A case of business failure: The Netherlands Trading Company (NHM) in Japan, 1859-1881


Late December 1880 the Nederlandsche Handel-Maatschappij N.V. (Netherlands Trading Company Ltd. hereafter: NHM) closed its last remaining sales office in Japan. The NHM was probably one of the largest and  most successful Dutch trading houses from the mid-1850s. Why did the NHM fail and decided to pull out of Japan? I will argue that the failure was mainly due to the loss of old and profitable networks after the Meiji Restoration of 1868 and the inability of the NHM to establish links with the new Japanese government.

The failure can hardly be attributed to only exogenous or only endogenous factors. The revolutionary changes introduced after the Meiji Restoration could not have been foreseen by any businessmen. The NHM sales offices may have failed in Japan, but the company as a whole continued to prosper in the Dutch East Indies and other Asian markets. The scholarly literature on business turnarounds offers no possibility for «partial failures» (e.g. failures of agencies, business units or divisions). Entrepreneurs often try out new products and probe new markets. When the results are disappointing they pull out. Failed investments can provide valuable lessons and a company may try to enter the same market again as the NHM successfully did in the 1920s, opening offices in Kobe and later in Osaka and Tokyo.

Business history is mainly concerned with investigating and explaining the successes of entrepreneurs and shows relatively little interest in business failures. Patrick Fridenson has argued that to focus only on creation and success creates an unbalanced view of business history. The history of the NHM in Japan provides an opportunity to investigate a case of business failure or rather failed investment in a new market. 

 The Business History Seminar has been made possible by financial support from the Erasmus Research Institute of Management (ERIM) and the Erasmus School of History, Culture and Communication.