TERRORISM, COMPETITIVENESS, AND INTERNATIONAL MARKETING – (1/6)

MARKETING ACROSS BORDERS UNDER CONDITIONS OF TERRORISM

An introductory note: Over the coming weeks, we will post a series of Prof. Czinkota’s work with Prof. Valbona Zeneli, from the Marshall Center in Germany and Prof. Gary Knight, of Willamette University, USA. The work presented here is based on the research titled “Terrorism, Competitiveness and International Marketing: An Empirical Investigation” which was published in the International Journal of Emerging Markets, 2018.  We thank Ms. Niparat Pitchayanonnetr our departmental assistant for her editorial contributions. The series presents insights into what has been labelled a key challenge to the global business world today.
Here is our first post in the series which, together with future postings, you can freely distribute with proper credit to the authors and source.

Valbona Zeneli, Marshall Center, Germany

Michael R. Czinkota , Georgetown University USA and University of Kent, UK

Gary Knight, Willamette University, USA

Terrorism refers to the risk or actual encounter of violent acts designed to cause fear and intimidation.  Despite posing an important threat to internationally-active firms, there is a paucity of empirical research that addresses the distinctive challenges that terrorism poses to the international marketing activities of firms.  Here we first provide a theoretical background on terrorism and its effects on international marketing in emerging markets.  We then relate terrorism to operational costs, marketing planning, supply chain management and distribution activities in the multinational enterprise (MNE).  We recognize significant costs in the international marketing budget of MNEs. Firms with substantial resources and international experience appear to have more alternatives, which allow them to cope better with the effects of terrorism than their less endowed peers.

Terrorism is a salient threat to organizational competitiveness in international marketing. It is the premeditated use or threat to use violence by individuals or subnational groups to obtain a political or social objective through the intimidation of a large audience beyond that of the immediate non-combatant victims.

For terrorists, perception matters! Terrorist attacks around the world have increased greatly in the past decades, spanning 92 countries and over 28,000 fatalities in 2015 alone. Most attacks are directed at civilians, businesses, and business-related infrastructure. The five countries most exposed to terrorist attacks in recent years are Iraq, Afghanistan, Pakistan, India and Nigeria.

Emerging markets are particularly affected by terrorism since their businesses and citizens have less of an opportunity to protect themselves. Among the possible environmental contingencies that can affect marketing organizations – such as weak economic conditions, rising energy prices, financial crises – terrorism is identified as potentially the most serious threat. Since terrorists select their targets with high flexibility, intensity and precision, international firms seek competitive advantage through the expansion of production, distribution, and the marketing of products and services across multiple national boundaries. Terrorism sharply reduces corporate enthusiasm to expand. Measures to counter terrorism in turn are based of restricted freedom of movement and increased government regulation, both of which impair global commerce. The border-crossing effect of terrorism creates slowdowns for international transactions reaching 2.5% of merchandise value, which is comparable to the average level of global tariffs.

International trade depends on the efficiency and cost-effectiveness of global transportation systems. Terrorism increases the transaction costs of international commerce and delays global supply chains and distribution channels. Terrorism’s main impact reaches far beyond its immediate and direct effects. Key are the long term results from the indirect effects that occur in national and global economies. These include widespread anxiety and uncertainty that affect buyer demand, shifts or interruptions in the supply of needed inputs, new government regulations and procedures enacted to deal with terrorism, and longer-term perceptions that alter patterns of global trade and investment. Terrorism can also affect managerial attitudes towards risk, shift the risk absorption capacity of firms, and reduce the likelihood of embarking on international ventures or new investments abroad.

Our Google search of the NGram viewer system analyzed the extent of terrorism-related writings, and checked for correlations with the key terms ‘trade,’ ‘investment’ and ‘risk’. The results indicate a rapid increase of concern about terrorism since 1998. This development serves as an indicator of the growing preoccupation (in the English-speaking literature at least) with terrorism. Concurrently, and as expected in terms of theory-based postulations, actual risk increased while trade and investment interests declined.

We believe that terrorism will continue to be a significant factor in international marketing for decades to come. The rise of terrorism signals a new type of threat relevant to both developed and emerging economies. As governments increase security of public facilities, the likelihood of attacks against the softer targets of firms’ international operations is likely to increase.  Emerging economies need to find ways to increase their security in order to retain their attractiveness for foreign sourcing and investments. Corporate preparedness for the unexpected is a vital task. Innovative managers develop appropriate resources, and undertake planning and strategies to accommodate dislocations and sudden shocks. Terrorism represents an organizational crisis whose ultimate effects may be unexpected and unknown, posing a significant threat to the survival or performance of the firm.  Terrorism presents the firm with a dilemma that requires new decision-making and behaviors that will result in organizational change.  Firms that neglect to devote resources and capabilities to respond flexibly to terrorist triggered disruptions, risk sudden, sometimes even, total loss of competitive advantage. We follow the thinking of former U.S. Secretary of Defense Donald Rumsfeld who stated: “There are known knowns, which are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don’t know. But there are also unknown unknowns, these are things we don’t know we don’t know”. The goal should be to analyze the role of terrorism under all three conditions.

Michael Czinkota teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His key book (with Ilkka Ronkainen) is “International Marketing” (10th ed., CENGAGE).

Breakfast of Champions


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Breakfast

On Monday (11th December, 2017) morning we hosted a get together for selected post graduate students.  These were drawn from course reps but also selected by Program Directors who identified individuals whose contribution to the programs was really making a difference.   Students were asked to offer brief feedback on…

– I feel good, because….

– I’d love to do more of….

– my best class experience was…

– on Campus, I enjoy most…

– millennials need classes to focus on ….

– …. will help me most with a job

Things students said in their two minute talk included:

  • I feel good being part of an academic community.
  • Each day, I improve.
  • Kent offers an entrepreneurial course, designed around asking professionals in the finance industry. As such, not only do I get academic skills but I’m gaining professional skills too.
  • I value the Bloomberg Room.
  • Professors are all very helpful and I’m learning relevant skills
  • Being on the program gives me different cultural perspectives.
  • I have found seminars really help me in developing my skills – it’s great to talk with so many different nationalities.

Thanks to Michael for his idea, for organizing the medals and for being thoroughly affable. Thanks to Tamsin for helping with arrangements.  Thanks also to Martin, Radu, Jaideep, Shaomin, Omar, Irena and Maddy for coming along.

Sometimes even rankings can be Christmas presents

GoogleRankingCongratulations to Professor Dr. Michael R. Czinkota on being recognized as one of the world’s leading authors on international business and marketing for publications during the period 1980-2015! Throughout the 35 years, Professor Czinkota has always stayed in the top 20 of the prolific authors list from different sources.

“An analysis of significant contributions to the international business literature” in the Journal of International Business Studies rated Professor Czinkota among the top 3 most prolific authors worldwide, 1980-1989.

An analysis in the Asian Pacific Journal of Management ranked Professor Czinkota as #4 in the Journal of World Business, #7 in the Journal of International Marketing and #14 in all 6 leading business journals in the world for the time period 1996-2006.

More recently, Professor Czinkota was recognized among the top 8 pioneering researchers in international marketing around the world. He was also ranked among the top 20 most prolific international marketing authors during the period 1995-2015 in an anthology by Leonidou, Katsikeas, Samiee and Aykol. (2018)

In December 2017 – right before Christmas, Professor Czinkota occupied the first place of Global Google citations for export promotion and export management. He also ranked in second place for trade policy and place 8 for International Marketing, which is an exciting present for Christmas.

Professor Czinkota teaches at the McDonough School of Business of Georgetown University and at the Kent Business School, University of Kent. He was awarded the Significant Contribution to Global Marketing award by the American Marketing Association in 2007. Professor Czinkota is the co-author of International Marketing, 10th Edition, Cengage (with I. Ronkainen); International Business, 8th Edition, Wiley (with I. Ronkainen and M. Moffett) and Fundamentals of International Business, 6th Edition, (with I. Ronkainen and M. Moffett), Wessex. His blog also was named the third most successful international business blog.

Georgetown First Year Seminar – Ideas and More

Yesterday we had an amazing session with our editorialists. Each student took about 5 mins to discuss their fantastic ideas with experts and listened to their suggestions.
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Thank you all for the help and your great thoughts! Looking forward to seeing the students’ products!

Professor Michael Czinkota (czinkotm@georgetown.edu) teaches international marketing at Georgetown University’s McDonough School of Business in Washington D.C. and the University of Kent at Canterbury, U.K. His key book (with Ilkka Ronkainen) is International Marketing, 10th ed., CENGAGE

Overcoming the challenges of product management in the international market

The core of a firm’s international operations is its products or services. Its success depends on the quality offered and the differentiation from its competitors. To the consumer, any product is a cluster of value satisfactions. The perception of value differs across cultures around the world. For example, in Latin America, a product produced by an American brand tends to hold greater value than something similar produced by a Latin American brand. This does not mean that the product produced by the Latin America brand is in any way inferior in quality or appearance, but that perception creates different values. Here, I explore the challenges facing product management and offer an example from Apple’s recent launch of the iPhone X.

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