The Ignorant Wise Man

by Michael R. Czinkota-Jan 24, 2019

Jan 24, 2019

Since World War II, U.S. firms were the most aggressive in the world with a zenith in the 1960s. Therefore, the U.S. private sector appeared not to need any help in its international trade efforts. 

The result of this overall philosophy was a continuing effort by the U.S. to aid countries abroad in their economic development while U.S. domestic firms were overlooked. The policies of helping to stimulate foreign economies were quite successful in the 20th century. However, the climate of the international market is quite volatile. As the U.S. continued to encourage trade abroad and not to aid the international ventures of its domestic firms, U.S. firms were placed in an unfavorable position.

American companies were assured that because of its size and the diversity of its resources, the American economy could satisfy consumer wants and national needs with a minimal reliance on foreign trade. The availability of a large U.S. domestic consumption power and the relative distance to foreign markets resulted in many U.S. manufacturers simply not feeling a compelling need to seek business beyond national borders. Subsequently, the perception emerged within the private sector that exporting and international marketing were simply too risky, complicated, and not worth it. 

This perception also resulted in increasing gaps in international marketing knowledge between managers in the U.S. and those abroad. This gap shaped different incentives to innovation. The Late-developing Advantage Theory can illustrate those differences, not only at a national, but also at a firm specific level. A less favorable position can always be an opportunity and motivation. While business executives who deal with small market sizes are willing to learn about cultural sensitivity and market differences, many U.S. managers remain blissfully ignorant of the global economy. Given such lack of global interest, inadequacy of information, ignorance of where and how to market internationally, unfamiliarity with foreign market conditions, and complicated trade regulations, the U.S. private sector became uninterested and fearful of conducting international business activities. 

However, conditions have changed. Traditional education institutions are becoming more attuned to the international dimension. Universities and particularly business programs are emphasizing responsibilities and obligations at the international level both in theory and in practice. Meanwhile, some government agencies are paying closer attention to the international needs of the U.S. business community. The U.S. Department of State offers training and instruction in business-government relations to domestic firms.

Newly emerging economies also accelerate the process of rising public attention. For instance, electronic commerce has made it more feasible to reach out to the global business community, whether a firm is large or small. International events can lend a new focus to business. In 2018, Alibaba generated US$30.69 billion in sales on Double Eleven or November 11th, which is known as a day of special promotions, and now includes a large share of international sales. Related industries and supply chains, such as transportation and logistics, are prospering with the growing volume of international trade as well.

In effect, U.S. corporate interests given to international markets both as an opportunity find both customers and suppliers to be growing. How can the U.S. maintain a sustainable competitive position? How can the managers further learn from what used to be former students? The need and demand for international marketing expertise can be expected to rise substantially. Overall, avoiding ignorance is the first step to becoming wiser.

Professor Czinkota (czinkotm@georgetown.edu) teaches international marketing and trade at the University of Kent in Canterbury and Georgetown University. His latest book is “In Search For The Soul of International Business”, (businessexpertpress.com) 2019