Welcome!
International Business Diplomacy
Dr. Satyendra Singh
Professor, Marketing & International Business
Conference Chair, ABEM Conference
University of Winnipeg, CANADA
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What is International Business Diplomacy (IBD)?
It builds/maintains +ve relations with host govt, NGO and stakeholders
Objectives: Business development (Value creation, trade Internationalization
Functions: Representation, Communications
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Corporate political activity/strategy vs IBD
Corporate Political Activity/Strategy
MNCs Influence public policy makers at home and abroad in favor of firms using their international business power
International Business Diplomacy
IBD activities Create long-term positive relationship with foreign government and NGOs in order to create legitimacy and operate businesses.
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IBD activities
Intelligence
Information search, dealing with enquires, Support (lobby), promote (advocacy)
Assistance
Trade fairs (e.g., export promotion), trade missions, networking
Problem solving
Trade disputes (e.g., creditors), issues (marketing, culture…)
Partner search and negotiation
Bring home business partner to the target market, and vice-versa
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IBD activities lead to
Export promotion, bilateral meetings, agreements
Benefits business/increases export or trade
Job creation and domestic growth
Public welfare to the benefit of the society
Political focus and strategic policies
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Arguments against IBD activities
No need for IBD
Firms can do it themselves
It’s a free market economy
Buyers and sellers can meet without embassy’s assistance
It’s internet age 🡪 easy and fast availability of information
Diplomats are generalists
Do not understand business
They’re overloaded with issues other than trade and investment
Cannot measure embassy’s business performance
Diplomats help friends
Encourages corruption within the diplomatic services
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Why is IBD important now?
Before WW2
Only recognized states were diplomatic actors
Now, supranational organizations
EU, UN, WTO, IMF…
Non-government organization
Amnesty international, Human Rights Watch, The Red Cross…
International Business
Oil (Exxon, Shell…), Financial firms (Deutsche bank, JP Morgan…), Automobile (Toyota, Mercedes…), Technology (Apple, Samsung…)
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How do IBD activities add value?
IBD activities are visible in media
Draw attention, marketing value at low cost
IBD have network
Can influence high-level contacts 🡪 valuable for SMEs
IBD have high trust factor
Can attract FDI easily
Intelligence gathering in embassy is centralized
Creates efficiency by not reinventing the wheel by all firms
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Why IBD activities be expanded?
Advance countries (West) need to internationalize
Emerging markets drive business from the West
West needs to market tech transfer, innovation in EM to maintain competitive advantage
EM are still controlled by their governments
So need diplomatic level communications
Firms from EM also internationalize
IBD activities help achieve these objectives (eg FDI…)
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What IBD activities MNCs conduct?
Direct stakeholder dialogue
Events, Forums, Meetings
Industry associations
Social projects
Social partnerships
…
🡪 However, not all firms have the skills to engage in these IBD activities
🡪 It’s challenging for SMEs
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Barrier to internalization by SMEs (OECD 2009)
Lack of working capital to finance exports
Limited information to locate/analyze market
Inability to contact overseas potential customers
Lack of managerial time, skills and knowledge
🡪 IBD generally focuses on SMEs to alleviate the barriers,
but SMEs do not use IBD services; they’re unaware of its existence
🡪 Or, SMEs try to find their own way overseas
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Factors influencing IBD activities
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e-IBD services provided via embassies websites �(on 5-pt scale, average score of all countries)
Gesink. 2012
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IBD activities in top 10 countries�
E-IBD activities in Netherlands�
Case Study: Denmark
🡪 Strategic sectors identified by governments must match IBD activities in embassies in strategic countries
Food products and agriculture
Climate and energy
Water and environment technology
Maritime transport and infrastructure
Health, medicine and welfare technology
Research, innovation and education urbanization
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Ministry of foreign affairs, Denmark. 2012.
Timeline for Danish-Chinese relations
Thogersen. 2012
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What does a presidential visit include?
Presidential visit generates businesses
Even though high costs of travel and security…with the entourage
Leads to signing of MoU
Technology transfer, weapons…
Consortia deals
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Rise in export following presidential visit
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� Memorandum of Understanding (MoU) is important
MoUs are taken seriously and provides direction for implementation
Valuable to both countries/parties
Most valuable tool to enhance commercial relations between countries
However, MoUs should be prioritized
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Criteria for successful MOUs
Direct/indirect involvement of business
Involve universities
Build on a match on common interest
Assign financial resources to realize pilot projects
Follow up activities by authorities to ensure implementation
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Role of a Minister
Provides input for the process of IBD activities and MOU
Set priorities
Network creation
Relationship building
Conflict resolution/reduce barrier
Indirect sales
Political focus and strategic policies are needed to contribute to export promotion, bilateral meetings and MoUs
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Who is in the embassy?
Business promoters
Understand commercial issues
Civil servants
Maintain PR and keep happy Ministry of Trade
Generalists
Business in broader diplomatic and political arena
Keep happy Ministry of Foreign Affairs
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Types of Diplomats
Elite-oriented
Come from upper status
Know a lot of people and has connections
Meetings, parties, social gathering
Conferences
Treaty-oriented
Law degree and expert in legal matters
Negotiates treaties based on country’s law and preferences
Structure-oriented
Professor expert in political/economic/social issue of host country
Bring insights to home government to take further action
Galtung and Ruge. 1965
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Diplomatic ceremonies, privileges…
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Can also be given to Internal Displaced People (IDP)
-- stateless, refugees…
Diplomatic disagreements
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Questions?�s.singh@uwinnipeg.ca