Why every big company really needs a ‘foreign minister’

Why every big company really needs a ‘foreign minister’

The thwarting by Microsoft of Russian cyber attacks on US political targets underscores the growing potential for businesses to become intertwined with foreign relations between states in sometimes thorny political, human-rights, technological and legal issues.

The targets of the attacks included a number of conservative think tanks that had called for more US sanctions on Moscow, and last week’s disclosures come soon after the US government charged 12 Russian intelligence officers with hacking computer networks used by the Democratic Party and its 2016 presidential nominee Hillary Clinton.

The incident has secured significant media attention, especially in light of Microsoft’s claim that “these and other attempts pose security threats to a broadening array of groups connected with both American political parties in the run-up to the 2018 elections.”  This is a politically sensitive issue in Washington after the 2016 US presidential election, although President Vladimir Putin’s spokesman has denied any Russian involvement in the activities Microsoft highlighted. 

It is only the latest example of tech companies been caught in political controversy. During the protests in Egypt that led to the overthrow of Hosni Mubarak in 2011, some telecommunications companies were forced to shut down their networks, and Google and Twitter collaborated on a “tweet to speak” program that was used as a communications platform by anti-Mubarak protesters. 

Google unintentionally sparked a diplomatic row in 2013 when it changed the name on its “Palestinian territories” homepage to “Palestine.” Palestinian President Mahmoud Abbas said this was a “victory for Palestine and a step toward its liberation,” but it provoked a complaint to the company from Israel’s Deputy Foreign Minister Zeev Elkin.

Google’s action pushed “peace further away ... and creates among the Palestinian leadership the illusion that in this manner they can achieve the result [statehood]. Without direct negotiation with us, nothing will happen,” Elkin said. An Israeli Foreign Ministry spokesman said Google was “not a diplomatic entity, which begs the question why they are getting involved in international politics and on the controversial side.”

The thwarting by Microsoft of Russian cyber attacks on US political targets underscores the growing potential for businesses to become intertwined with foreign relations between states.

Andrew Hammond

In this complex (sometimes uncharted) territory, companies — indeed, entire industries — may find themselves in the political spotlight.  For instance, Members of the European Parliament passed a resolution in 2010 after the disputed 2009 Iranian presidential election calling on EU institutions to “ban the export of surveillance technology by European companies to governments and countries such as Iran.” 

While these are by no means wholly new phenomena, they nonetheless appear to be increasing in incidence and salience.  Partly, this is driven by globalization, and also by the growth of key industries including new technology.

But technology companies are not alone in experiencing problems from working with diverse political authorities across the world.  Internationally focused companies in many other industries, from energy and extractives to fast moving consumer goods, have long been confronted with challenges too.

Of course, various international codes of conduct, including the UN Guiding Principles on Business and Human Rights, already reinforce the corporate social responsibility practices of individual companies. However, some of the most enlightened have recognized the need for a more decisive shift toward what has been termed strategic corporate foreign policy.
This aligns a company’s external affairs, including media relations, risk management, corporate social responsibility, government affairs and operational planning, in a clear strategic framework.  Recognizing the need for an unusual mix of core competences (eg. in advanced diplomacy) in some of these corporate functions, capability (including tools, training and infrastructure) can be enhanced where any gaps exist.
Other example areas of capability where companies may have gaps are foresight and horizon scanning to anticipate and plan for social, economic and political opportunities and risks. 

Companies may also need clearer internal guidance for determining decision-making, protecting stakeholders (including customers), and remaining faithful to corporate values, especially in fast-moving, unpredictable, crisis situations.
The relentless march of globalization, with the interconnections this brings, means that few international companies will escape these pressures completely. At the same time, owing to proliferation of media, and the influence of NGOs and related stakeholders, their actions are increasingly under the microscope.
For those companies that are pro-active and invest in their capability, the potential rewards (both in terms of mitigating risk and seizing opportunity) are ever more significant. For those who misstep, the fallout can be increasingly damaging, both reputationally and for the bottom line.

 

  • Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics
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