Global Business: Trade, Broken Down

In business, trade is a big word. Not in the sense of how you spell it, but rather how we use it, as there are many compartments to trading with different countries. From exports, to labor, to production and prices, trade isn’t just the exchanging of goods. Lets break it down and use the example of clothing.

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From Rome to Geneva: On the Significance of Trade

romeWhat gave Rome it’s preeminent power in the ancient world? No doubt its legionnaires were feared from Iberia to Galcantray. To fund military might the descendants of Romulus engaged in prolific international trade. Today, as globalization and international trade spark heated debates in capitals around the world, it is important to remember the long history of trade. From the Chinese to the Phoenicians, the Spaniards and the Dutch, the mighty British empire and the American industrial powerhouse, trade has been at the center of every great power in history. Great powers can either take that which they need by force, or buy it away. To most, trade is clearly preferable.

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Marketing innovation: A consequence of competitiveness | Journal of Business Research | Part 3: Research Methodology

 

Professor Suraksha Gupta, University of Kent

Professor Naresh K Malhotra, Georgia Institute of Technology

Professor Michael Czinkota, Georgetown University

Professor Pantea Foroudi, Middlesex University

ISSN 0148-2963

This study addresses this question in four phases. The first phase underpins the arguments about competitiveness and marketing innovation with the current academic knowledge about theory of competitive advantage and resource-advantage theory. The second phase explores the concept and assumptions using expert insights. During the third phase, this study conducts a field survey to collect data from resellers of international brands and use structure equation modelling (SEM) and fuzzyset qualitative comparative analysis (fsQCA) (Ragin, 2006 and 2008). fsQCA has received increased attention as it gives an opportunity to the researchers to gain a deeper and richer perspective on the data, particularly when applied together with complexity theory (Leischnig and Kasper-Brauer, 2015; Mikalef, Pateli, Batenburg and Wetering, 2015; Ordanini et al., 2013; Woodside, 2014; Wu et al., 2014). The fourth phase leads to interpret the results in order to make recommendations and consider future avenues for the research. This research contributes to the literature on business-to-business and international marketing. Finally, the study advances the current understanding about the interdependence of brand and reseller firms for developing their competitiveness and adopting innovative approaches to marketing.

Marketing innovation: A consequence of competitiveness | Journal of Business Research | Part 1: Context

Professor Suraksha Gupta, University of Kent

Professor Naresh K Malhotra, Georgia Institute of Technology

Professor Michael Czinkota, Georgetown University

Professor Pantea Foroudi, Middlesex University

ISSN 0148-2963

    Various studies recommend that managers aiming to venture into the challenging field of internationalisation should create a competitive edge that helps them to demonstrate the superior abilities of their firm (Porter, 2011; Samli et al., 1994; Barney et al. 2011). But, fear of the unknown deters managers from stepping out of their home country and benefiting from internationalisation because growth markets tend to be very complex as they foster competition (Knight, 1995; Thai and Chong, 2013). A business-to-business model of distribution allows managers of international firms to successfully deal with entry barriers and enter smoothly into a foreign market and effectively address the complexity of a place that offers high potential of growth to their businesses (Yan, 2012).

    A distributor simultaneously facilitates the entry of multiple firms with competing products into the market and engages micro level small and medium firms in the local market for selling (Chen, 2003). Since distributors offer multiple similar and competing products to resellers, markets being served through resellers become very competitive for international brands. Competition in a market encourages competing firms to demonstrate their ability to innovatively serve customers (Freeman et al., 2006). Lack of in-depth native knowledge in such markets is a major shortcoming for firms aiming to internationalise because it decreases their capability to innovate their marketing related business practices by predicting the business environment and trends in the consumption patterns of the foreign market (Bell, 1995; Johanson and Vahlne, 2009). Distributors and resellers have an important role to play in the successful penetration of a foreign market so how an international firm develops its capability to   market its products through reseller networks needs to be understood.

    The resource advantage theory recognizes the creation of a competitive edge as a function of marketing and identifies the role of branding in creating the capability of a firm to demonstrate its superior abilities (Hunt and Morgan, 1995; Hunt and Morgan, 1996; Srivastava et al., 2001). Simultaneously, the industrial practices of industrial brands particularly in the IT and telecom sector indicates that the managers of strong brands can compete in foreign markets based on their brand leadership and brand relationships in the local market. It has also been noticed and reported in the literature of local firms by studies like Gupta and Malhotra (2013) that a brand that contributes to the competitiveness of the reseller is able to compete at the local level using innovative marketing initiatives. These observations of various researchers indicate that the relationship between an international brand and its resellers in foreign markets becomes very important for brands in a market that poses strong competition (Anderson and Weitz, 1992).

Shame Curbs Bad Behavior

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.