Why should we worry about misaligned participations in trade? According to the U.S. Department of Commerce, less than 1 percent of U.S. firms export. Tens of thousands of small-business manufacturers and service sector firms could export their goods and services, but do not. These companies often fear the challenges of going overseas. But all firms entering new markets face shortcomings and disadvantages when compared to local competitors. Due to a lack of local knowledge, unfamiliarity with market conditions, insufficient insights into consumer behavior, and newness to political decision making, all new entrants encounter a “burden of foreignness.” Policymakers need to help prospective exporters overcome this burden and successfully access new opportunities overseas.
In China, no one is safe on March 15th, World Consumer Rights Day. An Evening Gala is hosted every year by CCTV, China Central Television since 1991. The purpose is to name and shame companies for their misconduct against consumer interest. In decades past, firms like Starbucks, LG and Hewlett-Packard have been called out when offering poor products or irresponsible customer service. Many Chinese companies and state-owned enterprises like China Mobile have been inducted in this Hall of Shame as well.
This year, the Evening Gala aimed mainly at the misconduct in E-Commerce and Social Media. According to the State Ministry of Industry and Commerce, during this gala, Elema, a billion-dollar food delivery company, was shamed for making food under unsanitary conditions; Yipai (Easy Pass), China’s leading online automobile marketing platform, was accused of hurting consumers by providing personal information to outsiders; Taobao, the biggest online shopping website founded by technology giant Alibaba, was named for fraudulent consumer reviews which influenced product rankings. The Gala quickly became a battle cry for corporate PR teams, who had to come up overnight with explanations and damage control.
Will these allegations curb bad behaviors in companies and individuals? The answer seems to be “yes”. A new law prohibits indoor smoking in Beijing. Individuals breaking these regulations can be fined $30, restaurants up to $155. In addition to the fines, repeat offenders see their names posted on a government website for one month, alongside a list of their offenses. Witnesses to infractions are urged to notify the government. Social shaming pressure is expected to make the new law more effective – and it works!
Shame can be used to focus attention on some “bad apples”, especially when it comes to major collective problems. It helps to be creative and focused when choosing targets. Companies, such as British Petroleum or SeaWorld, do not feel guilt. However, the people working in these corporations do. Their thoughts and behavior can be influenced by public disapproval and even mortify them. Public opinion can be essential for companies, especially if they are producing consumer brands, such as IPhones or agile Orcas. Reputational risks are a concern, and public shaming can be most effective if targeted at ”friendly” corporations and their employees.
One must ponder the question: can “shame” really work in implementing government policy? Jennifer Jacquet, author of Is Shame Necessary?, claims success for a website run by the state of California that lists the names of people who have not paid their taxes. The site targets only the top 500 delinquents, and the state has retrieved more than US$395 million in back taxes since it was launched in 2007.
Another possible and very helpful area for “shame policy” is immunization of a country’s population. Typically, 90 percent of people need vaccination for there to be true immunity. People can opt-out and get a “free-ride”, since everyone around them is taking the needle for them. However, with reduced compliance, immunization doesn’t work anymore. That’s where shaming can help encourage participation.
Another example is the Rainforest Action Network and its shaming campaign against banks which financed coal companies doing mountain-top removal in the Appalachia region. After a five-year campaign, two of the nine banks have changed their policy of lending to coal companies. Two out of nine may seem like limited success, but every march starts with the first step. Shaming can act as a stop-gap for the period when people are concerned about something and when actual change comes about.
Working to avoid shame can lead to better weights and measurements. Who wants to be ridiculed by competitors or lose a long-developed fine reputation. Particularly in fields such as marketing, where the brand and personal perceptions are paramount, shaming can become a major influence if not the rationale for the curative marketing approach which aims to heal relationships between business, government and consumers. Avoiding shame by reducing, eliminating and making up for past mistakes, can strengthen a company’s unique selling proposition and let it emerge as a seasoned competitor.
This is one of the published series on the linkages between freedom and international marketing.
Cultural studies tell us that there are major differences between and even within nations. International marketing, through its linkages via goods, services, ideas, and communications, can achieve important assimilations of value systems. On the consumer side, new products offer international appeal and encourage similar activities around the world: many of us wear denim, dance the same dances, and eat pizza and
On the consumer side, new products offer international appeal and encourage similar activities around the world: many of us wear denim, dance the same dances, and eat pizza and sushi. It has been claimed that local product offerings help define people and provide identity and that it is the local idiosyncrasies that make people beautiful. Some even offer the persistence of the specific breakfast habits of the English and the French as evidence of local immutability in the face of globalization. Yet, we should remember that values are learned, not genetically implanted. As life’s experiences grow more international and more similar, so do values. Therefore, every time international marketing forges a new linkage in thinking, new progress is made in shaping a greater global commonality in values.
It may well be that international marketing’s ability to align global values which makes it easier for countries, companies, and individuals to build bridges between them, may eventually become the field’s greatest gift to the world.
Universities are among the most successful institutions created. They do not however accept change lightly. But what role do universities need to play in the knowledge society of tomorrow to continue their success. This question grows more pressing for the western welfare states as their dominance in research and innovation is being challenged by globalization and the dynamics of the emerging economies.
The example of the US, which like no other nation, has been able to benefit from universities as drivers of growth, makes this abundantly clear. For a long time America has combined cutting-edge university research with strong science and engineering and entrepreneurial-oriented business schools. This has allowed the country to promote groundbreaking innovations.
Yet, in an era of major shifts in information flows and communication practices, there are increasing doubts about whether the concepts that allowed previous innovations remain sympathetic to the challenges and research priorities of the future.
The advance of biotechnology and social sciences absorbs almost half the research funds of US universities. Add the expansion of national security and military research, and universities have lost important drivers for the industrial use of new scientific insights. Instead, the ivory towers, which were once believed to have been abandoned, have re-emerged. Tackling the giant US budget deficit, will also require new structures and processes in research and teaching at universities.
In Europe, Germany may appear to be in better shape to innovate, with its broad mix of industrial and service-related leadership and its strong and flexible small and medium-sized businesses. However, this should not obscure obvious weaknesses. What has been achieved through a drive for excellence and high-tech initiatives, for which the government has provided competitive university funding and more autonomy in recent years, may be lost once more. Ideological campaigns declare either that universities are not and should not be subject to economic rules, or express fears about standardized expectations, which are said to lead to a commoditization of higher education.
Universities must deliver on accepted performance measures yet differentiate themselves sufficiently to attract scarce resources under competitive conditions.
Germany and the US face similar problems. So far the American and the German university system have learnt from each other in a time-delayed fashion. Now, due to mounting competitive and financial pressures, universities need to learn from each other simultaneously. University success is not about tearing down the ivory towers. Instead, it is about opening their windows as far as possible to other disciplines and to new markets.
While freedom of teaching and research must be defended, at the same time bridges for mutual transfers of knowledge and best practices have to be built.
We need Alexander von Humboldt’s ideas to be applied to the 21st century. The university of the future is only viable if best research and best teaching go hand in hand with best knowledge transfers. To achieve these goals, universities need reliable funding to generate innovative ideas through research. Interdisciplinary links, a close integration with the environment (both social and natural) as well as research relevance are also necessary.
All this calls for a major cultural change on both sides of the Atlantic. For new scientific knowledge to be used more rapidly in universities and businesses, the university approach to knowledge generation, transmission and application needs to be rethought. More risk capital, new business models and efficient intermediary organizations are needed in order to build a bridge over the valley of death, in which so many basic research contributions have perished before they could become innovations.
Such efforts would be worthwhile. It is not only about wealth and employment; it is also about the development opportunities of each individual and the defense of intellectual freedom.
Written by Michael Czinkota and Andreas Pinkwart and originally published in the Financial Times, August 2011.