Discussion Brief for the Export Strategy-Maker

There is little doubt that in this age of globalization, speed and digital distance, the effectiveness of a trade support institution (TSI) is fairly relative to its ability to actively participate in formal and informal networks. Without networks, and without the network industries such as information and communications, the modern economy would be much diminished, and the TSI fundamentally altered.

The very attributes of a TSI compel a need to network, perhaps more so than for any other kind of organization. Apart from the relationships that business firms usually have with suppliers, customers and other industry players, the complex environment within which TSIs typically operate requires an equally complex network of partners. Trade information alone, for instance, requires a TSI to participate in multiple networks to enable it to service the diverse needs of its clients. Narrowing further towards market-oriented information, the range of networks needed is influenced by factors such as the number of target markets, the industry sectors of interest within each market, and availability of potential sources of information (such as foreign commercial representatives, trade associations, commercial information providers, statistical offices, standards organizations, counterpart TSIs, international organizations).

Networks can thus ultimately shape the reach and range of a TSI’s scope of activities, and can delimit a country’s modes of participation in the global industrial fabric. For this reason alone, trade support networks deserve further study. TSIs can also affect macroeconomic policy and economic performance, and they shape the incentives facing firms in their market activities. A successful trade support network can therefore bring about comparative economic advantages.

The export strategy-maker, however, is faced with a daunting task since fostering a trade support network and maintaining its momentum is not easy. Complex and interrelated factors emanate not only from the external environment, but also from within. There is often a void between the rhetoric and the reality of national trade support networks. Addressing conflicting interests, changing organizational cultures and working practices, removing inter-organizational mistrust, aligning uncertain expectations and clarifying confused responsibilities are the order of the day.

Achieving a holistic approach to the trade support environment is thus a challenge that requires time, resources, reconciliation, ability and leadership. This paper is not intended to be a comprehensive analysis of networks or networking. Rather, it aims to provide an adequate basis for further discussion by touching upon the economics, the politics and the societal aspects of networks. The mini case studies are intended to bring out and illustrate relevant issues, and to suggest various scenario settings in order to stimulate debate.

For the purpose of this analysis, a network is described as an arrangement of a limited number of individuals, groups, and organizations that act and interact in a purposeful manner to realize shared objectives within the framework of a set of formal and informal rules.

What motivates TSIs to network? There are several possible reasons:

• to access additional resources (finance, skills, technology, information), share costs and risks;
• to create access to new markets or increase access to existing markets;
• to enhance the export capability of industry;
• to attract foreign investment;
• to increase leverage, improve image and strengthen credibility;
• to prepare for the adoption of standards and facilitate trade policy reform.

At the national level, significant advantages can arise from coherent and consistent efforts amongst the various players involved in international trade. Whether aiming to project the country’s image as a trading partner or to provide support services to industry, whether aiming to enhance the capabilities of SMEs to realize international business opportunities or to create a suitable macroeconomic policy, national institutional networking can lead to desirable outcomes:

• a better flow of ideas due to an enhanced skills-base produces better results;
• pooling of resources, competencies and sharing of costs allows more to be achieved;
• reduction in duplication cuts down wastage and increases resource utilization;
• holistic coverage satisfies more end-users’ needs;
• a unified and consistent vision reduces the risk of confusing the target beneficiaries;
• the end product is likely to convey more credibility.

Networking across geographical boundaries can likewise result in favourable conditions.

Some additional motivations for participating in multi-country networks may include:

• to exchange resources, competencies, experiences and expertise;
• to obtain complementary skills or expand into new areas;
• to gain speed;
• to minimize transaction costs;
• to access mechanisms for settling disputes.

From the perspective of the export strategy-maker, an effective trade support network brings about attractive results since it:

• affords a holistic approach to the trade support environment;
• is problem-oriented rather than bureaucracy-premised;
• allows a systemization and co-ordination of effort, expertise and information;
• brings together a common approach to the diverse interpretations of different TSIs;
• enables a pooling of resources;
• disrupts and challenges ‘cosy cultures’ of individual agencies.

Whatever the motivation, TSIs ultimately network to create economic advantages for the nation, or to reduce comparative economic disadvantages. Macroeconomic policy, for example, can shape the incentives facing economic actors in their market activities, affecting the costs of production and transaction. Encouraging a participatory process between governmental, non-governmental, private sector, and civil society elements promotes a common strategic vision and co-ordination at both national and international scales. This can lead to an enhanced development of technical capabilities and competencies, to the establishment of adequate regulatory policy and legal structures, to improvement in factors that enable or support transactional processes, and to the advance of physical infrastructures and environments – all essential elements for sustainable development, trade and investment. For many, however, successful institutional networking still remains an unattainable Utopia. Why?

Many TSIs, particularly national Trade Promotion Organizations (TPOs), are not-for-profit organizations. Although many TPOs generate their own funds, by way of selling services to their user-base, most depend on subventions from governments to operate successfully. As with any commercial entity, the public / parastatal TPO therefore has obligations towards its stakeholders, the most important of which include:

• shareholders (government is often the principal shareholder),
• customers (the end-beneficiaries of the TPO’s services and facilities),
• employees.

Government, as policymaker and key shareholder, is usually strong enough to unilaterally determine the TPO’s strategy. If it is to continue demanding growing financial support, then the TPO must visibly and tangibly deliver results that earn it recognition. Often, the single most important criterion in measuring the effectiveness of a TPO is perceived achievement. Such perceived achievement is calculated in various ways – usually quantitatively. Although the validity and reliability of such benchmarks is arguable, the following are just a few typical indicators:

• number of beneficiaries utilizing the TPOs services and facilities (e.g. number of firms
• commissioning market research, number of firms participating in trade missions, number of enquiries serviced, etc.);
• new services and facilities launched, and the perceived value of such services and facilities in the national context;
• improvement in national export performance.

Within the framework of a national trade support network, there are often several institutions at play. These may include the national trade promotion organization, government departments, trade associations, chambers of commerce, industry federations, Trade Points, World Trade Centers etc. In principle, and in word, all counterparts agree on shared goals, cooperation and complementarity. Indeed, they may truly have converging objectives; however, each entity has its own agenda, its own priorities, and the laws of competition inevitably take over. As a result, TSIs continually strive to obtain more recognition, to prove their superior effectiveness and efficiency over their ‘rivals’, and to attract more members or more funds. This tends to urge the pursuit of autonomy and competition, and therefore a deficiency in networking between agencies. After all, why should one TSI hand out a piece of the action, and a slice of the credit? In many instances, such competition may be desirable. For example, a country with an extensive network of overseas commercial representatives stands to benefit significantly from the contributions of each node. Competition amongst the overseas offices to promote the country as a business partner, to gather market intelligence, and to encourage business cooperation initiatives, can significantly enhance the potential of trade between two countries. There are, of course, many other complex and interrelated factors that deserve consideration, but overall, the country is likely to benefit considerably.

Usually, however, competition between national TSIs can lead to undesirable outcomes, such as:

• duplication of effort,
• resource squandering,
• conflicting and confusing messages to beneficiaries.

The Minister for the Economy sat alone at her desk. Reviewing the achievements of the various trade support institutions that she helped grow over the past few years, she couldn’t help feeling a sense of pride. There was little doubt that these agencies were assets for the country’s industrial development – the results spoke for themselves.

Yet, she was concerned – there was clear evidence of duplication of efforts, resulting in sub-optimal utilization of resources. Two of the leading organizations, for instance, had both launched e-marketplaces to promote the flourishing IT industry. Indeed, the country had made considerable progress in this sector, but did it really need two identical e-marketplaces? Resources, both human and financial, were scarce – she knew. As the most senior public official in the ministry, she was ultimately accountable for taxpayers’ money and it was her responsibility to see that this was well spent. Besides, she felt sure that the business community was confused. Recently, it was not immediately clear, even to herself, what distinguished one institution from the other – and she was not even counting the private sector agencies and associations. Why couldn’t there be more synergy among the various organizations? Of course, they were trying to obtain recognition for their efforts, to demonstrate their effectiveness, to win over a broader client base, to lobby for more funding. But was this state of affairs sustainable?

Something must be done – an effort to enhance collaboration among the various public and private trade support institutions, to deliver a shared vision to industry and to potential foreign business partners, to make the most of available resources. They just had to work together – they may not all like it, but it was in the country’s interests. She glanced down at her notes – this is what she would propose to her colleagues during next week’s cabinet meeting…

• reduce by 5% the subvention allocated to the individual public TSIs, every year for 3 years;
• establish an additional fund for initiatives or projects involving two or more agencies;
• establish a task force involving all TSIs with the Minister for the Economy as chair to develop a national vision, to avoid duplication and maximize utilization of resources. The Task Force will also examine project proposals and monitor progress and results achieved;
• require a business plan for each initiative or project proposal, one outlining clear strategic objectives, responsibilities, milestones and budgetary requirements within the context of the national vision;
• maintain the autonomy of each TSI within the context of a broader mandate – the national vision;
• change the rules for perceived success by rewarding and recognizing collaborative efforts.

Duplication of effort needs to be seen in the context of the mandate of the respective organizations. Whilst it is unlikely that two or more agencies operating in the same region will have identical terms, the nature of the business has a strong bearing on what, or what not, a TSI does. To be effective, TSIs often need to develop complementary services in order to satisfy the expectations of clients, to benefit from economies of scale, or to maximize return on investment.

For example, a TSI offering advice on the export development of the services industries is likely to require substantial investment in human and information resources. What may start out as a consultation service could eventually grow to include development of technical documents and guidelines, business opportunity alerts, preparation of market research reports, organization of activities to promote strategic alliances, training events and seminars, and promotional activities – such as sectoral trade missions or e-marketplaces. Where should the TSI draw the line? An institution that is set up as an incubation center for SMEs that are inexperienced in international trade may eventually find it necessary to continue growing with its clients – to get the most out of the close relationships it has developed at the enterprise level. An organization that has hitherto dealt exclusively in disseminating business opportunities may find it necessary to start organizing buyer-seller meetings to provide a better service to its clients. This is often done with little regard to existing facilities and expertise in other national counterparts.

Should a TSI work with its ‘competitors’? Should it encourage joint efforts, pool resources and lend a hand? The drive for recognition is a strong force and often goes beyond mere principles.

But there are also other issues. National networks are often difficult to form since these require shared vision, reconciliation of cultural differences in different organizations, the unequivocal commitment of all stakeholders, strong leadership and interpersonal skills. Sometimes, it is just easier working alone. No need for interminable meetings, no need to change or align strategic objectives, no need to argue with partners who, at the end of the day, have no power or real interest in another agency’s selected course of action.

The role of the export strategy-maker is to make modifications in national institutional arrangements that can improve the country’s comparative advantages to achieve superior economic performance. This is important since ultimately, national economic performance is influenced not by individual organizations alone, but by the aggregate institutional framework that the nation hosts. International trade, and effectual TSIs, requires the direct or indirect input of an extensive network of organizations, such as banks, insurance companies, shipping agencies, certification and standards bodies, customs authorities, bilateral/multilateral organizations, funding agencies, etc. One or more weak links in the chain of institutions involved in the trading cycle, can lead to national comparative disadvantages and creates difficulties for exporters and potential exporters.

The General Manager was excited – the company was going places. Following many discussions spanning several months, the Directors agreed – export was the way forward. They were a small company – 30 people; yet they had made their mark on the domestic market. Indeed, they had survived fierce competition from overseas firms, many of them much larger and more experienced. All this with minimum protection; imported competition was liable to only 3% duty – soon even that would be gone. But they were prepared. His ‘lean and mean’ policies had borne fruit. And now, his attempts to penetrate two overseas niche markets had generated new, exciting possibilities and expansion was high on the company’s agenda.

He had a busy time ahead. A million things needed to be scrutinized. But he was comforted by the thought that a chain of agencies was at his disposal and willing to back him up. The research findings he had presented the Board of Directors were only preliminary – a more rigorous study was requisite since intelligent business decisions are taken on good market intelligence. He was sure that the local export promotion organization would help him in identifying markets that offered the best prospects. And of course, he would check on possible participation in trade fairs and business missions. The World Trade Centre also organized such events – he should talk to them too. He needed to get to grips with export financing and export credit insurance since they had never really done that, so guidance was necessary. The bank would help, and perhaps the Trade Point with its strong links with the financial community. He needed to start establishing strategic linkages with overseas agents and distributors. The Chamber, with its extensive network of partners, would prove to be an invaluable source. Then, he needed to think about upgrading the company’s infrastructure – to enhance machinery and technology. The best place to go for that was probably the trade association – there he could gain on the experiences of others. Oh, and by the way, he needed to ensure that all permits, licenses and certificates were obtained. Probably the Department of Trade, or was it Customs? And what about logistics handling? There were freight forwarders to talk to, and insurance companies. And standards, labeling requirements and packaging, and …

He took a deep breath, a little less comforted, a little less excited. These were pillars of support – all pointing towards the same direction. Regrettably, they were positioned in parallel – never converging. Yes, the next few months were going to be busy ones. He called in his secretary – she was far better at scheduling his appointments anyway…

It is therefore clear that the challenge for the export strategy-maker to encourage networking amongst national TSIs is by motivating them to do so, and by ensuring that benchmarks for perceived success correspond to the national vision.

What remains to be seen is the extent to which a superior trade support institutional framework has a bearing on export success. This may deserve further study. Nevertheless, it is argued that globalization, and the increasing exposure of national economies to competition, generates pressures for the eventual convergence of national institutional networks. Faced with trade globalization, inferior institutional arrangements can lead to a loss in economic performance, thereby creating ever-increasing political pressure to change trade support networks of organizations.

Networking is an effective arrangement to overcome working in isolation, and can lead to an equitable distribution of benefits among members. However, this is likely to reduce the level of autonomy that each agency enjoys. Which is more important? An institution’s autonomy or an overall trade support network that encourages trade and improves economic performance? How much autonomy are agencies willing to lose in favour of a coherent national strategic vision?

Networks presuppose a unifying purpose – a vision or objective that brings individuals and organizations together to realize specific outcomes. This collective purpose infuses a sense of identity within the network and gives members and potential members a sense of value and desirability of association.

Common purpose has a strong bearing on the structure of the network – the way in which authority and control mechanisms are exercised and the way in which resources and competencies are combined and managed under shared control. Structure is dependent on the level of risk or sensitivity associated with the common purpose. If risks are high, then a hierarchical structure of governance is called for; where risks are low, a more informal set-up is adequate. A network that disseminates information on trade formalities (e.g. customs procedures) is likely to require a different structure from the more formal set-up needed by a network that aims to change established trade formalities.

Structure, in turn, affects processes – the way in which members exercise influence, in which decisions are made and things are done. Not only do processes delimit members’ modes of participation, but can ultimately determine resource allocation, affect the micro- and macro-environment within which the network operates, impact the competitive environment and eventually change the structure of the network itself. Many networks are based on the principles of reciprocity and mutual support – the premise of extending preferential treatment to other network members. A typical model is the WTO Most-Favoured-Nation principle (also referred to as NTR – Normal Trade Relations) whereby WTO member countries cannot normally discriminate between their trading partners. When a member grants favourable trade relations to one country (whether a WTO member or not) then that member is required to extend equally favourable trade relations to all WTO members.

In theory at least, reciprocity presumes that all partners contribute an equal amount of energy, that they work together, and that all benefit to the same extent from the collaboration. In practice, however, there is likely to be a disparity in the dynamism and influence of individual members.

This can have a bearing on the business of the network and the perceived or actual value of benefits reaped by the individual members, and can sometimes beget perceptions of discrimination or bias.

Many forms of interaction within networks are based on trust – a manifestation of confidence amongst members of a network. The level of trust between network members is largely linked to the common purpose and system of governance. Trust usually develops gradually from regular dealings between members and frequently leads to more open relationships and enhanced interaction. Although trust is a subjective perception of likely future behaviour, it alleviates the fear that network partners will act opportunistically, anticipates remedial actions in situations of conflict and enables co-ordination without coercion or competition. On the other hand, trust is fragile, and is maintained through the absence of contrary evidence.

Relationships based on trust alone often lack the clarity and consistency required for effective administration. It is sometimes difficult to design a structure of governance that is elaborate enough, and that simultaneously provides adequate mechanisms to cope with any possible outcome and action by members, to prevent or correct improper behaviour. A balanced level of trust amongst members is therefore desirable.

One of the most common motives for forming networks is to share, develop and evolve knowledge. In this era of global competition, organizations are looking for ways of generating extra value from their resources and competencies. By bringing people and information together, knowledge networks further enable the pursuit of organizational objectives in terms of learning and in terms of increasing capability in a specific subject or technology. The richness of the diverse individual experiences and expertise, the cooperative framework and shared goals that networks promote, and the openness and thought provocation that characterize networks are all conducive to accomplishments that are not normally achievable when working in isolation or within a conventional work environment.

Structurally, a network brings together specialized assets under shared control. Such assets are often intangible and may include individual experiences, expertise and skills. Networks promote joint ownership of such assets, thereby encouraging more universal access through communication. Since networks provide opportunities for abstract conceptualization and active experimentation, the potential for learning through reflective observation and concrete experiences exists both for leaders as well as for followers. Lessons can be drawn from both successes and failures, and network members can benefit greatly by evaluating the experiences of others.

We have seen this kind of network in action many times. Indeed, it is the raison d’être behind ITC’s Executive Forum, the ‘brainstorming’ sessions and e-Discussions. Hence, knowledge networks usually aim to promote the transfer of knowledge and to develop collective as well as individual learning. Typical applications may include:

• research;
• problem-solving;
• decision-support;
• scenario planning.
• best practice;
• project management;

The advantage of knowledge networks is that they encourage structured critical evaluation from the different perspectives of different network members. This, in turn, stimulates further discussion on existing and new concepts.

The concept of network externalities contends that certain products or services increase in value as more people use them. This often leads to positive network effects in two ways:

• increased economies of scale;
• increased returns.

For example, an e-mail listserver with only one participant is of no use. Adding another name increases its value because messages can now be sent and received between two people. As more names are added, the number of possible links rises fast since each person can reach more people, thereby enhancing the value of the system considerably.

The Internet, often labelled as the ‘network of networks’, would be of little use if it merely connected just two people together. The operating costs per person would be excessively high, making it economically unfeasible, and its benefits trivial since it would be severely limited in reach and in scope. The perceived value of administering an online business opportunities post for the furniture sector increases as the number of subscribers grows, yet the outlay and the effort needed to maintain it is just about the same whether it is exploited by a hundred users or whether it serves one.

A country (or region) has three trade support institutions that are roughly equal in size. One of these establishes an online trade information system that can be accessed by its clients via the Internet, thereby improving visibility and the quality of its services considerably.

Not to be outdone, the other two organizations immediately embark on developing and launching their own trade information systems.

What are the implications on equipment, development and training costs, time-to-market, reach, range of information provided, uniformity of data, integrity of information, duplication of efforts, marketing costs, utilization of the systems, benefits to end users?

The other two organizations request to be part of the network and argue that they can make valid contributions to the system. The first institution decides to maintain its monopoly position and declines.

What is the effect on the rapport between the TSIs? What are the likely reactions of the two organizations?

What are the likely prospects of future cooperation? Who stands to lose?

The other two organizations request to be part of the network and argue that they can make valid contributions to the system. The first institution agrees and a partnership is formed.

What are the implications of the partnership. Who stands to gain most? Who will lose out? Who receives recognition (from clients and other stakeholders)? Who benefits from funding to grow the system? Will resources be better utilized? Whose reputation will grow stronger? Consider the impact of the cooperation and future development; the effect on demand for the combined service, its usefulness and its credibility. Consider the implications on organizational cultures.

Networks therefore yield economies of scale – costs tend to decrease whilst value tends to increase as the network grows. Average fixed costs fall whilst fixed variable costs and incurred for the benefit of a larger recipient group. This implies improved utilization of assets, resources and competencies as the burden of other cost categories in the primary and support activities is spread. Similarly, benefits tend to increase as equivalent efforts yield better results and better value. Increasing returns are thus generated when the impact of an additional member is internalized within the network.

The same may be said of institutional networks. Increased cooperation between agencies can lead to increased economies of scale and cost benefits. No two organizations are the same. Each has its strengths and weaknesses, its areas of business, its unique mix of resources and competencies. Access to other organizations gives each member the ability to pursue additional areas of business. These can range from expansions of current business to introducing new lines of business. Likewise, network building and maintenance is often seen as a precondition for successful innovation. Not only do new ideas flow more easily, but the speed with which such ideas can be implemented will also improve, provided that the necessary structure and co-ordination mechanisms are in place.

Networks are useful because they avoid duplicated, localized or underutilized resources and competencies whilst achieving more integrated and more effectively deployed resources and know-how. Joint efforts can enable the organizations involved to cope with increasingly complex environments whilst allowing them access to the resources and competencies that they need to succeed. These can include access to markets, finance, skills and innovation capabilities.

As with any organization, various factors need to be given attention in order to achieve an alignment of the different interrelated aspects of a network. The following is an inexhaustive checklist.

At the outset, there is strategy – a coherent set of actions aimed at gaining sustainable advantage that intend to bring TSIs together to realize specific outcomes. This is the unifying purpose of the network, the central vision behind improving institutional arrangements to build national comparative advantages and better economic performance. Individually, TSIs generally have competing or conflicting interests. A network strategy brings about cohesion in each stakeholder’s raison d’être. It is important that a stakeholder audit is undertaken to identify all parties likely to be significantly impacted by the strategy of the network.

Structure is critically important and can make or break the national network. It brings together all parties identified in the stakeholder audit. Without proper structure, it is unlikely that the various actors in a national trade support network can willingly collaborate. So powerful is structure, that it can help turn uncooperative, inactive and adverse stakeholders into supportive ones. Structure needs to reflect the network’s strategy to allow the pursuit of objectives and the implementation of plans. At the same time, it needs to be flexible enough to support internal relationships that capitalize on efficiencies within the institutional network, whilst minimizing on formalities that can hinder momentum. Without structure, there is only a set of institutions working in isolation.

Systems for business operations facilitate strategy execution and strengthen the network’s capabilities to gain national comparative advantage. These may include:

• accurate information on customers, operations, employees, suppliers and financial performance;
• authority and accountability;
• diagnostic and benchmarking systems;
• performance indicators and performance-related controls;
• controls on resource utilization and finance via effective budgeting systems;
• information systems to maintain coherence and interoperability and to enhance co-ordination and communication.

Technology has a major contribution to make since an information infrastructure enables information flows, both internally – within the network, and externally. Indeed, technology can reinforce the network’s strategy and structure. In this context, the role of IS professionals can be valuable since these have systems integration knowledge, the ability to make efficient connections between pieces of information, are capable of neutral holistic views, can co-ordinate multiple activities across several functions, and are often competent drivers/managers of change.

The network needs strong leadership and the right skills. The role of the leader is to achieve the desired coherence between the various institutions responsible for the development and promotion of trade and inward foreign direct investment. In doing so, leadership needs to be clear and enthusiastic in specifying goals, in defining the achievable, and in stimulating motivation to build a desirable and welcomed vision of the future. This fosters a culture that is grounded in values, practices and behavioural norms that energize people to do their jobs in a strategy-supportive manner. Leadership is also concerned with identifying duplicated, localized or under-utilized skills that the network possesses in order to attain more integrated and more effectively deployed resources and know-how.

• . the rules of the network need to be defined – clarity of purpose, roles, responsibilities and authority;
• each member should have some distinctive added value to bring to the network; yet it must be inclusive and characterized by open decision-making processes;
• a degree of trust and understanding so that members can continue to work together with commitment and consistency;
• strong and dedicated co-ordination mechanisms, along with effective means of managing conflict;
• access to adequate resources and information;
• effective means of inter-agency communication at all organizational levels;
• a clear interface for clients, exporters or potential exporters, to maintain tidy relationships and minimize confusion. A ‘first-stop-shop’ concept with the necessary linkages to guide clients according to their stage of development is much desirable.

One of the fundamental decisions that the export strategy-maker needs to make concerns ownership of the network, and consequently its leadership. Should it be the public or the private sector that champions the national trade support network? There are advantages and disadvantages to both. The public sector has the resources and facilities for economic development. It has clout, political authority and access at the national, and sometimes international scale, but is often unco-ordinated and is characterized by red tape and cost inefficiencies. The private sector has the resources, skills and the expertise to commercialize, and manages supply and demand to obtain effectiveness and efficiency. However, it lacks the reach and range of the public sector. The public sector often adopts measures that have long-term outcomes; the private sector is more concerned with short- to medium-term profitability. The public sector is concerned with the macroeconomic environment; the private sector more with microeconomic factors. For example, past editions of the Executive Forum on National Export Strategies have clearly indicated that a country’s credibility and image are essential elements for successful exporting enterprises. Can the private sector alone provide such credibility? Is the image of a country a matter to be left only to the private sector? How many business firms would be willing to pay an annual contribution to promote the country as a business partner? The public sector usually has a better grasp of priorities in the national context and is more capable of objectivity. This heavily underlies the type, the quality and extent of subsequent support. For example, although local industry may feel that a level of protection may be desirable, introducing such protection may not necessarily result in the national interest, and can have severe implications on other, seemingly unrelated, areas of business.

Rather than being a question of more or less government involvement, it is perhaps a question of different governance – one that is characterized by the dynamism, efficiency and effectiveness of the private sector.

The export strategy-maker may also consider a participatory approach. This presumes an integrated effort of all stakeholders involved, and depends on a multiplicity of sources for initiatives and decision-making, allowing access to a wide range of alternative institutions and funding mechanisms in the network. Participatory governance can thus be the key to ensuring that the network continues to serve the unifying purpose. Leadership for the network can be provided by a public-private advisory group or steering committee which defines the network’s agenda, cooperatively plans the use of shared resources, and fosters a climate of trust.

Whichever the approach, strong and resourceful leadership is fundamental. What is also certain is that the export strategy-maker needs to feel the pulse of industry, and a consultative approach is therefore more likely to render better results in a shorter time.

Joint ownership is thus commendable; but it must produce an integration of assets, communication and command in an efficient and flexible manner. In this context, rules need to be broadly defined up-front, in terms of inputs to the network, and rewards to be expected. At the same time, care must be taken that momentum is not lost through excessive formality.

• simplify the framework regulating trading practices;
• achieve optimal synergy between the regulatory and operational functions;
• establish a coherent organizational structure to enable satisfactory co-ordination;
• develop internal and external communications mechanisms;
• improve flow of information and facilitate dialogue between policy-makers and industry;
• ensure adequate inter-linkages between trade-related business services;
• rationalize operations to achieve the maximum contribution to economic development;
• maximize utilization of resources through consolidation of functions;
• establish an enabling environment for export development;
• encourage local producers to reform so as to meet the competitive thrusts of foreign competitors;
• support the initiatives of the private sector to expand internationally
• generate new or alternative job opportunities with the sectors that contribute most to the economy;.

The power of one is said to be great; the power of many greater. How much greater depends on the synergies that are developed, the extent of group effort, the vision driving the collaborative effort, and the co-ordination mechanism.

How can the export strategy-maker advance the concept of national networking in practice? Unless there is a willingness to collaborate by the various actors, it is unlikely that the national network can be successful in the medium- to longer-term. It may work for a little while, because members feel they have to, but it will die at the first slackening of pace.

His task sounded simple enough – get the various trade support institutions working together to bring about a holistic approach to the trade support environment and rationalize government expenditure in this sector. For the Undersecretary of Trade, however, this was no mean task. The more he thought about it, the more overwhelming it appeared, since the agencies defended their territory aggressively. He wished to avoid a straightforward imposition; it could only lead to bureaucratic hostility. The minister was right though – there was clear scope for co-ordination. He had requested operational and strategic plans from all agencies. Within the week he had them all – they always responded quickly to requests from ‘head office’. His thoughts lingered on this for a few seconds, and then he knew just what to do. Of course, the details had to be worked out, but… During one of his recent speeches, the minister had mentioned the need for more assistance to the crafts industry – to help these thrive, to become less insular and more export-oriented. A statement in passing, perhaps, but it had not gone unnoticed by the agencies – their plans clearly revealed this. Two wanted to establish promotional Web sites for this sector; one wanted to organize a roaming exhibition in major European cities; another wanted to co-ordinate a wide-reaching training and support programme to help the micro-enterprises integrate and reengineer certain business processes; yet another proposed to set up an export consortium. Finally, it was also suggested to set up an authority to certify local producers of genuine handmade crafts to protect this indigenous industry from cheap, imported, machine-made imitations. Good ideas? All of them! He would take ownership of these plans and see to their implementation. They should be pleased to see such interest in their own suggestions. He would set up ‘Crafts Council’ with representatives from the agencies – people at the operational level – get them talking together. Better still, make it a ‘Trade Council’, would be easier to move to other things and give it more credence. Later on he would involve other partners – financial institutions, shipping agencies, customs, telecommunications providers… Yes, this could be a good start to get the trade support network working.

Many times, to garner such willingness and support, all it takes is vision and a desire to succeed. When the export strategy-maker decides to lead the national trade support network, and communicates this, the various institutions that are likely to be affected would want to be involved. The commitment by policy-makers in favour of a course of action that prioritizes opportunities and addresses national constraints is likely to engage the attention of the institutions. Being invited to participate in the network is, after all, an acknowledgement and recognition of each agency’s significance and substance.

The export strategy-maker has various choices in seeking to clarify the lines of responsibility for implementing the national vision. These can be identified by asking:

• whether or not the arrangements for the national trade support network are subject to formal mandatory requirements or universal statutory obligations; or
• whether or not the network is to have a greater discretionary interpretation of responsibilities.

These two aspects should be envisaged as two ends of a continuum rather than as wholly differentiated approaches. Some models of formal requirements include:

• statutory obligations stipulated in legislation (or other form of directive);
• contractual agreements binding the various institutions;
• guidelines, circulars, codes of practice and other forms of encouraging responsibility.

The alternative approach is to leave the process to greater flexibility, against a background of central direction and encouragement. In this case, the export strategy-maker may still require some process of consultation particularly if the environment is characterized by fragmentation and polarization. Such consultation will help to:

• raise awareness of the national vision and the need for institutional trade support networking;
• gather and check information;
• canvass opinion about proposed priorities;
• give agencies a voice in the development of strategies, thereby creating ownership;
• test support for particular strategies.

Fundamental to the decision is whether the export strategy-maker is after forming multi-agency partnerships or inter-agency partnerships. Each has its advantages and disadvantages. Another question concerns the export strategy-maker’s role. Is it that of navigator, driver or passenger? Navigating is about planning the route and setting the direction by establishing norms and catalysing change. The navigator is therefore concerned with ‘leading’. Driving is about following the set direction, implementing policy and delivering the service. The driver is thus concerned with ‘doing’. The passenger is more passive, but quietly observes and appraises the choice of route and the effectiveness of execution, and can thus offer advice for future improvement.

involves the coming together of various agencies without this significantly affecting or transforming the work that they do. The same tasks are conducted in cooperation with others. The level of involvement is nominal, as is the level of responsibility that can be delegated and accountability that can be imposed. Although easier to implement, the rewards of multi-agency network arrangements can be smaller.

involves relations that interpenetrate and affect normal internal working practices. This entails some degree of synthesis and melding of relations between agencies. Involves collaboration and interdependence. Inter-agency work can thus impact upon the nature of mainstream service delivery by participating organizations. This is likely to give rise to new structures, new identifiable units or new forms of working. Consequently, it presents greater challenges in management.

Networks can be costly to co-ordinate, the administrative tasks can be daunting, nonproductive networking activities can proliferate, and networking activities sometimes compete with (rather than build on) national priorities. Governance is under pressure in many countries and across many functions. Existing structures are often unsuitable in the framework of ongoing changes in global trends in trade and in market access conditions. The result is that administrations are forced to reconsider the way they operate, to question their role in the economy, and are pressured to reduce or contain expended resources. The national trade support network therefore needs to be sensitive to this force. The power and politics of the network inevitably reside here, for the governing structure is often a forum for airing internal demands and for resolving them within funding realities, whilst achieving economic growth.

As a network becomes successful, it is likely to attract new attention and new members. This, in turn, increases the value of that network to other users, inducing them to join. Fundamental to the success of the network, however, is its manageability. The larger the network, the greater is the need for supporting infrastructure, for systems of administration, management and control. Sometimes, more can be achieved with less. Problems may also arise from not identifying the right, or all the network partners.

Every network has dominant partners. These are individuals or organizations that tend to overshadow the other members of the group. The power of these dominant partners can come from a number of factors and may include seniority, size, political authority, access to resources or expertise, financial clout etc. Although the network should encourage enthusiasm, it is equally important that all members of the network recognize the need for equilibrium – the competitive or pressure relationship must be avoided. All members must recognize the need for co-ordination roles, for devoting time and energy to develop the national vision in a proactive manner.

Hidden agendas can cause the best designed strategies to fail. Unexpressed expectations are very common and cause disruption of the network and provoke internal conflicts. Informal or hidden relations may also arise. These can lead to decisions being taken outside of the formal network structures and co-ordination mechanisms. Such relations are hard to monitor and present problems for accountability, although they are often used as an excuse for ‘getting things done’. This runs counter to the spirit of network and often reinforces the power of the more dominant partners. It is therefore important to ensure that there is open and constructive management of conflict for inter-agency network trust relations to be sustained over time. A related problem is information hiding, whereby members do not convey useful information in order to get ahead of the network or achieve a dominant position.

Differences between the agencies can lead to ingrained conflict in which members slow down, or discourage creativity and implementation to defend their own interests and perspectives. Such opposition can be manifest by a lack of engagement with, or an observable disregard to, the contributions and tactics of fellow members. The result is inactivity as the network becomes trapped in wasteful and ineffective competitive discord and hostility. Alternatively, some members may seek to assert their interests by pursuing their own agendas, regardless of the position taken by the network.

Problem-solving and decision-making are two interacting and mutually reinforcing processes that must function well at every level of the network. These processes entail the ability to:

• define important problems with managing the network;
• gather relevant data from various sources to frame the issue;
• create a set of alternative actions to deal with the problem;
• decide on solutions;
• create the conditions to carry out decisions;
• monitor these decisions and the problem’s progression.

Because problems often require disparate parties to be brought together, the stature of the individual leading the network is critical. The leader takes on multiple roles to keep the network focused on the tasks at hand and acting as a broker between different interests, alternatively serving as interpreter, mediator, deal maker, and enforcer. Likewise, the leader’s expertise and personal relationship with network members are important, especially when conflicts arise.

• What human and financial resources are needed to implement and maintain the newly instituted trade support network?
• Have the start-up and running costs of sustaining the national trade support network been estimated? How can such costs be covered by the national budget? How can costs be reduced whilst achieving the national trade support objectives?
• Do the requirements imposed by the national vision fall within the capacity of the members to comply?
• Are the proposed systems, procedures and measures likely to command the confidence and cooperation of those affected? Is the network too focused on systems and processes to the exclusion of productivity (i.e. bureaucracy vs. thinking)?
• Are the necessary structural and co-ordination mechanisms in place to ensure that individual institutions keep pace, and in line, with the network as it evolves?
• Is the introduction of new national legislation required?
• What form will consultation with the various institutions take?
• Are benchmarks and timeframes clear and agreed upon?
• What sources of guidance will be provided to those charged with implementation?

One of the more acute difficulties faced by TSIs everywhere is performance measurement. How actually effective is a TPO? With networks, the problem of evaluation would seemingly become bigger. A simple answer could be that when the costs of achieving harmonization are lower for all organizations than the consequent increase in benefits, then the move towards harmonization is beneficial. But how does one measure the costs and benefits involved?

Performance measurement needs to allow comparisons of what has actually happened with what was planned – the original objectives of the trade support network. It is therefore logical to go back to the stakeholders for feedback and evaluation. The following quantitative and qualitative criteria are just a few factors likely to be checked for improvement by policy-makers and business firms alike:

• availability, cost and access to infrastructure, such as transport systems, telecommunications and technology;
• availability and access to trade-related business services in general, including promotion; availability and access to trade information and foreign market research;
• availability and access to trade finance and preferential rates of interest for exporters;
• incentives to export when compared to domestic supply;
• tariffs and taxes on important inputs for exports and their domestic suppliers efficiency, simplicity and transparency of administrative trade procedures;
• foreign investment as a consequence of improved industry structure;
• rates of product development and innovation.

The best indicators are likely to arise out of benchmarking such criteria by:

• evaluating the national trade policy regime and trade procedures in relation to those of competing countries;
• measuring the competitiveness of national industries against international competitors;
• assessing the competitiveness of firms against industry averages.

In doing so, it is useful to conduct such benchmarking exercises before the network starts functioning. This provides the yardstick against which future measurement can be compared.

Performance measurement therefore involves making judgements about the merit or worth of an activity during or after implementation. It answers questions of relevance, effectiveness, and efficiency. As such, evaluation needs to become an intrinsic part of the process of the network’s programme design and implementation. The reason for this is simple – there is always room for improvement. The trade support network can only be said to be completely successful when it makes itself redundant – when business firms no longer need trade support services.

• Methods of performance measurement must be identified before implementing any new process – it must be clear what is being measured, and what the starting position is;
• Assessments must be useful both to the individual agencies and to the network; the primary purpose is towards achieving institutional self-improvement;
• Indicators that are comparable across institutions should be maximized;
• All methods of assessment employed need to be based on criteria that match the network’s mission, its inputs, and its resultant trade support programmes;
• Multiple measurement modes are necessary – quantitative as well as qualitative data;
• Proposed criteria must be evaluated for their potential for unintended negative consequences, such as degrading institutional effectiveness;
• Assessments must be presented in the proper context, including appropriate analytical methods which will help avoid misuse;
• Performance measurement processes with costs that outweigh the benefits should be avoided.

When does the network become an effective institution? Simply, when members no longer find it necessary to deviate from the rules of the network. When systems and processes become self-enforcing, the network will remain unified and organized. When policies are credible, additional forces come into play that further enhance the stability of the network. Members, for instance, become willing to invest in the growth and success of the network. Once they do so, then they have a vested interest in upholding and nurturing the network regime. They do not find it desirable or rewarding to exit the network, and become a lobby in its favour. The network becomes an institution.

It is clear that the establishment of an enduring trade support network requires considerable time and effort. It does not come easily but has to be worked at. It requires a radical transformation in the way agencies think and operate. It needs to be seen as an interactive and continuous process involving careful planning, dialogue and exchange. The roles of the export strategy-maker and the leader of the trade support network are grueling and exigent, and these must come across as independent co-ordinators who are competent in negotiating and mediating conflicts in pursuit of the national vision. Programme management is vitally connected with all other areas of organizational capacity. The strength of the organization’s strategic leadership, human resources, other core resources, processes, systems, and intra- and inter-agency linkages ultimately affect the quality of the network’s work. The challenge is to maintain interest and gain momentum since performance is highly visible and is often the major focus of the network’s assessment.

The trade support network therefore remains a complex organization and it is appropriate to bring this study to a close with a definition of a complex system as "one made up of a large number of parts that interact in a nonsimple way. In such systems the whole is more than the sum of the parts, at least in the important pragmatic sense that, given the properties of the parts and the laws of their interaction, it is not a trivial matter to infer the properties of the whole" (Simon, 1962). Being a complex institution, it is difficult to recommend any single set of best practices, since different circumstances in different countries require distinctive and multifaceted analyses. Indigenous problems require indigenous solutions. It is hoped, however, that the assumptions, arguments, questions and checklists raised or outlined in this paper provide an adequate groundwork toward answering the central question:

Is your trade support network working?

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Posted 02 September 2008