The Future of Global Business

A Reader

Michael Czinkota, Ilkka Ronkainen

• Publisher: Routledge
• Year: 2011
• ISBN:
  9781135967277
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In the fast-paced world of global business, success is marked by the ability to stay on top of currents events, to recognize new trends, and to react quickly to change. This book offers contributions by global marketing authorities to help you understand this rapidly changing international environment and respond to opportunities and perils.

Editors Michael R. Czinkota and Ilkka A. Ronkainen use their years of experience in policy, business, and academia to provide these readings noted for their currency, relevancy, and scholarly depth.

Section 1

Role of Research in International Marketing

Chapter 1.1

An International Marketing Manifesto

Michael R. Czinkota and Ilkka A. Ronkainen

INTERNATIONAL MARKETING WORKS

Today might be called the triumph of international marketing. There seems finally to be proof that planned economies are less efficient than market economies. Governments all over the world are encouraging market-based activities. The abolishment of state monopolies, the privatization of state-owned companies, the opening of national economies toward the world market, and the ongoing introduction and enforcement of rules and laws to ensure competitive market conditions are being witnessed.

As a change agent, international marketing has brought important benefits to nation-states, firms and their employees, and customers. During the past 30 years, the value of global trade has risen from $200 billion to more than $7.6 trillion (World Trade Organization 2002). The growth rate of marketing between countries has consistently exceeded average domestic growth rates (International Monetary Fund 2000). The fastest globalizing nations have enjoyed rates of economic growth up to 50% higher than those that have integrated into the world economy more slowly (Global Business Policy Council 2000). Linked to this growth, these same countries have also achieved relatively greater gains of political freedom, greater increases in life expectancy, higher literacy rates, and better overall standards of living.

Firms have benefited substantially from global marketing expansion. With wider market reach and many more customers, firms in the international market produce more and do so more efficiently than their domestic-only counterparts. As a result, international firms simultaneously achieve lower costs and higher profits both at home and abroad. Market diversification and the stability arising from firms’ lack of dependence on any particular market are other positive effects. Firms also learn from their competitors, which often makes their managers more sensitive and responsive to differing environments, thus preparing them for change. In addition, their recruiting can expressly seek out and develop the best talent from all nationalities (Theuerkauf, Ernst, and Mahini 1996). The cumulative effect of these dimensions is major. Research has shown that firms of all sizes and in all industries that engage in international marketing outperform their strictly domestic counterparts. They grow more than twice as fast in sales and earn significantly higher returns on equity and assets (Taylor and Henisz 1994).

Workers also benefit from international marketing activities. International firms of all sizes pay significantly higher wages than domestic-only firms (Business America 1996). Because of their greater profitability and longevity, workplace security is also substantially greater for employees who work in plants of international marketers than for those who work in local firms (Richardson and Rindal 1996). Compelled by global media scrutiny, international firms have become greater practitioners of social responsibility—much to the benefit of their employees around the world. Never before have workers benefited to such a degree from benevolent rules implemented by corporations headquartered far away from their locale. For example, the global working conditions set by Nike, for its subcontractors, or by Kmart, for its suppliers, are unique in the annals of global commerce.

Consumers are the greatest beneficiaries of all. They are offered an unprecedented degree of product availability and choice. Furthermore, as a result of international competition, the prices of these products are usually low and offer a better quality of life to a broad spectrum of individuals. Rising incomes have ensured leaps in purchasing power. For the first time in history, international goods and service availability has gone beyond the luxury of the elite and has become, especially in emerging markets, the reasonable expectation of the masses.

Advocates and activists have had their causes benefit substantially from the spread of international marketing. In 1999, business, labor, and government representatives from 173 countries affirmed core labor standards as fundamental human rights, including freedom of association and the right to organize and bargain collectively. Included was also a call to eliminate child labor, forced labor, and employment-related discrimination (Mazur 2000). International marketing linkages have also resulted in the emergence of pressure points for activists, which has led to the introduction and implementation of new concepts. The acceptance of “fair trade” and “living wage” requirements has achieved substantial increases in the incomes of the poorer participants in international trade flows (The Economist 2001).

THE FIELD STAGNATES

In spite of these achievements, the academic field of international marketing bears up unsteadily under the weight of these laurels. Some researchers doubt whether the insights they gain from studying and working with other marketing systems broaden their own horizons and increase their abilities to explain marketing phenomena (Douglas 2001). Many practitioners ignore the academic pronouncement of globalization and still refuse to participate in the global market—judging either the market to be too dangerous or themselves too unprepared. This even applies to the most technologically advanced firms. For example, in the United States, most e-tailers do not accept orders from outside their home market, and more than 55% of U.S. web-merchants do not even ship to Canada (Putzger 2000). International marketing academics are not deluged by great attention from policymakers. Few marketers are offered chairs at the table in international negotiations, and the writings of international marketers are not often sufficiently part of any great readings package for policymakers (Czinkota 2000a).

Most visible is the discontent of consumers. The “Battle of Seattle” and the subsequent confrontations in Washington, D.C.; Davos and Geneva, Switzerland; Quebec, Canada; and Genoa, Italy have alerted the world to the displeasure vocalized by a variety of groups (Kobrin 2001). Simplistic populist messages have turned globalization into a derogatory term and are swaying the sentiments of the general public. For example, after the Seattle summit, a survey found that 52% of the respondents were sympathetic toward the protestors even though they may have been hard-pressed to explain the goals of the protest (BusinessWeek Online 1999). Within the United States, many people have come to believe that international marketing undermines U.S. labor and living standards. Outside of the United States, international marketing and its agents, the marketers, are derided as exploiters, destroyers, and Americanizers (see, e.g., Barnet and Cavanagh 1994; Klein 2000). Papers by experts are derided as planning for economic rape and pillage; their speeches and meetings are disrupted. International meetings are being shortened and held at inaccessible locations, giving the public impression of a gathering of fiends in the dark. Proponents of international marketing talk about retreat and introspection even though opponents do not offer any coherent alternative economic or social approaches.

Is this an example of the classic Sun Tzu strategy in which the victorious general only attacks already defeated armies? Has international marketing already begun its demise? We think not. We believe that the best is yet to come for international marketing. However, it will take new thinking and new actions by researchers to propel the field forward again. International marketing academics need to be the guardians who separate fact from fiction in policy, practitioner, and consumer discussions. Qualified not by weight of office but by expertise, thoughtfulness, and knowledge (rather than emotions), international marketing researchers must be the guarantors and guides toward free and open markets.

Antiglobalization activists deride international marketing but seem to have difficulties articulating what they are really for. At the same time, government and business arguments in favor of globalization are often vague and based on an abstract long-term vision. No wonder ordinary citizens are left confused, skeptical, and ill-informed, which may lead them to make poor decisions. Given that the public in general does not have a great deal of interest toward international and trade matters, the need is great for outspoken comment on the transformational and uplifting capabilities of market forces. This is a task for marketing scholars. Two examples can highlight this imperative. Antiglobalizers have argued (1) that globalization equals Americanization and (2) that globalization leads to global brands’ hegemony and, therefore, global uniformity. In practice, it is evident that cultural imperialism does not sell. In nearly every television market of the world, local production has grown at the expense of imports (The Economist 2002). More significantly, with the increased facilitation of global production companies, local producers and products have penetrated markets beyond their domestic ones. Although global brands may have gained worldwide prominence in terms of headlines, they constitute only a small percentage of a global marketer’s sales in any given market.

… THE DEEPER THEY FALL

The ongoing growth and success of international marketing cannot be taken for granted. As the events of September 11, 2001, show, the international landscape can change with the impact of tectonic-plate adjustment. Even the very essence of international exchange may be called into question. History demonstrates that international marketing has not always persisted in spite of its proven benefits. For example, in 1896, the Empress Dowager Tz’u-hsi, to finance the renovation of her summer palace, impounded government funds that had been designated for China’s shipping and its Navy. As a result, China’s participation in world trade came almost to a halt. In the subsequent decades, deprived of its means to market internationally, China operated in virtual isolation, without transfer of knowledge from the outside, without major inflows of goods, and without the innovation and productivity increases that result from exposure to international trade.

During the 1930s, the turning away from international marketing came through the Smoot-Hawley Act, which raised U.S. duties to reduce the volume of imports into the United States in the hopes that this would restore domestic employment. However, the result was an increase of duties and other barriers to imports by most other trading nations as well. These measures were key contributing factors in the subsequent worldwide depression and the collapse of the world financial system, which in turn set the scene for World War II (Czinkota and Ronkainen 2002).

As global marketing advances to emerging markets, new challenges emerge and old ones may be magnified. For example, international expansion typically results in a more widespread use of intellectual property (Czinkota and Ronkainen 1997). More customers should then lead to an increase in the value of such property. However, resource constraints combined with popular demands and political power have delivered different scenarios. Entry into some markets may actually lead to value destruction. The government-induced price revisions of AIDS drugs in Latin America and South Africa and of Cipro, the anthrax antidote, have revealed new problems, which may yet fan local flames into global conflagrations.

The present-day worst-case scenario is frightening. Some people view globalization as a force of oppression, exploitation, and injustice. Might not then extreme actions, such as anarchism and terrorism, be justifiable to correct for its impacts? Successful international marketing scholarship can perhaps become a bulwark against terrorism. Such work does not need to be perceived as apologetic for business interests in promoting international trade. International marketing may well become a key remedy for the world’s poor, because scholars should help devise creative strategies for the poor to access the world marketplace.

SEVEN PROPOSITIONS

Given the precarious experiences by the international marketing field in spite of the substantial global improvements due to international marketing activities, steps undertaken by international marketers in academia must be considered to ensure the further progress of and ongoing contribution by the field. Such progress is not viewed narrowly to benefit the academic high priests of international marketing and their acolytes, but rather it is considered imperative in order to have input and guidance for further improvements in the global economy and in the lives of people. Here, we present propositions for the strengthening of the future role of international marketing. We hope that they will lead to introspection as well as to an open and frank exchange of ideas with a subsequent renaissance of international marketing.

1 Remember the Roots and Purpose of the Field

International marketing is a practical field. It is based on the premise that international marketing transactions can be carried out more effectively, that there are many needs that have been left unsatisfied worldwide, and that the field of international marketing can improve the quality of life of individuals. The field requires that its proponents visit with people, institutions, and companies to observe, talk, and understand their activities. The central role of people in international marketing subjects the field to all the vagaries inherent in social sciences. Research gains are not only what researchers can learn about other systems but also what they are forced to learn about their own system in order to understand what happens elsewhere (Cox 1965). With this approach, junior researchers do not need to compromise the requirements placed on them for detailed research at the expense of seeing the bigger picture.

Rediscovery of this truth may force some international marketing researchers to shed their “lab coat” syndrome. For some, complexity has become fashionable and esoteric, and analytical tools have become the drivers of research content. On occasion, researchers talk more about models than about people, substitute tools for insight, and examine printouts instead of market participants. Although some international marketers may have chosen the academic profession in a repressed desire to become hard scientists such as physicists or chemists, it is unlikely that a squirt of one compound, a dash of another liquid, or an increase in pressure will precisely manifest itself in international marketing outcomes.

It is critical to develop...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• About the Editors
• Section 1. Role of Research in International Marketing
• 1.1. Czinkota, Michael R. and Ilkka A. Ronkainen, “An International Marketing Manifesto,” Journal of International Marketing 11, 1, 2003, 13–27.
• 1.2. Czinkota, Michael R. and A. Coskun Samli, “The Remarkable Performance of International Marketing in the Second Half of the 20th Century,” European Business Review, 19, 4, 2007, 316–331.
• 1.3. Czinkota, Michael R., “Freedom and International Marketing: Janis Joplin’s Candidacy as Patron of the Field,” Thunderbird International Business Review, January–February 2005, 1–13.
• 1.4. Czinkota, Michael R., “Academic Freedom for All in Higher Education: The Role of the General Agreement on Trade in Services,” Journal of World Business, 41, 2, 2006, 149–160.
• 1.5. Czinkota, Michael R., “International Information Cross-Fertilization in Marketing: An Empirical Assessment,” European Journal of Marketing, 34, 15, 2000, 1305–1314. Winner, Article of the Year Award.
• 1.6. Czinkota, Michael R. and Ilkka A. Ronkainen, “Trends and Indications in International Business: Topics for Future Research,” Management International Review, April 2009.
• 1.7. Kotabe, Masaaki and Crystal X. Jiang, “Contemporary Research Trends in International Marketing: The 2000s,” in Alan Rugman, ed., Oxford Handbook of International Business, 2nd ed., Oxford: Oxford University Press, 2008, 447–501.
• Section 2. Competition from Emerging Markets
• 2.1. Malik, Omar R. and Masaaki Kotabe, “Dynamic Capabilities, Government Policies, and Performance in Firms from Emerging Economies: Evidence from India and Pakistan,” Journal of Management Studies, 2009.
• 2.2. Gao, Gerald Y., Janet Y. Murray, Masaaki Kotabe, and Jiangyong Lu, “A ‘Strategy Tripod’ Perspective on Export Behaviors: Evidence from Domestic and Foreign Firms Based in an Emerging Economy,” Journal of International Business Studies, 39, 2009.
• 2.3. Aulakh, Preet S., Masaaki Kotabe, and Hildy Teegen, “Export Strategies and Performance of Firms from Emerging Economies: Evidence from Brazil, Chile, and Mexico,” Academy of Management Journal, 43 (3), 2000, 342–361.
• 2.4. Aulakh, Preet S. and Masaaki Kotabe, “Institutional Changes and Organizational Transformation in Developing Economies,” Journal of International Management, 14 (September), 2008, 209–216.
• Section 3. Marketing Mix
• 3.1. Dimofte, Claudiu V., Johny K. Johansson, and Ilkka A. Ronkainen, “Cognitive and Affective Reactions of U.S. Consumers to Global Brands,” Journal of International Marketing, 16, 4, December 2008.
• 3.2. Czinkota, Michael R. and Masaaki Kotabe, “Entering the Japanese Market: A Reassessment of Foreign Firms’ Entry and Distribution Strategies,” Industrial Marketing Management, 29, November 2000, 483–491.
• 3.3. Swan, K. Scott, Masaaki Kotabe, and Brent B. Allred, “Exploring Robust Design Capabilities, Their Role in Creating Global Products, and Their Relationship to Firm Performance,” Journal of Product Innovation Management, 22, 2, March 2005, 144–164.
• 3.4. Clark, Terry, Masaaki Kotabe, and Dan Rajaratnam, “Exchange Rate Pass-Through and International Pricing Strategy: A Conceptual Framework and Research Propositions,” Journal of International Business Studies, 30, Second Quarter, 1999, 249–268.
• 3.5. Gençtürk, Esra F. and Masaaki Kotabe, “The Effect of Export Assistance Program Usage on Export Performance: A Contingency Explanation,” Journal of International Marketing, 9, 2, 2001, 51–72.
• Section 4. Global Sourcing and Supply Chain Management
• 4.1. Czinkota, Michael R., “An Analysis of the Global Position of U.S. Manufacturing,” Thunderbird International Business Review, October 2003: 505–519.
• 4.2. Kotabe, Masaaki, Michael J. Mol, and Sonia Ketkar, “An Evolutionary Stage Model of Outsourcing and Competence Destruction: A Triad Comparison of the Consumer Electronics Industry,” Management International Review, 48, 1, 2008, 65–93.
• 4.3. Kotabe, Masaaki, Michael J. Mol, and Janet Y. Murray, “Outsourcing, Performance, and the Role of E-Commerce: A Dynamic Perspective,” Industrial Marketing Management, 37, 1, 2008, 37–45.
• 4.4. Murray, Janet Y., Masaaki Kotabe, and Joe Nan Zhou, “Strategic Alliance-Based Sourcing and Market Performance: Evidence from Foreign Firms Operating in China,” Journal of International Business Studies, 36, 2, March 2005, 187–208.
• Section 5. Emerging Issues
• 5.1. Czinkota, Michael R., Gary A. Knight, Peter W. Liesch, and John Steen, “Positioning Terrorism in Management and Marketing: Research Propositions” Journal of International Management, 11, 2005, 581–604.
• 5.2. Czinkota, Michael R., David A. Grossman, Rajshekhar G. Javalgi, and Nicholas Nugent, “Foreign Market Entry Mode of Service Firms: The Case of U.S. MBA Programs,” Journal of World Business, forthcoming.
• 5.3. Czinkota, Michael R., “How Government Can Help Increase U.S. Export Performance: Testimony Before the House Committee on Small Business.”
• 5.4. Kotabe, Masaaki and Crystal X. Jiang, “Three Dimensional: The Markets of Japan, Korea, and China are Far from Homogeneous,” Marketing Management, 15, 2, 2006, 39–43.
• 5.5. Kotabe, Masaaki, Srini S. Srinivasan, and Preet S. Aulakh, “Multinationality and Firm Performance: The Moderating Role of R&D and Marketing Capabilities,” Journal of International Business Studies, 33, 1, 2002, 79–97.
• Index