Crossing the border:

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Embassy services from a business perspective

A case study with regard to the influence of clients and the network environment on the demand for embassy services.

University of Groningen

Faculty of Management and Organization BSC Bedrijfskunde

Specialization Business Development

Master thesis by Sandra Spruijt

May 2006

Address: Korreweg 40a

Postal code, place: 9715 AB Groningen Phone number: 06 47 122 283 Email address: s.m.spruijt@student.rug.nl

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Crossing the border:

Embassy services from a business perspective

A case study with regard to the influence of clients and the network environment on the demand for embassy services.

University of Groningen

Faculty of Management and Organization BSC Bedrijfskunde

Specialization Business Development

Master thesis by Sandra Spruijt

May 2006

Address: Korreweg 40a

Postal code, place: 9715 AB Groningen Phone number: 06 47 122 283 Email address: s.m.spruijt@student.rug.nl

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Acknowledgements

This research could not have been performed without the help of several persons. First of all I would like to thank the economic department of the Dutch embassy in Brussels and in specific Peter Brulmans and Rob Zeldenrust for giving me the opportunity to experience working at the embassy and to discover Brussels life. Besides the unforgettable experience of working at an embassy, being involved in the organisation of the state visit of the Dutch queen to Belgium was probably a once in a life time experience.

Additionally, my gratitude goes to mrs Ranga for her constructive support during the accomplishment of this thesis. I would also like to thank my second supervisor, mrs van Peet for the valuable comments and evaluation of my final thesis.

Subsequently, I would like to thank all interviewees, who spend the time and effort to provide me with valuable information to make the accomplishment of this thesis possible. My special thanks to Paul Verlinden of the Koninklijke Metaalunie, as he spent much time supporting me with the execution of the survey.

Last, but certainly not least, I would like to thank my parents, sister and boyfriend for their unconditional support, especially during the difficult periods.

Sandra Spruijt

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Abstract

The purpose of this research is to inform the economic department of the Dutch embassy in Brussels about the possibilities to increase the demand for economic services in order to reach the departmental objective more effective. The theoretical basis of this research is formed by a client and a network perspective. By defining users of government services as client, the behaviour with regard to services can be investigated by means of business models. The influence of current and potential client needs, expectations and experiences on the demand for economic services is investigated by means of secondary material and a questionnaire among potential clients. From the network perspective, the influence of the overlap in actor attributes and the relation with the network actors, on the demand for economic services is investigated by means of ten semi-structured interviews with network actors. Six factors could be identified by this research to be of negative influence on the demand for economic service. Firstly, a gap between expectations and experiences of economic services exists among current clients. Secondly, the visibility of economic services among potential clients is low. Thirdly, a misperception of the target groups of economic services exists among potential clients. Fourthly, the economic department runs the risk to be sided out, as overlap in actor attributes exists within the network. Fifthly, the economic department does not have an optimal relation with actors in the network that fulfil and intermediate function. And finally, not using the relation with network actors to promote the economic services of the embassy. Based on these factors, different measures can be taken to make an increase in client demand possible. Developing effective procedures for service recovery, managing expectations, defining the identity of the economic department more precise, informing network actor well, sending specific mailings and improving the relation with network actors with an intermediate function are measures that can be taken to increase the client demand for economic services.

Key words: Government, Services, Demand, Clients, Networks First supervisor: Drs L.M. Ranga

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Crossing the border – By Sandra Spruijt

REFERENCES... 76 APPENDICES... ……….. APPENDIX A: Organogram Ministry of Foreign affairs ... APPENDIX B: Promotional article in newsletter Koninklijke Metaalunie... APPENDIX C: Questionnaire needs and expectations of potential customers ... APPENDIX D: Interview questions network actors ... APPENDIX E: List of interviewees...

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Tables and figures

Tables

TABLE 4.1 Interviewed network actors ... 26

TABLE 5.1 EVD budgets ... 28

TABLE 5.2 Embassy website visits (economic section) ... 29

TABLE 5.3 Embassy website visits (economic section) 2004 and 2005 compared... 30

TABLE 7.1 Interviewed network actors ... 46

TABLE 7.2 Objectives of network actors... 47

TABLE 7.3 Target groups network actors ... 48

TABLE 7.4 International services of organisations in the network... 49

Figures FIGURE 2.1 Delivery process of services by the economic department... 5

FIGURE 3.1 Purchase process for services ... 13

FIGURE 4.1 Conceptual framework... 19

FIGURE 6.1 Type of client according to enterprise size ... 33

FIGURE 6.2 Type of client according to international experience... 33

FIGURE 6.3 Client needs for economic information content... 35

FIGURE 6.4 Client experiences of intermation provided... 35

FIGURE 6.5 Consensus between client expectations and experiences ... 36

FIGURE 6.6 Respondents according to enterprise size ... 38

FIGURE 6.7 Export shares of respondents ... 38

FIGURE 6.8 Expectations of Belgium as trade country and information need... 39

FIGURE 6.9 Needs for economic information content... 40

FIGURE 6.10 Use of suppliers of international information about Belgium ... 41

FIGURE 6.11 Expected importance of information suppliers... 42

FIGURE 6.12 Familiarity with the services of the Dutch embassy in Brussels ... 42

FIGURE 6.13 Familiarity with target groups of economic services... 43

FIGURE 6.14 Expectations of economic services ... 44

FIGURE 6.15 Drop out of acquirment process for services ... 45

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1 INTRODUCTION

Business research in a governmental context does only take place sporadically. This is quite surprising, as this research showed how valuable a business administrative perspective can be in the context of ministries, governmental regulations and complex networks. In this research we will cross the border by investigating a government problem of the Dutch embassy in Brussels from a business perspective.

This thesis addresses the issue of a doubt, about the current level of customer demand for the services of the economic department of the Dutch embassy in Brussels. This issue is relevant as the economic department wants to maintain a certain level of effectiveness and efficiency in its service delivery to customers and wants to fulfil the departmental objective as much as possible. Besides the practical relevance, this research is theoretically relevant as it shows how business administrative models can be applied in a governmental context.

The object of the research is therefore formulated as follows:

“To advise the economic department of the Dutch embassy in Brussels about the possibilities to increase the direct client demand for economic services in order to meet the departmental objective more effectively”

This issue is treated by means of two perspectives; the client and the network perspective.

This research investigates the current and potential client behaviour with regard to the demand for economic services, by means of the purchase process for services as identified by Lovelock and Wirtz (2004: 35). The needs, expectations and experiences of these (potential) clients are central in this analysis.

As Ringeling (1990: 55) argues, government agencies get more and more surrounded by other organisations. This changing position of the government, from a central leader to a player in the network provides leads for this research. The influence of this network on the direct demand for economic services will be investigated by comparing the attributes (also: characteristics) of the different network actors and by investigating the relation between the economic department and the actors in the network.

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Based on the research objective and the two research perspectives, the research question is formulated as follows: “How do the expectations, needs and experiences of current and potential clients and the network environment influence the direct demand for economic services of the Dutch embassy in Brussels?”

The following research questions are logically derived from this research question:

“What are the characteristics of economic services, what is the current direct demand for these services and what is the effectiveness of the current direct service delivery?”

“What are the expectations, needs and experiences of current clients with regard to the services directly offered by the economic department?”

“What are the expectations and needs of potential clients with regard to the services offered directly by the economic department?”

“What influence does the network environment have on the direct demand for economic services?”

The thesis is organized as follows. In chapter 2, the problem of the thesis will be explained in the problem analysis. In chapter 3, the theoretical concepts that are useful to treat this issue will be described in the theoretical framework. Also the client and network perspective will be explained in more detail here. Subsequently, the research design will be set up and explained in chapter 4. Chapter 5 discusses the current demand for economic services and the consequences of this demand.

The findings of this research will be separated into: current client findings, potential client findings which will be described in chapter 6 and network findings which are explained in chapter 7. Based on these findings, an answer to the research question will be given in the conclusion in chapter 8. Chapter 9 discusses the recommendations which will suggest ways to increase the direct demand for economic services in future and suggest directions for further research. Finally, the reflection looks back on the research and discusses the usefulness of the business models in this research and the external validity of the research.

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2 PROBLEM

ANALYSIS

“A problem well stated is a problem half solved”

Charles K. Kettering

Before going into the problem of this research, it is important to understand the context in which the problem takes places. Paragraph 2.1 will therefore start with an introduction of the Dutch embassy in Brussels. Paragraph 2.2 will introduce the economic department of this embassy as the owner of the problem. Subsequently, paragraph 2.3 will discuss the service delivery process of the economic department. A detailed description of the problem as well as an explanation of the practical and theoretical relevance of this problem will be given in paragraph 2.4.

2.1 The Dutch embassy in Brussels

The embassy in Brussels is a government agency coordinated by the Ministry of Foreign Affairs. The Ministry of Foreign Affairs has the head office in The Hague, and several embassies and consulates (also called posts) in foreign countries all over the world, that represent the Netherlands in these countries. The complete organogram of the Ministry of Foreign Affairs can be found in Appendix A.

In Belgium, the Netherlands is represented by an embassy in Brussels and consulates in Antwerp, Gent, Liege and Namur. Among them, the embassy in Brussels is the largest post. This research will focus on the embassy in Brussels.

In general, the task of an embassy is to look after the interests of Dutch people abroad. To fulfill this task the Dutch embassies are charged with the following responsibilities:

1. Political tasks

2. Economic tasks

3. Development co-operation 4. Consular tasks

5. Press- en cultural affairs

2.2 The economic department

The economic tasks of the embassy in Brussels are accomplished by the economic department of the embassy (further referred to as economic department). The problem that forms the

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starting point of this research concerns this department. This economic department consists of three full time employees and one head of the department. The objective of this department is: “ To support 1) the Dutch export to Belgium 2) Dutch investments into Belgium and 3) useful collaboration between Dutch and Belgian companies, organisations and institutions.”

The tasks of the economic department are coordinated by the Agency for International Business and Cooperation (abbreviated as EVD). The EVD is an agency of the Ministry of Economic Affairs, which supports entrepreneurs and public organisations with their international trade and cooperation. The EVD stimulates international activities and information about foreign markets with thematic and financial support (www.evd.nl).

The EVD is of great importance for the economic department as it coordinates the tasks of this department and provides budgets to fulfil these tasks. The EVD can be considered as the sponsor and coordinator of the services of the economic department.

Target groups

Dutch Small and Medium-Sized enterprises (further referred to as SMEs) are considered as the main target group of the services of the economic department. According to MKB- Nederland SMEs are defined as: “ Enterprises with less than 250 employees of which small-sized enterprises have a maximum of 50 employees.” Beside SMEs, intermediates are also considered as a target group of the economic department. Chambers of commerce, branch organisations and other interest organisations that want information about doing business in Belgium can be informed by the economic department.

Services

The economic department offers service to Dutch SMEs, the government (in particular the EVD) and intermediates. The economic department offers the following services to these stakeholders:

1 Answer individual questions of enterprises and intermediates about doing business in Belgium

2 Provide information about doing business in Belgium through the website of the Dutch embassy in Brussels

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4 Spread a weekly newsletter with short economic news facts about Belgium to interested persons.

5 The making of market scans (in cooperation with the EVD) for SMEs that see opportunities on the Belgian market

6 The organisation of trade support activities in cooperation with other parties 7 Advising parties when they want to render a project by the EVD

8 Advising the EVD about rendered project ideas 9 Identifying favourable economic sectors in Belgium 10 Promoting the Netherlands as trade country in Belgium

11 Answering questions of the Dutch Ministries of Economic and Foreign Affairs 12 Writing reports for these ministries in The Hague

2.3 Service delivery process

As explained in chapter one, the economic department offers services to Dutch SMEs. The services are offered directly and indirectly to these clients. The service delivery process of the economic department is showed in Figure 1. The red arrow shows the services being offered directly to Dutch SMEs, whereas the green and purple arrows show the services being offered, respectively through the EVD and other intermediates.

Figure 1 shows that the EVD and the intermediates are important in the service delivery process of the economic department to Dutch SMEs.

FIGURE 1

Delivery process of services by the economic department

Legend

Services offered directly to Dutch SMEs Services offered through intermediates Services offered through the EVD EVD

Economic department

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2.4 Problem analysis

As described in the previous paragraphs, the economic department offers services to Dutch enterprises (which can all be considered as SMEs) that need support when doing business in Belgium. These services are offered continually through the website and on demand by phone, email or when visiting the embassy.

The economic department mentions to have doubts about the current level of direct demand for these services. The demand for economic services is not measured by the economic department on a regular basis. However, the economic department thinks to offer useful services to Dutch SMEs and wonders why Dutch SMEs do not use these services more frequently. At the moment the economic department has the human capacity to handle an increase in customer demand. Especially the reasons customers identify for not using the economic services are perceived as important related to this issue.

In order to investigate the identified problem the following question, asked by the economic department, can be identified as motive for starting this research.

Relating to this management question, De Leeuw (2001: 176) identifies three different types of problems namely: an goal problem, a reality problem and a perception problem. The management problem, as identified by the department, is a doubt about the current level of demand for economic services.

The economic department wonders what the possibilities are for increasing this demand. This doubt about the current level of the demand is not based on fluctuations in demand during the previous years or on a comparison with other embassies in the world. This doubt is based on perceptions of the department with regard to the current level of demand. As no database or other ways to measure the demand for economic services are used by the economic department, the reality of the problem is not managed properly. Based on the information available it is not possible to determine, if the problem is a real problem or a wrong perception by the economic department. Therefore the assumption is made to identify the management problem as a reality problem.

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Practical relevance

Low demand for governmental services is not necessarily a major problem for a government agency. For profit organisations, a low demand for services means: less income and lower profits. For a governmental agency like the economic department, this is not the case. Government agencies work according to different budgets that are provided by the Dutch government, so a low demand does not influence the income or profit of the department.

As the current demand for economic services does not influence the income or profit of the department, the question rises: ”Why should this current demand be investigated?” For a government agency a certain level of efficiency and effectiveness is also needed to reach the desired behaviour as identified by the departmental objective. If the demand for economic services is lower than possible the objective of the department is only partially fulfilled.

Theoretical relevance

Questions about customer demand for government services can arise in many government areas. This research demonstrates how business models can be applied in a government environment and how valuable these models are in this context. The value of these models relating to the investigated government context, will be discussed in more detail in the refection. This research focuses on the economic services of the embassy in Brussels, but it can also be used as a starting point for investigating demand for other governmental services.

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3 THEORETICAL

FRAMEWORK

“A room without books is like a body without a soul” (Cicero)

This chapter discusses the theoretical concepts that are related to the problem of the economic department as described in the previous chapter. The objective of this theoretical framework is to select concepts that are a useful foundation for this research. Paragraph 3.1 will explain the governmental context of this research and the focus of a government agency. Paragraph 3.2 continues with an explanation of the characteristics of services in general and the specifics of government services. Also the characteristics of government clients and demand for governmental services will be described in this paragraph. Subsequently, paragraph 3.3 discusses the network environment of a government agency. Finally, paragraph 3.4 presents the models that will be used to investigate the problem as identified in the previous chapter.

3.1 Government context

As a division of the Ministry of Foreign Affairs an embassy can be considered as a government agency. The position of Dutch embassies as part of the Ministry of Foreign Affairs is also clarified by the organogram in Appendix A. Before applying business models to a government environment it is important to understand the differences in acting between private companies and government agencies. These differences can have significant consequences for the tasks and activities accomplished by a government agency.

The difference in general between private companies and government agencies is described by Lane (1993: 1):

“The institutions of politics, government and bureaux populate the public sector whereas various market institutions inhabit the private sector.”

The differences between a government agency and a private company are described by Koers (1996: 72-75):

- A government agency cannot go bankrupt;

- Reward systems of managers within government agencies are less combined with profit; - The government has influence on the market structure, the behaviour and the performance

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- Government agencies do not face a lot of competition;

- Government agencies have an administrative service character;

- Political actors can influence a government agency by determining objectives (internal restriction).

Focus of a government agency

Buurma (1990: 15-20) describes that offering services in a government context is based on the transaction principle. The government offers a service to a citizen, who shows a by the government agency desired behaviour. So by means of this transaction, a win-win situation has been created for both parties.

Usually the users of the government are involuntarily users, because of the monopoly of the government and the necessity of the offered services (Ringeling, 2001: 35-36). This involuntary position of clients has consequences for the market orientation of government agencies. Lane (1993: 143-144) describes this public leadership according to the definition of Hirschman (1970) as follows:

“Private leadership is sensitive to consumer demands in a way that public leadership is not. The market-oriented nature of private leadership implies that consumers have the exit option when they are not satisfied with the performance of enterprises. Public leadership relates to the consumer on a different basis, that is, authority.”

Ter Bogt (2005: 6) argues that also a government agency has to maintain a certain level of effectivity and efficiency in its service delivery to guarantee the continuity of the organization. Therefore it is also for a government agency important to focus on the users of its services.

3.2 Government services

To understand how a service differs from a physical good the service definition as proposed by Grönroos (2001:46) is useful. He defines a service as follows:

“A service is a process consisting of a series of more or less intangible activities that normally, but not necessarily always, take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems.”

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Based on this definition Grönroos (2001: 47) identified three basic characteristics of services: 1. Services are processes consisting of activities or a series of activities rather than things 2. Services are at least to some extent produced and consumed simultaneously

3. The customer participates in the service production process at least to some extent

Lovelock and Wirtz (2004: 13-16) argue that important differences among services exist. They categorize services based on the processes of service creation and delivery. They define a process as: “A particular method of operation or a series of actions, typically involving multiple steps that often need to take place in a defined sequence.”

By looking at services from this perspective, Lovelock and Wirtz (2004: 13-16) categorize services in four groups, which are referred to as:

- People processing (services directed at people’s bodies)

- Possession processing (services directed at physical possessions) - Mental stimulus processing (services directed at people’s minds) - Information processing (services directed at intangible assets)

Services offered by a government agency can be categorized in the mental stimulus processing group, which is characterized by:

- An interaction with peoples minds

- Recipients do not necessarily have to be physically present in the service factory - The core content of these services is information based

Additional to these characteristics, an important characteristic of governmental services is that these services are supplied for free.

Users of government services

In general, service firms supply services to customers who buy these services. According to Clemente (1992: 95) a customer is defined as:” The buyer of goods or services.” However, the complimentary and information based nature of government services causes that users of these services cannot be defined as customers.

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citizen, which is given by the dictionary of the Dutch language (van Dale, 2006) as: “Resident of a city of country”, is only related to the global type of person and not specifically to the use of services or goods and the payment of these services or goods.

As a government agency offers information based services, users of government services might be better defined as clients instead of citizens. The dictionary of the Dutch language (van Dale, 2006) defines a client as: “Somebody who uses the services of a lawyer, notary, psychotherapist, a social worker and so on.” Government services fit very well in this defined list of services. Unfortunately no definition related to services with a complementary nature could be found. The definition of clients is most applicable regarding to this specific situation, as it focuses on the use of services. During this research the user of governmental services will therefore be defined as a non paying client.

In marketing definitions customers and clients are often mixed up, Huizinga (1991: 44) refers to the term customers when defining clients. Clements (1992: 65) focuses on users of marketing services when defining clients, he defines a client as: ”a person of organization who retains the services of an advertising, public relations or other marketing services agency.” Also authors of service marketing literature (i.e. Lovelock and Wirtz, 2004 and Grönroos, 2001) use the term customer of services instead of client. Models that focus on customer behavior regarding to services, can therefore also be used to investigate client behavior.

Demand for government services

Most general marketing definitions of demand centralize purchase intensions. For example Clemente (1992: 102) who defines demand as: ”Consumers’ collective financial ability and desire to purchase goods and services.” As identified before, the clients of governmental services do not have purchase intentions, as they do pay for the service.

Therefore in this research demand is defined as: ”The clients’ collective desire to acquire good or services.”

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3.3 The environment of a government agency

The environment of government agencies is getting more and more complex. The government does not have the position anymore of a central organ that leads the society (Hufen & Ringeling, 1990: 1). Ringeling (1990: 55) argues that government agencies get more and more surrounded by all kind of social organisations. A result of this growth is increased cooperation between government agencies and private organisations. Besides increased cooperation this growth causes competition between government agencies and private organisations (Hufen and Ringeling, 1990: 1).

Complex networks

The complex environment, in which competition and partnership between the actors exists, has many characteristics of a network. The changing position of the government from a central authority to a player in the network provides leads for this research as this network environment might be of influence on the client demand.

3.4 Two research perspectives

Based on the previous literature, two aspects are important regarding the investigation of the identified problem. Firstly, the client behaviour with regard to the service of the government agency determines if a demand for government services takes place or not. Secondly, it is of interest to investigate the changing role of the government, to a player a in a complex network, in more detail as a factor that might influence the demand for economic services.

Investigate the demand from a client perspective

Although clients of a government agency do not have to pay for government services, they also go through a decision making process when considering to demand for a service or not. The purchase process for services as defined by Lovelock and Wirtz (2004: 35-37) can also be used to analyse the client acquirement process for complementary services. In this research the model of Lovelock and Wirtz (2004: 35) will be used to analyse, the behaviour of clients and potential clients of the economic department regarding to economic services. The term acquirement process for services will be used during this research instead of purchase process for services when discussing the client behaviour process regarding to government services. When explaining the model of Lovelock and Wirtz (2004: 35-37) the original terms are used.

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The purchase process for services starts with the recognition of a need, goes on with the information search and evaluation of alternative services suppliers and ends after the service delivery with an evaluation of the service performance and future intentions as shown in figure 1.

FIGURE 2 Purchase process for services

(Source: Lovelock and Wirtz, 2004: 35)

This decision making process starts with an awareness of a need. Based on this need the customer will search for information about where to satisfy this need, the information search. In this phase the customer can obtain information from several sources: personal sources, commercial sources, public sources or experiential sources. Subsequently, evaluation takes place by evaluating alternative service suppliers. Because of the intangibility of services, services are usually more difficult for customers to evaluate than physical goods. When the service is requested from the chosen service supplier, the service delivery takes place. Finally, the customer evaluates the service quality and the satisfaction or dissatisfaction with the service experience. The outcome of the evaluation will affect the future intentions of the

Awareness of Need

Information Search

Evaluation of Alternative Suppliers

Request Service from Choosen Supplier

Service Delivery

Evaluation of Service Performance

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customers, such as whether to remain loyal to the provider or whether to pass on positive or negative recommendations to family member and other associates (Lovelock and Wirtz, 2004: 37)

So satisfied customers can have a positive influence on future demand for governmental services , by remaining loyal to the provider and by passing on positive comments to others, whereas dissatisfied clients can influence the future demand negatively.

Lovelock and Wirtz (2004: 35) emphasize the importance of needs and expectations during the stages before the services delivery, as the needs and expectations influence what alternatives are considered by clients. According to Lovelock and Wirtz (2004: 37) the experiences of customers during the service delivery determines their future intentions: ”Customers evaluate service quality by comparing what they expected with what they perceive they received from a particular supplier. If the service experience does not meet their expectations, customers may complain about poor service quality, suffer in silence, or switch providers in future.”

With regard to the problem of client demand for government services, it is need to identify how current and potential clients behave. Regarding to the demand for governmental services it is important to investigate the drop out of potential clients as well as the behaviour of current clients during this acquirement process for services.

So three factors appear to be of interest to investigate the acquirement process of current and potential clients namely: the needs for services, the expectations of services and experiences with the service (only of influence on the current client behaviour).

Investigate the demand from a network perspective

Next to client behaviour, it is of interest to investigate the influence of the complex network on the demand for economic services. Thompson (2003: 30) argues that:

”Networks have often been considered as above all ‘informal’ practices of coordination, they rely upon direct personal contact of different groups with similar concerns, interests or aspirations. A common purpose or interest, for which all will work, forms the reason for existence of the network”.

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Most authors define networks in terms of relations, structures, positions and processes or actors, resources and activities (Nooteboom, 1999: 50). Actors and relations are repetitive aspects in all these definitions. A model that is useful to define and investigate the complex network regarding to potential and current client demand for economic services is defined by Wasserman and Faust (1994: 36-39). The reason for using this model is the relatedness to the client requirement process. Overlap is actor attributes results in more possibilities for evaluation by the client. The kind of relation determines if the network actor is able and willing to contribute to increase the direct client demand for economic services.

The network model of Wasserman and Faust (1994: 36-39) consists of: - Actors

- Kind of relations between the actors (relational content) - Attributes of these actors

Actors are these people, groups, organizations or collectives that are active in the network. Relations between the actors can be viewed according to the “relational contents” as defined by Knoke and Kuklinski (1991: 177) and refers to different kinds of relations between the actors. Kinds of relations are for example: individual evaluations, transactions or transfer of material resources, transfer of non-material resources, interactions, movement, formal roles or kinship. Finally, actor attributes refer to the characteristics of the actors in the network.

So after analysing the network environment of a government agency, two factors appeared to be of interest to investigate regarding to the demand for government services. Firstly, the attributes of the different network actors are of interest, to find out if more alternatives can be evaluated by clients and competition as identified by (Hufen and Ringeling, 1990: 1) takes place. Secondly, the kind of relation between the economic department and the network actors is of interest regarding to the possibilities for increasing the direct client demand.

Conclusion

Doing management research in a governmental context means taking into consideration the specifics of the government environment. These days the government is not totally insensitive to client demand anymore. A government agency needs to realize a certain effectiveness and efficiency to guarantee the continuity of the agency. Therefore it is also for a government agency important to focus on the users of its services.

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The client perspective and the network perspective are two interesting factors that needed a closer look in relation to the demand for economic services. From the client perspective the needs, expectations and experiences of current and potential clients determine how current and potential clients behave during the requirement process for governmental services. From the network perspective the overlap in actor attributes and the kind of relation with the network actors are of interest to investigate relating to the client demand.

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4 RESEARCH

DESIGN

“The greatest challenge to any thinker is stating the problem in a way that will allow a solution.”

Bertrand Russell (1872-1970)

In this chapter the research and design will be presented. In paragraph 4.1 the research objective will be explained. Subsequently, paragraph 4.2 will focus on the research question and subquestions of this research. In paragraph 4.3 the definitions of terms that need explanation will be given. The conceptual framework, that forms the basis for this research will be given in paragraph 4.4. Finally, the methodology will be discussed in paragraph 4.5.

4.1 Research objective

Based on the problem analysis, the research objective can be formulated as follows:

4.2 Research question

In the theoretical framework two research perspectives were identified to investigate in relation to the identified problem namely: the (current and potential) clients and the network environment of the economic department. Based on the theoretical framework the research question can be formulated as follows:

Sub questions

The described research question is divided into four subquestions:

1 “What are the characteristics of economic services, what is the current direct demand for these services and what is the effectiveness of the current direct service delivery?”

“How do the expectations, needs and experiences of current and potential clients and the network environment influence the direct demand for economic services of the Dutch embassy in Brussels?”

“To advise the economic department of the Dutch embassy in Brussels about the possibilities to increase the direct client demand for economic services in order to reach the departmental objective more effective”

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This subquestion will be answered by means of a description of the characteristics of and the direct demand for economic services and an explanation of the effectiveness of this service delivery process.

2 “What are the expectations, needs and experiences of current clients with regard to the services directly offered by the economic department?”

The needs, expectations and experiences of current customers are important factors in the demand process of the client. The influence of these factors on the demand for economic services is described by answering this sub question.

3 “What are the expectations and needs of potential clients with regard to the services directly offered by the economic department”

The needs for and expectations of potential clients are of interest in the acquirement process for economic services.

4 “What influence does the network environment have on the direct demand for economic services?”

From the network perspective two factors were identified to investigate in relation to the demand for economic services: the actor attributes of the different network actors and the relation between the economic department and these network actors

4.3 Definitions

According to the definition of the royal association SME the Netherlands (translated as MKB-Nederland), in this research SMEs are defined as enterprises with a maximum of 250 employees. A small enterprise has a maximum of 50 employees. The SMEs involved in this research are only these SMEs that have export potential

Current customers are these Dutch SMEs that have used or are using the services of the economic department. Potential customers of the economic department are these Dutch SMEs that have the capacity to do business in or with Belgium, but have not used the services of the

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The network environment of the economic department should be seen as a compilation of actors that are all involved in the support of Dutch organisations when doing business in Belgium (further referred to as, the network of international support related to doing business in Belgium)

4.4 Conceptual framework

The conceptual framework shows the global insights that form the basis for this research. It helps to support and clarify the research objective by showing the coherence between the different research elements. The conceptual framework of this research is shown in Figure 3.

FIGURE 3

Conceptual framework

This conceptual framework is based on Lovelock and Wirtz (2004: 35) who identify the customer needs, expectations and experiences as factors that determine how a customer goes through a purchase decision process for services. These factors will be investigated to explain how a clients of a government agency go through the acquirement process for government services.

As Hufen and Ringeling (1990: 1) argue, the position of the government is changing from a central leader of the society to a player in a complex network. The following elements are used to investigate the influence of this network environment on the demand for economic services.

The overlap of attributes of the actors in the network

The relation between the economic department and the network actors. Direct demand for

economic services

Current customer behaviour

Potential customer behaviour

Expectations Needs Experiences Expectations Needs Actor attributes

Cooperation with actors Network environment

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Preconditions

¾ The practical research has to take place within a period of 4 1/2 month

¾ The research focuses on the services of the economic department according to the guidelines prescribed by the Dutch government and EVD.

¾ The research concentrates on the SMEs

4.5 Methodology

This research has, like every scientific research, the goal to produce knowledge. The question is how this knowledge can be generated. This question concerns the methodology, which can be defined as the science of doing research. This paragraph will explain the used methodology of this research.

As different research methods were used during this research, the research methods are discussed by each sub question.

First research stage: General information and the management problem

The first stage of the research had an inventory character: getting more insight into the management problem and the current service delivery of the economic department was central during this stage. The goal of this first research stage was to make it possible to set up a research objective and research question at the end of this stage.

To realize this, two research methods were used. As many knowledge and insights about the problem were in the heads of people, personal interviews were used to obtain this information. Besides, the complex service delivery process of the economic department needed further personal explanation. According to Baarda and de Goede (2001: 186) less structured interviews are useful when little information is available about the subject. As this was the case during this research stage, less structured interviews with all members of the economic department were used. The choice to interview all members of the department was based on the needed agreement about the research question.

Besides the interviews, desk research was important in this research stage, to obtain general information. The following documents were use:

- Plan of approach, economic department

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- Website reports Dutch embassy in Brussels

- Websites of the Dutch embassy in Brussels, the EVD and the Ministry of Foreign affairs

This general information which was obtained during the first research stage was also used to answer the first sub question which was formulated as follows:

“What are the characteristics of economic services, what is the current direct demand for these services and what is the effectiveness of the current service delivery?”

Second research stage: Analytic survey

After defining the management problem and clarifying the current situation, the goal of this research was to find out how the client demand was influenced by different variables. Testing a theory, by taking the logic experiment out of the laboratory and into the field is called an analytic survey by Jill and Johnson (2002: 98). After theoretical backgrounds regarding to the problem were gathered (chapter 3), these theories were taking into the field.

So this analytic survey forms the basis for the continuation of this research. The dependent variable, which we want to try to understand and explain, is the demand for economic services.

The independent variables, of which the influence on the dependent variable (demand for economic services) is investigated, are in this case:

- Current clients (needs, expectations and experiences) - Potential clients (needs and expectations)

- Network environment (attributes and relations)

The analytic survey was divided into three parts based on the three independent variables.

Independent variable 1: Current clients

The influence of current clients on the demand for economic services was investigated by means of the second subquestion of this research, which was formulated as follows:

“What are the expectations, needs and experiences of current clients with regard to the services directly offered by the economic department?”

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To answer this subquestion secondary material was used. The EVD held a telephonic interview among current clients of the economic department in September and October 2004. The findings of this research are used to answer the above subquestion.

The research population existed of all clients that have made use of the services of the economic department. Of this population a sample has been taken of 40 clients of the economic department, that used the services during September or October 2004. These clients were interviewed by telephone. The results of these interviews were compared with the results of four other three star embassies, i.e. embassies in countries that are considered as most important economic countries for the Netherlands.

Independent variable 2: Potential clients

The influence of potential clients on the demand for economic services was investigated by means of the third sub question of this research, which was formulated as follows:

“What are the expectations and needs of potential clients with regard to the services directly offered by the economic department”

To identify the expectations and needs of potential clients a sample selection had to be taken out of all potential customers. Identifying the research population was hard in this case. The size of the population could not be determined, because of low accessibility of information. The research population should include all Dutch SMEs that are internationally active or have the potential to become internationally active. In the Netherlands there are 653.400 enterprises that can be considered as SMEs. Of these SMEs 110.000 SMEs are internationally active as proved by the EIM (Hessels and Stigter, 2004: 6). However, information about this population is not accessible. Carrying out a representative research among this population was not considered as achievable, because of the accessibility of information about the population.

Therefore the decision was made to choose a specific sector for carrying out this research, to make the survey representative for the whole sector. By choosing a specific sector for this part of the research the population becomes smaller and information can be obtained more easily. According to Jill and Johnson (2002: 101) those who participate in the research have to be a representative sub-set of the research population so any findings can be generalized or extrapolated to that target population with confidence. By choosing a specific sector, the

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anymore, which results in a limitation of the external validity. External validity is defined by Baarda and de Goede (2001: 361) as: “The quality of the reach of the conclusion of the research: till how far can the conclusion be generalized to (a) general concepts, (b) other populations and (c) other situations?”

In this case the decision to investigate a certain sector restricts the possibility to generalize the results of the research to other sectors. Although the external validity is limited, the decision to restrict the research to a certain sector is based on the time restriction and the accessibility of information.

The sector that was chosen for carrying out this research was the metal sector. The reason for choosing this sector was the accessibility of information about the population and the importance of Belgium as trade partner for enterprises active in the metal industry (EVD, sector concept, 2005). Information about this population was accessible, as the Royal Metal Union (translated as Koninklijke Metaalunie) could provide information about the population.

The Koninklijke Metaalunie is the biggest branch organisation for SMEs in the metal sector. It has 11.000 members which are all SMEs active in the metal sector. A rough estimation could be maid for the international activity of the members of the Royal Metal Union. According to Verlinden (interviewee, Koninklijke Metaalunie), 25% of their members are international active and another 25% of their members are not international active yet, but have potential to do business in other countries. A list of addresses provided by the Koninklijke Metaalunie with 700 international active SMEs active in the metal sector could be used.

According to Gill and Johnson (2002: 103) choices about using face to face interviews or a questionnaire are influenced by a range of issues, for instance the complexity of information required, sample size, location and limits of recourses. In this case, not very complicated questions formed the basis for investigation and the time and money were restricted. Therefore, a written interview was considered to be the best data gathering method for this potential client research.

The disadvantages of a questionnaire compared to a face to face interview are according to Baarda and de Goede (2001: 229):

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- Much preparation is needed

- A questionnaire is unsuitable for open and complicated questions - Not too many questions can be asked

- No control on filling in

- Many incomplete questionnaires - High level of non-response

Besides, Gill and Johnson (2002: 103) mention that by using email a questionnaire can be spread much quicker and cheaper than by using the post.

To reduce the disadvantages of the questionnaire as mentioned above, the following actions were undertaken:

The questionnaire was sent by email to the respondents and put on the website of the Royal Metal Union, to try to reduce the level of non-response

The questionnaire was made short and easy to fill it, to avoid incomplete questionnaires and a high level of non-response, because of too complicated or too many questions. The questionnaire was tested by members of the economic department and an owner of a

Dutch SME who was international active, to avoid errors which could lead to a high level of non-response and incomplete questionnaires.

An attractive article about Belgium as trade country was placed in the newsletter of the Koninklijke Metaalunie to motivate people to fill in the questionnaire and to minimize the level of non-response.

Two weeks after sending the written interview a group of 25 people were reminded of the questionnaire by phone, to motivate them to fill in the questionnaire.

The covering article and the questionnaire can be found respectively in appendix B and C.

The questionnaire was sent out to 700 members of the Koninklijke Metaalunie. The final response rate was 30 filled in questionnaires. These 30 filled in questionnaires form 0.5% of the total population. This low percentage of filled in questionnaires is another restriction of the external validity of the research. As the external validity of this research is restricted, no generalisations can be made for the whole metal sector.

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Independent variable 3: The network environment

The influence of the network environment on the demand for economic services was investigated by means of the fourth sub question of this research, which was formulated as follows:

“What influence does the network environment have on the direct demand for economic services?”

The list of actors that are concerned with international support relating doing business in Belgium is endless. To carry out the research within the mentioned period of 4 ½ months, choices had to be made to reduce the size of the research. The main actors in the network of international support, were identified based on the following sample selection criteria, which were set up based on information from economic department employees and the internet:

Concerned with international support Concerned with Dutch SMEs

Concerned with doing business in Belgium Relatedness to the metal sector

Based on these selection criteria a list of main network actors was set up. Table 1 gives an overview of the these main network actors in the network of the economic department (network of international support related to doing business in Belgium).

As explained earlier, according to Gill and Johnson (2002: 103) choices about using face to face interviews or a questionnaire are influenced by a range of issues, for instance the complexity of information required, sample size, location and limits of recourses. Also Baarda and de Goede (2001: 229) argue that questionnaires are not suitable for open and complex questions. To investigate the network environment, complex information needed to be gathered. Besides, there needed to be space for personal insights and background information (for example about the relation with the economic department). Therefore, the choice was made to use face to face interviews for the network research.

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TABLE 1

Interviewed network actors

Groups of actors Interviewed actor

Government organisation - EVD

Interest organisations - MKB Nederland (represents the interests of Dutch SMEs)

- VNO-NCW (represents the interests of Dutch business)

Chamber of commerce (translated as KvK)

- KvK Rotterdam (international department) - NKVK (Dutch chamber of commerce in Belgium)

Trade supportive organisations

- Fenedex - NEC - NCH

Branch organisations - Royal Dutch Metal Union (Koninklijke Metaalunie)

- FME-CWM (Trade organisation for the technological- industrial sector)

Banks - Rabobank

The questions that were asked during these interviews and the list of interviewees can be found in respectively appendix D and E.

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5 CURRENT SITUATION

This chapter analyzes the current service delivery process of economic services and the current client demand for these services. The research methods used to answer this sub questions were: personal interviews with members of the economic department and desk research on the basis of departmental documents, as explained in more detail in paragraph 4.5.

This chapter answer the first subquestion of this research, which is formulated as follows:

Paragraph 5.1 will describe the characteristics of economic services. Subsequently, paragraph 5.2 will describe the current direct demand for these services. Finally, paragraph 5.3 will discuss the effectiveness of the current service delivery.

5.1 Characteristics of economic services

As a government agency, the economic department is bounded to government regulations with regard to the delivery of services. These regulations concern: available budgets, competition and the purchase of market information.

Available budgets

The first government regulation concerns working according to certain budgets provided by the Dutch government. These budgets have to be spent according to certain rules as prescribed by the EVD. Table 2 gives an overview of the budgets that are made available by the EVD for the economic department (overview departmental budgets). CPA stands for Collective Promotional Activities and PPP stands for Promotional Projects Posts. The CPA budget cannot be used by the department directly, but is meant for Dutch organisations who want to organise a trade supportive activity. The economic department only has an advisory and sometimes a helping role in the organisation of these activities.

So the economic department itself does not have much money to serve their clients. The basis for the supply of services is based on the knowledge and experience of the employees of the economic department about doing business in Belgium,.

“What are the characteristics of economic services, what is the current direct demand for these services and what is the effectiveness of the current service delivery?”

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TABLE 2 EVD budgets

Budget Objective

CPA € 1.850.000 Stimulate Dutch sale on foreign

markets by putting out tenders for Dutch organizations

PPP € 16.000 Promotion of Holland in Belgium

(Source: overview departmental budgets)

Clients who want to use the services of the economic department do not have to pay for these services. This means that economic department does not have any income or profit.

Competition with market parties

The second government regulation is, the economic department not being allowed to compete with the different market parties. The services offered by the economic department have to be additional to the services which are already offered by the market parties (interviewee, Roona)

Market information

The third government regulation is, the economic department not being allowed to buy any market information. Only information that is available in public can be provided to clients (interviewee, Roona)

So the economic department is restricted in its the possibilities for service delivery, because of the described restrictions.

5.2 Current direct demand

The current direct demand for economic services can be measured by means of the direct client use of the economic services. As explained in chapter two, clients can make use of the following services that are offered directly by the economic department:

1 Providing answers to individual questions (by email, phone and visit) 2 Providing information on the website of the embassy

3 Making of market scans 4 Spreading a newsletter

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1 Individual information

Individual information about varying topics is offered by the economic department to the clients in three different ways: by email, by phone or by visit. An estimation of the demand for individual information by clients per week indicates that about 25 questions per week are asked to the economic department (interviewee, van Mele). Most of these questions are asked by email.

2 Internet information

The demand for internet information can be measured by means of the amount of visitors of the economic section of the embassy website. The amount of visitors of this website since 2004 (when the website was launched) is presented in Table 3.

TABLE 3

Embassy website visits (economic section)

Month Visitors Page views

July 2004 87 364 August 2004 118 400 September 2004 285 704 October 2004 262 611 November 2004 244 489 December 2004 269 511 January 2005 305 651 February 2005 497 985 March 2005 638 1331 April 2005 402 741 May 2005 428 557 June 2005 348 448 July 2005 252 337 August 2005 323 448 September 2005 448 642

( Source: website report Dutch embassy)

As can be concluded from Table 3, the use of internet information has grown dramatically since the launch of the website in 2004. During the winter months and especially in March 2005, the website visits reached its peak. A possible clarification for this peak in March is that FME organized an activity at the embassy in this month. The low amount of website visits during the summer months (June, July and August) is possibly related to the holiday period during these months. Table 4 shows the use of internet information when the months July, August and September of the years 2004 and 2005 are compared.

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TABLE 4

Embassy website visits (economic section) 2004 and 2005 compared

Month 2004 2005 Increase

July 87 252 290% August 118 323 274% September 285 448 157%

( Source: website report Dutch embassy)

Table 4 shows an increase in website visitors of almost 300% when the months July and August of 2004 and 2005 are compared. The growing use of the economic section of the embassy website by clients could possibly be explained by the growing information society these days (people need to gather information more often, more quickly and more efficiently these days).

3. Market scans

In the beginning of 2006, the International Market scans were introduced by the EVD, as a service of the economic department. With this introduction, the economic department is allowed to provide an individual package of market information and contact addresses, that relate to the international strategy of the enterprise (www.evd.nl). As the making of market scans is introduced in the beginning of 2006, data about the current demand for this service is not available yet.

4. The newsletter

A newsletter with information about doing business in Belgium is sent every week to approximately 200 people, who indicated on the embassy website to be interested in information about Belgium. How this information is used and experienced cannot be estimated.

5.3 Effectiveness of the current service delivery

According to the transaction principle (Buurma, 1990: 15-20) the service delivery of a government agency should result in a certain client behaviour. If the offered services indeed resulted in the desired client behaviour the service delivery can be considered as effective.

This desired client behaviour is described by means of the departmental objective of the economic department, which is formulated as follows:

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“To support 1) the Dutch export to Belgium 2) Dutch investments into Belgium and 3) useful collaboration between Dutch and Belgian companies, organisations and institutions.”

Unfortunately this departmental objective is formulated too globally to measure if the service delivery indeed resulted in the desired client behaviour. The effectiveness of the service delivery can therefore not be determined. Too many external factors, like the delivery of services by other organisations, export trends and specific influences of different markets could possibly be of influence on the fulfillment of the departmental objective.

Conclusion

The economic department offers the following services directly to clients: individual information (by phone, email or visit), internet information, market scans and a newsletter. The use of direct economic information through the website has been growing a lot since the launch of the website in 2004. This growth can possibly be explained by the growing information society.

The departmental objective as identified by the economic department is formulated too globally to identify if the desired client behaviour is realized. The effectiveness of the current service delivery can therefore not be measured. Too many external factors, besides the service delivery of the economic department, could possibly be of influence on the fulfillment of the departmental objective.

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6 CUSTOMER

ANALYSIS

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning

(Albert Einstein)

This chapter will provide an answer to the second and the third sub question of this research. Paragraph 6.1 will discuss the second subquestion of this research:

Paragraph 6.2 will discuss the third subquestion of this research

6.1 Current client analysis

The current client analysis will start with a description of the characteristics of current clients in paragraph 6.1.1. Subsequently, in paragraph 6.1.2 the needs of these clients will be discussed. Paragraph 6.1.3 will describe the client expectations and experiences. Finally, paragraph 6.1.4 discusses the influence of these factors on the demand for economic services.

6.1.1 Current client characteristics

Based on the secondary information from the EVD research as described in paragraph 4.5, current clients of the economic department can be divided according to their enterprise size and international experience. The sectors in which these clients are active vary very much (final report EVD, customer satisfaction and characteristics three star posts, 2005).

Figure 4 shows the division of clients according to enterprise size. The clients of the economic department of the Dutch embassy in Brussels are slightly comparable to the clients of the consulate in Toronto. Based on the findings of this research the conclusion can be drawn that all clients of the economic department can be considered as SMEs. Of these SMEs, 72% can be considered as small enterprises. This percentage of small enterprises is high compared to the other investigated embassies and consulates. Other than this high

“What are the expectations, needs and experiences of current clients with regard to the services directly offered by the economic department?”

“What are the expectations and needs of potential clients with regard to the services directly offered by the economic department”

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percentage of small enterprises, Figure 4 shows that none of the clients of the economic department in Brussels can be considered as large-sized enterprise. All other investigated embassies and consulates have a certain amount of clients that can be considered as large-sized enterprise.

FIGURE 4

Type of client according to enterprise size

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Brussels Teheran Tokyo Toronto Warsaw Other posts

500 or more 250 to 499 100 to 249 50 to 99 10 to 49 1 to 9

(Source: final report EVD, customer satisfaction and characteristics three star posts)

Besides classifying clients according to their enterprise size, clients can also be classified according to their international experience. They can be divided into: starters, re-starters, experienced enterprises, partners and others. Figure 5 shows the division of clients of the different investigated embassies and consulates, according to their international experience.

FIGURE 5

Type of client according to international experience

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Brussels Teheran Tokyo Toronto Warsaw Other posts

N/a (e.g private) Partner Experienced Re-start Start-up

Crossing the border:

Embassy services from a business perspective

Crossing the border:

Embassy services from a business perspective

Acknowledgements

Abstract

Crossing the border – By Sandra Spruijt

Table of contents

Tables and figures

1 INTRODUCTION

2 PROBLEM

ANALYSIS

3 THEORETICAL

FRAMEWORK

4 RESEARCH

DESIGN

5

CURRENT SITUATION

6 CUSTOMER

ANALYSIS