Overview:

Des Moines’ businesses are poised for rapid internationalization, but the process is complex and can be intimidating.

Jeff Kappen and Matthew Mitchell, both assistant professors in the international business program at Drake University, are engaging in ongoing research to boost Greater Des Moines understanding and footprint in international markets. The two are assisting local firms – especially small- and medium-sized companies that lack staff expertise – in making the leap into global markets by researching how businesses from Iowa should begin the internationalization process, and identifying where they could encounter challenges in going global. 

Specifically, they focus on the specific country risks associated with global growth; the ideal entry mode for expansion; and how to coordinate operations between U.S. headquarters and international locations.

The Method:

Mitchell alone has travelled and worked in more than 70 countries. Kappen has studied the impact on Brazilian businesses in doing business with China. In any relationship between different cultures, there are similarities that can be applied to Iowa and Midwest companies doing business abroad and lessons to be learned from those similarities.

“In terms of the challenges they face, anyone doing business with a foreign partner, we might think “a” means “b,” they might think “a” means “c.” That’s common across any firm that decides to go international,” Kappen said.

The researchers made site visits and interviewed executives, industry associations and elected officials in the United States and in other countries.

Mitchell and Kappen have investigated how businesses select global markets, how they identify and mitigate risks and how they identify profitable global opportunities, as well as how businesses overcome hurdles related to culture, language and regulation.

For example, how does a product manufactured in Greater Des Moines avoid stiff tariffs in foreign markets. One way is to ship a product piece-by-piece for assembly in the country where the product is being shipped, Kappen said. That might mean sending four bolts for final attachment.

Results:

The research has produced insights into the key challenges faced by local firms that are growing globally, they said.

Three main challenges are:
– Upgrading the global mindset of Midwestern firms to be able to compete successfully in the global war for talent.
– Selecting the appropriate partner abroad to complement the firm’s existing resources and capabilities. 
– Identifying and mitigating the risks associated with doing business in global markets. The risks disproportionately affect the new small- to medium-size businesses that may be “born global,” such as technology companies.

Conclusion:

Mitchell and Kappen note that a big challenge, especially in the Midwest, is adopting a mindset that we can go outside familiar territory and compete on a world stage.

“In the Midwest, students and employees have a great work ethic, they’re smart as hell, they can compete with anyone globally,” Mitchell said. 

Mitchell and Kappen are utilizing their research to work on a pro bono basis to help the Greater Des Moines Partnership implement its regional export plan. The Partnership has enlisted ten groups of graduate and undergraduate students to work with local businesses to research how to promote exports among local Iowa businesses and how to attract foreign direct investment into Iowa businesses from abroad. The Partnership has a plan for upgrading the region’s capabilities by providing leadership and intellectual capital to create the necessary conditions allowing businesses to reach their maximum potential around the world.

This research, along with the focused engagement and collaboration of community partners, will help Des Moines achieve its ambitious global growth goals.

“The exciting challenge that wakes us up in the morning is to communicate these opportunities to Des Moines and develop a global mindset, and help them think about these opportunities … to develop global or transnational concept,” Mitchell said.

Resources:

Kappen and Mitchell said the ongoing research has immediate and practical applications that have not resulted in a formal paper. For more information about the Drake international business program’s faculty and research, go to http://www.drake.edu/internationalbusiness

Mitchell and Kappen are available via email at matthew.mitchell@drake.edu and jeffrey.kappen@drake.edu.