How to Develop a Corporate Foreign Policy for Multinational Companies
Geopolitics is back. Avoiding politics used to be a preferred approach for international companies to protect their interests or gain reputation. However, the reality of the 21st century is that such companies cannot escape politics, nor can they continuously pretend to be politically neutral.
In this context, any company operating in or trading with different countries and regions needs to develop a corporate foreign policy that
- Ensures its business success through careful geopolitical due diligence.
- Improves its ability to operate in unfamiliar environments through effective corporate diplomacy.
PRINCIPLES OF GEOPOLITICAL DUE DILIGENCE
- Assess transnational risk
- Keep an eye on regional political trends
- Assess local in-country risk
- Keep aware of home and near-abroad risk
PRINCIPLES OF CORPORATE DIPLOMACY
- Develop the company’s own proposition on foreign affairs
- Develop a transnational public image
- Diversify the company’s political relationships
Note: Before actually developing a corporate foreign policy, a company should define its interests, collect and analyse external information, identify regional and local allies, and develop an environment that is in favor of its business success. In doing so, a company must be aware of any cultural differences and adapt its style in accordance, while staying true to its moral principles.
Source: Chipman, J. (2016). Why Your Company Needs a Foreign Policy. Harvard Business Review, 94 (September), pp.36-43