Smart City Diplomacy inspired by Corporate Diplomacy

Smart City Diplomacy inspired by Corporate Diplomacy

By Wilfried Bolewski

Presentation at the “Key Competences for Smart Cities Stakeholders” workshop at the ALL DIGITAL Summit on 8 October 2020.

 1. Smart Cities as global actors

In the last years, cities have been flexing their economic and political muscles to gain increasing prominence on the world stage (Curtis/Acuto, 2018).  With their own foreign policies they engage in city-based diplomatic activities and even secure a more formal voice in multilateral affairs (Amiri/Sevin, 2020).

Cities develop own diplomatic initiatives that seek to translate their increasing importance and growing capabilities into influencing a new form of 21st century urban governance. The international agenda of global cities’ concerns include the most pressing problems of world politics, such as climate change, public health, urban security, transnational terrorism, refugee settlement, financial and environmental regulations, transport, but also income distribution and gender equality. Their manifold objectives range from city branding to brokering international agreements and providing creative local solutions in the face of global challenges which the international community of states finds itself increasingly unable to efficiently govern. Cities remain an enabler for country’s values and human rights.

Cities are not signing international treaties, nor do they have regular embassies. However, cities can engage in all kinds of negotiations, and influence world politics. They form their networks, practice dialogues with foreign counterparts, attend meetings with heads of state, facilitate public diplomacy, identify and share best practices and encourage collaboration between international private and public entities (Amiri/Dossani, 2019).

Cities are at the frontline where foreign public come to interact with a country and its people. State public diplomacy activities are run through or by city administrations (Amiri/Sevin, 2020). These efforts are sometimes parallel to traditional state diplomacy, they often engage with state authorities, some are even multilaterally recognized by the UN’s 2030 Sustainable Development Goals. Others could even be in competition or contrary to state activities. Embracing and enhancing city diplomacy does not necessarily mean undermining state diplomacy. In our globalized, fast-paced, and hyper-connected world, involving city networks in national and international decision-making processes could also be the beginning of strategic delegation of diplomatic tasks and responsibilities to cities (Amiri/Dossani, 2019). State governments should also place their diplomats in cities to coordinate these activities.

In their diplomatic activities, cities rely on the soft power of transnational municipal networks leading coalitions of public, private, and civic entities towards specific urban governance outcomes – rather than on sovereign forms of power (Davidson et al., 2019). The emergence of these international collaborative networks involve extensive engagement with the private sector, among them digital networks. This collaboration with transnational private worlds is increasingly crucial to addressing global challenges which transcend national borders and the capacities or the political will of state governments. The transnational forms of networked urban governance reflect the blending of public and private (Davidson et al., 2019). In some cases, the private sector can even play the role of initiator and facilitator of such city networking efforts. This type of privatization of city diplomatic activities takes on an entrepreneurial character and a soft institutionalization of public/private relations.

The conduct of international relations by representative of cities (City Diplomacy) is also perceived as an indication of a localization participation in foreign policy, a crisis of representation, an encroachment on the supremacy of state sovereignty and the power of hierarchies, the constitutional principle of subsidiarity as well as an important structural shift in the foundations of international society.

2. City Diplomacy: aims, tools, procedures

The rise of City Diplomacy with its soft power potential for pushing human and humanistic concerns to the forefront of international politics generates a capacity to engage and influence sustainable problem-solving. In a time of unprecedented global disturbances, common challenges and threats, City Diplomacy could even strengthen human solidarity for collective responses to conflict prevention, peace-building and post-conflict reconstruction.

So far, very little empirical and academic attention focused on the tools, modus operandi of human-centered City Diplomacy and the principles it embodies, other than the occasional opportunism (Hachigian, 2019; Caravaca, 2018; Mursitama/Lee, 2018). Its decision- making processes and outcomes lack an international legitimizing strategic foundation. This could be found in the civilizing virtues of a mindset of thinking and acting diplomatically within a shared space of functionality, responding to changing expectation on diplomacy as a societal practice.

“Societal diplomacy” and the underlying shifting from state rights to human rights is supplemented by a movement from state sovereignty to popular sovereignty taking into account the participatory role of the people and their perceptions, expectations  and commitments. This movement corresponds with another paradigm shift of sovereignty: from territoriality (and “domaine réservé”) to functional connectivity and specific identity (Bolewski, 2017). Today, there is more diplomacy in civil society and more of the civil society is found in City Diplomacy (Caravaca, 2018).

A reference to the established concept of Corporate Diplomacy practiced by transnational corporations could provide the necessary orientation knowledge, competence, and practical lessons for the future of Smart Cities.

3. Corporate Diplomacy as soft power influence for Smart Cities

Corporate Diplomacy has become a key concept of trusted and coordinated collaboration with government and local communities in global politics and a compass for private/public common good management in turbulent times.

International society is in demand of content-sensitive orientation knowledge to reassess, adjust and accommodate diplomacy’s essentials (human factor interdependency and interactions) to new expectations of the public sphere (Bolewski, 2017). This requires an opening through reflexive consciousness towards the values and cultures of diplomatic engagement and negotiations. Decision-makers should learn to think and act responsibly through the middle of conflictual situations towards compromise (Conway, 2019 a/b; Manfredi-Sanchez et al., 2017), thus managing politics through diplomacy. At the tipping point, such a paradigm shift of mindset and thinking will create a “diplomatic watershed moment” in the management process for public/private partnering aiming at compromise and consensus building as major accomplishments (Hare, 2020).

Reappraising its moral and civilizing virtues, a socially embodied diplomacy – not tied solely to the state– could become a form of “third culture” (Leira, 2017; Bolewski, 2008): a societal diplomacy with and through human relational practices (Qin, 2020). This encounter with Self and Other (Kuus, 2017) can even lead to a process of diplomatic social bonding among actors (Holmes/Wheeler, 2020).  Such a form of Everyday Diplomacy (Constantinou, 2016; Salacuse, 2013; Sennett, 2012) applies also to the ways individuals and communities (transnational companies, Smart Cities as well as NGOs) engage with and influence decisions about world affairs (Marsden et al., 2016).

This nascent knowledge area turning into an innovative management practice (Falcao et al., 2020) has developed over the last decades, dealing with geopolitical and non-commercial risks in international relations by sharing social/societal responsibilities among government and business: the concept of Corporate Diplomacy (White, 2020).

4. Corporate Diplomacy: a governance compass for multiplex turbulences

Confronted with social and environmental demands international business enterprises seen as “private public entities” are requested to get involved in issues of public concern by providing public goods and co-creating more just and peaceful co-existing societies. International diplomacy provides the tools for corporate conflict management (Melin, 2020; Hoffmann, 2014). Dealing with these geopolitical and non-commercial risks and tackling grand challenges, corporations are becoming diplomatic co-actors in the trade of diplomacy and acquiring access to the diplomatic arena (Ruël, 2020; Lima, 2019). Thus, multinational corporations are to be acknowledged both as objects and actors in diplomatic processes and international affairs (Sevin/Karaca, 2016).

Operating in an increasingly complex and volatile environment, transnational corporations experience the rising importance of the diplomatic mindset and practices. To navigate the ship of business through these challenges, it is imperative that global corporations integrate corporate diplomacy as governance compass into their strategic planning to successfully match the liabilities that come with operating in a foreign market (Doherty, 2014). When corporate diplomacy activities (Naray/Bezençon, 2017) are aiming at economically as well as socially sustainable business solutions, they can – at the same time – improve the public perception of companies’ legitimacy in society (social credit) by practicing political influence and filling government gaps (Mogensen, 2019, 2020). This perceived legitimacy and trust capital will also accredit them as political actors and civil society representatives.  In order to strengthen their place in society, they should treat societal shortcomings as opportunities; connecting the sustainability of business success with social transformations by harmonizing or at least reconciling economical with social goals (Nyberg/Wright, 2020). Corporations adhering to the diplomatic communication tool of Corporate Diplomacy are also gaining political influence over the development of societies (Chakhoyan, 2019). Transnational corporations can profit from traditional state diplomacy in order to create an enabling business environment to anticipate and avoid costly conflicts, if they practice Corporate Diplomacy as a dialectical decision-making process and key concept of trusted and coordinated collaboration, on a national and international level, with government and local host communities (Gutu, 2019).

The essence of diplomatic practice consists of managing situational and contextual ambivalence and harmonizing divergent interests and expectations within a holistic approach of emotional, social and intercultural intelligence (for more see Bolewski, 2019).

Such a mindset of management makes use of the essentially civilizing mission and typical social practices reflecting the contemporary humanist approach to people-centered alterity diplomacy (Zaharna, 2019: 126) as a comprehensive problem-solving device:

  • Multilogue (person-to-person contact, face-to-face conversation), networking, proactive engagement
  • Emotional cognition and dynamics (perception management), empathy, sensitivity for the other, discretion and humility
  • Dealing with uncertainties through ethically principled pragmatism (Bjola, 2018), the culture and logic of compromise and consensus
  • Mutual restraint for the sake of harmonization and sustainability (as ideal modes of governance and source of legitimacy)
  • Awareness of the context of global issues with their contrasting economic, ecological, cultural and social dimensions.

These are the fundamentals of diplomatic tradecraft, prioritizing constructive inducement, incentive pragmatism and emotional intelligence for problem-solving over the present practice of coercive and punitive usurpation and militarization of diplomacy.

This diplomatic mindfulness will lead to the following shifts in style of issue management and guiding principles:

  1. Practice mindful and active listening to stakeholders and turning people’s energy and intelligence into action for the common good, apply empathy, non-judgmental understanding and humility in order to identify the political, social and other non-commercial risks to international operations, focus on root causes, grievances and underlying structural drivers of conflict and addressing public interests, that are also of concern to them.
  2. Identify stakeholders who can influence or control those risks,
  3. Develop strategies for the cultivation of key stakeholders, prioritizing relationships with critical audiences for the effective management of risks.
  4. Any strategic engagement must be socially responsible to local political, economic and legal conditions.

Moreover, Corporate Diplomacy provides the soft power for all non-state diplomatic actors (multinationals, NGOs and even smart cities, Sevin 2020) to increase their activities and follow their own agenda in the international arena as well as to engage in providing solutions to global problems such as climate change.

This symbiotic relationship between corporate and government actors creates a synergy between the private and public spheres through a “Privatized Diplomacy” (Shepherd, 2016; Hocking, 2004). With the further extension into a triangular pattern of relations between public, private and civic entities, this privatization could pave the way for reshaping their operating environment in a new social (and even moral) contract (Monteiro/Meneses, 2015). It should take the form of an unconventional deliberative “multilogue” among all concerned on vital (important as well as urgent) societal issues, without tabooing adjustments and transformations within the traditional dogma of priorities and misplaced “posteriorities” (de-prioritization, subsequentness), moving rather towards a more human-centered economy with a shared sense of what change is needed and how to secure it.

5. Recent examples of Corporate Diplomacy implementation

At a time when trust in state governments and confidence in their politics are waning (Brexit, Trump; see Bolewski, 2018, 2019), business influence becomes increasingly transnational, transversal and capable of impacting global governance, offering services that communities need and advancing social and societal causes, neglected by the state sector.

Sport in general and the Olympics in particular are an area of power transfer from nation-states to the International Olympic Committee (IOC), transnational corporations and Smart Cities. The IOC-state-corporate nexus is governed by the concept of Corporate Diplomacy, with the gradual shift of influence from the public to the private and from the national to the transnational realms.  Thus, the hosting of the Olympic Games will remain a fertile ground for diplomacy within sport, diplomacy for sport and diplomacy through sport (Jackson/Dawson, 2017; Murray, 2018).

A recent case of corporate social responsibility with the application of Corporate Diplomacy was provided by the 2015 European refugee crisis. Corporate responses and public/private collaboration concerning food, housing and training programs for migrants (for examples Daimler, Metro, Telekom, BASF, Hugo Boss, Zalando in Germany; Axfood, SKE, Volvo, Ericsson, Investor, SEB in Sweden) showed the blurring of the border line, where politics start and business ends (Weber/Larsson-Olaison, 2017). The active public debates and consequential corporate actions strengthened the concept of corporate governance and the societal role of corporations. On the one hand, corporations are shaped by societal expectations, on the other, they gain access to influence societies and public opinions for their own future business activities.

The commitment towards society, creating a symbiotic nexus with external stakeholders via Corporate Diplomacy could lead to a marketing paradigm shift of “Curative International Marketing” (Kaufmann et al., 2019).  This management concept is based on social relationships and human actions, closely related to the culture and value component of Corporate Diplomacy, both inside the corporate system and between the corporate system and its external environment. Such a corporate vision reflects – in addition to the supply chain perspective and even beyond reputation and legitimacy oriented corporate behavior – a spirit of care, pronounced contribution and active damage restitution to global shortcomings in the cause of humanity. This corporate role for systemic change could generally apply – beyond the case of migration – to the provision of public goods and societal services such as health and welfare improvements.

In the global coronavirus pandemic transnational companies are taking up the role as “public utilities” with the supply of medical equipment (such as Jack Ma’s Alibaba in China with a 100 Million masks donation to the WHO and Zara in Spain, using the extensive logistics network of a retailer to support the pandemic response), to substitute for or collaborate with government leadership, thus guiding a transition of changes in individual and societal behaviors towards a triple solidarity of government, business and science. Global catastrophes like pandemics demonstrate the urgency for public-private partnerships in solidarity between government and business for a human-centered security.  To provide future financial, economic and social resilience in times of international catastrophes, government can also profit from corporate experience and innovation in anticipatory risk assessment, including banks and insurances; and business will appreciate (in the last resort) the cover from governmental intervention and security.  In an open society they can best face exceptional challenges in close cooperation. The

According to a media release following a joint ESSEC Business School and LSE research seminar on July 7, 2020 on “Prompting sustainable partnerships in response to the impact of the pandemic”, the ESSEC Dean Michel Baroni stated: “While the State has taken the initiative in managing the pandemic, companies are aware that their responsibility is also changing.  The crisis has revealed the fragility of the existing economic model, its rigidity and its shortcomings in meeting society’s needs.  Good intentions are not enough, rather new models of partnership and action are needed to move forward together”.  Bruno Roche, the founder of “Economics of Mutuality”, summarizes, “In meeting the COVID-19 crisis, many companies are preparing to contribute to a Schumanesque reform agenda by adopting new models of corporate governance and innovation, with an eye toward purpose-led value creation.  The business community is recognizing that addressing stakeholder problems is a better approach than maximizing  shareholder returns without considering the consequences” (Badré / Cohen / Roche, 2020).

6. Conclusions

In view of multiplex interconnected turbulences in our disruptive world, polycentric governance (social by nature and geo-political and -economical in function) needs an appropriate compass for the business/government nexus in an increasingly horizontal society and an Open Government Partnership (Manfredi-Sanchez et al., 2017). Over the past decades the conceptual breakthrough of Corporate Diplomacy has gained considerable traction in academia as well as in business practice as a strategic communication management tool (Corporate Statecraft; Haynal, 2013). This qualitative leap towards a change of mindset signifies a corporate commitment to diplomatic efforts for a symbiotic and coordinated cooperation between business and government. Moreover, Corporate Diplomacy could provide the soft power for smart cities as cooperative partners for solutions to global problems.

On the basis of the extending multi-layered societal diplomacy, Smart Cities should draw the outlined lessons and competences from the concept of Corporate Diplomacy to meet the social and economic challenges of our times and to play a complementary role in metropolitan dynamics.


About the Author

Dr Wilfried Bolewski is a diplomat, International Lawyer and Professor of International Law and Diplomacy. He is currently a senior lecturer at the Académie Diplomatique Internationale, Paris; associate editor of the new BRILL  journal Diplomacy and Foreign Policy, reviewer for Routledge New Diplomacy Studies, diplomatic commentator for the BBC and France 24. He was a Professor at the Institut d’Études Politiques de Paris (Sciences Po), the American Graduate School in Paris, American University of Paris, the Free University of Berlin. For diplomatic positions and selected publications, see more in the attached CV.

Dr Bolewski’s fields of expertise include

  • Public International Law and the diplomatic decision-making process
  • Political psychology in foreign policy and conflict analysis
  • Corporate Diplomacy (State and non-State actors)
  • Protocol

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