the developments in IT and the arrival of big data are leading to very significant changes in the internal
organization of companies, their business strategies and their
structures. Their impact is clearly visible in two milestones: 1)
the deconstruction of value chains, with the decomposition
of vertically integrated businesses as interoperability and
interconnection standards replace intermediation processes
and, 2) the polarization of economies of scale, which means
that, in certain sectors, economies of scale and experience
are losing their ability to add competitive advantages, while
this ability is intensifying in others.
• The need for companies to take positions on critical issues
which demand the attention of consumers (climate change,
labour rights, transparency, ethics, fair trade, the wage
gap, etc.), in order to establish what is known as “business
ethics”. in this regard, the public is progressively abandoning
traditional information systems (the press, radio, television)
in favour of others based on immediacy, such as online
newspapers and social media, a trend which is radically
transforming the way in which companies communicate
with society.
• Management of intangibles. Companies can no longer
find success based exclusively on traditional competitive
factors, such as product, quality, service, costs, and so on. The
true competitive opportunity will be found in their capacity
to manage intangible resources and transfer them to the
market as stand-out proposals for adding corporate value.
• The role of the State remains a core factor in this context
of complex social change. its capacity for structuring is
decisive when it comes to dictating policies to satisfy the
general interest. The sensitivity of the public, as dictated
by stakeholders, poses a constant challenge for political
authorities which, in order to soften its impact, opt to
completely regulate the markets. This phenomenon, called
hyper-regulation, is currently one of the major concerns for
entrepreneurs.
4 Adams, Carol (2014). Reinventing the Company in the Digital Age, BBVA.
Within this context, in which the speed of change has exceeded the speed of adaptation to it, we should consider a set of
fundamental changes which deeply affect company strategy:
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• The role of the regulator as a stakeholder. public servants, in their role as watchdogs
in favour of the public in general, strongly encourage the participation of stakeholders,
thereby enhancing the cooperation of citizens and their agents in public life. This
convergence, which is the result of political pragmatism, provides exceptional opportunities
to stakeholders, who are then able to build their relationship with their environment with
more professionalism.
• Taking on the challenge of sustainability. Getting companies to take responsibility
for the impact they have, beyond their traditional areas of control. This new corporate
responsibility in the business world means both being accountable for one’s actions, and
accepting the consequences of them in the eyes of stakeholders.
•constantcompanystrategyreviewsandflexibilityindecision-making.The key is to
reconcile the daily demands of business activity with the early identification of risks and
opportunities, formulating strategic and innovative initiatives with agility and implementing
them with the required speed (Kotter, J., 1990)5. Within this new environment, the
capacity to obtain and process information takes on great importance. Companies must
guarantee an organizational structure which prevents the process of information being
converted into cultural heritage and provides the necessary mechanisms to promote open
collaborative intelligence. in order to achieve the above, a dual organizational system, in
which hierarchically structured company departments co-exist with other areas organized
online, can facilitate this flow of information.
• The open innovation proposed by professor Henry Chesbrough (2003)6 takes on its full meaning in this new collaborative
environment. in order to improve and increase their flow of information, companies must go beyond the internal limits of
their organization and open up to the market, in which cooperation with external professionals takes on a strategic role.
open innovation means breaking down the internal barrier which prevents us from opening up in order to combine internal
knowledge and external knowledge.
• Disruptive, global and independent talent. The new environment demands a new organization capable of bringing together
special talent for each business. With new work formats, companies should be able to formulate new value propositions
to a collaborator, who will bear little resemblance to traditional freelance contractors. They will be global professionals who
participate in knowledge networks, and are committed to projects and their leaders, versatile and have a great capacity for
self-teaching, with career paths which are much more difficult to predict.
• The selection of information is important within a context of information overload (a phenomenon known as infoxication).
it is essential to know how to manage sources, filter and categorize the information and, finally, process it so to can be used
in decision-making.
• Global operations. The theatre of operations of business activity is global. Financial and production flows oblige companies to
be open with regard to the location and geographical distribution of their processes in the value chain. risks of a geopolitical
nature and companies’ increasing susceptibility to new regulatory, social and trans-cultural challenges are widening the
agenda of business diplomacy.
• The strategic management of stakeholders is on the agenda of the board of directors. its increasing importance means
ever-greater precision needs to be applied to its objectives and the reporting of its activity. The good governance of a company
requires the values and ethical principles of the organization to be aligned, thus ensuring consistent actions by the company’s
representatives.
5 Kotter, J. (1990). The Leadership Factor. Madrid: Ediciones Díaz de Santos
6 Chesbrough, H. (2003). Open Innovation – The New Imperative for Creating and Profiting from Technology. Harvard Business Press
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8. How does the organization come
to terms with these changes?
is it ready and does it have
the competences required by
this new relational framework?
i t seems clear that the
management of this complicated
agenda constitutes a highly
significant factor for competing
in a global world.
an interpretation of the results
o f the s tudy conducted
appears to indicate that
Senior management is chiefly
supported by two departments
in the implementation of the
Corporate Diplomacy agenda,
namely Public Affairs and
Communication , as can be
observed in figure 4:
a Cross-functional approach
The function of public affairs is related to the positioned and influential dialogue that companies conduct with the government,
and more specifically, with the regulator and the public monitoring and supervisory bodies. in this regard, it seems that the
regulatory and supervisory tendency of the State will increase in the coming years, affecting every industry, in every way and
in every country7.
15
12
9
20
21
12
13
23
17
10
10
15
13
Source: Internal.
Figure 4. Departments of the Organization Involved with the Content which Leads to the Definitions Considered
Compliance
Board of Directors
Chairmanship
CEO
Foundation
General Management
Country Manager
General Secretariat
Legal Department
Relations with Investors
Business Development
Institutional Relations
Communication
CSR
Reputation
HR
Internal Communication
Departments ≥ 15 mentions
Public Affairs
Marketing
Risks
Information Security
Security of Installations
Strategy
7 Report: “Beyond the Law”, 2013, KPMG Auditors. Available online at https://www.kpmg.com/ES/es/Actual idadyNovedades/A r t i c u l o s y P u b l i c a c i o n e s /Documents/Beyond-the-law-ES.pdf
Committees
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The relationship between Corporate Diplomacy and other company departments confirms its cross-functional nature and the difficulty of installing it operationally in any of them while retaining its own autonomy. Throughout the research, it was determined that this inter-disciplinary activity should have points of contact of different intensity with 25 functional company departments, reflected in figure 5:
in order to reach this conclusion, a
questionnaire was sent to a sample of
83 senior executives , asking them to
apportion 100 points in accordance with the
importance of each department in relation
to Corporate Diplomacy. in particular, the
executives highlighted two highly relevant
departments: Public Affairs (which obtained
a score of 10.43) and Institutional Relations
(with a score of 9.52). The areas related to
Senior management, particularly General
management and the Chairmanship, also
received high respective scores of 9.52 and
8.05.
at a lower level there were seven departments,
headed by Communication (6.38), followed by
General Secretariat/Legal Consultancy (5.90)
and the figure of Country Manager (5.00).
Below them came the Senior Management Cabinet, Chief Executive Officer, Corporate Social Responsibility and Reputation.
When, on the other hand, the numbers of
mentions the respondents made to each
department are analysed, the Chairmanship and Communication are those mentioned
most often, both registering 90%. in second
place, with 86% mentions, the executives
indicated the Institutional Relations and
Public Affairs departments. This is shown in
figure 6:
Source: Elaboración propia. Source: Internal.
Figure 5. Relationship between Corporate Diplomacy and Departments within the Organization
Figure 6. Departments Mentioned in the Questionnaires (%)
Barely relevant Relevant Muy relevante
Board of Directors
Chairmanship
CEO
Senior Management Committees
Foundation
General Management
Country Manager
General Secretariat
Legal Department
Relations with Investors
Strategy
Business Development
Institutional Relations
Communication
CSR
Reputation
Human Resources
Internal Communication
Public Affairs
Sales Management / Marketing
Risks
Information Security
Security of Installations
Compliance
Procurement
Board of Directors
Chairmanship
Chief Executive Officer
Senior Management
Committee
Foundation
General Management
Country Manager
General Secretariat / Legal
Department
Relations with Investors
Strategy
Business Development
Institutional Relations
Communication
CSR
Reputation
Human Resources
Internal Communication
Public Affairs
Marketing
Sales Management
Risks
Technological Security
Security of Facilities
Compliance
Procurement
n = 21
0 10 20 30 40 50 60 70 80 90 100
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in terms of the order of importance for Corporate Diplomacy, the department
the respondent executives most often put in first place was Public Affairs, followed by the Chairmanship. in third place, General Management, Institutional Relations, the Country Manager and Reputation were
mentioned in the same proportion.
Finally, in order to obtain greater precision with regard to the scope of
the concept of Corporate Diplomacy, the 25 management and functional
departments were grouped together into four categories: management,
Stakeholders, Corporate responsibility and Business management. although
the data appeared to indicate that CD management is a task for Senior
management, it was necessary to proceed to incline its internal position
towards a functional group. Therefore, the scores given by the respondents
for each department or functional unit were added together, as shown in
figure 7:
Senior Management
48%
22%
14%
19%
Corporate Responsibility
Stakeholders
Business Management
Source: Internal.
The results confirm that Corporate Diplomacy is a discipline directly supervised by Senior management and that its functional scope is related, to a large
extent, with the departments in charge of stakeholder management.
Figure 7. Áreas citadas en los cuestionarios (%)
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risk management is not
new for today’s company
management. However, what
is new is the speed of change
and the interaction between
different types of risks, which
lead to highly-volatile scenarios
of enormous uncertainty, as
shown in figure 8:
3.5 4.0
4.0
4.5
5.0
4.76average
4.87average
4.5 5.0 5.5
The complex map of forces involved in the globalization process intensifies its tension by including, in addition to the frictions between global and local
systems or the lack of governance, a new multi-polar scale which leads to changes in political leadership, the fragmentation of power, the emergence of
new trade blocs and a lack of capacity to respond to new global threats, such as organized crime, cyber-terrorism and Jihadist terrorism (figure 9).
1 large-scale involuntary migration
2 extreme weather events
3 Failure of climate-change mitigation and adaptation
4 interstate conflict
5 Natural catastrophes
6 Failure of national governance
7 Unemployment or underemplyment
8 Data fraud or theft
9 Water crises
10 illicit trade
1 Failure of climate-change mitigation and adaptation
2 Weapons of mass destruction
3 Water crises
4 large-scale involuntary migration
5 energy price shock
6 Biodiversity loss and ecosystem collapse
7 Fiscal crises
8 Spread of infectous diseases
9 asset bubble
10 profound social instability
economic
environmental
Geopolitical
Societal
Technopolitical
Top 10 risks in terms of Likelihood
Top 10 risks in terms of Impact
Categories
9. a New panorama of risk
Source: Global Risks Perception Survey 2015. World Economic Forum
Source: Global Risks Perception Survey 2016. World Economic Forum
Figure 9. Global risk ranking
Figure 8. Global risk panorama
PROBABILITY
IMP
AC
TWeapons of mass destruction
Spread of infectous diseases
Critical information infrastructure breakdown
Failure of critical infrastructure
Biodiversity loss and ecosystem collapse
Fiscal crises
asset bubble
Failure of financial mechanism or
institution
Cyberattacks
adverse consequences of technological advances
Failure of urban planning
Food crises
profound social instability
energy price shock
Water crises
Deflation
Unemployment or underemployment
extreme weather events
illicit trade
State collapse or crisis
Failure of national governance
Natural catastrophes
large-scale involuntary and
adaptation
Terrorist attacks
Data fraud or theft
Failure of clmate-change mitigation and adaptation
man-made environmental catastrophes
interstate conflict
Unmanageable inflation
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in a recent survey conducted by pWC in which 1,408 Ceos in 83 countries were interviewed, 66% perceived more threats. The
survey also suggested greater complexity resulting from multiple economic systems, local regulatory processes and the emergence
of regional trade pacts and blocs (figure 10).
A global world bank
Climate change and environmental damage
Regional investment banks
Q: For each alternative, please select the one that you believe the world is moving more towards
Q: How concerned are you about the following potential economic, policy, social
and business threats to our organization’s growth prospects?
The business risk caused by hyper-regulation is given in the same
pWC survey by 79% of the respondents as the main problem
currently facing companies (figure 11).
This new state of affairs demands a new approach from organizations
with regard to the handling of global risks. it is necessary to establish
a specialist system of fluid information which acts proactively and
in a timely fashion. The selection of sources and their links is one of
the functions of corporate diplomacy.
Figure 10. ceosmustnavigateanincreasinglycomplicatedandmulti-polarworld
Figure 11. CEOs are getting more concerned about a wide range of risks
39%
35%
22%
15%
14%
72%
15%
53%
59%
75%
81%
83%
25%
79%
over-regulation
79%
Geopolitical uncertainly
74%
Exchange rate volatility
73%
Top 3 threats
Key threats
79%
74%
73%
72%
71%
69%
65%
61%
60%
55%
50%
Over-regulation
Geopolitical uncertainly
Exchange rate volatility
Availability of key skills
Government response to fiscal deficit and debt burden
Increasing tax burden
Social instability
Cyber threats
Shift in consumer spending and behaviours
Lack of trust in business
Political unions
Economic unions and unified economic models
Single global marketplace
Single global rule of law and liberties
Commonglobal beliefs and value systems
Free and open access to the internet
Nationalism and devolved nations
Multiple economic models
Regional trading blocs
Multiple rules of law and liberies
Multiple beliefs and value
systems
Fragmented access to the internet
Source: Redefining business success in a changing world. 19th Annual Global CEO Survey / January 2016. PWC. Source: Redefining business success in a changing world. 19th Annual Global CEO Survey / January 2016. PWC.
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10. Traditional approach vs. New approachTraditional public diplomacy serves as an aid to visualizing this business function which is being described. Historically speaking, the accredited diplomatic
corps in a country has the following functions:
1) REPRESENTATION OF THE STATE, in
a permanent mission. Diplomatic activity
takes place in respect of all kinds of subjects
and is conducted in an uninterrupted and
simultaneous manner, pursuing the interests of
the country and the protection of its citizens.
although there are currently multiple forums for
bilateral and multi-lateral diplomatic exchange,
the permanent presence of representatives
remains a basic pillar of these relations, owing
to the inter-dependence of States, the existence
of global problems whose solution requires
international cooperation and the worldwide
repercussion of events of different kinds.
2) NEGOTIATION, which, in iklé’s words, is
based on “a process of interaction by means of
which governments explicitly attempt to carry
out a new combination of their common and
opposing interests” (iklé, F.C., 1964)8.
3) OBSERVATION AND INFORMATION, directly
and in the field, using the appropriate sources.
its purpose is to remain as fully and accurately
up to date as possible, on all the events which
occur in the receiving State and to inform the
State being represented. Diplomatic agents
must be able to introduce themselves into the
different spheres and sectors of the society of the
receiving State and maintain good relations with
the organizations and figures with the greatest
prominence and influence in the life of the State,
not only in the political domain but also in the
economic and social worlds.
8 Iklé, Fred Charles. ‘How Nations Negotiate’. New York Harper & Row, 1964
These functions indicated above can be transferred to the business world, in which companies used to resolve their problems
in an almost unilateral manner, by means of the application of the DaD (Decide, apply, Defend) model. in a generally reactive
manner, when a company faced a problem, it identified the appropriate interlocutor and addressed him or her either directly
or through intermediaries/facilitators, in order to resolve it in the fastest and most expeditious manner possible, taking into
account the interests of the decision-makers, but only giving a certain degree of consideration to the interests of any third
parties that might be affected.
Thus, the dialogue consisted of the messages and directional content that the company provided to the interlocutors they
deemed appropriate. open dialogue only took place in special circumstances with, of course, the stakeholders, and when
considered most appropriate.
Nowadays, this directional system has been radically altered and the communication agenda is being increasingly affected
by priorities imposed from the outside. in a society whose institutions are under suspicion, companies and entrepreneurs are
subject to thorough scrutiny by multiple stakeholders. Bad practice in the labour field, influence peddling, corruption, tax evasion,
commercial cartels, and so on, have generated a prevalent situation of mistrust that companies must endeavour to remedy.
according to the Trust Barometer regarding institutions (metroscopia, 2015), 43% of Spaniards put their trust in large Spanish
companies, while 35% trust the multinational companies operating in Spain. in keeping with what was found in edelman’s
2016 Trust Barometer, the public trust private enterprises more than the Government, parliament, trade unions and political
parties (figure 12).
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91 7 Public health service doctors
89 6 Scientific researchers
88 8 Small and medium-sized enterprises
86 9 State education teachers
84 12 NGOs
82 15 The police
81 15 The Civil Guard
80 17 The Church's social work (Cáritas)
78 16 The municipality's social services
76 19 King Felipe VI
74 23 The University
66 24 The Spanish Armed Forces
64 25 Lawyers
60 35 The press (newspapers)
55 37 Tax inspectors
53 38 The Supreme Court
54 40 Judges, in general
52 39 Public prosecutors, in general
53 44 Public health
49 41 The Constitutional Court
47 42 Parish priests
48 46 Town and city councils
The Catholic Church 45 51
Large Spanish companies 43 50
The Autonomous Communities 39 54
Parliament 38 58
Multinationals 35 56
The State Government 34 64
Trade unions 33 64
The employers' organization 27 60
Bishops 21 69
Political parties 21 75
Banks 20 78
Politicians 17 79
Approves
Approves
Disapproves
Disapproves
BALANCE APPROVES-DISAPPROVES
BALANCE APPROVES-DISAPPROVES
Replies in %
+84
+83
+80
+77
+72
+67
+66
+63
+62
+57
+51
+42
+39
+25
+18
+15
+14
+13
+9
+8
+5
+1
-6
-7
-15
-20
-21
-30
-31
-33
-48
-54
-58
-62
Source: Metroscopia. 2015
Figure 12. Barometer of Citizens’ Trust in Institutions according to the traditional DaD model, a multinational company which wished to obtain
a mining concession in an andean country or obtain an oil exploration concession in
the amazon jungle negotiated directly with the government or the regulator in office
in the country in question, obtained the permits and began its activities, and did not
generally show much interest or pay much attention to any other external stakeholders
that might have been affected.
Nowadays, this process would involve a proactive, comprehensive and detailed agenda
with multiple stakeholders, seeking to pave the way with regard to any contingencies
which may arise.
The legitimacy of the granting of the licence to operate is currently achieved by involving
the society in question, and transparently managing both the expectations and the
potential prejudices which may exist prior to the operation.
The local population which stood to be affected by pollution problems or the destruction
of the natural environment was simply not taken into account, because they were not
assumed to be part of the forum of dialogue in which the decisions were made.
dIalogueenVIronmenT
exTernalsTakeholders
company FACILITATOR/InTermedIary
InTerlocuTor(Government,
Regulator, Trade Unions, etc.)
Figure 13. DAD model (Decide, Act, Defend)
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Given the distances between the headquarters of the
parent company and the places where the companies
operated, it was very unlikely that any corporate abuses
or injustices would become known, as a result of which,
companies did not need to take the minority groups
into consideration in the negotiation process.
Nowadays, this approach has changed radically:
let’s consider an NGo devoted to environmental
protection, or other NGos dedicated to defending the
rights of minority indigenous groups, which, with an
ordinary smartphone, can take photos of the impact
on the environment of the activities of multinational
companies, and upload the images onto the internet
(youTube, social media, etc.) in real time, all over the
world – photos of possible sources of pollution which
may affect the health or survival of these indigenous
groups: The reputation of the multinational in question
would plummet, not only in the country where it was
operating, but also in that of its parent company, leading
to a chain reaction from other NGos, consumer groups,
the media, the governments themselves and political
organisations in the multinational’s country of origin,
and so on, which would not only destroy its reputation
but also its value on the stock exchange.
This change of approach would not have been possible
without the changes outlined in previous paragraphs
(the globalization of business activities, social activism,
changes in new information and communication
technology), which have enabled individuals to get
organized and react to the potential bad practice of
companies.
This has forced companies to shift their approach towards a more collaborative or inclusive
model of relationship, as shown in figure 14:
in this new model, the “dialogue forum” has expanded, and it is not only companies and
governments who need to be at the negotiating table, but also, all the groups, people
and organizations that may be affected in some way by the business decisions, and
who will ultimately legitimize the corporate operating licence: Not only do the objectives
and interests of these new “interlocutors” have to be borne in mind, but companies also
need to take into account how they are affected. if the affected groups do not give the
company the “social permission” or “social licence” to operate, the company’s activities
might not only be delayed, but they will also be affected by negative publicity or smear
campaigns, which could delay the project in question or even cause it to be abandoned.
once a company has understood who is affected and how, it must establish a fluent
dialogue with each and every one of the affected parties, with the aim of enhancing
its business proposal.
dIalogueenVIronmenT
exTernalsTakeholders
Figure 14. New form of business relations in the 21st century
Traditionally, companies maintained a
strong asymmetrical relationship with
those involved, negotiating only with the
first line of representatives of the most
signif icant stakeholders (governments,
local authorities, politicians, trade unions,
the media, etc.) in a bilateral or unilateral
manner, using facilitators or intermediaries
in order to reach agreements and, once they
were reached, it executed them in a one-
directional manner. Therefore, we could say
that Corporate Diplomacy was conducted
in a “courtly” fashion. This company-centric
approach did not consider the potential
affected parties as “equals” and, if a crisis
broke out or an incident occurred, it was
resolved “tactically”, in a reactive manner and
on a case-by-case basis.
in the new dialogue forum of the 21st
centur y, the situation has changed
radically: Discussions are multilateral, and
include a wide variety of interlocutors who
are directly or indirectly affected by the
action of the company in question. These
include NGos, environmental defence
organizations, human rights groups, the
media, consumer associations, and the
governments of the parent companies of
the multinationals involved, to name just
a few examples (Fig. 15)
DIPLOMATIC ACTION AGENDA
Shareholders
Employees Suppliers
Competitors
Financial Community
PartnersBoard Members
Customers
Business Organizations
Institutional Market
Regulator
Non-differentiated
External Pressures
Public and Regulatory
Bodies
Social Agents
The media
Social Networks
Source: Internal
Figure 15. Multiple stakeholders affect the agenda of the current organization
company FACILITATOR/InTermedIary
InTerlocuTor(Government,
Regulator, Trade Unions, etc.)
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The “multilateralization” of the discussions has led to this approach being participatory and more inclusive, to the extent that the
opinions of the weakest stakeholders are taken into account. Therefore, far from being perceived as the epicentre, companies
begin to adopt a “community-centric” approach and are regarded as part of an ecosystem. in the light of this new mentality,
companies have to adopt a more humble vision, come down from their ivory towers and converse and talking to all those
potentially affected by the situation. as a result of this new mentality, companies have to adopt a more proactive stance and
think in a more strategic, long-term manner, in which the approach does not have to be a matter of solving the crisis, nor even
anticipating it to see how it can be solved, but rather avoiding it.
The differences between the two approaches are summarized in the following table:
Differences between traditional business diplomacy and New Corporate Diplomacy
TRADITIONAL DIPLOMATIC RELATIONS newdIplomaTIcrelaTIons
Unilateral and unidirectional (DaD approach) multilateral and multi-directional
The company as the epicentre of the activity The company as part of the ecosystem
reactive: resolving the crisis proactive: aiming for anticipation
Tactical and focusing on solving problems in the short term Strategic, multi-scale, focusing on the medium and long term
Based on public relations Based on institutional relations and influence as a management process
elitist, “courtly” relations, with a small number of stakeholders open, inclusive relations, with a large group of stakeholders
model with little transparency Transparent model
Source: Internal.
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11. PReSSuRe fRoM SoCiety
Skills and Competences of Corporate Diplomacy
in 1987, the Bründtland report9, expressly drawn up for the UN, used the term “sustainable development” for the first time,
defining it as “that which satisfies the needs of the present without compromising the ability of future generations to meet
their own needs”. perhaps, not for the first time, but in a very relevant manner, it warned of the need for countries and
companies to change their global structures and relationships in order to avoid endangering the natural ecosystems which
sustain life on earth.
Today, almost three decades later, concern for the planet and looking after it constitutes one of the priority issues on company
agendas (along with others, such as human rights, fair trade, respect for minorities, ethics in business, etc.), influenced by a
society which, by means of different platforms and stakeholders, demands that they play a more active role in corporate
social responsibility policies that symbolize the organization’s position, in this specific case, with regard to the environment
and ecology.
Nowadays, companies must continually expose themselves to public opinion in a transparent and proactive way, as a result
of the arrival of new technological resources such as the internet and mobile telephony, which have allowed the different
agents to communicate in an instantaneous and continual manner. all the above has led to a significant increase in the
pressure of society and its different agents on organizations, which not only now have to hold a position on the most critical
issues for society, but also have to actively contribute to their solution by means of specific investments and activities.
This public scrutiny has increased the role of the Third Sector beyond its
usual tasks of denunciation and monitoring, to the extent that nowadays,
some NGos acquire shareholdings in large companies, enabling them to
participate as full members in the decision-making process of General
meetings. This is a challenge of maximum interest for companies, taking into
account the increase in the number of agents with whom an organization
must maintain fluent relations in order to guarantee the fulfilment of
its strategic objectives, which exceeds the usual number of agents: the
Government, shareholders, customers and suppliers.
To the above we must add that, on a global scale, a progressive loss of
company credibility can be observed in the eyes of the public, resulting from
the high-profile corruption scandals that came to light during the recent
financial crisis. in response to this situation, governments have, in recent
years, introduced regulatory instruments to promote the transparency of
organizations and to protect their shareholders, within what are known as
good corporate governance practices.
in other words, companies nowadays are required to go much further than
drawing up a code of ethics and creating a department to protect the rights
of its workers. What is required of them is that they should be committed
to society and its problems, that they should actively participate with regard
to critical issues and, of course, ensuring that everything is done in the most
transparent way possible, so that any agent has real possibilities of evaluating
their behaviour.
This current-day business commitment must incorporate the social, ethical
and environmental concerns of society’s agents, from the perspective of
corporate responsibility towards its different stakeholders. Beyond simply
seeking economic benefit, the objective should be to promote well-being
in society by, for example, promoting the creation of stable and quality
employment and implementing policies of a social nature, freely agreed
upon by the workers.
These and other initiatives, encompassed within CSr (Corporate Social
responsibility) policies, go beyond compliance with the legal, fiscal and
employment obligations established by legislation. in fact, it is a matter of
creating a framework in which companies can manage their operations in
such a way that they foster economic growth and competitiveness, while
ensuring the protection of the environment and enhancing the social impact
of their business activity.
in short, it is a question of establishing a company which is sustainable within
a global ecosystem, based on four key criteria:
1. maximizing the creation of wealth for society by means of a proactive
attitude and within parameters which satisfy the wishes of their
stakeholders
2. promoting the creation of fluent communication channels with social
agents, which foster the establishment of common ground for the solution
of problems and conflicts
3. Having a leadership strategy which takes advantage of the continuous
opportunities for improving goods, products, procedures and attitudes
4. Being able to differentiate themselves from other competitors in the
industry by means of intangible elements such as ethical criteria, social
responsibility and posture on sensitive issues.
9 Bründtland, G.H. (1987). Our Common Future: The World Commission on Environment and Development, Oxford, Oxford University Press
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New Executive Skills for the New Society: Defining the Profile of the Corporate Diplomat
in order to analyse these new organizational skills, eleven specialists10 with different specialities (Headhunting, Human resources
and international Business) were brought together.
almost all the working group (83%) regarded this new function as having a strong impact on financial statements, although
they highlighted the difficulty of quantifying this contribution. However, 50% of them stated that, so far, companies have only
developed this function to a very preliminary stage.
among the main responsibilities of this new function, the group of experts highlighted support for the parent company in the
resolution of conflicts, the positioning of the company and the advocacy function (as a representation of interests), especially
with regard to the management of relations with the regulator.
it was unanimously stressed that organizations will incorporate this function over the coming years as a fundamental part of
their influence strategy, with the major challenge of creating the most favourable environment possible for their interests. as a
result of the above, the incorporation of professionals in the field, with a set of specific qualities and skills which will contribute
to the success of the management of a company’s Corporate Diplomacy agenda, will be essential.
10 Aguilar, Adolfo. Manager of Communication and Public Affairs, Thales Group; Bueno, Belén. HR Manager at Editorial Santillana; Cantera, Javier. Chairman of BLC; Dinesen, Elena. Chief Talent Off icer at SACYR; Fajardo, Plácido. Directorial Partner, Leaders Trust; Gascón, Ramón. Manager of Institutional Relations and Public Af fairs , BBVA; Gasset , Ignacio. Chairman of Gasley Consultora; Luis , Iñigo. Project Manager, Korn Ferry International; Marrodan, Jesús . Partner, Korn Ferry International; Truchado, Luis. Partner, Odgers Berndtson and Zuil, Miguel Angel. Directorial Partner, Boyden
11 h t t p s : / / w w w . k o r n f e r r y .com/product s /korn-fer r y -leadership-architect /k f la-overview
This defined profile provides twelve essential characteristics for organizations which wish to develop the key competencies for diplomatic work among their executives. executives act as company ambassadors; therefore, it is considered essential for them to develop these skills.
Profile of the Corporate Diplomat – Skills
in order to establish the profile, we worked with the Korn Ferry leadership architect methodology11, based on the selection and evaluation of competencies.
The twelve competencies identified are outlined below.
1. Communication skills: enabling them to convey messages in an appropriate and effective manner, while adapting them to different audiences and situations. in this regard, rhetoric and the ability to speak in public are also key elements.
2. having the qualities of any good diplomat: veracity and credibility, representativeness, precision, moral and intellectual certitude, good character, subtlety, patience, impartiality, loyalty to the organization and respect for stakeholders.
3. Public Relations: conducting business in a manner which is always in line with the company’s strategic objectives. in other words, being a businessperson who fosters new relationships and strengthens those which already exist.
4. business strategy and vision: which is reflected in being able to build a relational map with the various agents, detecting institutions, companies and advocates that may be of interest, as well as the way of forming links with them.
5. being a specialist in marketing: enabling them to make the most of opportunities in the market and to anticipate changes in the habits and attitudes of stakeholders. anticipation and knowledge will be two of their most important skills.
6. team management and leadership: in the event of having people under their responsibility in a department within the organization. management skills and human resources are critical in this regard.
7. Risk analysis: in order to search for, identify and implement the most favourable conditions for conducting the organization’s activities. Financial and economic knowledge will be essential in achieving this business vision.
8. Mediation: allowing them to assume the appropriate attitude in the event of potential conflicts, as well as having a proactive attitude in the generation of partnerships and agreements which may prove profitable for the future of the organization.
9. entrepreneurism: with a thorough knowledge of the organization and the segments of its activity, with an ability to detect business opportunities, favouring the growth of the entity and increasing its global presence.
10. Ability to negotiate: which involves not only having the necessary skills to do so, but also having the authority within the organization to reach binding agreements on its behalf within set parameters.
11. Adaptability and flexibility: essential elements for adapting to the constantly changing conditions of the market and its stakeholders, which enable suitable management of any uncertainty when it comes to making decisions.
12. Sensitivity: which means always bearing in mind the concerns and demands of the various stakeholders, as well as the effects of any decision on third parties, thus preventing potential situations of friction in the future.
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12. The major Challenges for Corporate Diplomacy
• The Ceo is the great diplomat of the organization: the person who
represents the interests of a company at the highest level.
• The main challenge facing the organization is to incorporate information
into a single diplomatic action agenda. at present, companies’ relational
strategies have been fragmented into multiple internal departments. This
integration will allow a pooling of resources, the assigning of responsibilities
and the execution of a plan in accordance with a high-level strategy.
• The ultimate goal is to create a framework of favourable business
relationships in which CD will act as a tool used by a company’s general
management to pave the way towards achieving results.
• The business intelligence aspect of CD is an effective way of obtaining
relevant information for the business in advance.
• Nowadays, there can be no strategic planning which does not include a
detailed framework of relations with its stakeholders. The management
of relational capital must measure the return on the resources it employs.
• The more transparent an organization becomes, the larger its field of
exposure and risk within society. as a result of corporate diplomacy, it is
possible to appropriately conduct interactions with the stakeholders.
• regulatory risk must be managed proactively. The incorporation of the
organization’s CD function is critical for the detection and anticipation of
these risks.
• it is important to encourage the creation of more proactive and long-
term business strategies, based on the establishment of partnerships
and cooperation agreements, as well as the total alignment of corporate
activities with entities’ communication policies (the constant development
of networks and coalitions with a direct impact on companies’ financial
statements).
• another challenge is to become a cornerstone for the development of
ethical companies, which has a fully social vocation and is integrated with
its environment and all its stakeholders and establishes relations of mutual
benefit and interest with them.
• Finally, the aim is to be one of the epicentres of innovation within
companies, creating business opportunities and being the basis for the
design of business operations, as a promoter of new vehicles of influence.
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13. 1
5
37
2
6
4
Conclusions
CD is making rapid progress towards equipping organizations
with a powerful tool which can help them to position
themselves as legitimate and influential agents.
The company of the 21st century is, first and foremost, a
relationship machine which feeds on filtered information
provided by corporate diplomacy. The aim is to establish
a solid framework of differentiation enabling interaction
with segmented stakeholders in accordance with a pre-
established plan.
Just as in modern states, in which the diplomatic function
is essential for representing national interests to third parties,
modern-day organizations need corporate diplomats to
ensure they have an influential presence in the markets in
which they operate.
research highlights the need to review current capabilities
with regard to relational capital management in order to
address increasingly complex scenarios.
The responsibility for CD management corresponds
mainly and directly to a company’s senior management.
The ability of a company to differentiate itself in
its structured dialogue with the Government and
the regulator becomes a competitive element. CD
management plays a key role in this regard.
public affairs, institutional relations and Communication
are the departments with greatest exposure to CD.
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ReSeARCh teAM
RAFAEL CABARCOS: executive Chairman of the
international institute of Corporate Diplomacy (iiDC). He
was Corporate Director of the prisa Group for 11 years.
He previously held the position of Human resources
Director of Global Banking at the Santander Group. He
obtained a degree in philosophy and psychology at the
autonomous University of madrid. He obtained an mBa
from the Company institute.
CARLOS S. PONZ: iiDC partner. economic journalist, with
a master’s Degree in economic information obtained
from the Universidad Complutense de madrid (Spanish
initials: UCm), a master’s Degree in Health Journalism
(UCm), a master’s Degree in entrepreneurial initiative and
Creation of Companies (Carlos iii). He worked as an editor
at several media outlets, such as expansión, Capital,
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institutional relations and communication consultant
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