Corporate diplomacy: the dimensional structure and outcomes

Abstract

PurposeGiven the great upheaval in the international situation and the increasing operating risk in international business, research on corporate diplomacy is thriving. However, it still lacks clear conceptualization and operationalization. Based on social capital theory, our study conceptualizes corporate diplomacy as a three-dimensional construct and quantifies its distinct and combined impacts on multinational enterprises’ (MNE) subsidiary performance.Design/methodology/approachThis research analyzes 134 responses collected from a questionnaire survey among key informants in Chinese MNEs using the regression method.FindingsThis research finds that corporate diplomacy is positively correlated with MNEs’ subsidiary performance. Specifically, compatriot-oriented diplomacy is the most effective, followed sequentially by host-partner-oriented and host-regulator-oriented diplomacy. In addition, compatriot-oriented diplomacy substitutes for host-partner-oriented diplomacy but complements host-regulator-oriented diplomacy in enhancing subsidiary performance.Originality/valueOur research enriches the conceptualization and operationalization of corporate diplomacy and provides a nuanced view of its distinct and combined effects on MNEs’ subsidiary performance.