Corporate Diplomacy: How Multinational Corporations Gain Organizational Legitimacy : A Neo-Institutional Public Relations Perspective

Abstract

Over recent years, there has been rising interest in the societal and political roles of multinational corporations (MNCs), increasingly engaging in issues previously reserved for govern-mental actors. Scholars have started analyzing the various interactions between corporations, foreign governments, and communities, referring to corporate diplomacy as the societal engagement of MNCs in the host country environment. The core goal of corporate diplomacy is to gain organizational legitimacy in the host country society and, in this regard, be perceived as acting appropriately and being socially acceptable. By applying a neo-institutional public relations perspective on corporate diplomacy, I explore the legitimation process of European MNCs in the United Arab Emirates (UAE) on three levels. The three views applied in this thesis include the company aiming at communicating its corporate diplomacy efforts, the mass media covering news about corporate diplomacy and the corporation, and the general audience that receives and interprets the information about corporate diplomacy, ascribing legitimacy. Building on that, the purpose of my thesis is to (1) examine the extent to which and how corporate diplomacy is practiced and communicated to be perceived as legitimate, (2) investigate how the media coverage in the host country covers and frames the MNC and its corporate diplomacy efforts, and (3) analyze how corporate diplomacy news affects the organizational legitimacy perceptions of the host country community toward the foreign corporation. In this thesis, I applied a multi-method research design, including in-depth interviews with public relations executives in Abu Dhabi and Dubai (N = 25), a content analysis of the media coverage of corporate diplomacy in Emirati news outlets (N = 385), and an experimental design study surveying residents in the UAE (N = 199) to explore the legitimation process of MNCs through corporate diplomacy. The findings indicate that MNCs strategically use public relations and communication to identify and respond to the societal expectations of the most relevant groups in their host country environment, which can contribute to the MNCs’ legitimacy. Simultaneously, MNCs seek to address demands arising from the corporations’ head-quarters and home countries, leading to different corporate diplomacy modes that affect organizational legitimacy differently. The analysis of the local media coverage revealed two media frames that contribute to organizational legitimacy on both a moral level and a pragmatic level. The findings suggest that legitimacy judgments in the local media mainly depend on the demonstrated linkages between corporate diplomacy and the key actors in the host country and the outlined beneficiaries of corporate diplomacy. The findings of the experimental survey revealed that favorable assessments of organizational legitimacy most probably occur in the UAE when the MNCs engage with the local government, which is, in most cases, inevitable due to the particularities in the given country context. In this way, my results pointed particularly to the role of a country’s culture and its political system regarding corporate diplomacy, public relations, and the legitimation process. Analyzing corporate diplomacy from a communicative and relationship-oriented perspective on the corporations, the media, and the general audience, this thesis provides substantial insights into how MNCs can take an active role in gaining legitimacy while shedding light on how legitimacy is co-constructed by the media and its audiences. This central research gap has not been analyzed before, thus this study contributes significantly to international public relations research and practice.