Introduction

The European Private Sector Ranking is an ongoing research project . The research aims to evaluate the involvement and engagement of European private sector corporations in the field of cultural diplomacy over the course of the last five years.

The purpose of the ranking is to raise awareness of the engagement of corporations in the field of cultural diplomacy and by doing so to inspire further engagement of the private sector corporations in the field.

Research Design

The European private sector ranking outlines corporate involvement in the field of cultural diplomacy as described by the corporations themselves. Corporations are ranked in accordance with the methodology, which is designed to qualitatively assess the corporations’ policies and direct actions in the field of corporate cultural diplomacy. The methodology takes into account a number of activities, projects, and co-operations in order to evaluate how and to what extent the selected corporations are engaged in cultural diplomacy.

Concept definitions

A scoring system has been developed in order to help quantify those qualitative judgments for the purpose of more finely judging whether or not a corporation has improved from year to year.

Cultural Diplomacy is defined by the Institute for Cultural Diplomacy as:

“ Cultural Diplomacy may best be described as a course of actions, which are based on and utilize the exchange of ideas, values, traditions and other aspects of culture or identity, whether to strengthen relationships, enhance socio-cultural cooperation or promote national interests; Cultural diplomacy can be practiced by either the public sector, private sector or civil society.”

Corporate Cultural Diplomacy is defined by the Institute for Cultural Diplomacy as:

“Corporate Cultural Diplomacy (CCD) activities are privately funded programs that encourage the exchange of cultural practices and values; ultimately promoting inter-cultural dialogue and respect. Corporate Cultural Diplomacy activities cover a wide spectrum of diverse fields and stakeholders. Examples of corporations engaging in CCD activities include intercultural exchange programs and activities in the fields of: education, art, sports, music, film and academic and scientific research.”

Research Design

The European private sector ranking outlines corporate involvement in the field of cultural diplomacy as described by the corporations themselves. Corporations are ranked in accordance with the methodology, which is designed to qualitatively assess the corporations’ policies and direct actions in the field of corporate cultural diplomacy. The methodology takes into account a number of activities, projects, and co-operations in order to evaluate how and to what extent the selected corporations are engaged in cultural diplomacy.

Concept definitions

A scoring system has been developed in order to help quantify those qualitative judgments for the purpose of more finely judging whether or not a corporation has improved from year to year.

Cultural Diplomacy is defined by the Institute for Cultural Diplomacy as:

“ Cultural Diplomacy may best be described as a course of actions, which are based on and utilize the exchange of ideas, values, traditions and other aspects of culture or identity, whether to strengthen relationships, enhance socio-cultural cooperation or promote national interests; Cultural diplomacy can be practiced by either the public sector, private sector or civil society.”

Corporate Cultural Diplomacy is defined by the Institute for Cultural Diplomacy as:

“ Corporate Cultural Diplomacy (CCD) activities are privately funded programs that encourage the exchange of cultural practices and values; ultimately promoting inter-cultural dialogue and respect. Corporate Cultural Diplomacy activities cover a wide spectrum of diverse fields and stakeholders. Examples of corporations engaging in CCD activities include intercultural exchange programs and activities in the fields of: education, art, sports, music, film and academic and scientific research.”

Methodology

The European Private Sector Ranking outlines corporate involvement in the field of cultural diplomacy. The methodology takes into account a number of activities and projects in order to evaluate how and to what extent the selected corporations are engaged in cultural diplomacy. A scoring system has been developed in order to help quantify these activities for the purpose of more finely judging whether or not a corporation has improved from year to year.

For the creation of the Corporate Cultural Diplomacy European Private Sector Ranking, the following stages formed the methodology used for the analysis:

• Stage One - Corporation Selection Methods

The first stage consisted of defining the 10 biggest sectors within the European private sector. Within these sectors, primary research was conducted to identify the 100 biggest corporations in the European private sector, based on their market value. The 10 biggest corporations from every sector were selected for this research based on the 2013 financial times ranking of the top 500 corporations in Europe based on market value ⁱ.

• Stage Two – Parameter Setting

The second stage consisted of setting parameters for the research to be conducted. The research was conducted by evaluating two areas of interest, a weighting of 30% was given to existing corporation policies and 70% given to corporations’ corporate cultural diplomacy activities. Various sub-categories formed the assessment for each section. Each sub-category used a scoring system in which a corporation was awarded a score of 0, 0.5 or 1 and the sum of these gave a total score for each section. Only the last sub-category used a scoring system of which awarded a score of 0.5 or 1.

• Stage Three – Research and Parameter Application

In the third stage, data was collected from the official websites of each corporation and the predetermined parameters were applied. The scores from each subsection were accumulated and the scores from both sections were calculated with respect to the 30% / 70% weighting. This provided an overall score for each corporation.

• Stage Four – Ratio Calculation and Grading

The fourth step involved converting the scores into a ratio and categorizing each corporation score into the United States grading scale system, which ranges from A to F based on each corporation’s calculated ratio. With these scores it was possible to construct a ranking of the top 100 European corporations, per sector, per country and for all the corporations separately.

Each of these stages is described in detail below.

Sector Selection

The sector selection process first required the identification of ten influential European industries. In some cases, sector categories cover a wide range of markets so as not to exclude important areas of commerce. These categories were constructed using the Financial Times ‘Top 500 European Corporations Ranking’ and are as follows:

• Automobiles and Parts (Including: Automotive Manufacturing, Vehicle Electronics, Equipment, Manufacturing and Service)
• Banking (Including: Financial and Insurance Services, Investment Banking, Private Equity, Investment and Wealth Management)
• Electronics and Information Technology (Including: Software and Computer Services, Industrial Engineering, Electronic and Electrical Equipment, Industrial Transportation, and Technology Hardware and Equipment)
• Energy & Utilities (Including: Electricity and Gas, Water & Multi-utilities)
• Pharmaceuticals and Chemicals (Including: Diagnostic Imaging, General and Specialty Medicines, Diabetes Care and Plant Biotechnology)
• Mining (Including: Industrial Metals)
• Oil and Gas (Including: Petroleum, Natural Gas, Motor fuels, other Petrochemicals and Convenience Stores)
• Retail (Including: Personal Goods, Food & Drug Retail, and General Retail)
• Telecommunications (Including: Fixed-line and Mobile)
• Tobacco, Food Producers and Beverages (Including: Food processing, Consumer Goods and Beverages)

Corporation Selection

For each year the ten largest corporations included in the Financial Times Global 500 ranking were then selected from each of the ten sectors, giving 100 corporations for each year. It is important to note that the Financial Times Global 500 ranking changed each year, therefore the corporations selected for this research also changed – i.e. some corporations appear all five years in the study while others appear in this study only once.

Some of the sectors in this report are a combination of selected industries on the Financial Times list. In the cases where industries were combined from the Financial Times list the top ten corporations were then selected from those combined lists.

Market value was chosen as the indicator of size, and therefore used to determine how large a corporation is. Aside from market value, the corporation also had to be listed on one of the Europe-based stock exchanges

Parameter Setting

In order to assess a corporation’s involvement in cultural diplomacy, a set of defining categories was developed to gauge each individual corporation’s involvement. The research was conducted by evaluating two areas of interest, existing corporation policies and cultural diplomacy activities, weighted 30% and 70% respectively. The 30% weighting was given to corporation policy, as this is only a statement of intent from a corporation, rather than definite action. Therefore, direct corporation involvement was weighted at 70%, as this shows actual engagement in cultural diplomacy

Corporation Policy (30%)

Employee Diversity

One of the fundamentals of cultural diplomacy is bringing those from different backgrounds together; this is the principle behind promoting diversity in the workplace. A diverse workforce acts a melting pot for cultures and ideas. These are the types of environments in which cultural diplomacy can thrive. Secondly, diversity in the work place is a reflection of that corporation’s openness to the idea of cultural diplomacy.

Four questions were asked in order to measure a corporation’s commitment to diversity in the workplace. Representation, recruitment, retention, and diversity training were selected as the four central themes representative of diversity.

• Can the corporation provide evidence that its employee makeup reflects that of the local area surrounding its headquarters?
• Are positions in the corporation advertised in such a way to attract a diverse range of applicants?
• Can the corporation provide data on the retention rate of its employees, particularly in relation to that of employees of minority groups?
• Does the corporation possess a stated commitment to diversity training?

The measurement of this parameter was based on the amount of importance corporations placed on diversity. If corporations participated in programs that encouraged employee diversity, or if they had a Human Resources department dedicated to diversity at the corporation, they got 1 point. If no such department or commitment was apparent, they were awarded 0 points.

International Internship Program

International internship programs are a useful insight into how much a corporation is interested in encouraging international employment mobility while at the same time allowing people to work in a multinational and multicultural environment. Four questions are posed in order to gauge the quality of a corporation’s internship program by way of its contribution to cultural diplomacy.

• Does the corporation possess and internship program?
• To what extent does the corporation make an effort to bring non-natives to their corporation headquarters or other national branches?
• What efforts does the corporation make or have in place in order to help those living abroad come and intern at their corporation?
• Can the corporation provide examples of specific programs designed to share the diverse range of cultures represented by their interns?

Corporations received 1 point if they offered international internship programs, and 0 if they did not.

Transnationalism

Transnationalism includes activities that transcend national boundaries. Corporations will be awarded points for operating and producing in countries outside of the country at which they are headquartered. Two elements were used to gauge a corporation’s degree of transnational activity.

• Does the corporation sell its products abroad?
• Are any products produced abroad?

Transnationalism is an indirect facilitator of cultural diplomacy due to its inherent ability to put people into contact from with other people from different nations and cultures.

This parameter measured whether or not a corporation has international branches. Corporations gained 1 point if they had branches worldwide, 0.5 if they had several branches within Europe, and 0 if they had none outside the country in which their headquarters are located.

Promoting Human Rights / Civil Rights

Four elements were used to measure a corporation’s engagement with the promotion of human and civil rights.

• Does the corporation possess a stated commitment to human and civil rights?
• A stated commitment to fair trade?
• Any involvement with charities in the realm of human rights?
• Can specific examples be provided showcasing a commitment to human rights?

This parameter measured how corporation policies encourage or protect human & civil rights. If corporations have programs, charts or codes of conduct that are in favor of these two issues they received 1 point, 0.5 points were awarded if they addressed just one of these areas and 0 if they did not address either of these areas.

Direct Corporation Involvement in Cultural Diplomacy (70%)

In order to assess each corporation’s involvement in cultural diplomacy, a set of defining categories along with their defining elements had to be developed in order to gauge involvement. The categories are detailed below.

These categories were chosen and developed as a means to qualitatively measure a corporation’s involvement in cultural diplomacy for the following reasons:

• The categories represent a way of directly engaging in cultural diplomacy. For example, the sponsorship of musical events at multicultural venues
• The categories represent a way of indirectly encouraging intercultural exchange through the bringing together of people from many different cultures
• The categories represent activities which corporations are either known to engage in or are reasonably capable of engaging in

Research into whether or not corporations satisfied the defining elements of each category was conducted through open source online research as well as direct contact with the corporations through both phone and email.

It is important to note, adjustments were made to the scoring criteria to adapt to changing forces in the corporate private sector. For practical reasons the years are always noted in brackets next to the parameter. The slightly different parameters used affected the layout of the final corporation profiles. Therefore priority was given to the most recent research conducted, from 2104.

Cultural Exchange Programs

Cultural exchange events represent one of the most effective ways corporations can engage in CD; such an event is one of the clearest and most direct examples of CD, it is an act that directly brings the culture of one party to another for the purpose of exchange. It is possible to see how cultural exchange events are ideal platforms for corporations to engage directly in cultural diplomacy.

The benefits for both businesses and society are clear; businesses will find that by bringing their home culture to the areas in which they operate, they build trust and understanding which in turn forms the foundation for long and healthy businesses relations. Further, this cultural transparency leads to a healthier relationship with the public and contributes to the corporation’s positive corporate image.

The elements of the cultural exchange program category are defined by the following questions that place art, language, and traditions at the center of its definition:

• Does the corporation display a commitment to organizing events that bring art from their home country abroad? E.g. Fiat organizes Italian art exhibitions in their London dealerships
• Is there a commitment to organizing events that bring their language abroad?
• Is there a commitment to organizing event that brings their traditions abroad?

Active Engagement with Cultural Events. 2012 (1 point if engaged in cultural events, 0 points if not)

Music, Visual Arts, Film Industry, Sporting Events (0 points awarded if there was no involvement, 0.5 if a corporation cooperates with another on the project or, 1 if it was the corporation’s own initiative)

In 2012 four separate categories (Music, Visual Arts, Film, Sporting Events) were amalgamated under the broader umbrella of Engagement with Cultural Events. However the definition and reasoning behind this sector stayed the same.

A cultural event is an event that promotes and creates access to one or many cultures. In a similar way to cultural exchange events, cultural events act as a showcase for culture. The principle difference between cultural exchange programs and cultural events is that the purpose of exchange programs is to bring the culture of the corporation’s home country abroad, whereas the focus of cultural events is placed in promoting the sharing of any culture. These types of events provide a platform for cross-cultural exchange, which in turn creates opportunities for cultural diplomacy and strengthens its effectiveness.

The facilitation of exchange is hugely important in building trust and understanding between cultures. The more knowledge that one can learn about a particular culture the less likely they are to subject that culture to prejudices. Businesses benefit from the greater awareness generated by organizing such events, both in terms of profit and a greater awareness of the various cultures which comprise their target market.

The following four questions were asked of corporations and were deemed to holistically represent the category of cultural events.

• Is the corporation involved with musical events? For example E.On are official sponsors of the Ruhr Piano Festival
• Is the corporation involved with film events?
• Is the corporation involved with sports events?
• Is the corporation involved with art events?

Co-operation with Universities (1 point if invested in academic collaboration, 0 points if not)

An (international) academic partnership is a partnership that creates interaction and dialogue between cultures allowing ideas, perspectives and attitudes to be shared in the realm of academia.

• Does the corporation collaborate with a University outside of its home country?
• Does the corporation grant scholarships to international students?

Grants & Scholarships (1 point if provided, 0 if not)

Grants and scholarships are considered as a financial aid for education recipients of academes, which do not have to be paid back. A grants characteristic is, that it is need-based (the individual who receives the grant needs this in order to be able to participate in education) whereas a scholarship as usually merit-based (the individual who receives the scholarship does not necessarily need it but deserve it through outstanding performance).

Humanitarian Aid (0 if there was no involvement in humanitarian aid, 1 point if the corporation has a program focusing on humanitarian aid or attributes funds accordingly)

Humanitarian aid is understood as a response to humanitarian crises, which include natural disaster as well as man-made disasters. Humanitarian Aid is achieved through the providence of material and logistical assistance for people in need. To define humanitarian aid more precisely it needs to be distinguished from development aid. Humanitarian aid covers sudden disasters, whereas development aid supports the development of a constant situation in order to be improved. In the EU humanitarian aid covers among others, areas such as: nutrition, healthcare and sanitation as well as shelter.

Extra activities in the field of corporate cultural diplomacy (0.5 or 1 point, depending on the amount and importance of the activities.)

This was included to award corporations that put extra effort into their cultural diplomacy projects, outside of the previous parameters. This was only included as a parameter in 2013. There was no 0 score given as to not devaluate a corporation on this value.

Corporate Responsibility & Sustainability Performance

This category was added in 2014 in order to update the assessment criteria, as sustainability has become a much more pressing issue in recent years. Nowadays almost all corporations have corporate social responsibility departments for promote sustainability and corporate social responsibility practices. Corporate Social Responsibility is an essential topic in terms of corporate cultural diplomacy and should not be overlooked. In this sector 0 points were awarded if the corporation does not address corporate responsibility and sustainability, 0.5 points if the corporation reports and addresses its environmental responsibility; for example, an annual CSR report, 1 point if a corporation reports and addresses its environmental responsibility as well as produce products/services with the commitment to reducing its carbon footprint)

Scoring

Corporations scored points by providing evidence that they have fulfilled the defined category criteria, within the aforementioned parameters from the Corporation Policy and Direct Corporation Involvement subdivisions. After calculating the individual score for both Corporation Policy and Direct Corporation Involvement sectors, the scores are multiplied by 0.3 and 0.7 respectively, to give them their correct weighting (As Corporation Policy was worth 30% of the score and Direct Corporation Involvement 70%). These numbers were then added to create the total score. The maximum score was 6.8 in 2011 and 2013, 3.3 in 2012, and 7.5 in 2014. Upon calculating a total score, the corporation score was then compared to the potential maximum score, which gave us a quotient. For every corporation the final quotient was rounded to two decimals. This enabled the comparison of individual corporations.

The following mechanism was employed for calculating this quotient. Upon receiving its total score (named as ‘indicator’), the corporation in question would be subsequently compared with the potential maximum score.

Example:

Corporation’s indicator amounts to 5.5

Maximum indicator for the research amounts to 7.5

5.5 ÷ 7.5 = 0.73333

For every corporation the final score was rounded to 2 decimals to correspond with the score table found below. This example amounts to a quotient of D (0.73), out of a possible 1.

Grading

The last step in the assessment process was to allocate a grade to the ratio of each corporation. This is done for the sake of clarity and the ability to more clearly make year-over-year comparisons. According to their ratio, every corporation received a grade showing the extent to which that corporation was involved in cultural diplomacy. As the research included checking relatively basic activities and features of corporations it was assumed that every corporation should achieve a quotient of at least 0.59 - this would translate as a minimum level of involvement, and therefore a grade F. Grade A+ was awarded to corporations that met 100% of the research requirements, which is to say that the corporation received the maximum amount of points on every parameter. The whole grading mechanism is presented in the table in the left.

The grading system may seem demanding; however, by taking into consideration the financial possibilities of the ranked corporations in this research, as well as the relatively basic criteria of the assessment, it shows real efforts of corporations in promoting and investing in cultural diplomacy.

Barriers to Research

This research, although unique in its field, faced challenges from the same kinds of barriers that present themselves in any primary research initiatives. This section acknowledges these issues and tries to explain how they were dealt with and addressed in order to uphold the simplicity, transparency and reliability of data that this research advocates.

The most frequent and extensive barrier that emerged during this research was the potential inconsistency in the analysis of corporations regarding their involvement in cultural diplomacy. As some corporations had very little to report about their cultural engagement on their official websites, it was extremely difficult, from a research perspective, to determine whether this was a reflection of a low level of engagement, poor reporting, or a PR exercise coming from the corporation. However, due to the academic principles of this research project, guaranteeing consistency, comparability and reliability in the data was crucial. The information contained in official websites, Annual Reports, and other official corporate documents was triangulated and complemented, and additional information was available on the web, with independent articles and websites. However, if a corporation failed to adequately report their involvement in cultural diplomacy on their website or official documents, they would not receive points in that category. Similarly, when data was inaccessible due to copyright restrictions, or not published due to a lack of obligation to report within the private sector, the researchers were forced to withhold points.

Methodological Modifications

The way in which business sectors and corporations have been selected for research has been kept constant for each year. Each business sector and the corporations that fall under them have been taken from the Financial Times ‘Top 500 European Ranking. However, as this list is constantly changed and updated, some corporations were only researched for one year, while others have been present for all five years.

In 2012 the methodology employed was slightly modified, however it was soon made apparent that the previous methodology provided fuller and less biased research results. The changes made to the 2012 methodology are outlined below.