There is Nothing Wrong With Civility

There is a new, more dramatic form of hostility in the media and their users. I knew that but only now have experienced it with an anvil falling on me. I wrote an article for The Hill which distributes news in and around the US Capitol, entitled, “Thanks to Trump, America Shows True Leadership on the World Stage,” and the article triggered over 550 comments.

To my dismay, the article did not garner thought-provoking debate, but rather a disparage of uninformed commentary. Many writers had appeared to not even have read the article. Commentators argued primarily about the fact that Trump is not a leader, that they do not like him or his cabinet appointments, and disagree with his international performance. An overwhelming 575 out of the 582 of the comments were negative, while only three commentators made direct reference to the author and the article itself.

Commentators did not even address the arguments made in the article. Rather they used my thoughts as a platform for entirely extraneous arguments. There were continuously scrolling pages of hateful comments and threats aimed as a reply to specific earlier comments made. Users called each other names and created a fiercely hostile environment against freedom of speech.

There was no “conversation” or “discourse” or even arguments among people on the subject. It appears to me that neither readers nor writers learned new aspects due to the comments from the blog. They also clearly appeared not to be looking for such edification.

When making comments, readers should do themselves, their friends (and even their antagonists) a favor. Next time one encounters an article with a disagreeable title or first sentence, it should be read, thought about, and then commented on. Education and learning is the best form of artillery in an argument

Two Major Honors for Professor Czinkota!

It is a great pleasure to announce Prof. Michael Czinkota has received two significant honors in Peru. First off, he has received a Doctor Honoris Causa degree (his third) for his work in international business and marketing. Second, it was announced by the Universidad Ricardo Palma,  that in light of his globally leading work in International Marketing and Business, its new School of Global Marketing and Business is being named after Dr. Czinkota.  These honors , of course, reflect  the many leading edge research activities carried out at the McDonough School of Business. An article covering the events in Lima can be found by clicking below.

article in Lima

Embrace Innovation to Increase International Market Share

 This article is taken from Marketing Management,April 2011, and co-authored by Michael Czinkota and Andreas Pinkwart.

Embrace innovation to increase international market share



Authors : Michael R. Czinkota and Charles J. Skuba
As he discussed his plans to work with Republicans in 2011, President Obama highlighted the importance of exports, innovation, competitiveness, and the need to achieve the possible rather than the ideal in creating jobs and boosting economic growth. The perfect is the enemy of the good, particularly in politics. This opens important policy prospects related to international trade and manufacturing. Now, with Representative Kevin Brady as the Chairman of the House Ways and Means Subcommittee on Trade, the President has the opportunity to work with the new Congress to take quick action and achieve the kind of dramatic results he outlined in his National Export Initiative and his Strategy for American Innovation earlier in his term. 2011 may prove to be a dynamic year for U.S. international trade and competitiveness prospects. As the second largest metropolitan export market in the United States, prospects look good for Houston as well.
America’s largest companies and brands are the best in the world.  America is the world’s leading exporter of aggregated goods and services and continues to be a strong manufacturing country with about a 20 percent share of global manufacturing output.  This is mainly due to U.S. strengths in high value added and differentiated products as well as cutting-edge services.  With increasing market access to fast-growing emerging economies, U.S. companies can deliver even better global growth.
The issue is whether this success will create domestic jobs.  Despite the seventeen consecutive months of manufacturing sector growth, U.S. manufacturing jobs have been sliding over time because of the decreasing labor-intensity of American products and dramatic gains in productivity. For example, in 1987 there was a common estimate of 18,000 jobs per one billion dollars of U.S. manufacturing exports. By last year, this job creation estimate had declined to 7,000 jobs per billion. With 9.9% unemployment in the manufacturing sector, the benefits of international trade and investment have been less apparent than the drawbacks of plant closings and layoffs in labor-intensive businesses.
President Obama expects jobs to come from exports and innovation, including from smart, smaller American companies, international companies investing in the United States, as well as larger American companies. To this end, he has presented a vision and policy directive: He wants to double U.S. exports by 2015 and to create a national environment to stimulate innovation and entrepreneurship. What has been missing is a legislative agenda and votes.  This is understandable given the strong protectionist and even anti-business sentiment that prevailed in the last Congress.
But with the new Congress, the President has real opportunity to work with legislators to convert  his vision into action. The first logical step is to bring the pending free trade agreements with Korea, Colombia, and Panama to the House floor for a vote. With the real impact that these agreements can bring to U.S. exports, having these agreements sitting in limbo since 2008 has been disgraceful. The positive auto industry compromise reached with Korea in November of last year pales against the billions of dollars in export opportunities lost by the U.S. over the  three years of hiatus. With Representative Brady, a champion of free trade agreements and the Congressional leader in the successful passage of the Central American Free Trade Agreement, the path now seems clear for passing the Korea FTA. We can expect him to push this forward in the near future.  But that needs to be a beginning rather than an end. We suggest that the House works with President Obama to ensure that the agreements with Colombia and Panama proceed simultaneously. There is no reason why U.S. companies should continue to suffer the competitive tariff disadvantages that these agreements will solve.   These agreements remove barriers to U.S. products and services.
After these first steps on trade, the Administration and Congress should also explore the innovation side of the President’s agenda. Global U.S. economic leadership and export success require a strong economy driven by innovation, especially among entrepreneurs. New business ideas foster dynamism and create jobs. There are certainly opportunities for policy initiatives to encourage innovation and entrepreneurship. A starting point would be to examine the policies that actively discourage innovation, which typically boils down to the high cost of doing business.  The 35% U.S. corporate tax rate, one of the highest in the world, and the burden of unnecessary regulations inhibit innovation and business expansion Just as free trade agreements work to eliminate barriers to U.S. exports, policies should eliminate barriers to innovation.
Today, U.S. exports are roughly 8 percent of global trade. To balance the U.S. current account, this world market share needs to rise to 12 percent under conditions of stable imports. To achieve such an increase requires action.  As with the U.S. – Korea Free Trade Agreement, where we gained concessions in the automotive sector but gave in on beef products, the focus should be on results. The goal must be to provide U.S. firms with the conditions that allow them to succeed. President Obama now has the opportunity for an action partnership with Congress to achieve this goal.
Michael Czinkota teaches international business and marketing at Georgetown University in Washington D.C. and the University of Birmingham in the UK. He served in trade policy positions in the Reagan and Bush administrations. Charles Skuba teaches international business and marketing at Georgetown University – he served in the Commerce Department under President George W. Bush.

Twice the Work in Half the Time: Doubling U.S. Exports

President Obama has announced the goal of doubling US exports within the next five years. This is an important goal for the U.S. economy, which is only slowly beginning to grow at a modest rate of about 3 percent.  U.S. unemployment is stubbornly mired at just below 10 percent, not counting the underemployment of skilled U.S. workers. Given the debt  leverage of the typical  American household, one can no longer just rely on the U.S. consumer for growth. If we are to avoid legislated import substitution with all its inefficiencies and risks, U.S. businesses must look to other countries for added demand. Emerging markets, particularly in Asia will be the ones with likely robust economic growth. 

Exports need to be a high priority. Overall, in the ten years from 2000-2009, U.S. exports grew by about 50 percent. Falling demand, increased competition, and a shortage of trade finance took the wind out of the global U.S. sales. Doubling exports in five years indicates a task four times as large as the past decade. Yet its achievement can greatly improve the economy and benefit American workers.  A recent U.S. Department of Commerce report identified that 10.3 million American jobs were export-supported in 2008. 

            More exports are achievable if the right combination of government policy and private sector international marketing activity come together. But, what is that combination?  What activities need to be rebalanced or restructured to set us on the right path? How can, with prudent use of government resources, U.S. firms, be enticed to export more? 

To start, U.S. companies need to embrace international markets. Many U.S. businesses see only the risks of exporting rather than the opportunities of reaching customers beyond our borders. The psychological distance of foreign markets – which is the geographic and cultural gap perceived by managers – and uncertainties about international business practices are key barriers to many U.S. marketers. As a result, the United States under exports when compared to other nations.  On a per capita basis, German exports in 2009 were $ 13,670 for every man, woman, and child. The figure for Japan was $ 4,063; for the United States, it was only $ 3,238.

 When a firm starts to export, management’s perception of risk exposure grows. There are entirely new factors such as currency exchange rates, greater distances, new modes of transportation, new government regulations, new legal and financial systems, new languages, and often substantial cultural diversity. At the same time, due to needed investment into the exporting effort the immediate profit performance may deteriorate. Our research indicates that export procedural expertise is crucial for successful performance. Such expertise and managerial ability falls short even for experienced large exporters. 

During the first two years of exporting, managers may face the unusual condition of rising risk accompanied by decreasing rewards. In light of this reality, and not knowing whether there will be a pot of gold at the end of the rainbow, many executives either do not initiate export activities, fail to expand them to additional countries, or discontinue them. There is a short-term gap in the working of market forces. 

Here is where Government can play an important role. Export assistance can help firms over this rough patch to the point where profits increase again and risk heads downward. Bridging this short-term market gap may well be the key role of export assistance, and the major justification for the involvement of the public sector. 

Export assistance can target the organizational characteristics and capabilities of the firm and improve them. It can also work on the managerial characteristics and contribute to knowledge and competence. Government also needs to continually monitor the environment and opportunities, as well as barriers, for U.S. companies and, in its international negotiations, do something about reducing the existing obstacles. At the same time, firms need to be enabled to take advantage of new opportunities, in order to avoid government’s opening of markets which are then supplied by free riders. 

With continued substantial economic growth in emerging markets like China and India, there exists enormous potential for American goods and services.  Hundreds of millions of global consumers are realizing their dreams for a middle class life and have new disposable income. Many have a preference for U.S. brands as evidenced by the success of General Motors in China. Dramatic investments in infrastructure projects worldwide offer U.S. manufacturing companies and service providers tangible opportunity to expand sales. 

 On the Government side, the Obama Administration has announced it National Export Initiative. The plan is to increase export assistance to U.S. businesses in the form of export promotion and education activities, trade finance, and policy actions such as the successful completion of free trade agreements with Colombia, Panama, and Korea.  Export assistance will be most effective when it reduces the risk to the firm and increases its rewards from export operations. For example, providing information on market potential abroad is likely to decrease the risk (both real and perceived) to the firm. Offering low-cost credit is likely to increase the rewards. 

Export promotion is vital for a strong U.S. economy.  Small and medium-sized businesses can benefit enormously from the wealth of research and services available through the U.S. Department of Commerce.  Successfully getting information to U.S. businesses remains a key challenge for government.  A smart program in this regard has been Commerce partnerships with key businesses like banks, e-commerce companies, and express delivery firms to provide good information on exporting to business end customers.  This year, Commerce and Small Business Administration officials are conducting training with FedEx and UPS employees to help them better educate their customers on doing business overseas.

Here are some other suggestions for a smart Government role:  Since exporting competence is crucial, the Department of Commerce could sponsor a Professional Certification in Exporting. The necessary knowledge and skills could  be taught in Business Schools and Community Colleges, proving firms with assurance that help is at hand. Liberal arts students should incorporate some international business education in their programs. Exporting must become of the national game plan, just as it has been for decades in Japanese and German society and is now in China. The time is right for such an initiative.

 States could rally annual competitions for the best case study written on an export entry success. Such studies should present an export problem which was solved. Just like the peer reference power of adolescents, companies need concrete success stories they can read about to convince them that exporting is worth pursuing. Such case work should involve support from the U.S. Commercial Service, Export Assistance Centers and Chambers of Commerce.  Hundreds of short cases a year could be added to national resource centers. Available on‑line, these cases could help in training swaths of interested people. 

Congress might consider the development and implementation of an “Export Impact Statement” in connection with major policy decisions. Export trade considerations should also become an integral part of foreign policy negotiations instead of just an afterthought. It must be recognized that successful international trade leads to a strong U.S. economy, which in turn is the necessary prerequisite for this country to remain the guarantor of its political achievements. 

Finally, budget issues need to be considered. The National Export Initiative calls for a modest increase in funding for export promotion. We support this and more of it. After all, government promotion should be intended to jump start activity that will continue over time.  To be first class in international trade cannot be done on a shoe string. We need to invest in our export knowledge, processes and capabilities. A native American proverb says: “When storms come about, little birds seek to shelter, while eagles soar. “ We should help our exporters to become eagles.

 – This Article was written by Michael R. Czinkota  and Charles Skuba of Georgetown University for Marketing Management Magazine