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Explaining commercial diplomacy effectiveness: an empirical examination as a starting point towards an holistic framework of commercial diplomacy effectiveness

Zuidema, L.H. (2011) Explaining commercial diplomacy effectiveness: an empirical examination as a starting point towards an holistic framework of commercial diplomacy effectiveness.

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Abstract:In this report a study on commercial diplomacy is presented. Commercial diplomacy has been used by many countries to increase international trade and enhance economic growth and welfare. Commercial diplomacy includes the use of export promotion programs and aims to support firms that (wish to) do business abroad. Due to globalization and economic problems, nowadays many countries try to reorganize and increase the effectiveness of their commercial diplomacy. This study intends to expand the body of knowledge of commercial diplomacy by proposing and empirically examining a framework that includes the determinants of commercial diplomacy effectiveness. The scope of this study in which determinants are located is limited to the commercial diplomat, the foreign post, the firm that makes use of commercial diplomacy, and the host country. The following central research question serves as the basis of this study: To what extent do commercial diplomat characteristics, foreign post characteristics, client firm characteristics, and host country characteristics explain differences in effectiveness of commercial diplomacy? A research model is proposed to reflect the relationships between the commercial diplomat, foreign post, client firm, host country, and commercial diplomacy effectiveness. Commercial diplomacy effectiveness is conceptualized into the quality of commercial diplomacy and relevance of commercial diplomacy. The hypothesized relationships are examined by means of statistical analyses of quantitative data. This data is collected via a questionnaire. The questionnaire is filled out by 110 commercial diplomats of Dutch foreign posts across the globe. Qualitative data, by means of semi-structured interviews, are also collected to illustrate and clarify the findings from the statistical analyses. The results indicate that commercial diplomat‟s experience at a foreign post and in a host country have a positive influence on the quality of commercial diplomacy. There is no evidence that whether a commercial diplomat has business affinity, i.e. in the form of experience or education, does play a role. Commercial diplomats that act as business promoters do demonstrate higher levels of empathy than commercial diplomats that act as civil servants or generalists. But they do not necessarily boost the quality of commercial diplomacy. Second the foreign post‟s resources (i.e. employees, budget, business network, and communication facilities) positively influence the quality of commercial diplomacy. Business network is relatively important. Third the extent to which a client firm is prepared (to go abroad) positively influence the quality of commercial diplomacy. A better prepared client firm increases the quality of commercial diplomacy. At last the host country‟s cognitive environment for foreign firms (e.g. information availability in the host country for foreign firms) negatively influences the relevance of commercial diplomacy. This suggests that a less favourable cognitive environment leads to an increase in the relevance of commercial diplomacy in that host country setting. Most of the findings reinforce and extent current knowledge. However this study did not support that business knowledge and business experience are supposedly key factors (Hogan, Keesing, & Singer, 1991; Kostecki & Naray, 2007; Naray, 2008). It may be that these factors do positively contribute to commercial diplomacy, but not directly boost commercial diplomacy effectiveness. Moreover results are indicative that a foreign post‟s business network directly boosts commercial diplomacy effectiveness while its employees, budget, and communication facilities are important resources that indirectly influence commercial diplomacy effectiveness. They serve as a basis on which commercial diplomacy can benefit from a business network. Moreover the host country‟s regulatory environment and normative environment did not affect the relevance of commercial diplomacy as expected II (Busenitz, Gómez, & Spencer, 2000; Kostecki & Naray, 2007; Kostova & Rott, 2002). The results of this study can be generalized across countries. But since the focus lies only on Dutch commercial diplomacy, retesting and extending this framework for other countries as well is recommended for future research. Future researchers could also focus on the relative importance of commercial diplomacy as well as the true contribution of business promoters to commercial diplomacy effectiveness. Some implications for practitioners are proposed. Foreign posts should focus on optimizing the business network. Second the client firm should play an important role in commercial diplomacy. Foreign posts could either introduce fees or selection criteria for firms before they can make use of commercial diplomacy. In doing so client firms would be more serious and increase their state of preparedness and boosting the effectiveness of commercial diplomacy.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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