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In this study of lending in the emergence of a modern steel industry in the United States, I analyze the evolving interaction between borrowers and lenders in historical context. I show how “relationship lending” (that is, credit allocation in which personal contacts play a major role) can go wrong, despite good intentions at the outset, and that institutional conditions exert an important influence on how lenders and borrowers negotiate conflicts. Particularly important in the case of Moses Taylor and Joliet Iron & Steel Company were the uncertain jurisdictions and political maneuvering that stemmed from structural peculiarities of the U.S. legal system, peculiarities that belie claims of its efficacy for protecting creditor interests. Although this failure of relationship lending might seem to imply negative consequences for economic development, I show that, at least in this case, the opposite interpretation is more compelling.
Aristotle Onassis was a leading figure in creating the new global tanker business in the second half of the twentieth century. This article examines the first thirty years of his career, before he became renowned worldwide, setting his business in the context of global shipping developments. Onassis is the most famous of the shipping tycoons that transformed maritime business in the post–World War II transitional period. He is among those “new men”—Greek, Norwegian, Danish, American, Japanese, or Hong Kong shipowners—who replaced the old order of the traditional British Empire shipowners. These new pioneers established the global shipping business in the era of American dominance.
The study of cartels is important to economists as well as business historians, but, on the whole, there has been little cross cultivation between the two academic fields. This article examines cartel theory developed by economists in the context of the historical case of international aluminum cartels in existence before 1940. By analyzing three basic theoretical questions—when cartels appear, when they break down, and when they are successful—in light of the empirical evidence of the aluminum industry, the article argues that economics and history, although they have very different approaches, can profit from using each other's methods when studying cartels.
Wartime naval builders in the United States constructed the world's largest fleet that defeated the Japanese Imperial Navy, aided the Allied victory during the Battle of the Atlantic, and projected American naval power into all corners of the globe. Many naval combatants were built by highly experienced shipbuilders who possessed advanced design skills and production capabilities that had been years in the making. The present study examines the structures and dynamics of American naval shipbuilding and compares them to their foreign counterparts; it argues that extant capabilities were vital to the success of the U.S. war economy.
The aim of this article is to develop a general narrative of the firms that led the growth of trade in nineteenth-century India, and thus to supply a missing piece in modern Indian business history. The trading firms had several features in common with trading firms globally, especially, a high degree of mobility, institutional adaptation, and occasionally, diversification into banking and manufacturing. But certain aspects of the process were specific to the regions where they operated, such as differences between the ports and the interior trading orders, between cities, and between expatriate and indigenous firms. The article reconsiders these features.
This article argues that entrepreneurs, not governments or markets, shaped globalization during the early nineteenth century. The article concentrates on the trading and financial activities of London merchant bankers, and in particular on the different diversification strategies they followed. Although most London merchant bankers remained cautious and did not diversify their operations either geographically or in the products they traded during this period, Huth & Co. established an impressive global network of trade and lending, dealing with over six thousand correspondents worldwide in a wide range of products. This firm shaped globalization well before the transport and communication revolution of the last quarter of the nineteenth century.
This article explores the globalization of knowledge-based services and their impact on host-country firms’ organizational capabilities. Two drivers of such globalization—foreign aid and foreign direct investment coming from the United States—contributed to the development of engineering consulting in Spain in the beginning of the new global economy. The largest Spanish engineering firms have been able to integrate imported knowledge into their own organizational capabilities, enabling them to compete successfully in international markets. This imported knowledge was disseminated in two ways: through private companies, via affiliates and strategic alliances between locals and foreigners; and through the technical and military aid the U.S. government provided during the Cold War.
This article describes and explains three patterns in the entry of Indian entrepreneurs in large-scale industries in South Asia, 1850–1947. It begins with Marwari businessmen in the jute industry in Calcutta. Then I discuss the success of the Parsi community in the Bombay cotton industries, and, finally, Gujarati (mainly Hindu) industrialists in Ahmedabad. I focus on three variables that might explain the timing, degree, and social and cultural variations in the emergence of indigenous industrialists in these cities. These variables concern: first, the colonial attitude towards indigenous industrialists in this field; second, whether or not these men belonged to a (religious) middleman minority; and, finally, their social and, in particular, occupational background.
As a host country for foreign direct investment, conventional measures suggest that Italy is not a very attractive location. However, based upon a new database of the one hundred largest multinationals in the country, this article shows that foreign firms consistently played a crucial role in Italy's industrial activities throughout the twentieth century. A detailed analysis of investment patterns, distribution across industries, and entry modes reveals that they concentrated their investment in sectors of high technological and scale intensity, such as chemicals and pharmaceuticals, where domestic capabilities and competition remained weak during much of the period.
I examine the factors underpinning the British radio-equipment sector's particularly poor interwar productivity performance relative to the United States. Differences in socio-legal environments were crucial in allowing key players in the British industry to derive higher monopoly rents than their American counterparts. Higher British rents in turn, had the unintended outcome of stimulating innovation around restrictive patents, initiating a path-dependent process of technical change in favor of expensive multifunctional valves. These valves both raised direct production costs and prevented British firms from following the American path of broadening the radio market beyond the household's prime receiver.
The relationship between ownership and control of distant ventures has been a major topic in business history. This relationship prompted the creation of a specific organizational form, the freestanding company, particularly active in international business before World War I. The freestanding form and railway companies such as Companhia Real share the common characteristic of being stand-alone firms based on foreign direct investment (FDI), but their legal ownership and management strategy were different. The freestanding companies offshored legal ownership; Companhia Real offshored top management since it was incorporated in the country hosting FDI. This business configuration was usual in French investments across European peripheral countries. This article introduces a new concept into the current international business literature, emphasizing the polymorphous character of foreign investment before World War I.
Economic and geographic centralization are typically seen as critical components of the industrialization of food during the late nineteenth and twentieth centuries. The development of the fresh- and processed-tomato industries during this period offers an important counterexample to this dominant narrative. Between the late nineteenth century and World War II, the most salient characteristic of both fresh- and processed-tomato production was economic and geographic decentralization. This article argues that the emergence of sites of tomato production and processing in virtually every region of the country played a vital role in fulfilling the long-standing quest for year-round access to both fresh and processed tomatoes.
The United Planters' Association of South India (UPASI), formed in 1893 at the zenith of British colonial rule in India, was an organization dedicated to the interests of British planters, mainly tea planters, of South India. In the first half century of its history, UPASI enjoyed an unusual degree of effectiveness and control. Its authority and reach owed to the fact that, unlike many other planters' organizations of the time, such as the Ceylon Planters' Association and the Planters' Association of Malay, UPASI was an “association of associations,” a cartel of cartels, its members being district associations. But its power also derived from the homogeneous ethnic composition of the firms that constituted and managed this body, making it an exclusive association of Europeans in an Indian world. In this article, I show how this combination of ethnicity and cooperation, dynamics that manifested across the entire range of modern businesses started in colonial India, proved to be both a source of strength and a point of weakness.
The stellar growth of Taiwan's personal-computer (PC) industry over the past three decades represents a paradox. Participating in the global production system, local firms in Taiwan grew in association with established firms in the West. Despite their technical know-how, manufacturing prowess, and size, most leading Taiwanese firms did not develop their own capabilities in branding and marketing. A close examination of the historical evolution of the industry reveals that interactions with established companies in the West, in addition to local competition, decisively shaped capability development among latecomer firms. A few firms in Taiwan that eventually joined the ranks of global PC brands had been investing in marketing early, guided by a strategic vision rather than near-term economic calculation.
This article explores the tendering process for the construction of the Tanzam oil pipeline during the mid-1960s. In addressing aspects of the political response to British investment overseas and the history of the British company Lonrho, it argues that the British government's determination to concentrate financial investments at home affected its ability to project its presence through supporting business overseas. In addition, the article suggests that the Zambian government demonstrated autonomy in awarding the tender.