Leadership, Corporate Social Responsibility and Sustainability, Part 3: Strategy Focus

Early corporate citizenship initiatives were often directed at supporting commu­nity causes ranging from charitable organizations to cultural institutions like municipal symphonies and operas. Companies have been historically helpful in developing the cultural infrastructure of many communities. Whether these cor­porate philanthropy efforts were beneficial to the company or only to selected individuals is very subjective. However, many of these early efforts were not scrutinized for their contribution to the strategic objectives of the firm. Michael E. Porter and Mark R. Kramer have argued that a company needs to choose its social initiatives strategically. They have advanced the concept of shared value, which they define as “policies and operating practices that enhance the competi­tiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and eco­nomic programs.”

Porter and Kramer identify three approaches that apply to international marketers:

(1) delivering attractive products that are truly beneficial to society; (2) removing problems in the supply chain that are both costly and socially detrimental, such as reducing. greenhouse gasses; and (3) enabling local cluster development to help communities become more competitive.

They argue that “we need a more sophisticated form of capitalism, one imbued with a social purpose. But that purpose should arise not out of charity but out of a deeper understanding of competition and economic value creation.” The best interna­tional marketers are driven by the desire to create value and improve their com­petitive positions, so shared value becomes the right and smart thing to do.

The Future of Export Promotion (VIDEO)

Professor Michael Czinkota and former US ambassador Charles Ford discuss International trade, foreign direct investments and export in the past and the future of US Foreign Service and how American businesses are involved in the global economy.

No More Silos! (Part 4)

Export Promotion and Assistance.

Charles Ford, acting assistant secretary for trade promotion and director general of the U.S. and Foreign Commercial Service, spoke about new export insights generated through research and analysis. Of all the U.S. firms that export goods, 58% only ship to one country and another 25% only export to two or three countries. If the skills, competence and competitiveness are already there, then such firms should be encouraged to serve more countries around the world.

Export assistance to large exporters suggests the largest yields of governmental support efforts, yet large exporters need help the least. Small and medium-sized firms can use the support most but often are uninformed and disinterested in engaging in exporting.

Based on World Bank data, $1 dedicated to export promotion generates up to $40 in actual exports. A new strategy intends to achieve exports by investing in the United States, particularly by making use of existing and growing university networks in export promotion.

Caroline Freund, a chief economist for the Middle East and North Africa region in the World Bank who specializes in international trade and finance, reported on research on firm size effects on export success. She found that there was little evidence of rapid growth from small to large exporters. Rather, exporters tend to be already large when they start with the export effort. Most of the trade is seen to take place on an intra-industry level, and more than one-third within firms. The top 1% of firms in a country typically carries out 80% of the export work, and export activities are characterized by a very high market entry and exit of firms, according to her research.

This article is a part of a series written by Michael Czinkota and Charles Skuba who report on the March 2013 meeting on trade policy and international marketing, a collaboration between the American Marketing Association, Georgetown University and the U.S. International Trade Administration. View part 3 hereGuest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.