INTERNATIONAL BUSINESS HISTORY

0. INTRODUCTION
1. KEY FACTORS IN THE GLOBAL ECONOMY
▫ Key actors in the present global economy:
o Multinational firms: a company controlling income-generating assets in at least 2 different
countries. Most of large companies.
o Global companies: very international companies in terms of sales, production and distribution
facilities.
▫ Size: turnover, sales, employees and market value.
▫ GDP: Gross Domestic Product
▫ Not only large companies invest abroad: also SMEs.
▫ FDI (Foreign Direct Investment): Indicates the willingness of investors to exert a direct influence on the
management and strategies of the companies in which they invest. The today’s activity is difficult to
estimate.
▫ IMF: Intenational Monetary Fund
▫ OECD: Organization for Economic Co-operation and Development
▫ UNCTAD: United Nations Conference on Trade and Development
▫ 1980: peak of FDI
▫ Since 1945 FDI has been growing with 2 exceptions:
o 2002: terrorist attack against the US (11s)
o 2008: global financial crisis
▫ FDI in developed countries: decreasing
▫ FDI in developing countries: increasing: especially from Asia
▫ BRIC countries: Brazil, Russia, India, China: future protagonists in the world economy
▫ Technology, natural resources, market advantages

2. OLD AND NEW DEBATES

▫ Multinationals are considered to be the micro components of the macro phenomenon of globalization.
Globalization is something which travels around the world on the shoulders of multinational investment
and global products.
▫ Multinationals have been identified as targets of anti-globalization movements.
▫ Today: blamed for the environmental damage, corruption, bad business practices in under-developed
countries.
▫ Developed countries are scared of newly industrialised countries that acquire companies abroad: protect
strategic knowledge, resources and technology: CHINA: Communism.
▫ Actions abroad are because of economic and political motives: Global companies are a direct expression
of the governments of emerging countries.
▫ Foreign investment = elimination of monopolistic power: Advantages:
o Constantly generating positive spillovers
o Diffusion of knowledge, technological progress and expertise.
o It has taken innovations, knowledge, capital and employment around the world.
▫ Inward investments: key elements in providing access to the international economy and to global
markets, but also to standard international business practices.
▫ Governments that are willing to modernize their countries’ industrial apparatus have returned heavily
to foreign investors.
▫ Global economy is constantly expanding its borders: interconnected world.

3. A NEW PHENOMENON?
▫ Adjective “multinational”: 1960s
▫ Noun “multinational”: 1970s
▫ First attempts to systematise the phenomenon go back to the 1950s, while the most relevant field-
specific interpretative framework: the OLI framework, was provided by John Dunning at the end of the
1970s.
▫ OLI: Ownership Location Internalisation
▫ The “FORM” of a multinational existed long before the noun. Ex:
o US sewing-machine producer Singer: 1960s: World’s first modern multinational
o German electro-mechanical companies
o French glassmaker Saint-Gobain
o German steelmaker Mannesmann
▫ Before WWII and during the Great Depression, a great deal of foreign investment went to European
countries
▫ Modern multinationals started to spread as a dominant form of enterprise during the second half of the
nineteenth century, coinciding with a technological revolution: transfer of people, goods, information
and money much easier.
▫ There have always been businesses operating across borders. Huge variety of the forms of international
business.
▫ Economic globalisation: the increase in the rate of economic interactions across the globe thanks to
technological and institutional innovations.
▫ Medieval international land routes and sea-trade routes linking North and South of Christian Europe to
Islamic North African Coast, and silk and spices road, India and China.
▫ Second half of the 19th century: world divided into empires: European countries had created their
empires and protectorates in Africa, China and japan dominance in East Asia, Russia empire = largest.
▫ Imperialism = British.
▫ Empires acted as the powerful agents of integration.
▫ The phases of globalization are separated by phases of disintegration: borders become less permeable,
people travel and transfer financial resources more slowly and protectionist policies, tariffs, and trade
barriers serve to encourage autarkic behaviour. De-globalization begins.

4. THE DYNAMICS OF INTERNATIONAL BUSINESS

▫ Long-term, forms of international business enterprises, challenge and choice in the process of
international growth.
▫ The succession of the phases of globalization and the phases of de-globalization has generated significant
business opportunities for enterprises and entrepreneurs, as well as for entire countries and national
systems.
▫ Variables:
o Technology: easier, safer and faster transfer of goods, information, people and capital.
o Institutions: standardization of business practices and of commercial laws and codes.
o Role played by governments: facilitators and supporters of the internationalization of domestic
firms: deal of violence, military power and diplomatic manoeuvring.
o Cultural and political attitudes: positive attitudes towards foreign products and culture cans
serve to explain the incentives that spurred both the international medieval merchants and the
opportunities enjoyed by American companies in Europe: process of cultural homogenisation
known as Americanisation.