Corporate Diplomacy and Institutional Work: Empirical Evidence from the Arab Spring Experience of Two Canadian Companies in Egypt

In this qualitative longitudinal study, we explore and compare efforts of two Canadian MNEs to maintain legitimacy during the context of "Arab Spring" events in Egypt in 2011, specifically comparing broader civic sector corporate diplomacy with more narrowly focused government centered institutional work. We show these firms shifted from government centered institutional work toward corporate diplomacy to reconfigure legitimacy.

We use the unique empirical setting of Arab Spring to explore these dynamics by studying the underlying the shifting institutional arrangements enacted by the two Canadian firms, Agrium and Methanex. We identify a shift  from government-centered institutional work before the uprising to community-focus corporate diplomacy after the revolution. These tactics to gain the confidence of civil society and governments is the essence of corporate diplomacy. In the Arab Spring the civil society upset the existing relationship between the firms and the government, requiring the firms to broaden their activities to ensure legitimacy throughout society, rather than solely with governments in authoritarian regimes.

Data collection

We collected data on Agrium and Methanex from publicly available secondary sources and databases and created a master file for each company in which all raw data were logged in a chronological order. The chronological reconstruction of interactions between stakeholders allowed us to analyze how conflicts and alliances emerged and trailed off over the three strategic episodes – before, during, and after Arab Spring events.

Findings

Political alliance between firms and the government before Arab Spring

Before the outbreak of insurgency, Agrium and Methanex managed to build strong relationships with both the local government using institutional work.

Civil society’s institutional work to upset firm-government ties during the unrest

After the revolution erupted, the behavior of civil society shifted from arguing with the firms and the government individually to depicting them as an inter-reliant system. In other words, the target of activists became the relationship between actors rather than the actors themselves.

Emergent social alliance between firms and civil society following the revolt

The revolution ended by the fall of the Mubarak regime and by the appointment of transitional council. As the two firms kept distancing themselves from the government, they engaged in corporate diplomacy to work with civil society.

Discussion And Conclusion

First, the analytical distinction between strategic episodes – before, during and after the revolution – assisted in unravelling the specific effects of Arab Spring events on the behaviour of Agrium and Methanex. Such distinction is instrumental because the turmoil led to major restructuring of institutional arrangements in Egypt. As a result, the nature and intensity of contingencies the two firms had to deal with have changed dramatically in a very short period of time. Secondly, the identification of three key institutional actors – firm, government and civil society –helped understanding various institutional work strategies and corporate diplomacy tactics over time.