SESSION 1: Security and Competitiveness
How Does Homeland Security Affect US firms’ International Competitiveness?
Robert Spich , UCLA
Robert Grosse , Thunderbird
Abstract: This paper frames the issue of homeland security and its relationship to the international competitiveness of US firms. This is largely a conceptual statement, identifying the areas of national security (homeland security) that are key to business, and exploring the management concerns of business to the new threats and opportunities that have arisen.
We establish the point that homeland security is a purposeful, conscious and rational response to terrorist events that is an emergent and evolving systems phenomenon. This systems approach is an especially useful way to look at the implications of homeland security in its relation to business. We then look specifically at the kinds of costs and risks that are generated for US international business (exports, imports, incoming and outgoing investments) as a result of this phenomenon. Management strategies for dealing with these costs and risks are explored for US firms.
Our conclusion is to demonstrate the scope of analysis that is needed to understand and to managerially cope with the homeland security problem. We show the value of using theory from various disciplines for analyzing a multi-dimensional problem like this. And finally we are able to recommend some policy dimensions for both companies and the US Government toward mitigating the negative impacts of the homeland security problem.
Developing the Eclectic Paradigm to a Model of Global Strategy:
An application to the impact of September 11
terrorist attacks on MNEs' performance
Sali Li, Manuel P. Ferreira, Stephen Tallman
The University of Utah
Abstract: We extend the eclectic paradigm towards a model of global strategic management and apply the latter to the impact of the Sep. 11th terrorist attacks on the MNEs' performance. First, we integrate MNEs' resources and capabilities, strategy, and structure with the eclectic paradigm. Then we focus specifically on the alteration of the location attractiveness to examine how MNEs adjust internal factors with the exogenous distortions caused by an extreme environmental shock. We suggest that this adjustment is carried out at three levels: resources and capabilities, strategy, and structure, which jointly determine MNEs' performance. Although we restrict the application of this model of global strategic management to the post-Sept. 11th, our model may be applied to other extreme events that change, at least partly, the worldwide, or regional, economic order.
Keywords: the eclectic paradigm, global strategic management model, September 11th terrorist attacks
Competition within the U.S. National Security Regime:
A Study of the U.S. Aerospace Defense Sector
Merrick School of Business, University of Baltimore
Abstract: This paper focuses attention on the aerospace defense sector and the national export control regime within which U.S. corporations operate. The government’s dual role as both the regulator and the sector’s largest customer is examined. From this vantage point, eight case studies illustrate the difficulties faced by companies operating in this challenging environment, and highlight factors that lead to noncompliance with U.S. government regulations. Firm performance effects are investigated, including impacts on profits, share price, and reputation. The paper concludes with implications for international business research and practice that reflect realities in the aerospace defense sector.
SESSION 2: Security and Regional Issues
U.S. Energy Security and Regional Business
Alan M. Rugman
Indiana University CIBER
Abstract: There is now robust empirical evidence that the great majority of international business is conducted within the regional blocks of North America, Asia, and the EU. Approximately 60% of world trade is intra-regional, and the world’s 500 largest firms average over 70% of their sales in their home region. In terms of energy the picture is also regional. Indeed, the United States relies on oil produced in all of the Persian Gulf for only 12% of its entire oil consumption. The United States obtains nearly 60% of its oil from NAFTA. Clearly the United States can develop a strategy of energy self- sufficiency if it wishes. If it does so, responsibility for the Middle East would need to shift to other G8 members who have a greater long-term energy dependency on Middle Eastern oil.
Impacts of Foreign Terrorism on East Coast Supply Chains
and its Effects on Global Competitiveness
Richard Lancioni, Michael Smith, Hope Jensen Schau, Alex Stein
Fox School of Business & Management, Temple University
Abstract: This paper examines how U.S. firms are responding to the homeland security threat to their supply chain systems. An initial study incorporating personal interviews was conducted to determine the key drivers of change in supply chain operations in response to heightened concerns about security. The key drivers addressed include operational issues such as delivery time, stock levels, procurement lead times, warehouse throughput, customer service and inbound transportation. Insights from this study will contribute to our understanding of how firms adapt competitively to disruptions in multiple environments, including issues in supply chain management. Strategic considerations include adaptation to government policies and certification, industry competitiveness, integration of technology in supply chain operations, cost incidence and impact on relationships between members of the supply chain community. From an organizational dynamic perspective, this study also addresses how firms adapt to abrupt changes in their internal and external environments.
The Impact of US Homeland Security on US-Latin American Trade and Investment
Terry L. McCoy, Brandon L. Knox
University of Florida
Abstract: Latin America is one of the few regions of the world with which the US enjoys a favorable trade balance. The attacks of 9/11 and subsequent U.S. anti-terror policies not only strained political relations between the two regions, but also raised concerns regarding future trade integration between the two regions. An assessment of U.S. anti-terrorism policies and their impact on commercial relations between the US and its southern neighbors is therefore timely.
Specifically, this project assesses the impact of Homeland Security regulations on U.S.-Latin American trade. It first details the role of the Department of Homeland Security and the most significant rules related to trade security that have been enacted since 9/11. The project then addresses how these rules will impact different regions of Latin America (Mexico, Central America, the Caribbean, the Andean Region, Brazil, and the Southern Cone), as it is apparent that the impact will not be uniform across all of Latin America. The project concludes by highlighting what major research issues warrant further investigation.
This research relies on literature reviews and extensive interviews with businesses engaged in US-Latin American trade. It will categorize direct impacts, providing quantitative estimates where feasible, derive indirect impacts and suggest policies and strategies to minimize negative effects of Homeland Security regulations on US-Latin American trade and investment flows and on US firms with business transactions dependent on those flows.
SESSION 3: Role of Information Technology
ICTs, Strategic Asymmetry and National Security
University of North Carolina at Greensboro
Abstract: In the history of warfare, several examples of strategic uses of asymmetric technologies can be found. Consistent with history and theory, individuals, organizations and nations have spotted opportunities to employ modern ICTs to gain and exploit asymmetric advantages and to counter asymmetric weaknesses. This article discusses various asymmetries associated with institutions, nations and organizations that influence the ICT-national security nexus. Regulative, normative and cognitive institutions in a country provide various mechanisms that affect the nature of positive and negative asymmetries. Nations and organizations also differ in terms of their capability to assimilate ICT tools to gain positive asymmetries and deal with vulnerabilities of negative asymmetries. Integrative approaches that combine policy and technological measures at various levels are likely to make the world a more secure place.
Keywords: Strategic asymmetry, information and communication technologies, national security, institutions, cyber attacks
Using Information Technology for Effective Emergency Response
Stella Ying Shen & Michael J. Shaw
University of Illinois at Urbana-Champaign
Abstract: Emergency is any natural or man-caused situation that results in or may result in substantial injury or harm to the population or substantial damage to or loss of property. While recent terrorism threats have drawn great attention on public safety, the increasing globalization and reliance on computer networks in today’s business have made uncertainty and security to be the main concerns for companies with multi-national operations. Thus, the capabilities to rapidly respond to emergency situations become an important part of Homeland Security as well as firms’ global competitiveness. The nature of emergencies creates many challenges for rapid response. It has been noted that the emergency response system is a multi-disciplinary concept that includes not only information technology (IT), but also social communication network, and flexible organization designs (Calloway and Keen, 1996) . The purpose of this paper is to identify the research domains pertaining to IT-facilitated effective emergency response management. Particularly, in this research we will focus on the use of IT for coordination, hence improving the response effectiveness, by identifying the technologies that fit with the needs of particular emergency response situations.
Pattern of Global Cyber War and Crime: A Conceptual Framework
University of North Carolina at Greensboro
Abstract: The flourishing synergy arising between organized crimes and the Internet has increased the insecurity of the digital world. What factors encourage and energize their behavior of hackers? These are very important but highly under researched questions. We draw upon literatures on psychology, economics, international relation and warfare to propose a framework that addresses these questions. We found that countries across the world differ in terms of regulative, normative and cognitive legitimacy to different types of web attacks. Cyber wars and crimes are also functions of the stocks of hacking skills and availability of other economic opportunities. An attacking unit’s selection criteria for the target network include symbolic significance and criticalness, and degree of digitization of values. In the target country, existence of laws aimed at securing networks and relationship with the government of the nation where the attacking unit is located moderate the effect. Managerial and policy implications are discussed.
Keywords: Information and communications technologies, cyber war, hacking, mafia, nationalism
Session 4: Security and Corporate Management
Positioning Terrorism in Marketing: Research Propositions
Michael R. Czinkota
Gary A. Knight
Florida State University
Abstract: Terrorism poses both direct and indirect threats to the marketing operations of the firm. It represents a market imperfection that increases transactions costs and creates barriers to the free flow goods, affecting potential gains that would occur in the presence of unhindered exchange. Terrorism reflects the risk or actual encounter of violent acts, whose goal is to engender fear, coercion, or intimidation. We investigate terrorism and its association with marketing strategy and operations. Key concepts on terrorism are reviewed and a collection of propositions is offered. We highlight the pivotal roles of sourcing, production, distribution, pricing, communications, and general marketing strategy as functions influenced by, or capable of influencing, terrorism. Lastly, we offer managerial implications, as well as directions and guidelines for future research.
Assurance of Security in Maritime Supply Chains:
Conceptual Issues of vulnerability and Crisis Management
Paul H. Barnes & Richard Oloruntoba
Queensland University of Technology
Abstract: Security assurance across maritime trading systems is a critical factor in international business and in the evolution of international trade generally. Currently a number of initiatives are underway focusing on security issues in ports and ships (International Ship & Port Security Code), customs inspections in international ports (Container Security Initiative) and whole-of-supply chain outcomes (Customs & Trade Partnership against Terrorism).
The main purpose of these initiatives is to reduce the likelihood of maritime vectored terrorism; however, competitiveness may be hampered without careful consideration of their implementation. The paper suggests that the complexity of interaction between ports, maritime operations and supply chains create vulnerabilities that require analyses of a different order to those embodied in these security initiatives. The paper concludes that there is a need to examine the goodness-of-fit of these security initiatives against business efficiency and competitiveness goals, and to consider the training needs for crisis management capabilities that will allow private and public sector groups involved in global trade to effectively mitigate the threat of maritime terrorism.
Keywords: Maritime Security, Crisis Management, Competitiveness, Vulnerability.
Risk Management in Global Firms:
The Direct and Indirect Impact of Homeland Security
Thunderbird, The Garvin School of International Management
Abstract: This paper explores the direct and indirect impact of United States Homeland Security legislation on the operations of various business interests in the international trade supply chain. A U.S. “importer” is used as an example of a business firm seeking membership in the Customs-Trade Partnership Against Terrorism (C-TPAT) offered through the U.S. Customs and Border Protection unit of the U.S. Department of Homeland Security. The security requirements of C-TPAT are extensive and extend to the “importer’s” relationship to all firms in its supply chain (foreign and domestic) thereby giving rise to responsibility and probable ultimate liability for a supply chain partner’s failure to comply with security requirements. The indirect impact relates to: 1. the “foreseeable harm” to U.S. interests of a terrorist attack on the importer’s supply chain and 2. the “duty of reasonable care” imposed by the U.S. legal system on importers to protect against terrorist acts.