Strategy and structure of modern trade promotion agencies

Abstract

Almost every country in Europe has a Trade Promotion Organisation (TPO). While they vary in size, scope and services offered, TPOs share the broad mission of assisting small and medium sized enterprises (SMEs) to internationalise and the ongoing challenge of justifying the public funds that typically sustain them (Olarreaga & Sperlich, 2015). While SMEs, the core clients of TPOs, have been the subject of a lot of research, very few studies consider how TPOs decide what services to offer and in what way (Gillespie & Riddle, 2004). This even if international institutions and researchers continue to ask, ‘what works?’ in trade promotion (ITC, 2015; (Lederman, Olarreaga, & Payton, 2010).

In particular, we seem to know a little on what is happening ‘within’ the TPOs. These have been approached as a black box in the international business literature but we are unaware of the specific strategies and structures they use to support internationalised SMEs. The research questions in this study are, first, should TPOs use a Porterian (1990) approach to nurture the development of clusters or give emphasis to firm high performing ‘stars’ that do really well irrespective of the industry sector; and, second, should TPOs rely on their agencies abroad or rather follow a centralised decision making whereby the home country headquarters provide strict guidelines on what means to follow to support internationalised SMEs abroad. Both of these research questions have received minimal attention in the literature, yet evidence into them will assist TPOs provide high-quality services to their internationalised SMEs. To this end, we provide empirical insights collected from in-depth interviews and related search of 14 modern TPOs based in Europe. This paper is structured as follows. The next section provides the theoretical background to this study followed by methodological details. The section following that elaborates on the findings of this study, and the last section concludes with the discussion, and key implications and future research directions.