Corporate diplomacy can be defined as the strategic handling of MNCs’ external relationships to achieve long-term goals. MNCs face multifold issues in the fast-changing, complex global business environment, such as competition with various cultures, complications in different rules and regulations, and other stakeholder expectations (Marschlich, 2022). MNCs can gain respect and credibility in overseas markets by establishing strong connections with the government, local people, NGOs, and other stakeholders. Corporate diplomacy assists in dealing with cultural differences through understanding and respecting them, facilitating effective communication and rational decisions.
Furthermore, corporate diplomacy allows MNCs to manage political and regulatory risks by fostering dialogue and mutual understanding with government officials and policymakers—the initiative that takes proactive measures, limits risks, and reveals new prospects and chances of cooperation. In addition, corporate diplomacy promotes innovation and growth opportunities by bringing collaboration among diverse stakeholders and knowledge exchange (Marschlich, 2022). Corporate diplomacy is an inherent factor in the proper working of MNCs on foreign soils, stimulating sustainable growth and creating beneficial cross-border relationships.
Cross-cultural communication plays a significant role in global business. It enables companies to penetrate different markets and develop strong relationships (Sahadevan & Sumangala, 2021). Knowing the ethnic nuances ensures the proper adjustment of products, which leads to the widening of the market. Crosscultural communication brings conflict resolution, peace, and harmony to social relations. The necessity of effective medication effectuation and productive teamwork with diverse cultural backgrounds in MNCs is prominent. Cultural diversity fuels creativity as various points of view stir up innovative thinking. Internationally successful businesses communicate because of market access, relationship creation, conflict resolution, employee engagement, and innovation (Sahadevan & Sumangala, 2021). The study examines how corporate diplomacy facilitates cross-cultural communication for multinational companies (MNCs) in global business.
Corporate Diplomacy in Cross-Cultural Communication
Corporate diplomacy strategies play an essential role in promoting cross-cultural communication among MNCs. Corporate diplomacy would help multinationals to overcome cultural challenges in international business by developing cultural sensitivity and building relations, modifying communicational styles, exploring conflict resolution, and involving stakeholders. Cultural sensitivity is an essential aspect of corporate diplomacy in MNCs, and employees should view culture with an open mind. Training programs, cultural exchange activities, and cross-cultural communication workshops are the channels through which MNCs provide their employees with the knowledge and skills for coping with various cultural surroundings.
On the other hand, eye contact, gestures, and body language all mean something completely different from one culture to the next, ultimately leading to miscommunication. Through corporate diplomacy, MNCs can overcome this obstacle by raising awareness of cultural differences in non-verbal communication among employees and motivating them to monitor and adjust their non-verbal cues. Thus, by nurturing cultural sensitivity, MNCs enable employees to communicate more effectively with colleagues and clients of diverse origins. With this method, the interactions become more cooperative, the misconceptions are eliminated, and the relations improve. On the other hand, cultural sensitivity prevents MNCs from experiencing cultural blunders that affect their reputation or business success.
By Marschlich and Ingenhoff (2021), corporate diplomacy emphasizes the significance of developing strong links with various stakeholders, such as in international relations between the MNCs and host countries. This will entail cooperating with local communities, governments, and other organizational actors, thereby nurturing good relationships and being involved in decision-making processes concerning societal and political issues. The activities generate social capital, the total assets that develop from participation activities, and connect individuals through relationships. MNCs can adopt distinct strategies to achieve their objectives, such as networking events and partnerships with local organizations.
By interacting with stakeholders in the host country, MNCs can develop cross-cultural communication and create a suitable environment for cooperation and mutual understanding. This approach is in line with corporate diplomacy principles, which underscore the significant role of communicating with stakeholders to provide favorable outcomes for the corporation and society of the host country.
MNCs incorporate corporate diplomacy in their communication so that communication style fits different cultural contexts. CAT aligns with multinational corporations’ endeavors to change their communication styles through corporate diplomacy (Sood, 2021). CAT focuses on the fact that people change their communication style, trying to achieve sync in mutual understanding. These changes can include using various languages, alternative communication methods, and cultural considerations in the brand’s messaging (Sood, 2021). MNCs guarantee that the messages they communicate are understood and accepted by various cultures by being sensitive to cultural differences and flexible enough to accommodate the
themes. They are sometimes forced to communicate in different languages from their own to communicate with stakeholders more efficiently anywhere in the world. This could be done by translating the documents, hiring native speakers, or using interpreters for precise and accurate communication. Besides this, some cultures can be more prone to utilizing different communication channels (Tutar et al., 2014). For instance, some cultures favor face-to-face conversations, whereas others prefer email or telephone. MNCs should develop the capability for a flexible communication method adapted to the needs of different people.
Corporate diplomacy is essential to mediate the disputes that emerge from cultural differences. Conflicts may occur due to a lack of understanding, different communication methods, or diverging values and social norms. As corporate diplomacy is a proactive response of MNCs when the nation-states of the host countries fail or there is no international institution that can deal with the issues, it becomes the approach (Westermann‐Behaylo et al., 2015). MNCs can tackle conflict situations with various strategies, including negotiation and compromise, while maintaining cordial relations and respecting cultural differences. Massage means a neutral third party who assists the confronting parties in finding a mutually acceptable solution.
This way, the agreement among the parties involved can be attained.
Through this, the interests and needs of the parties are being exchanged for a good deal for both parties. MNCs with better cultural knowledge will also know how to use negotiating strategies that have been culturally adapted, thus bridging gaps and reaching multicultural agreements. The sensitive way of negotiating conflicts can convey cultural sensitivity and respect, which can be the best for the reputation and relationship with stakeholders (Westermann‐Behaylo et al., 2015). In addition, diplomacy for solving conflicts can give a better understanding and cooperation between culturally diverse teams and facilitate a diverse and collaborative work environment.
MNCs use corporate diplomacy to interact with stakeholders from different cultural communities, which is a crucial step toward building trust and improving cross-cultural communication (Guțu, 2019). Engaging with stakeholders here implies actively listening to their concerns, meeting their needs, and giving them a chance to be part of decision-making. Through meaningful stakeholder engagement, MNCs can achieve trustworthiness, vital in successful cross-cultural communication. As per Egea, Parra-Meroño, and Wandosell (2020), stakeholders who feel heard and valued are likelier to be cautious and cooperative.
Thus, a conducive environment is created for smoother communication, which enhances the company’s reputation as an accountable and responsible corporate citizen. Both can gain valuable information about local customs, values, and preferences, which can be used to tailor strategies to address better the cultural context (Egea et al., 2020). Corporate diplomacy’s stakeholder engagement strategy is critical to creating beneficial connections and successfully communicating cultural differences between MNCs operating in culturally divergent countries.
Impacts and Benefits
Comprehensive cross-cultural communication among MNCs is necessary in the globalized business environment. It promotes better relationships, higher employee morale and productivity, better decision-making, conflict and miscommunication slash, and market expansion (Okoro, 2013). Communication strengthens business relationships by providing trust and reliability among the stakeholders such as the customers, suppliers, and partners. Trust is a critical factor for long-term success in international markets. Good cross-cultural communication increases employee morale and productivity by generating an environment where everyone is embraced and respected. This increases involvement and desire (Sahadevan & Sumangala, 2021).
Moreover, it improves decision-making, produces many opinions and ideas, and leads to more creative and effective responses to complex problems. Effective cross-cultural communication reduces conflicts and misunderstandings by promoting understanding and empathy across cultures, leading to smoother business operations and fewer disruptions. Lastly, effective cross-cultural communication helps MNCs expand into new markets by understanding and adapting to cultural norms and preferences, increasing sales and revenue growth (Okoro, 2013).
Application in the Corporate Environment
In 2003, corporate diplomacy improved cross-cultural communication for Saudi American Exchange (SAE) by facilitating direct engagement between students from different countries in a collaboration-based series of exercises around a marketing campaign (Hayden, 2009). The SAE was founded as a response to the events of September 11, 2001, with a commitment to promoting understanding through communication between the United States and Saudi Arabia. The Saudi sponsors launched a new international sporting event focusing on a Formula 1 Boating championship race. The event was held in Saudi Arabia for the first time and presented a unique opportunity for creative marketing strategies to promote the event and attract public interest and advertising revenue.
The program, the Formula 1 Marketing Challenge, involved extensive contact between participants before the trip, allowing the participants to establish working relationships and explore the particulars of communicating a promotional campaign for a commercial event to a diverse audience (Hayden, 2009). This initiative has created an environment of goodwill and public diplomacy through sport and tourism in Saudi Arabia, which shows how corporate entities need to use cultural events to fill in the gap and promote understanding. The program was successful in doing so by uniting students from the US and Saudi Arabia, and it provided a platform that enabled them to work together, research, develop, and present a comprehensive marketing plan based on the new sporting event. Through the exchange, participants were forced to confront points of difference and misunderstanding, challenging assumptions and promoting mutual understanding (Hayden, 2009). By engaging in the roots of marketing communication, multinational corporations could improve cross-cultural communication by creating opportunities for meaningful interaction and dialogue between people from different cultural backgrounds.
When Pepsi entered the Chinese market, it researched Chinese cultural psychology and discovered that Chinese consumers preferred brands associated with auspicious meanings. Instead of phonetically translating Pepsi into Chinese, Pepsi rebranded it as “Bit as Shi Ke Le,” meaning “everything is enjoyable” in Chinese (Li, 2011). The name resonated well with Chinese consumers and contributed to Pepsi’s success in the Chinese market. On the other hand, a Chinese battery production company faced challenges when it translated its product name into English as White Elephant, which has negative connotations in English (Li, 2011).
The oversight led to difficulties in selling the product overseas. The two companies’ approaches highlight how corporate diplomacy improves cross-cultural communication by adapting appropriate communication styles to suit different cultural contexts. Communication accommodation theory (CAT) by Giles posits that individuals adjust their communication styles to align with those of others, aiming for mutual understanding and acceptance (Giles et al., 2023). CAT is crucial in cross-cultural interactions as people navigate diverse communication norms and expectations.
Non-language codes, such as body language and symbolic objects, play a significant role in cross-cultural communication (Li, 2011). Different cultures have varying levels of implicitness in their communication styles, with high-context cultures relying more on implicit methods such as facial expressions and body language. Giving a lotus as a gift in Chinese culture symbolizes glorifying the receiver’s integrity. In contrast, it is interpreted as a curse in Japanese culture because the lotus is considered a bad omen (Li, 2011). Cultural norms and traditions can influence non-verbal communication. Chinese businesswomen may avoid direct eye contact and have a less firm handshake due to traditional values like the three obediences and four virtues for women, emphasizing obedience and modesty (Li, 2011).
However, in American culture, eye contact and a firm handshake are signs of honesty and confidence. Cultural differences can lead to misunderstandings and affect the outcome of business negotiations (Li, 2011). Hofstede’s cultural dimensions theory is a prominent framework for understanding cultural differences in communication. The theory identifies several dimensions along which cultures can vary, including individualism-collectivism, power distance, uncertainty avoidance, and masculinity-femininity (Gerlach & Eriksson, 2021). The dimensions explain how cultural values and norms shape communication styles and preferences. Understanding non-verbal cues and cultural norms is essential for successful communication in diverse cultural settings.
Corporate diplomacy is viewed as private-sector corporations contributing to the national interests of host states through information exchange and influencing foreign stakeholders (Salvi & Ruel, 2022). As illustrated in the case of the Pasona Group’s New Tohoku program, executives and managers engage in cultural diplomacy to enhance the corporate image and build favorable business relationships (Bier & White, 2020). The initiative promotes Japan’s culture and image and contributes to solving social problems, aligning with the mindset of helping those challenged by disadvantage, discrimination, or disability.
Moreover, Japanese public diplomacy, which emphasizes people-to-people exchange and cultural promotion, widens the understanding of PPPs (public-private partnerships) as a natural choice for Pasona executives and managers (Bier & White, 2020). The traditional Japanese cultural and soft power-oriented approach has also brought into corporate practices some soft power strategies, including culture promotion, to help Japan and the Japanese people make the world a better place. The New Tohoku program underlines that cultural diplomacy can become part of the corporate strategy of MNCs, thus strengthening the cross-cultural communication and the governmental, cultural, and diplomatic targets and the corporate goals of sales and social connections, identity management, and publicity.
Conclusion
Through corporate diplomacy, MNCs operating in multicultural environments can achieve cross-cultural communication. Through promoting cultural sensitivity, building relationships, adapting communication styles, conflict resolution, and stakeholder engagement, corporate diplomacy assists MNCs in dealing with the intricacies of international business. Cultural sensitivity training in MNCs equips employees to acquire the information and skills to communicate across cultures effectively. MNCs can create trust and be perceived as responsible business entities by engaging stakeholders across various cultural groups. Corporate diplomacy also contributes to resolving disputes caused by cultural disparity and boosting the cultural intelligence of culturally diverse teams. The role of corporate diplomacy must be considered in the context of cross-cultural corporate communication, especially for MNCs trying to prosper in the globalized economy, contributing to the prosperity of all the countries involved.
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