Outsourcing Port Management and Country of Origin Effects

The  outsourcing of US port management to a Dubai firm has created a furore. As the story unfolds Emily Messner has done a wonderful summary of the issues in her Washington Post blog. From a purely managerial sense  Dubai port is exceptionally well managed. As my friends in the transportation business tell me, it’s frustrating to have your truck (or ship) stuck with delays in loading/unloading and inefficient ports are both inexplicable and yet  rampant worldwide.  To get a ship in and out quickly ( and safely without any "trojan" elements!) is really the key. As Messner points out Dubai has much more to loose than gain in messing up American port management contracts. But what do you tell everyone who are understandably so concerned about terrorist threats? Reminds me of a stream of Internationalization  Research involving expansion  into foreign markets.

Called the Country of Origin (COO) Effect (eg. Bilkey and Nes, 1982  ) this involved the notions people have about countries from which goods are exported and how these notions get transfered to the products that are being marketed by the exporting country. Interestingly, roughly 25 years after this had been pointed out for products we are seeing the COO effect working against Dubai in delivering a management service. There will have to be long explanations before Americans are convinced that all will be well if the deal moves forward…

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