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Opinion: Does business diplomacy ‘Trump’ political diplomacy?
Presumptive Republican nominee Donald Trump has been accused of having no political or diplomatic experience. But as an international businessman, he will have needed business diplomacy skills.
By Alammar Fahad, Dr Andrew Cardow and Associate Professor David Pauleen. “I know Russia well. I had a major event in Russia two or three years ago, Miss Universe contest, which was a big, big, incredible event. An incredible success.” (Donald Trump) Billionaire real estate developer and TV personality Donald J. Trump is the presumptive Republican nominee. Not without reason some pundits are saying that he is a businessman with no political or diplomatic experience and the quote above would seem to lend them credence. However, recent management and
international business studies suggest otherwise. Globalisation has changed the international business landscape. Business now operates in different countries, and business people now deal with multiple jurisdictions, engage in complex negotiations and the development of trade standards and treaties. Increasingly they also must deal with geopolitical and non-commercial risk. They face considerable pressure from governments and civil-society organisations to sign up to international codes, be more transparent and meet ethical standards. Many global firms also face state-type challenges and have reached a level of economic and social impact similar to that of nation states. Diplomacy, the act of conducting relations with different political entities and systems, has become the business of global corporations. It is this transformation that has given rise to the development and emergence of business diplomacy. The notion that business people adopt the role of diplomats is not new. Diplomacy has always been associated with business and commercial activities for thousands of years. Traders crossing the Silk Road in the middle ages had to be equipped with diplomatic capabilities to navigate and negotiate their safe passage among multiple political powers. The British and the Dutch East India Companies governed large territories where their employees served as diplomatic representatives. Business diplomacy is seen as being the practice of establishing and maintaining positive relationships with internal and external business and non-business stakeholders, including businesses, governments and civil-society actors in order to create alliances, and shape and influence the environment. So Donald Trump, with his international property dealings, has at least dabbled in business diplomacy. He may be bombastic and at times a little confused – but he has built an international business reputation. Despite his business being closely held, he needs to engage with the external world in order to see his visions become reality. Whether he reflects and learns from his experiences and could transfer them into effective political diplomacy remains to be seen. In international business, the boundaries between the different agents of diplomacy, including government, business and non-governmental organisation, have become blurred. It is true that applying ‘political’ diplomatic skills and knowledge is a different skill set to that of ‘business’, however, there is convergence in the skills and knowledge required to handle the issues that arise when conducting business involving millions of dollars, often across international boundaries. Already there is a cross-fertilisation of knowledge and skills of what is termed ‘diplomacy’ between businesses, governments, and academics. For example former ambassadors are being appointed as vice presidents for global corporations, while business people are being appointed as ambassadors and diplomats.
Alammar Fahad's PhD thesis is investigating the knowledge and skills required for business diplomacy.
Business people and diplomats have much in commmon Research in this area has recently been conducted by this article’s first author [Fahad Alammar], a PhD candidate from Massey University. In interviews with diplomats and business people from various countries concerning the knowledge and capabilities needed to succeed in business diplomacy, initial findings suggest a convergence between what official diplomats know and believe to be political diplomacy and how business people understand the term business diplomacy. These findings support recent management and international business research suggesting that business people perform tasks and take in roles that are seen as compatible with those of official diplomats. Business CEOs can take on ambassadorial-type roles representing their companies in foreign countries; and business executives can engage in diplomatic-related activities that are similar to political diplomats. They persuade and influence trade agreements, maintain relationships and negotiate deals, interact with pressure groups, foreign governments and international organisations such as the UN. Business diplomats participate in trade negotiations, build cross-border alliances to promote their own agenda and discuss plans with companies and non-commercial stakeholders. They understand different laws and practices of various governments, and are familiar with the management and political style of differing national countries. They comply with protocol and etiquette, cope with crises, while simultaneously managing their business. Above that, they understand and handle media, negotiate across cultures, tolerate ambiguity and uncertainty. All of these activities and capabilities are similar to that of an official diplomat. So, at least in theory, Donald Trump’s abilities and knowledge in the art of deal-making and negotiation, public and media relations, knowledge of different laws and practice, networking, wide interests and constant travel and his psychological strategies, are similar to that of a political diplomat. Like politicians, business people engage in
diplomacy because they know well that the incompetent management of stakeholders, external constituencies and pressure groups could result in millions of dollars of costs, loss of business opportunities, and reputational damage, with long-lasting effect. Business people in today’s complex and interconnected world assume many roles that were previously outside the scope of their work. Entrepreneurs and business people can take on the role of a diplomat with insight, fully cognisant of the consequences for the practice of their companies. People may not like Trump, but they cannot claim he has no diplomatic experience. Whether this qualifies him to be President of the United States is another question entirely. Alammar Fahad is a PhD candidate from Massey University. He is seeking senior managers and diplomats to participate in his research project investigating the knowledge required for business diplomacy. Participants will receive an executive summary outlining his findings of best practice. Contact
[email protected] (mailto:
[email protected]). Dr Andrew Cardow and Associate Professor David Pauleen are his PhD supervisors from Massey’s School of Management. Created: 07/06/2016 | Last updated: 07/06/2016
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