Michael Czinkota researches international marketing issues at Georgetown University. He served in trade policy positions in the George H.W. Bush and Ronald Reagan administrations. His International Marketing text (with I. Ronkainen) is now in its 10th edition. Kimberly Boeckmann participated in drafting this work.
A powerful concept in the international marketing community today deals with how to establish honorable practices in the workplace and, most importantly, across borders. This focus on “honorable practices” is of cutting-edge importance, at this time mainly in Europe, and brings new life to old thoughts.
The AMA’s global marketing special interest group dedicated its annual meeting in Cancun to the task of “The Honorable Merchant in International Marketing,” with three days of papers, presentations, discussion groups and workshops addressing the topic.
Honorable practices are the rules that were established to prepare merchants for conducting international business, and an honorable merchant is one who adheres to rules that go back as far as Proverbs (11:1) where merchants are specifically addressed: “A false balance is an abomination to the Lord, but a just weight is his delight.” The New Testament, Matthew 19:23-24, cites Jesus as saying that it’s easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God. Later on, the Quran makes specific reference to the charging of interest, which is seen as inappropriate and even sinful (Quran 3:130-131). In Chinese society, the role of a merchant was seen as a necessary evil, far below the exalted societal role played by, say, imperial officials.
Another example comes from medieval Florence, where the abrogation of guild bylaws were of great concern. Debtors, tax delinquents, interest-takers, falsifiers or forgers and robbers were punished harshly. Honorable merchants in cities were in charge of guarding and protecting processes and merchandise.
In practice, fines were reserved for the rich, whereas corporeal punishment was imposed on the poor. The harshest punishment, expulsion from the guild or exile, also had different effects on rich and poor. For the upper class, exile meant travel, the establishment of business branches abroad, perhaps even diplomatic service and the prospect of a glorious return. For the poor, exile usually meant death. In general, a person stealing or damaging merchandise would be dealt with much more harshly if he happened to be homeless or of low social status.
Cities, guilds and nations that had advanced international trade developed punishments that invoked both heaven and hell but still had their common touch. Here is a sample from a Venetian merchant code of ethics on handling cargo after a captain dies: “If you infringe on your duty or you are corrupted, let God the Father Almighty and his son Lord and the Holy Spirit be against you … and let you burn in hell with Judas the betrayer forever. In addition, you will have to compensate the executor of my will with five pounds of gold.”
If a violation of reliability and stability was caused by the ruler, then the populace broke out in anger, sometimes leading up to a revolution. For example, in 1253, the Duke (Herzog) of Munich inflated his currency by two-thirds so that 150 Munich pennies were worth only 60 Augsburg pennies. In 1284, a widely dissatisfied population destroyed the duke’s mint and killed the master of the mint, an equivalent to today’s chairman of the Federal Reserve.
In 1282, the Hanse, an association of north German merchants, felt that its members were suffering from severe injustices by Norway. On learning that one of its ships had been attacked and pillaged by the Norwegians, the Hanse called an assembly of its members and resolved on an economic blockade of Norway. The export to Norway of grain, flour, vegetables and beer was prohibited, and the penalties were fines and the confiscation of the goods.
The blockade was a complete success. Deprived of grain from Germany, the Norwegians were unable to obtain it from England or elsewhere. As a contemporary chronicler reported: “Then there broke out a famine so great that they were forced to make atonement.” Norway was forced to pay indemnities for the financial losses that had been caused and to grant the Hanse extensive trade privileges.
Honorable practices also dictated that organizations were held to account for the actions of their leaders. Early in the 15th century, creditors from abroad started to request that citizens persevere upon their nobility to pay their trade debts. If not, attacks were threatened, not only against noblemen and the cities themselves, but also against merchants from those cities, wherever they were.
A historic review summary then indicates:
1. The profession of merchants does not benefit from immediate strength and respect.
2. There are mixed emotions prevalent, since merchants can both help and hinder through their work.
3. Internationally, merchants suffer from the liability of foreignness, meaning that their backgrounds and their being different detracts from business success.
4. International merchants are attractive by bringing choice to market, but also are worrisome by displacing domestic relationships.
5. To overcome this psychic distance, merchants need to compensate for their shortcomings, both real and perceived.
Merchants have long had a variety of objections when engaging in their trade, focused both on the central players or anchors and on the path to trust. Trust is thought to provide trading partners with a means of overcoming international drawbacks because it facilitates investments in relationship assets, encourages information sharing and generally lowers transaction costs. However, the honorable practices designed millennia ago may no longer be effective today. Yet even in a time of frequent-transaction orientation, international marketers are again beginning to think of themselves as building long-term customer relationships, though they may encounter opposition by their firms’ financial managers who may prefer short-term actions.
I believe that the solution for honorable behavior remains in the construction of “trust bridges.” A reputation as the honorable merchant can be developed by highlighting commonalities and shared experiences, which allows the forging of these so-called trust bridges. The concept establishes a set of international standards for business based on a commonality of experiences. If two parties are exposed to common conditions and values, a discovery that they share these experiences will help them establish connectivity, warmth and trust more rapidly than if they had dissimilar backgrounds. Through a combination of collaboration, symposia, conferences and courses, partners can accredit and certify persons or companies into a database of trust bridges.
One interesting contextual difference that has emerged between Europe and the United States focuses on the use of honorifics that are designed to single out a person as being more special than others, both as an individual as well as through one’s role in society. In much of Europe, for example, the term used in addressing a leading government official is “excellenz,” derived from the Latin “excellere,” or “outstanding.” Whether such a special position is associated with any particular merit or simply “the protruding nail that will be hammered down” remains unresolved.
In the United States, by contrast, it is the election of an individual, be it a congressman, mayor or council member, that results automatically in a new term of address. The bestowment of the “honorable” title is by virtue of the election, not by any special appointment. There may be an underlying assumption of the election reflecting a special capability, but the proof is in the pudding. It appears that the term “honorable” provides a specific context in the United States. The conferral of the term indicates a process rather than a capability. Nonetheless, the use of the term helps in building a trust bridge. We cannot spend sufficient time together in order determine someone else’s capability and benevolence, but the act of a public election is taken as substitute knowledge that gives advance trust credit to a person and provides a feeling of commonality.
Key findings from the conference in Cancun were documented in a Delphi study conducted with the conference participants. The top three critical characteristics of the honorable merchant in today’s world trade are, 1.) building trust, 2.) demonstrating corporate social responsibility, and, 3.) demonstrating integrity and reliability. Global trust bridges will allow for these three key directions to be taken simultaneously, and these bridges can be facilitated in the realm of academia, business and policy.
A simple but key application of a trust bridge exists for a university’s alumni. The university’s ability to offer special experiences enables the building of a common bridge, which is anchored in the fact that many people have had similar life-shaping experiences. It is one of the most effective ways to develop a strong relationship when each party knows what the other can bring to the table. Teamwork, networking and reputation will increasingly become the key reasons why people will still choose to attend a bricks-and-mortar university, long after the Internet has substantially altered the common approach to education. For such efforts to be victorious, however, they must go beyond a mere transfer of information, and help with the collaboration and connection of interested parties.
Familiarity brings a fast track to a relationship and a database of shared experiences can be instrumental in fostering such familiarity. It therefore will be critical to select information on those new dimensions that are of common interest and form a common context. Through this better understanding of others, there will be a greater ability for trust and for shaping honorable relationships. After many decades of high variations, honorable practices would again become the expectation and the norm.
Article Source: American Marketing Association
The recently concluded 2014 American Marketing Association Special Interest Group conference on the Honorable Merchant and International Marketing was a great success! We had an excellent turnout of 30 participants representing nearly every continent at the Dreams Resort and Spa hotel in Cancun, Mexico. The 2014 conference was held from Wednesday, April 16th to Saturday, April 19th. The diversity of international participants cultivated unique research topics on the area of the Honorable Merchant and allowed for stimulating discussion to ensue. Research papers ranged from comparing Marketers to the Devil to cheating at Universities and Honorable practices for sustainable cocoa supply. The participants completed three rounds of Delphi Questionnaires on a wide range of topics. The results will be published later this year.
To view more conference photos click here.
Michael R. Czinkota and Ilkka A. Ronkainen for www.ama.org
Companies that have adopted this approach have incorporated the following four dimensions into their organizations.
The first dimension relates to a clear and consistent long-term corporate mission that guides individuals wherever they work in the organization. Examples of this are Johnson & Johnson’s corporate credo of customer focus; Coca-Cola’s mission of leveraging global beverage brand leadership “to refresh the world, inspire moments of optimism and happiness, create value and make a difference”; Nestlé’s vision to make the company the “reference for nutrition, health and wellness”; and Samsung’s mission to “create superior products and services, thereby contributing to a better global society.” But formulating and communicating a vision or mission cannot succeed unless individual employees understand and accept the company’s stated goals and objectives.
This relates to the development of a cooperative mindset among region or country organizations to ensure the effective implementation of global strategies. Managers may believe that global strategies are intrusions on their operations if they do not have an understanding of the corporate vision, if they have not contributed to the global corporate agenda, if they are not given direct responsibility for its implementation or if there is no reward for their cooperation.
The third component in the “glocal” approach is making use of representatives from different countries, regions, and cultures. Organizationally, the forces of globalization are changing the country manager’s role significantly. With profit-and-loss responsibility, oversight of multiple functions, and the benefits (and drawbacks) of distance from headquarters, country managers enjoyed considerable decision-making autonomy, as well as entrepreneurial initiative. Today, however, many companies have to emphasize the product dimension of the product-geography matrix, which means that power has to shift at least to some extent from country managers to worldwide strategic business unit and product line managers. Many of the previously local decisions are now subordinated to global strategic moves.
In today’s environment, the global business entity can be successful only if it is able to move intellectual capital within the organization—that is, to transmit ideas and information in real time. If there are impediments to the free flow of information across organizational boundaries, important updates about changes in the competitive environment might not be communicated in a timely fashion to those tasked with incorporating them into the strategy.
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Image from ama.org
——Friday, April 18——
All sessions will be held in the Ballroom – Cielo
9:00 – 10:00 Session 3: Meet the Editors
Moderator: Rüdiger Kaufmann (University of Nicosia)
Mary Teagarten, Editor in Chief (Thunderbird International Business Review)
David Stewart, Editor (Journal of Public Policy and Marketing)
David Griffith, Former Editor (Journal of International Marketing)
10:00 – 10:15 Break 6
10:15 – 11:45 Session 4: The Honorable Merchant and International Action
Moderator: Suraksha Gupta (Brunel University)
Relationship factor as the key to Sustainable Export Marketing with Asia
Anura Amarasena (Swinburne University) and Geoffrey Chow (Swinburne University)
Online Retailing Paired with Kirana – A Formidable Combination for emerging Markets
Piyush Kumar Sinha (IIM Ahmedabad) and Srikant Gokhale (IIM Ahmedabad)
Investigating Quality Perceptions of Foreign Services by Chinese Consumers
Subir Bandyopadhyay (Indiana University)
The International Dive of Inter-Generational New Products: Measures, Patterns, and Predictive Model
Javier Palacios Fenech (Universidad Adolfo Ibañez) and Gerard Tellis (Universidad Adolfo Ibañez)
The evolution of scholarly research on international marketing managers’ behavior of exporters and marketing relationships: A critical discussion on the ethical profile and competences of international marketing managers
George S. Spais (Graduate Technological Educational Institute of Western Greece) and Rüdiger Kaufmann (University of Nicosia)
11:45 – 13:15 Lunch Break (at leisure throughout the resort)
13:15 – 13:45 Keynote: Keeping Trust on the Policy Side
Major General (ret.) Al Zapanta (President & CEO, U.S. – Mexico Chamber of Commerce)