NORMATIVA APLICABLE

1.2.1. Government supported export/trade promotion

Literature in international marketing and economics has tackled trade and export promotion considerably. The importance of government supported export promotion in the context of current globalisation provides a point of departure for addressing and positioning commercial diplomacy in the management and business studies literature. Although export promotion is not the only field addressed by commercial diplomats, it has received by far most attention in the literature. Rose (2007) says that “as communication costs have fallen, much information about foreign countries has become quickly and cheaply available through alternate sources” and that consequently, the relatively expensive diplomatic services involving Ambassadors, commercial attachés, and other members of the diplomatic corps position themselves as “agents of export promotion” and are “said to pay a key role in developing and maintaining export markets” (Rose, 2007).

The most common mode of business involvement in international markets is export since “it involves minimum business risks, requires low commitment of resources and offers high flexibility of movements” (Leonidou, 1995b). Exports represent many market expansion possibilities, however, foreign market conditions are likely to differ from those prevailing in the domestic market (Katsikeas, 2003). International marketing scholars (Hibbert, 1990a; Hibbert, 1990b; Czinkota, 1982; Seringhaus et al., 1990) commonly refer to cultural, technological, political, legal, and other environmental forces that might vary from one country to another. It is believed that export promotion helps firms to overcome export barriers, thereby facilitating the accomplishment of export results. These arguments have inspired governments to devise policy instruments designed to encourage exports, particularly those of small and medium-sized enterprises. From a government’s point of view, offering export support programmes is intended to improve the international competitiveness of domestic firms and thus the country’s trade balance (Diamantopoulos et al., 1993). Therefore, the need for export promotion is likely to depend on the degree of a nation’s global trade expansion and its relative competitiveness with other trading nations.

The use of government export assistance is expected to provide managers of business firms more information, experience, and resources to help them overcome export barriers and increase their level of pre-export activity (Singer and Czinkota, 1994).

1.2.2. Complex business-government and service relationship

On one hand, private businesses obtain an ‘ear and voice’ via the diplomatic channel abroad for the defence of their interests that might involve public relations, even the political arena as well as diplomacy. Public actors, government, para-public actors as well as private business entities are involved in the complex interaction between the commercial diplomat and private business.

By the same token, this business-government relationship is also about a service in exchange of paid taxes or additional fees for the service on some occasions. Managers of business firms may also use services – possibly sponsored by government – that seek to match them with potential foreign buyers to increase their export sales, such as trade shows and missions. Ruël (2013) says that “support for small and medium-sized enterprises (SMEs) to internationalize via commercial diplomacy activities and instruments is of considerable relevance, because SMEs are considered engines of economic development and growth” quoting an OECD report of 2009. Particularly, Ruël notes in case of SMEs “the limited information to locate/ analyse markets and the inability to contact potential overseas customers” (2013) which are indeed included in the services commercial diplomats are able to offer.

1.2.3. Management angle to study commercial diplomacy

The approach chosen in this thesis is nourished by management/business studies. This relatively new approach allowing to grasp the nature of commercial diplomat’s work and performance is inspired by multi-disciplinary literature within management/business and marketing studies. This managerial perspective of studying commercial diplomats results in important added value. Such angle to study commercial diplomacy allows to address effectiveness and performance. In addition, it focuses rigorously on the definition and managerial function of the commercial diplomat instead of the relatively general and abstract concept of “national interest” in diplomacy whereby commercial diplomacy remains a generic term under the umbrella of political diplomacy. Furthermore, neither political/international relations nor the economics/econometrics approach address the complexity of business-government relations and the nation’s competitive advantage in the context of commercial diplomacy. In contrast, the approach taken in management and business studies will help to understand the following:

– The   organisational/management   dimension   as   management   of   the   function   (commercial  diplomat)  within  and  without  the  organisation,  including  stakeholder   management   and   the   commercial   diplomat’s   interactions   with   multiple   internal   and  external  stakeholders.  

– The   services   management   dimension   involving   the   client-­‐provider   issue   what   we   define   as   the   interaction   and   transaction   between   the   commercial   diplomat   and   mainly   corporate   beneficiaries   (clients).   The   latter   approach   the   commercial   diplomat  with  their  enquiries,  questions,  and  demands.    

– The  commercial  diplomat’s  function  and  the  management  of  stakeholders  in  both   public   and   private   sectors   including   the   positioning   of   commercial   diplomacy   in   both  foreign  affairs  and  the  government’s  trade  promotion  architecture.  

– The  individual/personal  dimension,  whereby  the  commercial  diplomat’s  individual   initiative  and  drive  need  to  be  considered  as  a  success  factor  of  a  system.    

Commercial diplomats often evolve in public/semi-public agencies or Government Ministry type of organisations. In Mintzberg’s (2009) vocabulary these would constitute ‘the machine organisation’: “formally structured with simple repetitive operating tasks (classic bureaucracy), its managers functioning in clearly delineated hierarchies of authority and engaging in a considerable amount of controlling”. However, under a certain business pressure and in the context of increasingly result based management practices in public administrations, commercial diplomacy must perform by providing tangible results for home business and the economy. The performance pressure results in the following, among others:  

– Value  creation:  activities  of  commercial  diplomacy  such  as  the  promotion  of  trade   and  investments  that  are  supposed  to  create  value  for  stakeholders.  This  prepares   the  ground  to  define  the  nature  of  activities  from  a  managerial  standpoint.    

– Effectiveness  and  efficiency  of  the  system.  

– Managerial   concerns   regarding   the   interaction   between   the   business   community   and  the  commercial  diplomat.  

Thus, the management and business studies angle captures the importance of effectiveness – and not only efficiency – as well as the complexity of the nature of activities that by definition involve multi-stakeholders of private, public, and semi-private nature. Understanding the

commercial diplomat’s interaction with the business community will eventually help effective and efficient implementation of business promotion programmes and policies.

Most of the above-mentioned points emerging out of the management studies approach have been already addressed in the author’s scientific peer-reviewed publications on which this thesis is extensively based. The scientific community’s interest in commercial diplomats’ work has increased considerably in the last ten years (see details in the literature review in chapter 2) and the author was able to sustain a dialogue with this growing scientific community resulting in an exchange on the topic. This continuous dialogue provided evolving and enriching feedback. A discussion paper published, which the author published with Professor Michel Kostecki in 2007 entitled Commercial Diplomacy and International Business was the point of departure, on which chapter 3 of this thesis is based (see Kostecki and Naray, 2007). In 2008, the author presented an updated version of the discussion paper of 2007 in the World Trade Promotion Organisation Conference, a professional conference gathering most trade promotion organisations of the world (see Naray, 2008). Afterwards in 2011, the author published his first peer reviewed scientific article partially based on the 2007 discussion paper and additional empirical research in the Hague Journal of Diplomacy (see Naray, 2011).

Subsequently, two other scientific papers were peer reviewed in specialised scientific journals/publications. These are listed in section 1.3. to show their correspondence with the chapters of this thesis. The author was also invited to become a reviewer (i.e. member of the review board) of the recently created International Journal of Diplomacy and Economy and has peer reviewed several scientific articles specialised in trade promotion/ commercial diplomacy since 2012.

In addition, the author’s professional career – apart from academia – even before embarking on this thesis and subsequently up until the present day also played a considerable role in the evolution of this thesis. Notably, it allowed participative observation and access to important networks instrumental in the area considered in this thesis. Experience gathered in the diplomatic service between 2003 and 2004 at a Swiss Embassy abroad involved direct participation in the process of bilateral trade promotion and engaging with important actors, such as bilateral chambers of commerce. Such first-hand and direct exposure to commercial diplomacy triggered and nourished the research design right from the start of this thesis. At a later stage, valuable inputs and insights came from the author’s programme officer and project manager job, which required managing multi-million US dollar value international trade promotion/development

projects at the International Trade Centre (ITC – a joint agency of the World Trade Organisation and the United Nations). Continuous work contacts with business support organisations, policymakers, exporters, often involving the network of trade representations (commercial diplomats) in various projects of ITC, contributed to the deep understanding and mature judgment about complex issues encountered throughout the research process of this thesis. Particularly, this professional experience added to the comprehension of governments` and business firms’ needs as well as enabled to gain valuable insight into business support organisations’ functioning, management and priorities. The author`s scientific publications were also progressively shared for feedback internally at the International Trade Centre. In addition, the author was also invited to become an expert reviewer and participated in the peer review of the International Trade Centre’s recent publication (ITC, 2013; 224 pages) Entering New Markets: A Guide for Trade Representatives. This review procedure also allowed productive debates and exchanges to take place between experts further sharpening the author`s comprehension of the matter at hand.

To build bridges between academia and the professional community, the following two articles were published in two different magazines and languages:

– Naray,  O.  (2009).  Was  ein  guter  Wirtschaftsdiplomat  Alles  können  muss.  Schweizer   Monatshefte,  973.  

– Naray,  O.  (2010).  What  a  good  commercial  diplomat  has  to  know  and  be  capable   of.  Exchange  The  Magazine  for  International  Business  and  Diplomacy,  2,  8-­‐9.  

Consequently, the present thesis benefits not only from a continuous dialogue between the scientific community and the author, but also from an important managerial and field experience in international trade promotion and development.