Foreign Buyers Research Articles

Schumpeterian Dynamics Versus Williamsonian Considerations: A Test of Export Intermediary Performance

Using a sample of export intermediaries connecting domestic producers and foreign buyers, the study tests competing hypotheses on firm performance derived from the Austrian and transaction cost perspectives. Specifically, the Austrian perspective suggests that the more distant the export market and the more complex the product that the intermediary specializes in, the better its performance. Transaction cost theory, on the other hand, offers conflicting predictions. Our results indicate that these two theories are complementary to each other, and a contingency framework is proposed and discussed.

Ilakaka (Madagascar) : la ruée vers le saphir

Ilakaka, Madagascar : The Sapphire Rush. Impelled by the dream of acquiring a rapid fortune, Malagasy prospectors have been flocking by the tens of thousands ever since October 1998 to the hamlet unknown until then of Ilakaka, in southwestern Madagascar, to exploit an immense deposite of sapphires. They have been followed by buyers of the sapphire trade, thus placing the locality in the very current of international commerce. On one of the two main highways of the country, the RN 7 which goes from the capital, Antananarivo, to Toliara on the edge of the Mozambique canal, a new city is in full expansion, growing along with the rapid advance of the pioneer front. That front, with its earth heaps, trenches and its wooden shanties constructed in no matter what way and with no matter what material in some cases, dig literally for miles around in a vast savannah where before there were hardly any men in Ilakaka. A landscape anarchy thus characterizes Ilakaka now, and the same can be said of the businesses that have developed in it. In this Far West, the beginnings of regulation and order are still rare an fragile, while the sapphires enrich their foreign purchasers without benefiting Madagascar in any manner, and with the prospectors digging at great risk to their lives under very precarious work and living conditions. In addition, the uncontrolled extension of the pioneer front poses a menace for the local environment, in particular for the Isalo National Park nearby and which is the main eco-tourist center Madagascar.

Child Labor in Bangladesh: A Critical Appraisal of Harkin’s Bill and the MOU-Type Schooling Program

The article discusses child labor in Bangladesh, referring to Harkin's Bill and the Memorandum of Understanding Type schooling programs. Bangladesh is considered to be one of the child-labor abundant countries. The Child Labor Survey, 1995-96 estimates that the number of children in the labor force is 6.58 million out of the 34.45 million children in the age group of 5-14 years. Harkin's Bill concentrates on prohibition, rather than on regulation, and fails to take into account the situation of acute poverty that forces children to enter the labor force. That is why many developing countries opposed such global prohibition of child labor. These countries consider these initiatives to be a kind of disguised protectionism and claim that their children are being used to protect jobs in the developed countries. Naturally, the bill appeared as a great threat to the Bangladeshi garments industry. The U.S. and other foreign buyers declared that they would boycott this exportable item of Bangladesh as long as children below the minimum age for employment are being used by this industry.

Successful Adjustment in Indian Industry: the Case of Ludhiana's Woolen Knitwear Cluster

This paper examines the case of adjustment in a labor-intensive export industry (woolen knitwear) to understand how traditional sectors in developing regions cope with external crises and rise above them. India's woolen knitwear industry, concentrated in Ludhiana, recently survived two crises—the collapse of its largest export market (the former Soviet Union), and the simultaneous opening up of the domestic market to freer trade. After an unusually short downturn, the cluster not only recovered rapidly, but is increasingly diversifying into more demanding and competitive external markets. Four factors are key to explaining this surprisingly resilient recovery. First, the best performing firms had a strong and simultaneous presence in dynamic segments of the domestic market alongside exports. This generated key organizational learning, and built managerial and production capacities that helped firms adapt quickly to more demanding markets later. Second, an important feature of the learning relationship between first-time exporters and their foreign buyers was the small-scale nature of contracts and a “customization of fit” between the producer and the feedback-giving intermediary. Third, better performing firms paid equal if not greater attention to making organizational changes in their work practices than to the purchase of new equipment. Fourth, the embedded nature of production networks, and the government's past programs to assist local firms have indirectly helped create a dynamic middle-tier of locally-rooted exporters who appear to be leading the cluster's transformation and modernization.

The Role of Transportation Costs for People

Exports can enable developing countries to overcome the problem of small domestic markets. Manufactured exports from developing to industrial countries often require transfer of technological know-how from the latter to the former through repeated movement of engineers and other skilled personnel. The cost of this movement increases with distance. Distance from the temperate industrial world thus becomes an obstacle for productivity increase in the tropics. Export trading companies can help to conquer distance by gathering information and matching domestic producers with foreign buyers.

Performance in Trade Shows and Exhibitions

The purpose of this paper is to summarize recent studies of trade show performance. While trade shows are an important communication medium for domestic marketers, its importance is magnified for international firms, most notably to allow foreign buyers to assess product quality firsthand. Recent studies are discussed and synthesized into a model of trade show performance. Factors underlying trade show performance are identified and discussed. Then, a model of trade show performance, which is based on a synthesis of previous research, is presented. Finally, managerial and research implications in the context of international marketing are suggested and discussed. Given the popularity and importance of trade shows, the model, its constructs, and the links it suggests are useful to both researchers and practitioners of international marketing.

The Otavalo trade diaspora: social capital and transnational entrepreneurship

This article examines the role of historical social resources in the development of a transnational trade diaspora of Ecuador's indigenous Otavalan merchants. The Otavalans are well known for their production of handicrafts, using pre-industrial and industrial technologies, and for their far-flung trips in search of foreign buyers. In this account, the role of 'social capital', typically defined as a 'public good', is highlighted to better gauge its usefulness to other migrant and indigenous groups. I conclude that the Otavalo case suggests that in-group 'social capital' is: (a) not sufficient or necessary for 'grass-roots' transnational entrepreneurship; (b) the political origins of an ethnic group's 'trust-worthiness' reveal a more diverse set of symbolic and cultural 'capitals', which may then be used by an emergent merchant class to gain financial capital for a business venture; and (c) 'globalization' notwithstanding, contemporary trade diasporas may rise and fall due to similar causal dynamics found among much older and ubiquitous 'cross-cultural trade diasporas'.

Exchange Rate Effects on the Relationship between FDI and Trade in the U.S. Food Processing Industry

The effect of exchange rates on international trade and, more specifically, on agricultural trade flows has been documented by several studies.' Most studies agree that an appreciation (depreciation) in the value of the U.S. dollar hurts (helps) U.S. agricultural exports. An appreciation of the U.S. dollar raises the cost of U.S. products to foreign buyers and reduces their purchases.2 Although neglected early on, the effect of exchange rate risk as measured by its volatility on trade flows was also found to be negative (Arize, Pick). Parallel to this literature were the devel-

Export Intermediary Firms: A Note on Export Development Research

Building on Leonidou and Katsikeas' (1996) recent review of the export development literature, we identify an important missing link in existing research: the role of export intermediaries as an organizational form connecting domestic manufacturers and foreign buyers. In response, a new research agenda drawing on the transaction cost and resource-based perspectives is advanced. This agenda focuses on why export intermediaries are selected by manufacturers in their channel choice decisions, and why some intermediaries outperform others. The paper closes with discussions of research, practice, and public policy implications.

Technological Capability and Firm Efficiency in Taiwan (China)

This article highlights the importance of firms' own investments in technological capability. Recent research on the nature and extent of technical change in developing countries shows that the accumulation of technological capability should be treated not as a by-product of some other activity but as an activity in its own right. This research also points to the critical role of firms and indicates that firm-level efforts to obtain international knowledge may have higher payoffs when accompanied by complementary investments in the development of in-house technological capabilities. Using micro data from Taiwan (China), the authors estimate the technical efficiency of firms. They proxy firm-level efforts at modifying or adapting technology by expenditures on research and development and on-the-job training. They then use a stochastic production frontier model to estimate the correlation of a firm's efficiency both with investments in training and research and development and with international linkages (such as exporting, direct foreign investment, and foreign technology licenses). The evidence from manufacturing firms in Taiwan suggests that efficiency is positively correlated with the firm's investments in training and research and development and with its informal contacts with foreign purchasers through export sales.

Enhancing Sales Skills and Cultural Awareness: An International Competition Approach

This article describes how students can enhance their sales skills and cultural awareness by participating in an international selling competition. The best sales students from a French Canadian, Mexican, and American university were brought together to compete in conducting sales presentations in a business-to-business environment. While the competition will be an annual event held at one of the three institutions, to date two programs have been conducted. In the first competition all students were required to sell to a foreign buyer in English on the first day. On the second day they were assigned to either a selling or buying team which was comprised of a student from each of the three schools for a negotiating exercise. During the second competition students sold on the first day of the competition in their own language. On the second day the students sold in a foreign language—or used an interpreter—to a business person from a different culture. The competitions were judged by panels of international business people. Students received both monetary and non-monetary awards. Suggestions are offered regarding how this competitive sales training approach can be conducted at other universities and/or businesses.

Export credit risks and the trade credit offer: some Canadian evidence

Not getting paid for an export sale is a fundamental problem in international business which export credit managers try to avoid. Nevertheless, the export credit decision remains largely neglected by researchers, with little known about the actual impact of export credit risks on the trade credit offer. This paper presents empirical data from a survey of Canadian export credit managers to address questions about the relative importance of the various standard commercial and export-specific risks: whether country risks lead export credit managers to view a foreign buyer's creditworthiness differently and whether export credit risks are actively managed in the trade credit offer. The findings demonstrate that existing trade credit models are insufficient to explain the export credit decision. New trade credit models which integrate both standard commercial and export-specific risks must be developed for export sales.

Inviting Excess Volatility? Opening up a Small Stock Market to International Investors

What is the effect on asset prices of opening up a small stock market to international investors? In this paper, some evidence is found that net purchases of stocks by foreign investors lead to temporary price effects in a small stock market. On average, foreign investors' net purchases of stocks look like noise trading and seem to create some amount of excess volatility in the market. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

Dependent Development: the Subcontracting Networks In the Tiger Economies

The ‘dependency development’ approach attributes the phenomenal economic growth of Hong Kong and Taiwan to their structural linkage with the advanced industrialised countries through trade. Foreign buyers and sourcing agents of the multinationals subcontract to the Hong Kong and Taiwanese manufacturers for low‐cost and flexible production of labour‐intensive consumer products. Such a dependency relationship is, however, successfully managed by the manufacturers in the two economies of the operation of a very similar subcontracting system in major industries. This paper examines the nature of the subcontracting system, the reasons for subcontracting, the operating dynamics, the sustaining mechanisms and the inherent structural problems of the subcontracting network. With the industrial restructuring process taking place in Hong Kong and Taiwan, there are changes to the subcontracting system which have significant implications for the welfare of the workers.

Foreign acquisitions in the United States: Effect on shareholder wealth of foreign acquiring firms

This paper examines shareholder wealth gains for 195 foreign firms that acquired U.S. target firms during 1983–1992. We find that foreign acquirers experience positive and significant abnormal returns of nearly two percent over days (−10, +10) when they acquire targets in the United States; however, U.S. acquiring firms do not gain at all from their purchases of foreign firms over the same period. Analysis of abnormal returns reveals that Japanese, British, Australian and Dutch acquirers gain significantly from purchases of U.S. firms. Bidder abnormal returns are not related to relative size of target to bidder, or to the extent of their overseas exposure, or to the target's R&D intensity; they do not exhibit an industry factor nor are they affected by the value of foreign currency. There is support for the hypothesis that competition among bidding firms for the same target decreases the returns to the acquirers; we find that the 1986 Tax Act has led to no gains to foreign buyers of U.S. firms.

The Prediction of Country Risk Classification: The Case of the Export Development Corporation of Canada

AbstractThis paper replicates Export Development Corporation's (EDC) short‐term and medium‐/ long‐term country risk classifications on the basis of economic variables. Using a recursive partitioning algorithm, the results suggest that EDC's risk categories respond to some of the variables suggested by the theory and can be correctly predicted from a handful of publicly available economic information. Whatever the time horizon, the most important discriminators are external debt indicators, such as long‐term foreign debt, trend in the debt service ratio, and foreign debt rescheduling. Moreover, the findings suggest that EDC considers different factors to decide the amount of short‐term and medium‐/ long‐term exposure it is prepared to accept in a country.RésuméCet article reproduit les cotes de risque‐pays à court terme et à moyen/long terme de la Société pour l'Expansion des Exportations (SEE) du Canada. Les résultats suggèrent que les classes de risque de la SEE répondent à certaines des variables que la théorie économique a identifiées. En outre, il apparait que ces classes de risque peuvent ětre reproduites correctement à l'aide d'un nombre limité de variables économiques. Quel que soit l'horizon, les déterminants majeurs de ces cotes de risque sont des indicateurs de la dette externe, tels que la dette étrangère à long terme, la tendance dans le ratio du service de la dette et un rééchelonnement récent de la dette étrangère. Finalement, les résultats de cette recherche indiquent que la SEE considère differents facteurs pour décider des engagements à court terme et à moyen/long terme qu'elle est prěte à accepter dans un pays.

Collection Development: The Experience of Kenya Polytechnic Library

Discusses fundamental problems encountered at the Kenya Polytechnic Library in collection development, particularly the problems of inadequate funding, lack of collection development policy and those associated with foreign purchases. Highlights the various factors which librarians at the polytechnic ought to consider in order to realize brighter collection development prospects. These factors include the formulation of suitable collection development policy, the organization of gifts and exchange practices and participation in resource‐sharing programmes with other national polytechnics and universities. Suggests an introduction of library development levy and also the practice of collection weeding.

Export‐led Technology Development in the Four Dragons: The Case of Electronics

ABSTRACTTo date, little attention has been paid to the strategies of local firms in bringing about industrialization in Bast Asia. This article focuses on the methods by which domestic firms utilized foreign connections to overcome technology and market barriers in electronics. A simple market‐technology model is developed as a first approximation of how domestic technology assimilation relates to export marketing in the four ‘Dragons' of East Asia (South Korea, Taiwan, Hong Kong and Singapore). It proposes that export demand shaped the pace and pattern of technological progress in electronics in each of the four Dragons. Historical evidence shows that each country used a distinctive mix of direct and indirect export mechanisms to acquire technology and to enter international markets. Foreign buyers, transnational corporations (TNCs), original equipment manufacturer (OEM) arrangements, joint ventures and licensing deals were exploited by ‘latecomer’ firms to their market and technology advantage. Asian firms progressed from simple assembly tasks to more sophisticated product design and development capabilities, travelling ‘backwards' along the product life cycle of traditional innovation models. Today, leading Asian firms invest heavily in R&D and engage in partnerships with TNCs to acquire and develop advanced new electronics technologies. The technological progress of latecomers remains closely coupled to export demand through OEM and other institutional arrangements.

Le vicessitudini del riformismo in un sistema economico socialista

Property company shares have more than doubled in London during the past 18 months, up to February 1994. Institutional investors and foreign buyers are rushing to add property investments to their portfolios. However, a closer look at these developments suggests an absence of tangible indicators of a real recovery in the UK property market. (annex on the UK institutional commercial property lease). JEL Codes: P20

An analysis of foreign takeovers in the United States

AbstractUsing a sample of 96 US companies taken over by foreign companies during the period 1975‐87, we assess foreign takeovers in two stages: pre‐takeover and takeover. We find evidence that foreign firms target US firms whose operations are related to their own operations and that have low market‐to‐book ratios, suggesting foreign bidders acquire firms that provide a greater opportunity for market entry and synergistic gains. The synergistic gains appear to result from the foreign buyer using its own intangible assets (e.g. managerial skills) to improve the target. We also find that foreign takeover activity is aimed primarily at US industries that themselves make high levels of foreign direct investments, implying that the bidders use takeovers as a quick way to counteract rival firms' moves. We find evidence that foreign takeovers take place in relatively mature, low‐growth industries and that foreign targets are, on average, smaller than the non‐targets. The wealth effect on the announcement of a takeover is significantly higher for foreign takeovers than for takeovers by domestic firms. Also, we find that foreign bidders pay a slightly higher premium for targets whose operations are related to their own.