Discussion

Abstract

The interview study aimed to explore how corporate diplomacy is performed as an engagement strategy to gain organizational legitimacy. Overall, the interviews showed that corporate diplomacy in the UAE involves different actors, including the government, the employees, local citizens, and other companies. Across all different social groups, the interviews demonstrated that the MNCs intentionally engaged with particular actors either because they felt that it was necessary, or they sought to reach favorable conditions.

8.1 The Organizational Perspective on Corporate Diplomacy and Organizational Legitimacy

This chapter is derived in part from an article published in Journal of Public Relations Research as Marschlich, S., & Ingenhoff, D. (2021a). The Role of Public Relations in Corporate Diplomacy: How Relationship Cultivation Increases Organizational Legitimacy. Journal of Public Relations Research, available online: https://www.tandfonline.com/doi/full/10.1080/1062726X.2021.1981332 and in Public Relations Review as Marschlich, S., & Ingenhoff, D. (2021b). Stakeholder Engagement in a Multicultural Context: The Contribution of (Personal) Relationship Cultivation to Social Capital. Public Relations Review, 47(4), 102091, available online: https://doi.org/10.1016/j.pubrev.2021.102091.

Corporate Diplomacy as Strategic Engagement with Different Social Groups

The interview study aimed to explore the extent to which and how corporate diplomacy is performed as an engagement strategy to gain organizational legitimacy. Overall, the interviews showed that corporate diplomacy in the UAE involves different actors, including the government, the employees, local citizens, and other companies. Across all different social groups, the interviews demonstrated that the MNCs intentionally engaged with particular actors either because they felt that it was necessary or they sought to reach favorable conditions. These results imply that corporate diplomacy is a strategic engagement: “As strategy, engagement represents an organizational philosophy conducive to synthesizing the meaning and value that evolve from diverse stakeholder views and perspectives […]. [The organizations] realize engagement outcomes associated with collective levels of engagement, investments in cultural, communicative, and relational resources of the organization are needed” (Johnston, 2018, p. 27). The results further imply that by engaging with different social groups in the host country, foreign MNCs can identify and discuss societal expectations and recognize further actors relevant to the organization, thereby broadening their networks. Engagement in this research was conceptualized as involving individuals and groups within the societal environment of an organization, thereby facilitating relationship building between the organization and the social environment (see section 2.3.1). As the results showed, different methods for the implementation of engagement were used by the MNCs, mainly depending on the social group involved.

As the results indicate, engagement with the government can occur on a formal level when MNCs discuss potential and ongoing initiatives with governmental actors, resulting in a contract-like document, the MOU, or on an informal level, when MNCs meet with different actors in so-called Majlis meetings, taking place in a pleasant atmosphere. For both methods, personal relationship cultivation appeared to be at the core. This result implies that corporate diplomacy engagement with the UAE Government follows personal public relations approaches. MNC-government engagement in the UAE seems similar to the personal influence model of public relations (Grunig et al., 1995). According to this model, building close relationships with key actors positively influences public relations efforts (Grunig et al., 1995). In the UAE, the personal influence model can be extended by not only including relationships with the most influential persons but also relationships fostered by building on a personal level, for instance, through conversations about personal, private topics. As White and Alkandari (2019) have stated, collaborations between the public and the private sector are the standard way to address societal issues in the Middle East. They result from cultural particularities and the close connection between the political and economic systems. Accordingly, long-term and close relationships are fostered because they reflect a social and cultural norm (Jamali & Sidani, 2012; White & Alkandari, 2019). This result is in line with this study’s findings, in which the MNCs expressed how they engage with the government as self-evident within the cultural and political setting. Moreover, the results indicate that corporate diplomacy engagement with the host government seeks to gain social acceptance and organizational legitimacy through political and cultural alignment.

The study further implies that engagement with other MNCs in the host country’s environment follows less personal and individual approaches to relationship cultivation. This might be reasoned by the different cultural backgrounds of the other foreign MNCs. Mostly, the interviewees referred to MNCs from Western country contexts, which might be regarded as originating from rather individualistic cultures, in which close and personal relationships are less common in the business context than in collectivist countries such as the UAE (see Hofstede, 2001; Hofstede Insights, n.d.). The engagement with other MNCs was mainly referred to as an alliance engagement bringing together knowledge and power to create synergy effects. The results suggest that this type of engagement was used to demonstrate the societal commitment to the host country’s government, which becomes more visible due to the engagement with other powerful MNCs. Hence, corporate diplomacy engagement with other foreign MNCs is not primarily concerned with gaining legitimacy but can be used to connect with the government, a significant legitimacy evaluator.

In the context of employee engagement, it was revealed that corporate diplomacy facilitates relationship-building between corporate leaders and employees by offering volunteering sessions and implementing employee councils. In this way, corporate diplomacy can contribute to a collective decision-making process between local company leaders and their employees, resulting in affective engagement outcomes, such as the employees’ goodwill toward the company (Johnston & Taylor, 2018). As previous research has found, employee councils give the employees a voice, and critical issues will not be missed (Tourish, 2005). Importantly, the MNCs in this study expressed that employee engagement allows for identifying the employees’ expectations and simultaneously aligning with them, which may contribute to organizational legitimacy (Devin & Lane, 2014). However, in some cases, it seemed that the MNCs almost expected their employees to participate in a volunteering session. When employees do not feel free to decide whether they want to engage, corporate diplomacy would fail as an engagement process that allows for facilitating relationships and ultimately results in legitimacy (see Devin & Lane, 2014; Heath, 2018; Johnston et al., 2018). Employee engagement should include continuous internal communication, which is open, transparent, and trustworthy to avoid negative relationships or pressure (Mazzei & Ravazzani, 2011).

Concerning community engagement, the results indicate that, due to local restrictions, relationship-building with local community members is limited. MNCs often need governmental approval, which complicates and lowers their engagement approaches with the local community. Therefore, whether a genuine and open dialog between the MNC and local citizens is possible, which is a premise of engagement (Heath, 2018) and essential for gaining organizational legitimacy (Devin & Lane, 2014), is questionable. However, the results imply that community engagement can still be fruitful for the MNCs because they can demonstrate their willingness to contribute to the local community to the host country’s government. This result points to a meta-level engagement “where organizations communicate about their activities, performances, and outcomes as part of their ongoing stakeholder relationships” (Devin & Lane, 2014, p. 439). By doing so, the results suggest that companies seek to build legitimacy toward the government. As such, community engagement in the UAE can be regarded as a means to an end rather than a process that involves different perspectives to create shared meanings (Johnston & Lane, 2018).

Overall, the results indicate that MNCs seek to engage particularly with strategic actors, which directly or indirectly impact MNCs. In engaging with these strategic actors, relationship cultivation is at the core, supporting the assumption that corporate diplomacy is concerned with relationship-building (Ingenhoff & Marschlich, 2019). Moreover, corporate diplomacy engagement helps identify societal expectations of the MNC, as suggested by previous research on engagement (Devin & Lane, 2014; Johnston, 2018; Johnston et al., 2018). As Devin and Lane (2014) have stated, “[p]ositive relationships between organizations and stakeholders are acknowledged as providing vital channels through which clear statements of stakeholder expectations of organizations can be articulated; and through which organizations can demonstrate their responses to these expectations” (p. 436), which would, in turn, contribute to organizational legitimacy (Collins et al., 2005). Hence, relationship cultivation is the major element of corporate diplomacy, allowing MNCs to identify and respond to societal expectations and create organizational legitimacy.

Corporate Diplomacy Engagement as Legitimation Attempts

In addition to the different engagement approaches, the results pointed to the role of corporate culture and the mission and vision of the company, subsumed as corporate identity. Following this, corporate diplomacy approaches are shaped by different engagement methods and the alignment with corporate values. Building on the findings presented in the previous section and bringing these together with corporate culture as an antecedent of engagement, five corporate diplomacy modes can be derived, presented in Table 8.1. Depending on the degree to which the modes adapt to the local or global environment, they fall into global, local, or glocal public relations approaches (see, e.g., Ingenhoff & Rühl, 2013). Depending on the involved actors, the societal expectations considered by the corporation, and whether corporate core values are taken into account, the level of organizational legitimacy as the consequence of corporate diplomacy engagement differs.

The first approach refers to corporate diplomacy as alignment with the political agenda of the host country concerning the societal activities of the MNC and can be regarded as local public relations. In this mode, governmental actors in the host country are involved. By demonstrating that the MNC contributes to societal issues of local relevance, the MNC can demonstrate its congruence with local societal expectations, allowing for creating moral legitimacy (see Suchman, 1995). The chance to gain legitimacy increases when demonstrating the corporation’s link to the government as an established institution that the local community is familiar with (Baum & Oliver, 1991). Moreover, since corporate diplomacy as governmental engagement is reflected in the alignment with governmental expectations, this approach can contribute to regulative legitimacy (see Diez-Martin et al., 2019). The second corporate diplomacy approach is similarly situated on the local level and represents a local public relations approach. Within this approach, MNCs use corporate diplomacy as employee engagement in the host country. The results implied that employee engagement allows showcasing the company as a good employer interested in the local community. Secondly, this approach enables the MNC to respond to the employees’ expectations, for instance, by offering volunteering sessions and involving them in the decision-making process concerning concrete corporate diplomacy initiatives. By doing so, companies can gain pragmatic legitimacy since they aim to meet the employees’ individual interests and values (see Suchman, 1995).

The third and the fourth corporate diplomacy approaches reflect a mix of global and local public relations modes and thus are referred to as “glocal” public relations. In the third approach, corporate diplomacy demonstrates the adjustment of the MNC’s global corporate culture to the host country setting, thereby involving different host country actors. However, this approach’s primary goal is the alignment with the global corporate culture, mostly set by the MNC’s headquarters. In this way, corporate diplomacy follows a globally set agenda of the societal issues the MNC engages in first. In the second step, the MNC considers which topics might fit best with the host country’s values and expectations derived from the engagement with different host country actors. In this way, MNCs can demonstrate that they meet the individual internal expectations emerging from the corporate headquarters, which can contribute to the company’s pragmatic legitimacy toward the company’s leaders (see Bitekine, 2011). In the second step, MNCs can show that they are aligned (at least partly) with the external expectations from the local community and governmental institutions. In this way, they can build moral or regulative legitimacy toward the host country’s environment (see Scott, 2001; Suchman, 1995). The latter depends on the degree to which the corporate diplomacy efforts are presented as in line with governmental demands and the assumed expectations of the broader local community (see Diez-Martin et al., 2019; Suchman, 1995). The fourth approach similarly balances corporate with host country values, but corporate diplomacy in this approach is primarily oriented toward the host country’s priorities—in the UAE, mainly resulting from the national agenda. Therefore, the MNCs engage particularly with the government in the host country. In the second step, the MNC seeks to identify which topics might best match the company’s core business or vision. By doing so, the MNC can demonstrate that it meets the local government’s expectations, contributing to regulative legitimacy (Diez-Martin et al., 2019; Scott, 2011). Simultaneously, the MNC can show the overall societal value of the company to the local community, increasing its chance of gaining moral legitimacy (Suchman, 1995).

Within the fifth approach, companies seek to involve the broader society to demonstrate their general social responsibility as a global corporation. Companies do not adapt to the host country’s environment. Instead, they have the same corporate diplomacy agenda everywhere. Therefore, this corporate diplomacy mode falls into a global public relations approach. When corporations demonstrate that they act similarly across different countries, this may contribute to their cognitive legitimacy (Suchman, 1995). The easier a particular organization can be understood due to consistent actions, the more likely it is perceived as taken-for-granted and comprehensive, which builds cognitive legitimacy (Suchman, 1995). Moreover, as the companies in this mode show that they act in a normative manner from a global society perspective, moral legitimacy can be gained (Suchman, 1995).

Table 8.1 Public relations (PR) and corporate diplomacy (CD) modes and the related expectations and legitimacy approaches from the company’s perspective

Glocal public relations approaches are regarded as helpful and valuable for MNCs. Glocal approaches allow for engagement on the local level, while MNCs can simultaneously follow their corporate culture and remain authentic (see Jain & De Moya, 2013; Wakefield, 2011). Therefore, glocal approaches are more efficient than global or local concepts. Moreover, it can be assumed that glocal and local approaches, compared to global approaches, are more likely to be covered in the media due to the media’s close relation to the government encouraging local engagement. Local issues have higher news value and are more prone to be covered (Galtung & Ruge, 1965). Moreover, the legitimation attempts of the global approach are limited in fulfilling the host country’s demands as it just focuses on the “global” society. Lastly, moral legitimacy in the global approach can be threatened when global moral values are not congruent with the local moral values (see Mogensen, 2020a). In the UAE, the results revealed specific issues that the MNCs promote in other countries but not in the UAE due to governmental restrictions and conservative Islamic values.

However, expectations can conflict within the host country setting, which can challenge engagement processes and mutual understanding (see Dare et al., 2014). For instance, governments may have different objectives than employees, which might differ from citizens’ demands. In the UAE, the results imply that the government, due to its power and impact, is widely considered the key social group to be involved in corporate diplomacy. In this regard, corporate diplomacy might be considered the result of regulative pressure and the perception of coercion (see DiMaggio & Powell, 1983). MNCs may almost exclusively adapt to governmental expectations while ignoring others. However, in the case of the UAE, the study’s findings revealed that corporate diplomacy without governmental involvement is often difficult to perform due to local restrictions on civic engagement and the skepticism toward foreign MNCs (see also Kostova & Zaheer, 1999 on “the liability of foreignness” of MNCs). Moreover, the lack of pluralistic views in the UAE may create barriers to successful engagement involving different and conflicting interests (see Lane & Kent, 2018), which comes with issues of morality (Mogensen, 2019). However, it goes beyond the scope of this study to discuss the issue of power imbalance, but it needs to be taken into account when discussing corporate diplomacy in the context of the UAE.

Overall, this study identified different corporate diplomacy approaches, which should not be considered mutually exclusive. Instead MNCs can use them interchangeably but should be careful to still act authentically and avoid mixing too many different approaches since they can conflict in cases where the values and expectations of the involved social groups vary.

8.2 The Media Perspective on Corporate Diplomacy and Organizational Legitimacy

The Role of Media Frames in Gaining Moral and Pragmatic Legitimacy

The second empirical study of this thesis examined how local media coverage of corporate diplomacy may contribute to organizational legitimacy building. The study built on the assumption that by reporting on and evaluating corporate diplomacy activities in a certain way, the media forms legitimacy judgments, which may affect the legitimacy perceptions of media audiences concerning an MNC (see Bitekine, 2011; Deephouse et al., 2017). A content analysis of the media coverage in Emirati daily newspapers was conducted to explore whether individual media frames on corporate diplomacy can be found that construct legitimacy on different levels. The results of an exploratory factor and a cluster analysis revealed three media frames on corporate diplomacy, portraying and treating corporate diplomacy in different ways, which either contribute to moral or pragmatic legitimacy (moral and pragmatic corporate diplomacy frame) or remain neutral, not attributing socio-political legitimacy in the media (neutral corporate diplomacy frame). Moreover, the study found that corporate diplomacy media coverage contributes to cognitive legitimacy but that the extent of cognitive legitimacy varied among the media frames.

The results particularly showed that a specific combination of frame elements are related to the construction of moral and pragmatic legitimacy in the news of corporate diplomacy. First, the findings revealed that moral legitimacy in the media is attributed when the media frames corporate diplomacy as corporate engagement linked to relevant actors, particularly the host government, national and international companies, and social actors (problem definition), thereby endorsing this activity and outlining that it pursues socially accepted values or societal demands (causal interpretation), depicting the community as benefitting actors (moral evaluation), and demonstrating support for the corporate activity (treatment recommendation). Following this, moral legitimacy is particularly reflected in corporate diplomacy initiatives highlighting their benefit for the local community and the linkages to different host country actors, which may vary. In this sense, corporate diplomacy on a moral level can be subsumed as a commitment to the local society. Second, pragmatic legitimacy in the media was built when corporate diplomacy is portrayed as cultural initiatives or engagement in programs that contribute to the labor market, linking the MNC to national and international companies and the government (problem definition) with a positive connotation (causal interpretation), highlighting that corporate diplomacy contributes to the particular interests of the national government and the country (moral evaluation), and advocating for the initiative (treatment recommendation). Hence, pragmatic legitimacy in the media is reflected in the linkages of an organization with more powerful actors and the presentation of the country, including the local government, as beneficiaries. In this sense, corporate diplomacy on a pragmatic legitimacy level in the media is demonstrated as a company’s contribution to the national agenda and the country’s progress. These findings show that the construction of media frames can empirically support the theoretical conception of moral and pragmatic legitimacy (Suchman, 1995). Besides that, the findings demonstrate that moral legitimacy, conceptualized as congruence with broader societal values, and pragmatic legitimacy, as the alignment to individual self-interests, are highly context-dependent. Cultural and institutional contexts determine societal and individual expectations and what they contain (Dowling & Pfeffer, 1975) and, following this, what institutional linkages are and who the beneficiaries are.

As the results further showed, in comparison with the neutral corporate diplomacy frame, the moral corporate diplomacy frame is linked with a significantly higher degree of cognitive legitimacy. Cognitive legitimacy, reflecting a high recognition and the taken-for-grantedness of an organization, is the most significant form of organizational legitimacy (Suchman, 1995). The more an organization is perceived as taken for granted, the less likely it will be questioned. This thesis’s results point to the essential role of moral values and norms and the moral orientation of companies in gaining cognitive legitimacy. As Scherer and Palazzo (2011, 2012) have noted, organizational behavior oriented toward moral standards in a given context becomes increasingly important for two reasons. First, MNCs are increasingly criticized for their social and environmental harm, threatening their organizational legitimacy. Second, in a globalized world, traditionally accepted concepts of morality are fragmentized, and corporations need to find ways to demonstrate that they are congruent with the social values and norms within the given context—and because societal expectations can change: The “value pluralization of modern society and the fact that multinational corporations operate within numerous and sometimes contradictory legal and moral contexts, makes a simple adaption to external expectations difficult” (Scherer & Palazzo, 2012, p. 33). This argument is supported by this thesis’s findings as the media frames reflect different types of expectations (individual versus societal) and contexts (different corporate diplomacy topics and linked actors). However, in contrast to Scherer and Palazzo’s (2011, 2012) suggestion that pragmatic legitimacy attempts increasingly fail, this study’s findings suggest that corporate efforts outlining benefits for individual self-interests, particularly the host country’s government, can be successful, at least when considering positive media coverage as effective and relevant.

The Lack of Regulative Legitimacy

The findings showed that almost three-quarters of the articles contribute to moral and pragmatic legitimacy judgments, while regulative legitimacy rarely played a role. This result implies that although governmental expectations in the given country context seem to play an essential role in organizational behavior (see also sections 7.1 and 8.1), media coverage only marginally includes references that would relate corporate diplomacy to governmental demands or rules. This is a surprising result, given that many media outlets in the UAE are owned by government members or close relatives of governmental actors (Kirat, 2005). Accordingly, it could have been assumed that the alignment between corporate diplomacy activities and governmental expectations is prevalent in the news. However, even if the link to regulative legitimacy did not occur, media coverage linked corporate diplomacy to the government as part of the frame element “problem definition” in both the moral and the pragmatic corporate diplomacy frames. The government’s role in corporate diplomacy in the UAE still became apparent since corporate diplomacy was mostly covered when performed together with the government. However, it also seems reasonable that corporate diplomacy was often covered as a collaboration between an MNC and the government because it is commonly performed as a public-private partnership—which was suggested by the results of the interview study (see section 7.1 and section 8.1). Particularly in the Middle East, partnerships with public institutions are widespread because of public actors’ significant power and impact and historical and cultural reasons (White & Alkandari, 2019). Either way, the results suggest that linkages to powerful actors benefit corporate diplomacy through positive, endorsing, and supportive media coverage, highlighting the role of institutional linkages. According to the previous literature, institutional linkages can benefit corporations through legitimacy spillovers from the established organization to the corporation (Baum & Oliver, 1991; Kostova & Zaheer, 1999), referred to as linkage legitimacy by Bitekine (2011).

Overall, the results indicate that corporate diplomacy is an effective legitimation strategy for MNCs in the host country’s environment, supporting previous conceptual papers on the link between corporate diplomacy and organizational legitimacy (Mogensen, 2019; Ordeix-Rigo & Duarte, 2009; Westermann-Behaylo et al., 2015). The findings imply that corporate diplomacy should be concerned with the broader social values and norms and individual interests of the host country’s environment, resulting in different expectations to be addressed by corporate diplomacy communication. In this way, the results support Kochhar (2018), stating that the corporate diplomacy approach “depends on the nature of the stakeholder interest, the relevance to the business, and the most practical way to meet stakeholders’ specific needs and expectations” (p. 350). Moreover, the study’s results suggest that media coverage plays a significant role in corporate diplomacy. So far, the role of the media in corporate diplomacy has rarely been considered. In previous public relations and public diplomacy research, the purpose of the mass media was mostly limited to the dissemination of information (Gilboa, 2001; Zaharna, 2009), and scholars have emphasized the importance of direct and personal communication regarding corporate diplomacy engagement (Macnamara, 2012; Mogensen, 2017; Ordeix-Rigo & Duarte, 2009). However, this study has demonstrated that corporate diplomacy could benefit from media endorsement and positive media evaluations. Additionally, MNCs can use media relations to inform about their corporate diplomacy efforts and to enhance their visibility and, in this regard, their cognitive legitimacy. Simultaneously, media frames can help MNCs build and maintain moral and pragmatic legitimacy. As Zaharna (2009) emphasized, the establishment of “strong media relations and relying on the local media are part of the relationship-building strategy” (p. 92) for public diplomacy activities, including corporate diplomacy. Organizational legitimacy is a facet of relationships (Lock, 2019). In this regard, the study’s findings confirm and extend Zaharna’s (2009) findings by clearly presenting how local media can contribute to corporate diplomacy practices and MNCs’ legitimation attempts.

8.3 The Audience’s Perspective on Corporate Diplomacy and Organizational Legitimacy

This chapter is derived in part from an article published in Public Relations Review as Marschlich, S., & Ingenhoff, D. (2022). Public-Private Partnerships: How Institutional Linkages Help to Build Organizational Legitimacy in an International Environment. Public Relations Review, 48(1), 102124, available online: https://doi.org/10.1016/j.pubrev.2021.102124.

Direct Effects of Corporate Diplomacy on Organizational Legitimacy

The third empirical study of this thesis examined how corporate diplomacy news with institutional linkages to the host country government affects organizational legitimacy. The literature has emphasized that corporate diplomacy seeks to gain organizational legitimacy (Mogensen, 2017; Ordeix-Rigo & Duarte, 2009; Westermann-Behaylo et al., 2015) and that institutional linkages between a corporation and an established institution increase the chance to build legitimacy (Baum & Oliver, 1991; Bitekine, 2011). These two assumptions were brought together in a model and tested. The results imply that corporate diplomacy news with institutional linkages to the host country’s government only partly directly affects organizational legitimacy. While moral and regulative legitimacy increased significantly through the governmental, institutional linkages, pragmatic legitimacy was not significantly directly affected by whether corporate diplomacy involved the government. These findings suggest that institutional linkages with the government enhance the perception of a company’s contribution to the wider community (moral legitimacy) and the perceived congruence with governmental expectations (regulative legitimacy).

In contrast, the perception that the company serves the individual self-interests of community members through corporate diplomacy engagement is not directly influenced by institutional linkages with the host country’s government. Instead, the results showed that pragmatic legitimacy was fully mediated by issue legitimacy, governmental legitimacy, and media credibility, indicating that the effects of corporate diplomacy news with governmental involvement on pragmatic legitimacy can only be explained through the effects of corporate diplomacy without/with institutional linkages on the intervening variables (issue legitimacy, governmental legitimacy, and media credibility) and the effects of those three intervening variables on pragmatic legitimacy (see Hayes, 2018; Koch et al., 2019). Hence, the perception of the MNC as legitimate on a pragmatic level, i.e., serving individual self-interests (Suchman, 1995), only increases when the government is involved (compared to without governmental involvement) because individuals perceive the issue and the government as more legitimate and the media as more credible.

This result is in contrast to what Bitekine (2011) suggested when referring to linkage legitimacy as one major perceived dimension evaluators render to form legitimacy perceptions on a pragmatic level. So far, the direct effect of institutional linkages on pragmatic legitimacy has not been tested. Instead, legitimacy was measured as organizational survival or growth when testing the effects of institutional linkages (e.g., Baum & Mezias, 1993) or as purchase intention (Lock & Schulz-Knappe, 2019). Pragmatic legitimacy “involves direct exchanges between organization and audience; however, it also can involve broader political, economic, or social interdependencies, in which organizational action nonetheless visibly affects the audience’s well-being” (Suchman, 1995, p. 578). One explanation for the insignificant direct effect of governmental, institutional linkages on pragmatic legitimacy might be related to the corporate diplomacy issue presented in the fictitious newspaper article in the experimental stimulus, i.e., public health. As the interviewed public relations executives working for healthcare corporations outlined, the healthcare system in the UAE is perceived as insufficient by the citizens, particularly in comparison to those of Western Europe. For this reason, building a first-class healthcare system is one of the most relevant priorities on the UAE’s national agenda, and the government particularly builds on the expertise of foreign MNCs to improve the healthcare system. Therefore, it might be concluded that the host country government’s involvement in an initiative on public health does not increase the perception that individual interests are improved compared to if the public health initiative were performed by the MNC only, which would, in turn, increase pragmatic legitimacy. It can be suggested that corporate diplomacy initiatives on issues that are not viewed positively or as a strength of the government do not significantly increase the MNC’s pragmatic legitimacy when the government is involved in corporate diplomacy efforts. In other words, if the government is involved in corporate diplomacy initiatives that are not perceived as “government issues,” it makes no difference in terms of pragmatic legitimacy whether corporate diplomacy is carried out only by the company or the government is part of the corporate diplomacy initiative because the effect of institutional linkages, in that case, seems to be dissipated by the linkage between the government and the issue (healthcare).

Concerning the direct effects of corporate diplomacy with institutional linkages on regulative and moral legitimacy, the results support previous literature on the immense role of respect toward governmental actors in the Middle East region (see Dhanesh & Duthler, 2019; White & Alkandari, 2019). Also, the effect of governmental, institutional linkages on moral legitimacy implies that governmental actors’ involvement increases the perception of corporate activities as contributing to society and as congruent with social norms and values. This finding is in line with earlier assumptions that the nation-state acts as a reference point for moral orientation (see, e.g., Windsor, 2006). Particularly in non-democratic, emerging countries, where the government wields significant power on social life while simultaneously seeking ways to improve social well-being, this seems reasonable. Second, the UAE Government made several commitments to its community to advance social welfare, including achieving a first-class healthcare system (UAE Government, 2020). Therefore, it appears that community members relate the healthcare corporate diplomacy initiative involving the government as more congruent with societal standards (moral legitimacy) and governmental demands (regulative legitimacy).

Effects of the Intervening Variables on the Legitimation Process

The results further point to the role of intervening variables in the effects of corporate diplomacy with institutional linkages on organizational legitimacy. First, the study indicates that the institution’s legitimacy, i.e., governmental legitimacy, plays a significant role in gaining organizational legitimacy. The higher the perceived legitimacy of the institution the company collaborates with, the higher the company is regarded as acting legitimately on different levels, supporting Baum and Oliver (1991). At the same time, the demonstration of corporate diplomacy as a public-private partnership increases the perceived legitimacy of the government. According to the concept of bounded rationality, an organization’s activity with another organization is cognitively related, leading to spillover effects on how the activity and the organization are perceived (Kostova & Zaheer, 1999). The results imply that the positive nature of corporate diplomacy, i.e., contributing to the local community, is cognitively related to the government when it is involved in the initiative. In this regard, the institutional linkage benefits not only the MNC but also the established organization the MNC is linked with, which has not been considered in previous literature.

Moreover, this study suggests that issue legitimacy is a significant mediator between corporate diplomacy and moral, pragmatic, and regulative organizational legitimacy. In support of and extending Baum and Oliver (1991), the findings imply that institutional linkages affect legitimacy regarding the organization and concerning the issue related to the organization. Corporate diplomacy news with governmental involvement positively influences the legitimacy of the promoted corporate diplomacy issue. Also, issue legitimacy was found to increase organizational legitimacy, as Chung et al. (2016) have suggested. Therefore, the more the individuals perceive the promoted issue as legitimate, the more likely they are to judge the organization as legitimate, pointing to the role of issue management in corporate diplomacy—the “application of legitimacy arises in ongoing issue management efforts, and its aim is not to gain approval for a corporation’s place in the social structure, but to gain approval from critical publics for a specific corporate policy or activity” (Boyd, 2000, p. 349). Moreover, the comparison between the indirect effects’ strength revealed that regulative legitimacy is mostly affected by governmental legitimacy, suggesting that organizations seeking legitimacy on a regulative level should particularly engage with the government, which seems reasonable. Accordingly, the audience perceives the MNC as more congruent with governmental expectations, which builds regulative legitimacy when the MNC collaborates with the local government in the corporate diplomacy initiative.

Lastly, the results suggest that the credibility of the content source, in this case, the media, is positively affected by institutional linkages and simultaneously increases the chance of gaining organizational legitimacy. This finding supports and adds to the previous literature that analyzed the effects of content credibility on corporate legitimacy (Bachmann & Ingenhoff, 2016) and media credibility on industry legitimacy (Finch et al., 2015). The more credible a source is evaluated, the more likely the message can influence the audience, which might be related to the perception of the content source as trustworthy and having expertise, building the foundation for credibility (Lafferty & Goldsmith, 1999).

Overall, the study indicates that institutional linkages can benefit private organizations in a foreign environment. Applying this to public relations research, the concept of institutional linkages adds to the research on organization-public relationships by suggesting institutional relations as a form of organization-public relationships that seems to increase the perceived quality of the relationship, in particular, the legitimacy of the institution and the organization. As such, the study’s results support the previous notion that legitimacy emerges from organization-public relationships, perceived as high quality (Wiggil, 2014). Public-private partnerships on societal issues in the Middle East were found to be viewed as mutually beneficial because the host country’s government increases social welfare, and the foreign company can demonstrate its commitment and identify what the host country’s society needs (White & Alkandari, 2019). Hence, while Mogensen (2017) advocated that corporate diplomacy can only be effective in gaining legitimacy when engaging directly with the local citizens, this study demonstrated that engagement with governmental actors is a significant approach for gaining moral and regulative, and, indirectly, pragmatic legitimacy. In the UAE, this thesis revealed that corporate engagement with local community members is very much restricted. Thus, the involvement of governmental actors in corporate diplomacy is often the only way to affect social well-being and to reach civic society.

However, as Mogensen (2019) has noted, corporate diplomacy is often related to power disparities, particularly concerning the engagement with the host country’s government. Such an imbalance in power has already been addressed by neo-institutional approaches. Accordingly, organizations face normative and coercive pressure that forces them to completely adapt institutional rules (DiMaggio & Powell, 1983). Thus, institutional linkages and, in this respect, public-private partnerships in the UAE can be regarded as the result of external pressure emerging from the most powerful actors within the organizational environment (Baum & Oliver, 1991). However, at least for organizational legitimacy perceptions, institutional linkages seem to be a promising approach.

8.4 Overall Discussion of the Findings

Now that the results of the individual empirical studies have been presented and discussed, they will be summarized and discussed on a meta-level to answer the overall research question of how MNCs can gain legitimacy in the UAE’s local society through corporate diplomacy.

The Legitimation of MNCs through Corporate Diplomacy

According to DiMaggio and Powell (1983), the organizational environment, referred to as the organizational field in the neo-institutional approach, is constituted by “those organizations that, in the aggregate, constitute a recognized area of institutional life, […] [emerging] as a result of the activities of a diverse set of organizations” (p. 148). In the case of corporate diplomacy in the UAE, the organizational field comprises several actors, including the host country’s government, the local employees, local NGOs, media actors, other MNCs, and citizens living in the country. However, as this thesis found, MNCs in the UAE are mostly constrained in their decision-making and access to social resources by powerful institutions. The results of the current research project showed that the government is the most critical actor in the organizational field of foreign MNCs in the UAE due to its immense power and impact on several systems of society. This result supports previous research regarding the most relevant actors in the organizational field of foreign companies (e.g., Kostova & Zaheer, 1999). Especially in an authoritarian state, a partnership with the government seems important as it allows access to general audiences and creates synergy effects.

Moreover, due to the local restrictions, public-private partnerships in the UAE are, to a great extent, inevitable. This finding supports the assumption of the sociological neo-institutional approach of coercive isomorphism, according to which organizations try to gain legitimacy mainly toward political actors due to their pressure (DiMaggio & Powell, 1983). The institutional impact of governments particularly emerges from their authority and power in legislative and judicial decisions, through which they can sanction inappropriate corporate actions (Scott, 1995, 2001). Besides, the result supports earlier research that has pointed to the relevance of public-private partnerships in the Middle East region (White & Alkandari, 2019) and corporate diplomacy (Ordeix-Rigo & Duarte, 2009). Ordeix-Rigo and Duarte (2009) have emphasized public-private partnerships as a valid measure for participating in decision-making processes, through which MNCs may “take over some of the traditional functions of the state, [and] corporations engaged in corporate diplomacy actively add new roles to the traditional role of the corporations” (p. 562). This, in turn, fosters the development of corporate legitimacy toward society. Following the core assumption of this thesis, legitimacy arises from the perception of congruence between corporate behavior and societal expectations, which are based on socially and culturally constructed norms and values (see Dowling & Pfeffer, 1975; Suchman, 1995). As such, the results empirically showed that companies could establish legitimacy by demonstrating that they adapt to or align with the audiences’ expectations in the host country.

However, as this thesis revealed, such expectations are not homogeneous and vary by social groups in the host country and may differ with corporate culture and related expectations (e.g., expectations of corporate leaders or the company’s headquarters). The results imply that the UAE Government expects or desires companies to participate in issues displayed on the national agenda, thereby contributing to the nation’s interests and the public good. Employees in the UAE, most of whom are not part of the local community, are more likely to expect to be actively involved in societal issues, for example, through volunteering. Additionally, the findings showed that for some companies, corporate culture plays an essential role in implementing corporate diplomacy, especially regarding issues. For instance, some companies pursue a global agenda and do not adapt to local conditions. Corporate diplomacy approaches may vary depending on which expectations are prioritized or which social groups are primarily addressed. Five corporate diplomacy approaches were derived based on the results, including local approaches (corporate diplomacy as a political alignment to the host country and as employee engagement in the host country), “glocal” approaches (corporate diplomacy as an adaptation of global corporate culture to the host country culture and politics and as a commitment to the host country, integrating corporate culture), and a global approach (corporate diplomacy demonstrated as the responsibility of global corporations in society). Based on the results, it can be outlined that the different approaches in which companies prioritize audience expectations at a local, “glocal,” or global level affect the legitimacy building of companies differently (see Kostova & Zaheer, 1999; Suchman, 1995). Thus, it can be concluded that companies attempt to gain legitimacy from different actors by applying different corporate diplomacy modes.

However, the two corporate diplomacy media frames identified in this research imply that corporate diplomacy initiatives with local relevance, i.e., either on issues that demonstrate a commitment to the UAE residents (especially Emiratization, employees’ well-being, and cultural initiatives) or in collaboration with local actors such as the government, are more likely to generate positive media coverage and increase companies’ visibility and legitimacy. Since the media is often the most critical source of information about foreign MNCs, the media’s legitimacy judgments play a crucial role in forming the legitimacy perceptions and evaluations of the host country’s environment (see Bansal & Clelland, 2004; Deephouse, 1996; Pollock & Rindova, 2003). The results support the assumed role of news media in granting organizational legitimacy through corporate diplomacy. However, these results should be viewed with caution as the current research did not find any critical news stories about companies related to their corporate diplomacy initiatives. This result might be explained by the political and media system (see Duffy, 2011, 2013; Kirat, 2005; see also sections 5.1 and 5.4). Accordingly, information positively associated with the government and the country’s image or progress is likely to be published as news in the local media.

Similarly, at the general audience level, the results imply that corporate diplomacy activities in collaboration with the UAE Government can increase organizational legitimacy. This highlights the importance of institutional relations (see Baum & Oliver, 1991), i.e., demonstrated linkages between MNCs and established host country actors, which can be interpreted as a particular type of organization-public relationships. In this way, the results underscore the role of strategic communication and public relations in building and demonstrating institutional linkages and highlight the significant role of the host country’s government in forming the perception of corporate diplomacy. However, this has built on the assumption that the host country’s government is perceived as legitimate, as suggested by the neo-institutional approach (see Baum & Oliver, 1991). The experimental study’s results showed that the government in the UAE is regarded as legitimate. However, these findings cannot be generalized since governments might be perceived differently in other countries. Examining other institutional actors, such as NGOs, could have led to different conclusions. However, foreign MNCs seem to profit from relationships with established actors, such as the government in the case of the UAE.

To sum up, firstly, the results suggest that the identified local corporate diplomacy approaches seem most promising in the UAE context for building legitimacy. However, following the sociological neo-institutional approach, it is sufficient to gain legitimacy if formal structures meet societal expectations (Meyer & Rowan, 1977). Consequently, “glocal” corporate diplomacy approaches can be regarded as valuable for building legitimacy as long as companies communicate their focus on local issues or actors externally. Secondly, the findings support the assumption that organizational legitimacy can be gained by emphasizing the congruence of organizational actions and societal expectations (see Dowling & Pfeffer, 1975; Suchman, 1995). In this context, external communication is central, and the role of public relations is to recognize societal expectations and demonstrate the congruence between organizational behavior and the societal demands of the host country’s society.

Figure 8.1 illustrates the legitimation process of MNCs through corporate diplomacy as analyzed in this thesis and supported by its findings. The three actors displayed in the largest forms (the organization, media, and local community) are those focused on within the current research project. As this thesis found, the host country government is the most critical actor from an organizational perspective in the UAE. As shown in the figure, other key actors constituting the organizational field include the company’s headquarters, which may determine the global strategy and the corporate culture to a great extent, and the employees with specific demands regarding corporate diplomacy initiatives and issues. For the sake of clarity, only the actors particularly examined in this research (the media and local community members) and the most critical actors found in the results (government and employees) are linked to corporate diplomacy by arrows. However, all actors portrayed in the figure affect the MNC and its corporate diplomacy efforts by raising expectations concerning the appropriateness of organizational behavior.

Figure 8.1

Legitimation through corporate diplomacy in the organizational field

Institutional Logic and Societal Expectations in the Organizational Field of MNCs in the UAE

Figure 8.1 points to the societal expectations and institutional logic emerging in the organizational field and are critical for forming organizational legitimacy judgments. Institutional logic is regarded as socially constructed patterns emerging from values and norms and guiding the actions of all actors in an organizational field (Friedland & Alford, 1991). In this regard, institutional logic is highly linked to societal expectations, which similarly build on socially constructed norms and values (see, e.g., Suchman, 1995). However, institutional logic is developed over a longer period and is usually more stable than societal expectations (Friedland & Alford, 1991). Different actors in the organizational field, including the host country’s government, the media, the local citizens, the home country, and the employees, observe and evaluate organizations and their activities. Thereby, these actors form legitimacy judgments emerging from their particular expectations. Those expectations and beliefs affect what organizations do and how they communicate about it—for instance, as a contribution to a specific group or the wider local community. Hence, corporate diplomacy articulates “manifestations of institutional rules, norms, and ideas that function as rationalized myths” (Fredriksson et al., 2013, p. 186) and is one way to respond to the present institutional logic and societal expectations, which follow these rationalized myths (Meyer & Rowan, 1977). This points to the social constructed-ness of the organizational field, the societal expectations, and the institutional logic within the field. Building on that, the meaning of corporate diplomacy can be regarded as socially constructed. The organizational meaning-making of corporate diplomacy makes sense only when understood within institutional logic (Meyer & Rowan, 1977; Scott, 1995). In the specific case of the UAE, the institutional logic is mainly related to the country’s political and cultural particularities. Three institutional logics are most apparent and discussed briefly in the following.

First, this thesis showed that corporate diplomacy in the UAE is perceived and performed as a contribution or commitment to the host country’s national agenda. This can be explained by the power and impact of the host government and the specific culture that highly values hierarchies and treats leaders with significant respect (Yasin Fadol & Sandhu, 2011). This institutional logic, which is also implemented in the UAE’s regulations, complicates and restricts direct engagement with civic society. Corporate diplomacy in the UAE comes with limitations lowering the chance of involving all different stakeholder views—the ultimate goal of civic engagement (Johnston et al., 2018; Johnston & Lane, 2018). However, when the MNCs are aware of these distinctive political and cultural characteristics, corporate diplomacy engagement can be fruitful and rewarding for the MNC and other involved actors (Dawkins, 2014).

Second, another institutional logic is reflected in the personal and direct communication style, which builds on close relationships, personal influence, and private affairs. The current research showed that there is a particular way of “how to do business in the Arab region,” which has also been identified to some extent in previous research and mainly builds on Islamic and collectivist cultural values (Dhanesh & Duthler, 2019; White & Alkandari, 2019). However, this thesis pointed to the inherently contradictory nature of institutional logic. While engagement with local governmental actors was found to mainly build on personal relationships, engagement with (other multinational) companies appeared to follow a less personal relationship cultivation approach. Personal relationship management is a common way to do business in collectivist countries (see Dhanesh & Duthler, 2019; Yasin Fadol & Sandhu, 2011), while people from individualistic contexts, such as Western European countries, tend to foster more loosely knit social relationships (Hofstede, 2001). Therefore, the difference between the relationship cultivation of foreign MNCs with the host country’s government and other foreign MNCs might be reasoned with the similar individualistic cultural background of other corporations involved in corporate diplomacy. In the case of corporate diplomacy in the UAE, the different cultural backgrounds of the involved actors did not seem to lead to major problems as long as the dominant culture was adopted within the local organizational environment.

Third, the findings pointed to the role of moral legitimacy, implying that morality or the understanding of moral values can be interpreted as institutional logic. First, the results revealed the moral corporate diplomacy frame. This frame treats corporate diplomacy as contributing greatly to the local community and demonstrates that linkages to the local government are the most frequently occurring media frame, contributing to cognitive legitimacy the greatest. Second, the experimental design study implied that moral legitimacy is affected by demonstrating institutional linkages between corporate diplomacy and the local government. This thesis indicates that the congruence between organizational actions and moral expectations of organizations can positively influence organizational legitimacy and the social license to operate, as Scherer and Palazzo (2012) have suggested. However, in the UAE, morality seems related to the social commitment to the local community, as proposed by conceptions of moral legitimacy (e.g., Suchman, 1995), in that the moral corporate diplomacy media frame implies that morality in the UAE is linked to the government. Similarly, the results of the experimental design study revealed that moral legitimacy perceptions significantly increase when corporate diplomacy is linked to the government.

The previous literature built the understanding of moral legitimacy on the assumption “that the social environment of corporations consists of a more or less coherent set of moral rules” (Scherer & Palazzo, 2011, p. 915). This understanding can mainly be explained by the dominant perspectives of Western political philosophy, whose worldview and normative understanding are based on liberal, democratic values (see, e.g., Rorty, 1991). However, in a globalized world characterized by an increasing pluralization of values and norms, the moral frameworks and understandings of what is right or wrong differ significantly at the cultural or national levels. Due to the political system and the related power of the local government, moral legitimacy in the UAE can rarely build on the “forceless force of the better argument” (Habermas, 1990, p. 185), as suggested by Scherer and Palazzo (2011). Therefore, this thesis points to the differences between morality and ethics, arguing that moral legitimacy approaches in the UAE seldom emerge from ethical approaches, as applied by business ethics scholarship (Garriga & Melé, 2004; Windsor, 2006). “Ethics denotes theories of right conduct whereas the term morality denotes the actual practice of right conduct” (Ambrose & Cross, 2009, p. 5). As Bauman (1995) has noted, ethics and morality can conflict since ethics refers to the “actual truth” set by authorities in modern society, describing what correct behavior is. In contrast, morality is always an individual perspective on the relationship with another individual and builds on an autonomous identity in a post-modern world (Bauman, 1995). Therefore, moral legitimacy constructions in the UAE seem to build on moral sense-making of socially accepted norms and values (see, e.g., Calton & Payne, 2003) rather than universal normative values.

However, it must be noted that private organizations, due to their economic nature, not only follow institutional logic shaped by external groups but also create and follow their institutional logic. This finding was discussed in section 8.1, in which different corporate diplomacy modes were presented. These modes pointed to the active role of organizations in the legitimation process (Frandsen & Johansen, 2013; Lawrence, 1999) and implied that MNCs have organizational logic in addition to the institutional logic emerging from interactions in the organizational field. Organizational logic follows economic reasoning, organizational self-interests, and shareholder interests to a great extent. Against this background, scholars have increasingly discussed the extent to which private companies have the right, the responsibility, and the accountability to engage in governmental issues and contribute to the public good (Scherer & Palazzo, 2011, 2012). Many private companies do not participate in societal issues and are successful because they fulfill the shareholders’ interests and, in this regard, meet the expectations for an economic license to operate (Henderson, 2001). However, under globalization conditions, the strict division between state and non-state actors in global governance can no longer be held (Matten & Crane, 2005; Scherer & Palazzo, 2007).

Concerning the right and the accountability of private companies to engage in societal issues previously reserved for governments, Mogensen (2019, 2020a, b) has discussed the legitimacy issues of corporate diplomacy. In particular, two central questions arise: To what extent can private companies legitimately represent public issues since the public does not elect them? How can MNCs deal with or overcome the disparities in power and expertise to legitimately engage in societal issues? Answering these questions goes beyond the scope of this thesis, but both are relevant to consider when researching and practicing corporate diplomacy and related terms. However, the findings imply that dialogical approaches and the willingness to integrate varying opinions from different groups in the host country into the corporate diplomacy decision-making process might be essential prerequisites for assuming responsibility for societal issues. Hence, effective engagement processes involving different perspectives and interests may enable addressing or even overcoming such potential legitimacy gaps and power imbalances, as Mogensen (2019, 2020a, b) has mentioned.