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What do researchers know about the global business environment?

Young, Stephen. International Marketing Review18.2 (2001): 120-129.

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Abstract
Highlights the dearth of research on the range of issues surrounding the international environment and the impact on international marketing. Such issues concern trade and investment liberalization and protectionism, the role of multilateral institutions and the NGOs, and country, sector and company analyses. A research agenda is proposed. Suggests company studies (the impacts on the firm of the evolution of regulation and liberalization in different company or regional markets); country studies (impact of government intervention in international trade and investment); government assistance and support: multilateral institutions (how theses affect trade and investment relations); non-governmental organizations (how they implement international marketing strategies).

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Full Text
Stephen Young: Department of Marketing, University of Strathclyde, Glasgow, UK ACKNOWLEDGMENT: The author would like to thank Kevin Ibeh, Marian Jones and Colin Wheeler of Strathclyde International Business Unit for their assistance; and two Doctoral researchers within the Department of Marketing, Manto Gotsi and, especially, Roshan Boojihawon, for their research support. Introduction There is little doubt that the business environment for international marketing is changing radically under the influences of globalization, the information technology revolution and the emergence of the new economy. The institutional structure too is being realigned and reshaped by multilateral institutions such as the World Trade Organization (WTO). As the debates over globalization and multilateralism have intensified, new global actors have appeared in the form of the non-governmental organizations (NGOs), challenging liberal views on the benefits of free trade and investment and threatening to reverse the market opening trends of the past decade with a slide back into protectionism. The basic argument of this Viewpoint is that international marketers have paid a totally inadequate level of attention to these global economic, legal/institutional and political/social developments. Such factors are, in effect, written off as "foreign environment uncontrollables". There has been little relevant research, so that academic debate is limited and there are inevitable consequences for international marketing education in universities and colleges. Similarly, international marketing academics have had rather little to offer practitioners in the field. Yet there are major opportunities from detailed enquiry and

investigation, and the positive objective of this Viewpoint is to propose a potential research agenda for international marketing scholars. Current debates and issues The benefits of free trade and investment A wide-ranging debate has been taking place for some time concerning the economic benefits and costs of free movements of trade and capital. There has, of course, been an unprecedented rise in living standards in the period since the end of World War II, associated with the freeing of trade and payments and most recently foreign direct investment (along with improvements in science and technology). But the accelerating impact of these and related developments (loosely termed "globalization") has reopened debates concerning rising inequality within and between countries, the potential exclusion of the poorest nations and peoples from increasing worldwide prosperity, and environmental degradation. These are genuine issues of concern, but the concomitant growth in opposition to liberalization could lead to a return to protectionism, with closed markets for international firms and declining living standards. The liberalized world economy is partly underpinned by the WTO, and its ongoing agenda, which includes, for example, services liberalization and Chinese membership, should have positive impacts. However, the WTO itself is under attack. The rise of the NGOs The case for regulating international business has serious supporters (Picciotto and Mayne, 1999). But the opposition to "global capitalism" has been driven by the effective and coordinated actions of a multitude of disparate NGOs. The inclusion of labour and environmental standards in WTO agreements has been the focus of their demands, albeit within a wide-ranging agenda. With the use of the Internet, they have globalized more rapidly and effectively than their multinational corporate and multilateral institutional targets. There is interesting and important research work to be done on the international marketing strategies of these non-governmental organizations. The multilateral institutions The International Monetary Fund, the World Bank, the United Nations, the European Union, the North American Free Trade Area and the WTO have all been the subject of attack by public interest groups, labour unions and national politicians in both developed and developing nations. There is widespread recognition of the need for reform: in respect of the WTO, for example, reform possibilities include streamlining decision making; making the dispute settlement process more transparent, but also revising procedures to ensure compliance and to assist developing countries in pursuing and defending complaints; taking initiatives to tackle the problems of poverty and global inequality; whether to expand investment rules and introduce multilateral competition policy; and whether or not to include provisions for labour and environmental standards. Of particular current interest is the debate over the possible launch of a new, comprehensive Millennium Trade Round (a successor to the Uruguay Round), although this seems unrealistic and undesirable in the present climate (Brewer and Young, 2000).

Responding to the critics Aside from the need for institutional response and reform, the major challenges posed by the backlash against globalization and the rise of NGO power are those facing multinational corporations (MNCs) (Micklethwait and Wooldridge, 2000). To date a number of initiatives are in evidence: - UN-sponsored Global Compact. Signed in July 2000 by 50 of the world's largest MNCs, this commits the companies to adhere to nine principles in the areas of human rights, labour and the environment[1]. - The Organisation for Economic Cooperation and Development's (OECD) Guidelines for Multinational Enterprises were first published in 1976 and have been regularly updated since then. The latest set of rules were agreed in June 2000, with strengthened sections on the environment, labour relations and business policies, and attempt to address more effectively the issue of implementation. Like the UN Global Compact, the guidelines are non-binding and represent recommendations on responsible business conduct addressed by OECD governments to MNCs[2]. - Corporate codes of conduct. There is evidence to indicate that the majority of large MNCs now have their own codes of business conduct (see, for example, Financial Times, 2000). In respect of coverage, emphasis is on three issues, namely, fair business practices, environmental stewardship and fair employment. In a survey by Kolk etal. (1999), however, it was shown that almost one third of firms did not monitor compliance, while a further 58 per cent undertook the monitoring themselves. The UN and OECD initiatives have been criticized by the NGOs because of their non-binding nature. The NGOs have been equally sceptical of corporate codes, and are still seeking binding mechanisms to enforce corporate social responsibility; this is despite recent programmes to promote independent verification of codes of conduct (Brewer and Young, 2000, p. 284). It is evident that businesses need to dialogue with the vociferous and powerful global civil society, as do the multilateral institutions. Indeed the continuance of a liberal trading and investment system depends on a process involving diverse groups and interests in political processes in all parts of the world. In order that dialogue may be based on fact and reason, a sustained research effort, in which international marketing academics and researchers clearly have a role to play, is essential; and it is to this topic that we now turn. Relevant literature Non-marketing disciplines The issues dealt with in this Viewpoint emerge in a variety of literatures, the most directly relevant being those of business-government relations and the linked area of multilateral institutions and policies. The subject-matter is essentially interdisciplinary and is addressed in a range of fields of study. In Law and Political Science there is, for example, an extensive literature on international trade law, and in Political Science much has been written on international regimes and the domestic politics of trade. In Economics, there is a wideranging literature on trade and financial capital flows and to a lesser extent on foreign direct

investment; the theme of multilateral institutions has received less attention. In respect of Business Strategy, Kobrin (1997) indicates that the role that politics and nation states have played in the international business literature encompasses firm-state interactions, including political risk and MNC-government relations, strategic management, and international political economy. There is, finally, a lengthy tradition of research on Public Affairs and Business-Government Relations (Vogel, 1996), including interesting work on lobbying (Coen, 1999). Scholars in international business particularly (but also international marketing) will be familiar with a number of the journals in which the above topics are covered, such as Transnational Corporations, the Journal of World Trade, International Organization, The World Economy, California Management Review and others. In the general marketing and allied subject areas, a number of the themes of this Viewpoint are considered at the margin through the work on corporate reputation, corporate citizenship, business ethics, green marketing and related subjects. Recent illustrations in this journal include Simon (1995) on corporate philanthropy, and Melewar and Saunders (1998) on global corporate visual identity systems. Interest in the marketing field seems likely to grow, as it is in related discipline areas. For example, Business and Society Review (2000) devoted a Special Issue to "Corporate citizenship", including a paper by Mirvis (2000) on "Transformation at Shell: commerce and citizenship". The Royal Dutch/Shell group, of course, was a major target of protesters in its operations in different parts of the world in the late 1990s. International marketing literature A number of approaches were taken to ascertain the importance attributed to the global business environment and the role of multilateral institutions and non-governmental organizations in the core international marketing literature. Initially the major textbooks on international marketing or global marketing (eight in all, dating from 1996 to 2001) were inspected to assess their coverage of the topics. Two of the volumes (the oldest admittedly) did not include a chapter on the international business environment per se and managed to avoid any reference to multilateral organizations. Among most of the others, there were separate chapters on the various constituents of the international environment, with some limited relevant coverage in, for example, the sections on the economic environment and the political and legal environment. The texts by Czinkota and Ronkainen (International Marketing, 6th edition, 2001), and Terpstra and Sarathy (International Marketing, 8th edition, 2000) devoted most coverage to the international environment. In the former, commentary on the multilateral institutions was mainly contained within the chapter on "International trade institutions and US trade policy". It was really only in Terpstra and Sarathy that coverage was given to some of the detailed issues within, say, the WTO, for example, dispute settlement, WTO working groups. Generally there was little discussion or analysis of the influence of the global environment and multilateral institutions on international marketing strategy and operations. Six texts on International Business, published between 1998 and 2000, were also reviewed. Coverage of the relevant topics was slightly greater in these volumes. For example, Daniels

and Radebaugh (International Business, 9th edition, 1998) contained chapters on "Governmental influences on trade" and on "Economic integration and cooperative agreements"; and Czinkota et al. (International Marketing, 5th edition, 1999) included two reasonably relevant chapters, and, while incorporating little on the WTO per se, it did have an interesting case on the "banana wars". One edited text (Tayeb, International Business, 2000) took as a major focus the international environment with chapters on "The international governance of international business"; "Labour standards, corporate codes of conduct and labour regulation"; "Political risk"; and "Government intervention in international trade". In general this text took a different approach from the majority of others in the field, being closer to a volume on the international environment and cross-cultural management, although it was none the worse for that. Turning to literature in the international marketing and closely related journals, two broad topic areas were identified: Exporting from the home base and government export assistance The theme of managers' perceptions of export barriers and problems has been dealt with fairly fully. Kaleka and Katsikeas (1995) and Morgan (1997) developed a fivefold categorization of barriers, of which the "external-foreign problems" are particularly relevant here. These are problems which arise from the external environment but are experienced within the foreign market. They include restrictions imposed by foreign government rules and regulations; tariff barriers; exchange rate problems; lack of information about foreign markets; and difficulties in understanding foreign business practices. These factors rank highly in management surveys of export barriers; and it is suggested that the majority of barriers are infrastructural and institutional rather than marketing management-related. On the topic of export assistance, there has been a limited amount of work focusing particularly on the suitability and evaluation of different types of programmes and the link between assistance programmes and export development stage (a review of the earlier literature is contained in Diamantopoulos et al., 1993). Interestingly Crick and Czinkota (1995, p. 61) observe that:"Since trade policy is regulated by international institutions such as the WTO, unless governments are "flexible" in interpreting agreements, there is only so much they can do to assist exporters." There is clearly an indirect link between the government policy stance in international negotiations and the effectiveness of lobbying by industrial trade associations, employers' associations and individual companies (but MNCs rather than SMEs). However, there is little if any research on this topic. Multilateral and regional agreements and international marketing A different approach is to assess the international marketing literature which assesses the problems and opportunities associated with particular multilateral or regional agreements, and that related to specific issues in trade or investment performance. A preliminary review was undertaken as part of the research for this article, with three groupings of studies being identified. The first group comprises general reviews of particular agreements/institutions, for example, WTO, NAFTA, ASEAN and their broad impacts, with the emphasis being on

information provision rather than analysis. Second, are studies focusing on the effects of international agreements and institutions on corporate marketing strategies and performance. Examples include Okoroafo and Russow (1993) relating to the effects of IMF programmes on marketing strategies and performance; and the impact of the GATT on consumer products (Tucci, 1996) and food marketing (Gibbs and Shaw, 1995). A third area concerns particular issues in international trade, including countertrade, intellectual property rights, privacy, parallel exports; and a subset of this literature focuses specifically on the EU, covering topics like the harmonization of export controls (Weinland, 1996), managing the grey market (Chaudhry and Walsh, 1995), and legal aspects of Euro-marketing (Hildebrand, 1994). In summary, it is clear that there has been rather little interest by international marketers in topics which should be our bread and butter; and there are no consistent directions in the limited research that has been undertaken. While an unprecedented level of information is now available on the international environment through the Internet, and through the publications of national and international organizations, this has not been translated into increased research effort. Yet this is an area where international marketers have a real contribution to make by focusing on company-level behaviour; and one which is complementary to that of other subject disciplines, and where (the desirable) interdisciplinary research is possible. Future research agenda Company studies There are substantial opportunities for research on the impacts on the firm of the evolution of regulation and liberalization in different country or regional markets and sectors. How do companies respond in respect of choice of countries or markets, commitment to markets, selection of modes of entry, marketing strategies and practices? Included within such work could be studies of the evolution of international marketing activities in particular countries or regions over time; studies of firms in sectors which are liberalizing, for example, financial services and telecommunications; research on exporters vs. multinationals. Country studies Studies on government intervention in international trade and investment which take a country focus represent another fruitful area for research. There is already good basic information in, for instance, the annual reports issued by the EU and the USA about each other's barriers to trade and investment. Specific topics like the progress of the EU's Single Market programme, and investigations of types and groupings of countries will prove valuable. So too will research on trade and investment barriers (and their removal) at different levels, distinguishing the multilateral, regional, national and sub-national levels. Government assistance and support It was suggested above that there were limitations on governments' ability to assist exporters because trade policy is regulated by international institutions such as the WTO. Nevertheless, there is clearly a link between the government policy stance in international negotiations and the effectiveness of lobbying byindustrial trade associations, employers' associations and individual companies (although mainly MNCs rather than SMEs). But there

is little if any research on such topics. How effective is the marketing of these different groups? How do they engage with national governments and regional and multilateral institutions? How can small companies interact with governments and gain a voice in negotiations over regional and multilateral rules? Existing studies on government assistance have focused on exporters, whereas little research has been done on support for foreign direct investment (FDI) and other market servicing modes, as well as support for the development of international networks and alliances. In respect of FDI, at least, this is because assistance has been limited historically because of ambiguous views about the impact of FDI on the home economy. Appropriate questions for research include: Has globalization encouraged governments to support a variety of internationalization routes? What programmes are in place; which countries are most active? What are company views about support available (or lack of it)? Multilateral institutions The argument above is that the future is likely to see a much greater impact of multilateral institutions, such as the WTO, on trade and investment relations and, therefore, on international marketing. These impacts will occur as new and existing rules are implemented at country level, and trade disputes are increasingly resolved through the WTO's Dispute Settlement Mechanism. Particularly important are sector-specific studies; but research on the effects on companies of rulings on trade disputes are also important, for example, the impact of US retaliatory action regarding the banana dispute on European exporters (who was affected and how, and in what ways did they respond?). In addition, the likely entry of China and Russia into the WTO offers exciting possibilities for research. Non-governmental organizations There is an important and wide-ranging research agenda here pertaining to the international marketing strategies of these NGOs, and if and how they are coordinated between organizations. Similarly, what lessons can be learned from the effective internet-based policies of the NGOs? Questions concerning consumer attitudes to the NGOs and the level of support for these organizations also have important policy implications of relevance to international marketing. International marketing and economic development If support for the liberalization of international business is to continue, then it has to be shown that the poorer nations are benefiting. Studies in international marketing, focusing on the company level (both developing country firms operating abroad, and foreign enterprises involved in poorer nations), have an important complementary role to those in economics, which generally take a macro-economic perspective. Conceptual development From the perspective of scholarship and publication, conceptual development is clearly highly relevant, and the issues discussed have important implications. In respect of internationalization process models, can some of the conflicting results from studies be explained by changes in host government rules? Do the latter also help explain the discontinuities apparent in internationalization development? Concepts from network theory

and relationship marketing are clearly important for the NGOs. How do MNCs match the NGOs and build trust, for example, through strategic alliances? Are there new concepts from political science and other disciplines that may be of value to international marketers? Undertaking the types of research proposed does pose challenges. Of course, it is possible to undertake some of this from a home base, but much will require investigation in countries abroad, thus emphasising collaborative research. On the other hand, in the current climate there may be more interest among companies, for example, in funding certain types of study. There is also plenty of scope for varied methodologies, and not simply case study based research. The challenge for us is to initiate a programme of work, and we all have lots of Master's and Doctoral students ... ! Notes 1. Details on the Global Compact are contained in: http://www.unglobalcompact.org./gc/UNWeb.nsf/content/thenine.htm 2. The latest version of the OECD Guidelines for Multinational Enterprises are presented in: http://www.oecd.org/daf/investment/guidelines/mnetext.htm References 1. Brewer, T.L. and Young, S. (2000), The Multilateral Investment System and Multinational Enterprises, Oxford University Press, Oxford. 2. Chaudhry, P.E. and Walsh, M.G. (1995), "Managing the gray market in the European Union: the case of the pharmaceutical industry", Journal of International Marketing, Vol. 3 No. 3, pp.11-34. 3. Coen, D. (1999), "The impact of US lobbying practice on the European businessgovernment relationship", California Management Review, Vol. 41 No. 4, pp. 27-44. 4. Crick, D. and Czinkota, M.R. (1995), "Export assistance: another look at whether we are supporting the right programmes", International Marketing Review, Vol. 12 No. 3, pp.61-72. 5. Czinkota, M.R. and Ronkainen, I.A. (2001), International Marketing, 6th ed., Harcourt College Publishers, Orlando, FL. 6. Czinkota, M.R., Ronkainen, I.A. and Moffett, M.H. (1999), International Business, 5th ed., Dryden Press, Orlando, FL. 7. Daniels, J.D. and Radebaugh, L.H. (1998), International Business, 9th ed., Prentice-Hall, Upper Saddle River, NJ. 8. Diamantopoulos, A., Schlegelmilch, B.B. and Tse, K.Y.K. (1993), "Understanding the role of export marketing assistance: empirical evidence and research needs", European Journal of Marketing, Vol. 27 No. 4, pp. 5-18. 9. Financial Times (2000), "Mastering management", Part 7, Financial Times, November 13. 10. Gibbs, J. and Shaw, S.A. (1995), "Implications of changes in GATT for the marketing strategies of British beef producers", British Food Journal, Vol. 97 No. 1, pp. 3-10. 11. Hildebrand, D. (1994), "Legal aspects of Euro-marketing", European Journal of Marketing, Vol. 28 No. 7, pp. 44-54. 12. Kaleka, A. and Katsikeas, C.S. (1995), "Exporting problems: the relevance of export development", Journal of Marketing Management, Vol. 11, pp. 499-515.

13. Kobrin, S.J. (1997), "Transnational integration, national markets and nation-states", in Toyne, B. and Nigh, D. (Eds), International Business: An Emerging Vision, University of South Carolina Press, Columbia, SC, pp. 242-56. 14. Kolk, A., Van Tulder, R. and Welters, C. (1999), "International codes of conduct and corporate social responsibility: can transnational corporations regulate themselves?", Transnational Corporations, Vol. 8 No. 1, pp. 143-80. 15. Melewar, T.C. and Saunders, J. (1998), "Global corporate visual identity systems", International Marketing Review, Vol. 15 No. 4, pp. 291-308. 16. Micklethwait, J. and Wooldridge, A. (2000), Future Perfect, William Heinemann, London. 17. Mirvis, P.H. (2000), "Transformation at Shell: commerce and corporate citizenship", Business and Society Review, Vol. 105 No. 1, pp. 63-84. 18. Morgan, R.E. (1997), "Export stimuli and export barriers: evidence from empirical research studies", European Business Review, Vol. 97 No. 2, pp. 8-79. 19. Okoroafo, S. and Russow, L.C. (1993), "Impact of marketing strategy on performance: empirical evidence", International Marketing Review,Vol. 10 No. 1, pp. 4-15. 20. Picciotto, S. and Mayne, R. (Eds) (1999), Regulating International Business, Macmillan, Basingstoke. 21. Simon, F.L. (1995), "Global corporate philanthropy: a strategic framework", International Marketing Review, Vol. 12 No. 4, pp. 20-37. 22. Tayeb, M.H. (2000), International Business, Financial Times/Prentice-Hall, Harlow. 23. Terpstra, V. and Sarathy, R. (2000), International Marketing, 8th ed., Dryden Press, Orlando, FL. 24. Tucci, L.A. (1996), "The general agreement on tariffs and trade (GATT): implications for consumer products marketing", Journal of Consumer Products Marketing, Vol. 13 No. 1, pp. 35-61. 25. Vogel, D.J. (1996), "The study of business and politics", California Management Review, Vol. 38 No. 3 pp. 146-63. 26. Weinland, L. (1996), "The harmonization of export controls in the European Union", in Cavusgil,S.T. and Madsen, T.K.T., Advances in International Marketing, Vol. 8, JAI Press, Greenwich, CT, pp. 179-205.

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Indexing (details)
Subjects Free trade, Protectionism, Globalization, International trade, Marketing, Studies United States, US 1300: International trade&foreign investment, 7000: Marketing, 9130: Experimental/theoretical What do researchers know about the global business environment?

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Authors Publication title Volume Issue Pages Number of pages Publication year Publication Date Year Publisher Place of Publication Country of publication Journal Subjects ISSN Source type Language of Publication Document type Subfile

Young, Stephen International Marketing Review 18 2 120-129 0 2001 2001 2001 Emerald Group Publishing, Limited London United Kingdom Business And Economics--Marketing And Purchasing 02651335 Scholarly Journals English Feature Free trade, Protectionism, Globalization, International trade, Marketing, Studies 224328744 http://search.proquest.com/docview/224328744?accountid=132872 Copyright MCB UP Limited (MCB) 2001 2010-06-09 ABI/INFORM Complete << Link to document in ProQuest

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