From Total War to Cold War: International Business and Organisational Innovation


Neil Forbes
Neil Forbes
  • Speaker
Faculty of Business, Environment and Society, Coventry University
Takafumi Kurosawa
  • Speaker
Graduate School of Economics, Kyoto University
Teresa da Silva Lopes
Teresa da Silva Lopes
  • Speaker
The York Management School, The University of York
Ben Wubs
Ben Wubs
  • Speaker
Erasmus School of History, Culture and Communication, Erasmus University Rotterdam

Event Information

Type
Research Seminar
Programme
Finance
Date
Mon. 19 Sep. 2016
Contact
Abe de Jong
Time
12:30 – 17:00
Location
M3-05


Abstract

This seminar comments on how macroeconomic and political environments shape the form andcontent of international business by focussing on the question of organizational innovation. The intention is to set out a conceptual and methodological framework for analyzing the ways in which the coming of the two World Wars, the devastating consequences of such Total Wars, and the ideological challenge of the Cold War acted as a pivot points in shaping the nature and character of the contemporary firm. Given the tendency of European companies to adapt to local markets and to take on a more decentralized structure than their American counterparts, it is surprising that the impact of the world wars on the European corporate structure has not received more attention.The modern multinational enterprise faced two world wars, nationalism, and the division of global markets in the first half of the 20th century. MNEs were forced to address these challenges organizationally and strategically. With enterprises in the defeated states in Europe hesitant about foreign direct investment after the sequestration of their assets abroad during World War I, international cartels were favored as a means to direct investment in the interwar period. A dual national structure, original devised for tax purposes, became a strategic defense mechanism against confiscation of assets in Germany and the occupied countries as well as in the Allied countries during the Second World War., with long-lasting organizational consequences. Companies shifted part of their global business from the European continent to the western hemisphere as a result of their organizational adaptations. and introduced innovative and complex legal systems to mitigate the risk of state control. In the period after 1945, MNEs were challenged by punitive levels of double-taxation, threats of nationalisation from the political left and economic nationalism from the extreme right. .In other respects, pre-war distinctions between government and business were elided: international consortia pursued transnational interests, with political actors promoting the interests of business, whilst those representing business sought to reflect national or supra-national interests. Cold War security concerns also shaped the corporate form, ownership and governance structure of European MNEs.From a transnational and international perspective the paper enquires into to the extent these organizational changes had elements of duration and continuity and whether strategic responses can be explained by sector or product specificity, by different national or supra-national circumstances and institutional structures as well as by the geographical spread of interests of respective firms.

Speakers:

Innovative forms of organisation in international business
Teresa da Silva Lopes, University of York

In the past three decades, researchers in international business history have pointed out the lack of explanatory power of existing theories in international business to clarify why certain unconventional governance structures exist (Wilkins, 1986, 1988, 1998; Jones, 1996, 2000). Many firms set up operations in foreign markets following patterns of internationalisation distinct from those discussed in international business theory, which assume that in order for foreign direct investment to take place there needs to be majority control and ownership of operations (Buckley and Casson, 1976, 2009).

Examples of such unconventional or innovative forms of organisation include free-standing firms, chartered trading companies, network organizations, business groups, born global firms, cartels, and firms with ‘ring-type’ organizational structures and ‘cloaked’ governance arrangements. This paper provides a systematic analysis of the alternative unconventional governance structures in international business since the late nineteenth century until the present day, which do not fall under current definitions of foreign direct investment. By following on the arguments of Jones and Khanna (2006), Lopes (2010), and Jones and Pitelis (2015), the paper is grounded on historical case studies to help refine international business theory, and draw patterns of entrepreneurial and firm behaviour. 

Teresa da Silva Lopes is a Professor of International Business and Business History at the Management School, University of York, Director of the Centre for the Evolution of Global Business and Institutions (CEGBI), and Head of the Marketing Group. She is the President of the Association of Business Historians (ABH). Her work in the field of international business history includes Global Brands: The Evolution of Multinationals in Alcoholic Beverages (2007), Internationalisation and Concentration in Port Wine (1990), and Trademarks, Brands and Competitiveness, with P. Duguid (2010). 

Rio Tinto’s Spanish investments before and after the Second World War: corporate strategy and political risk.
Neil Forbes, Coventry University 

This paper considers international business practice and organizational innovation by examining the strategies pursued by one British-based multinational enterprise - the Rio Tinto Company. As a major, international mining company, Rio Tinto controlled the trade in several, strategically important minerals and metals - raw materials used by the armament industries. With major interests in Spain, the company was forced to confront the rise of nationalism and then required to come to terms with the Francoist victory in the Spanish Civil War and operate in the shadow of fascist dictatorship during and after the Second World War.

This paper will, therefore, examine the decision-making by management as the company was confronted with the dilemma of how it could both protect its investments in a potentially hostile environment and simultaneously contribute to the defence of capitalism and liberal democracy. With the Spanish operations becoming increasingly uneconomic in the post-war years, the company looked to dispose of most of its investments. The paper will analyse how Rio Tinto conducted business in such challenging conditions, which included the threat of expropriation, between the mid-1930s and the early 1950s. Key questions to be considered include how this experience impacted upon corporate governance or organisational structures and policies, and how foreign direct investments were assessed when weighed against political risks. 

Neil Forbes is Professor of International History and Associate Dean for Research in the Faculty of Arts and Humanities at Coventry University, UK. His research interests and publications lie in the following fields: the interaction of foreign policy formulation with the practices of multinational enterprise during the interwar years, the processes of financial stabilisation after the First World War, Anglo-American relations and the rise of the Third Reich, and cultural heritage with particular reference to conflict, contested landscapes and the memorialisation of war. He has played a leading role in several research projects, including a £1m digitisation and creative archiving project in association with the UK’s BT and The National Archives, and is Co-ordinator of the EU’s FP7 RICHES project - Renewal, Innovation and Change: Heritage and European Society. He is a member of several professional associations and other bodies.

Enhancing the neutrals. Organizational change of Swiss and Dutch multinationals as a result of the First World War
Takafumi Kurosawa (Kyoto University)
Ben Wubs (Erasmus University Rotterdam)

It has been suggested that companies in the neutral states like the Netherlands and Switzerland have enhanced their international competitive position as a result of World War I. Given the tendency of European companies to adapt to local markets and to take a more decentralized structure than their American counterparts, it is surprising that the impact of the world wars on the European corporate structure, together with the European exogenous condition of the division into small national markets, has not received more attention. This paper aims to compare organizational change as a result of political and security risks of two major European multinationals, i.e. Roche and Philips, headquartered in two relatively small neutral nations, Switzerland and the Netherlands. It addresses the following questions: What challenges and opportunities did the First World War create for the Swiss and Dutch multinationals? How did the First World War and the rise of nationalistic economic policy affect the organizational structures of these companies? Last, to what extent had these organizational changes long lasting effects?

Takafumi Kurosawa is professor of economic policy at the Graduate School of Economics, Kyoto University in Japan where he received his PhD in 2001. He is a trustee of BHC (2016-18) and a member of the Council of the Business History Society of Japan (BHSJ), having served as an editor of Japan Business History Review. His dissertation analyzed the Swiss economy and the formation of the cross-border economic regions in the nineteenth century. His English publications deal with MNEs and political risks, industrial clusters, the paper and pulp industry, and industrial policy, examining European and Japanese cases. 

Ben Wubs is an associate professor at the Erasmus University in Rotterdam and an appointed Project Professor at the Graduate School of Economics Kyoto University. He is engaged in various research projects related to multinationals, business systems, transnational economic regions, Dutch-German economic relations, and fashion industry. He is a principal investigator of a European consortium (HERA II) which does research into the transnational connections of the European fashion industry since 1945.

Abe de Jong
Professor of Corporate Finance and Corporate Governance
  • Coordinator
Ben Wubs
Ben Wubs
Associate Professor at Erasmus School of History, Culture and Communication
  • Coordinator