CORPORATE FOREIGN POLICY


Corporate world is different from political world. These two worlds are dependent on each other for their survival. Earlier, corporate houses looked towards respective national governments for their social, economic, political and legal protection. Whenever corporate houses became powerful, they had influence upon their political protectors in policy matters. Until twentieth century, power and influence of corporate houses never grew beyond the control and wishes of their political masters. With increasing sophistication in working methodology of corporate houses, their ability of influencing governments goes beyond limitations. In term of Gross Domestic Product as well as human resource availability, many corporate houses are of much better position than many nation states. This is obvious, with increasing influence and power; these corporate houses affect the national and international policies of nation states.

The term corporate houses used here may include not only business houses but influential non-government organisation, cross border religious groups, think tanks, media houses and influential powerful individuals. In highly changing world, every corporate house seems to be more protective towards protection of its own interests than interest of nation state. In actual and practical sense, the concept of nation state does not attract corporate houses as well as constituents of their human resource. There are several reasons of their neutral attitude towards concept of nation, like; their multi-ethnic and diverse human resource and influence border –less business transactions and interests, global village market, increasing thrust for profit making and wealth creation, decreasing dependence for security and protection, and power to influence political governments of nation state. Ministry of Foreign Affairs also recognised importance of corporate diplomacy in its public diplomacy conference held on 10-11 December 2010.

The corporate houses have their distinguished personality and philosophy. These two define their course of action in business and social activities. Every corporate house along with its core business object directly indulges in some other activities which are currently terming as corporate social responsibilities. These activities never limit to some social services but go much beyond that and create corporate social values. These activities have influence on industry organisations, intergovernmental groups, governments committees, media discussions. Further, corporate houses finances non government organisations, religious groups, charitable groups, political parties and think tanks. All these corporate initiatives affect all stakeholders; directors, shareholders, employees, customers, suppliers, as well as other beneficiaries. This creates a certain kind of social values and awareness among its stakeholders, society at large and governments which have influence across ocean. Further, corporate houses routinely hire lobbyists to serve their interests and influence law making process and extracting desired results in form of favourable policies and laws. This is a usual practice to influence international treaties and conventions by all means.

These days, all corporate houses have their own policies related to their relations with foreign nations and nationals. No doubt, the policy sometimes, may not be in writing but always exists in the mind of business leadership and usually reflect from their corporate actions.

Many corporate houses have business interests which may not be in concurrence with the policy, particularly foreign policy, of their host nation. Further, we may see foreign direct investment by several corporate houses in non-friendly communist regime of China against the will of the political government of host nation. Same time, corporate houses from friendly western world are not investing into friendly Pakistan and Israel. We may also like to note here that all over the world, sovereign wealth funds and state owned companies are also doing cross border investments and influencing decisions of the corporate house in which they have investments.

This is high time to recognise existence of corporate foreign policy and its impacts on society. We should define the concept of corporate foreign policy. The corporate foreign policy is a policy statement of a corporate house, defining its overall relations with foreign nation state and subjects of that foreign nation state in long term interest of their business growth and sustainability.

Robert Amsterdam, partner of Amsterdam & Peroff defines ‘corporate foreign policy’ in its blog, “Corporate foreign policy is (1) a principled methodology guiding current and future decisions in the foreign relations between and among governments and private sector business interests. (2) An emergent network of transactions and relationships, which  lead corporations to pursue political objectives, and governments to pursue business objectives[i].

With growth of businesses beyond borders, the corporate foreign policy became multi-dimensional depending upon size of the corporate house. One particular dimension deals with its internal policies relating to manpower recruitment and remuneration, and another with import, export, foreign exchange, merger and acquisitions.

Corporate foreign policy is a policy statement of big corporate house defining its long term goal of successful sustainable existence either as an exporter of goods and services to the host nation, as a trusted long term investor into host nation or as employers for the people in the host nation.

International Trade: Every corporate house has its own import export policy. Such policy is a derivative of many factors like, international or bi-lateral taxation treaty, foreign trade policy, foreign exchange fluctuations, quality perceptions relating to products or services originating from particular country, historical, cultural and public relations with particular country, along with all financial considerations. Normally, all these considerations affect decision makers and are usually subordinated by financial considerations. However, public to public relations also have important effect on such decision making. When someone imports something, it is not just importing that particular goods or services but importing a piece of that country. International trade is trade of warm relation, quality, credibility, efficiency, history, relationship, warmness, trust, and much more.

Sometime, corporate houses bar themselves from trade relationship with a particular country due to its ethical and moral believes. Corporate houses may have policies for not importing from a particular country which may indulge in racial discrimination, international terrorism, human trafficking, use of child labour, human rights record and possible end use of proceeds.

Investor: Corporate foreign policy has much effect in cross border investment. These days, there are several sovereign wealth funds, multi-billionaire international investors and other multi-national corporations. Abu Dhabi Investment Authority, Government Pension fund of Norway, SAMA Foreign Holdings of Saudi Arabia, Government of Singapore Investment Corporation is few sovereign wealth funds. Warren Buffett is an example of individual investors, who himself is a corporate house. They all affect policies of host nation as well as corporation in much influential manner.

Many times, several governments design their policies according to the requirement of potential investors. Same time, governments have concerns with their balance of trade and trade deficit. With eye on overall sustainable developments of nation, governments are required to coordinate with potential investors, exporters and importers. At the time of policy designing, all governments take cares of all concern of these influential corporate houses. Governments, at the instance of these corporate houses, design its laws, policies and programmes. These policies may not necessarily relate to commercial aspect of governance but also other areas, like; social security, local governance and human right records.

Employer: Corporate foreign policy effect psyche of employees of organisation all over the world in general and in host nation in particular. This policy is a derivative of corporate ethics and culture prevailing in the corporate house. In a multi-ethnic multi-national organisation there are more chances of interaction of employees and better mutual understanding among them. In simple notion, we understand these multi-ethnic multi-national corporate houses contribute towards friendlier world order and peace. In all, reasonable possibilities that promoters or management of multi-national corporate houses are also spreading their ethics and culture among people from different origins.

The corporate foreign policy needs professional leadership for its preparation and practice. The corporate house must know; policies, values, ethics, culture, and standing of its own nation. They must also define their own ethics and values. Only thereafter, they may translate these values into their corporate foreign policy. All organisations need informed professional who know values of organisation as well as that of other stakeholders. We must remember, organisation never sales products and provide services but sale its values, trust, quality and ethics.

In India, there is not much awareness about public diplomacy, corporate diplomacy and corporate foreign policy. We need its understanding among local corporate houses and professionals. In near future, we may see corporate diplomacy as a good profession and career option.

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