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The purpose of this paper is to analyze the impact of diplomatic activities on outward foreign direct investment (OFDI).

The paper first develops a set of hypotheses drawing insights from politics, international business and institutional theory. It then tests these hypotheses by estimation of Panel Corrected Standard Error models, using the data of Chinese OFDI flow to 131 countries over the period of 2003-2010.

The main findings are: friendly bilateral diplomatic activities help OFDI in general; bilateral diplomatic activities provide effective support to some sensitive and important investments; and bilateral diplomatic activities play an important role in host countries where institutions are absent or poor in quality.

Friendly bilateral diplomatic activities provide strong support to multinationals investing abroad.

The paper incorporates a neglected but important factor, diplomacy, into a model to analyze its influences on OFDI. It investigates not only the direct impact of diplomatic activities on OFDI but also their moderating effect on other OFDI determinants, such as economic and institutional factors.

In an ongoing process of globalization and technology improvements and due to an increase in worldwide actors in the economic sector, commercial diplomacy is an important tool for countries to support their business community during the internationalization process and afterwards. Nevertheless, commercial diplomacy literature is still in its infancy. Therefore, this chapter reviews existing research on the topic and develops a framework, which integrates the topics examined so far and provides the reader with a more complete picture of the topic at hand.

By means of a literature review, this chapter shows that the body of literature involving research of both disciplines, International Relations and International Management, is still rather limited. As a consequence, we determine a future research agenda and call for more empirical studies, especially in the field of (political) economy.

In this chapter we approach the issue of Business Diplomacy (BD) from a historical perspective, showing how this activity has been performed since the ancient Greece. In particular, we give a brief overview of the main BD concepts used, starting with the proxenos, the “pioneers” in the BD field, until present days.

The analysis is grounded on a theoretical approach backed by a comprehensive overview of the representative literature in the field of BD. We identify and discuss the main challenges to be faced by BD in a globalized world, dominated by multinational corporations (MNCs).

We show that BD has been practiced for centuries and nowadays is still performed by honorary consuls and chambers of commerce. In a globalized world, BD is being assimilated by MNCs either as their main activity or as an auxiliary one becoming a key tool and mindset toward securing their market reputation, positioning, and legitimacy.

Apart from the historical overview of the beginnings and evolution of the main diplomatic actors and activities, the chapter proposes new concepts and legal frameworks for the actual BD field such as: consulariate instead of consulate (devoted to business) and chancellariate instead of embassy (devoted to political affairs).

These structural, economic and political developments in the global economy go a long way to explaining the expansion of commercial diplomacy activities by nations. On the one hand, nations use commercial diplomacy to expand trade and investment in the context of declining economic policy sovereignty. The creation of the WTO in 1995 led to an extension of the rules and regulations of international trade and trade-related matters (including the financial services industry). This leaves national economic policy-making severely restricted. Expanding commercial diplomacy to secure new export markets and new inward investments becomes a necessary political tool for nations competing for new markets. When these new markets are in nations where the formal institutional context for doing business is underdeveloped or non-existent or where much of the economy is under state control, the need to expand and develop commercial diplomacy is all the more important.

This study aims to investigate the influence of the Confucius Institute (CI) on outward foreign direct investment (OFDI) by China and its potential interaction with cultural difference and institutional quality in host countries.

In the empirical study, the gravity model is adopted as the benchmark to investigate the effects of CI on China's OFDI using the ordinary least squares or Poisson Pseudo Maximum Likelihood estimators. Panel data on China's OFDI from 2004 to 2015 are used. Cultural difference and institutional quality are included explicitly as control variables to examine the effects of CI on China's OFDI.

CI has a significant positive effect on China’s OFDI, and this effect depends on the cultural difference and institutional quality of the host country. The impact of CI on China’s OFDI is more prominent in host countries with a smaller cultural difference or lower institutional quality.

CI is a comprehensive platform for foreign cultural exchange and signifies the rebirth of Confucianism in China. The present study shows that CI can stimulate the growth of China’s OFDI, with implications for other Asian countries influenced by Confucianism. Based on the results of the study, strategies for “Going Global” and encouraging economic growth based on cultural exchange and the recognition of host country heterogeneities are proposed.

This chapter focuses on the role played by both companies and universities on the dissemination of services and courses related to Business Diplomacy (BD). Special attention is given to the partnerships between companies and universities and to how BD is taught by universities around the world.

With an exploratory analysis technique, we have surveyed the websites of 22 companies and 20 universities and institutions, belonging to various countries, engaged in activities related to BD (i.e. services supply, courses at different stages of the academic curricula, workshops, seminars, training etc.).

The objective of the analysis was twofold: first, to give a better understanding of the concept of BD and of the various meanings associated with it; the results indicate that in both cases the practiced concept of BD is converging to the canonical set of diplomatic functions; second, to offer useful insights to practitioners in the field of BD by looking at the type of BD courses covered by the academic curricula of various universities and BD services offered by market companies.

This chapter presents a comprehensive analysis of the BD issue, going beyond its treatment as a mere auxiliary activity. It also offers a detailed overview of diplomacy’s main functions and adjuvant activities, with the purpose of advancing organisational charts’ structures inside companies, and academic syllabi offerings by universities.

Multinational corporations (MNCs) are experiencing a number of major challenges in the international business arena. Can business diplomacy help them to deal with these challenges effectively? In this introductory chapter we conceptualize and identify the relationship between MNCs’ international business diplomatic activities and firm performance.

We conducted a literature review and interviews with five large MNCs that are operating in distinctive industries. Business diplomatic activities have been classified into three particular areas to support the analysis, namely: (1) MNC–Non-Governmental Organization (NGO) relations, (2) MNC–Host Government relations, and (3) MNC–Local Community relations.

The main findings suggest that international business diplomacy has a direct positive effect on firm performance with regard to so-called soft or nonfinancial indicators. These indicators include knowledge sharing, reputation, company image, and marketing possibilities. The effect can in turn lead to a better financial performance and market stance in the long run.

The results of this study are important for the future awareness and execution of business diplomacy in large MNCs.

The goal of this essay is to examine the conflict resolution activities during political diplomacy as a dynamic and interactive process. In an application of Relational Order Theory (Donohue, 1998), this essay employs a model highlighting the instrumental, relational, and identity‐based issues involved in conflict resolution. To illustrate the utility of this model of Relational Process Management, this essay examines the process of diplomacy leading to the Dayton Accords in the areas of the Former Yugoslavia. For years the international community's efforts at intervention in this conflict were quite meager, as ceasefires and peace plans were brokered and dissolved with some regularity. Ultimately, a final coordinated effort by multiple external parties finally brought the combatants to the table in Dayton, Ohio to negotiate a formal agreement. The complex process by which the parties came to the negotiating table provides a rich case study by which to explore the interactive processes of diplomacy. An examination of the events in this case through the lens of instrumental, relational, and identity‐bound issues culminates with lessons learned from this interactionally‐based analysis of international conflict.

This chapter describes the business goals, purpose, and strategy of public diplomatic services. It reinforces diplomatic organizations’ fundamental bureaucratic administrative culture (Tier 1). The bureaucratic culture of diplomacy is deconstructed, and each of the five layers is described in detail. The authors also explain why focusing on the artifacts and behavior layers are the dominant and essential starting points for analysis in diplomatic cultures. The public service culture (Tier 2) overlays and mediates the bureaucratic culture.

Additionally, the authors describe the influence that political appointees as leaders may play in shaping public service cultures. Next, the authors explain how diplomatic cultures reflect the core values of a state’s culture. Next, the chapter outlines the landscape of external influencing cultures (Tier 3) in diplomacy. Finally, the knowledge, learning, and collaboration (KLC) culture of diplomacy is considered, with opportunities for future growth.