¹ A multinational enterprise in this context is defined as “an enterprise that controls and manages production establishments—plants—located in at least two countries.” Caves, Richard E., Multinational Enterprise and Economic Analysis (Cambridge, Mass., 1982), 1Google Scholar.

² Rugman, Alan M., ed., New Theories of Multinational Enterprise (London, 1982Google Scholar); but see the critique of this concept by Casson, Mark, “General Theories of the Multinational Enterprise: Their Relevance to Business History,” in Multinationals: History and Theory, ed. Hertner, Peter and Jones, Geoffrey (Aldershot, 1986), 42–63Google Scholar.

³ Mark C. Casson, “Transaction Costs and the Theory of the Multinational Enterprise,” in Rugman, New Theories, 24–43.

⁴ “The moral of our review of the literature is that there is no really satisfactory general theory of the MNE.” Casson, “General Theories of the Multinational Enterprise,” 53. See also Dunning, John H., “Changes in the Level and Structure of International Business,” in The Growth of International Business, ed. Casson, Mark (London, 1983Google Scholar).

⁵ Fieldhouse, David K., “The Multinational: A Critique of a Concept,” in Multinational Enterprise in Historical Perspective, ed. Teichova, Alice, Lévy-Leboyer, Maurice, and Nussbaum, Helga (New York, 1986), 9–29, 24Google Scholar.

⁶ Peter Hertner and Geoffrey Jones, “Multinationals: Theory and History,” in their Multinationals, 1–18, 15.

⁷ Plummer, Alfred, International Combines in Modern History (London, 1934), 54Google Scholar.

⁸ Franko, Lawrence G., “The Origins of Multinational Manufacturing by Continental European Firms,” in Business History Review 48 (Autumn 1974): 277–302CrossRefGoogle Scholar; Merkle, Hans L., “Internationale Aufgaben des Unternehmers,” in Schwerpunkte unternehmerischen Handelns (Frankfurt, 1971), 29–46, 35Google Scholar.

⁹ Rugman, Alan M., “Motives for Foreign Investment: The Market Imperfections and Risk Diversification Hypothesis,” Journal of World Trade Law 9 (1975): 567–73, 568Google Scholar.

¹⁰ Chandler, Alfred D. Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 10Google Scholar.

¹¹ Casson, “General Theories,” 42.

¹² Brewer, Thomas C., “Political Risk Assessment for Foreign Direct Investment Decisions: Better Methods for Better Results,” Columbia Journal of World Business (Spring 1981): 5–11Google Scholar.

¹³ Davidson, William H., “The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects,” Journal of International Business Studies (Fall 1980): 9–22CrossRefGoogle Scholar.

¹⁴ In Germany after the introduction of state regulation of the handling of foreign exchange (Devisenbewirtschaftung) in 1931, very few direct investments were made up to 1939. But in those rare cases usually not all the money was transferred from Germany; instead profits of the enterprises in third markets were used for this (for example, the cooperative investment of IG Farben and ICI in their dye factory in Trafford, England, in 1938).

¹⁵ Wilkins, Mira, “Modern European Economic History and the Multinationals,” Journal of European Economic History 6 (1977): 575–95, 592Google Scholar; Wilkins, “The History of European Multinationals: A New Look,” ibid., 15 (1986): 483–510, 506.

¹⁶ Casson, Mark, “Multinational Monopolies and International Cartels,” in The Economic Theory of the Multinational Enterprise, ed. Buckley, Peter and Casson, Mark (London, 1985), 60–97CrossRefGoogle Scholar.

¹⁷ In the interwar period German enterprises and their foreign performance differed at least as much from more general patterns as did the Swedish businesses investigated by Ragnhild Lundström. See Lundström, “Swedish Multinational Growth before 1930,” in Hertner and Jones, Multinationals, 135–56.

¹⁸ Casson, “Multinational Monopolies,” 96; Helga Nussbaum, “International Cartels and Multinational Enterprise,” in Teichova, Lévy-Leboyer, and Nussbaum, Multinationals in Historical Perspective, 131–44; Teichova, Alice, “Multinationals in Historical Perspective,” in Debates and Controversies: 9th International Economic History Congress, Bern, 1986 (Zurich, 1986), 112–23Google Scholar. I am working on a project comparing multinational enterprises based in small European countries (Belgium, the Netherlands, Sweden, and Switzerland).

¹⁹ For details see Stonehill, A., Foreign Ownership in Norwegian Enterprises (Oslo, 1965Google Scholar).

²⁰ R. Hjerpe, “Ahvenainen: Foreign Enterprises and Nationalistic Control: The Case of Finland since the End of the 19th Century,” in Teichova, Lévy-Leboyer, and Nussbaum, Multinationals in Historical Perspective, 9; Stonehill, Foreign Ownership in Norwegian Enterprises, 20; Political and Economic Planning and Industries Group, Report on International Trade (London, 1937), 116Google ScholarPubMed; Pohjolan Puutavarau Vienti OY.

²¹ The investment amounted to nKr 600,000 in 1926; Politisches Archiv des Auswärtigen Amtes, Bonn [hereafter, PA AA], Sonderreferat Wirtschaft, Industrie 20, Band 1, Kartelle.

²² The amount, 6,000 tons of chlorine per year, was quite significant. Any production of chlorine on its own was prohibited. Contract of 9 Jan. 1931, Bayer Werks Archiv, Leverkusen [hereafter, BWA] 19, Chlor 5.

²³ Lange, E., “The Concession Laws of 1906–1909 and the Norwegian Industrial Development,” Scandinavian Journal of History 2 (1977): 311–30CrossRefGoogle Scholar.

²⁴ The investments of the German iron and steel industry, both hidden and open ones, are listed in Schröter, Harm G., Außenpolitik und Wirtschaftsinteresse: Skandinavien im außenwirtschaftlichen Kalkül Deutschlands und Großbritanniens, 1918–1939 (Frankfurt, 1983), 412–14Google Scholar.

²⁵ “Some of [the German ore mines] are being developed under great sacrifices purely for the purpose to safeguard a minor influence upon the Swedish market….” Ausschuß zur Untersuchung der Erzeugungs und Absatzbedingungen der deutschen Wirtschaft, Die Rohstoffversorgung der deutschen eisenerzeugenden Industrie (Berlin, 1928), 84Google Scholar.

²⁶ For this problem, see also G. Aalders and C. Wiebes, “Stockholm's Enskilda Bank, German Bosch, and IG Farben: A Short History of Cloaking,” Scandinavian Economic History Review (1985): 25–50; Schröter, Außenpolitik, 412; Milward, Alan S., The Fascist Economy in Norway (Oxford, 1972), 56Google Scholar. Milward's account of German investments in Fosdalens Bergverks AS and in Sovestad mines (p. 56) has not been substantiated by German sources until now.

²⁷ The reason for this was twofold. These were the only nickel ores Germany would have access to in case of war, and the German navy longed for a submarine base at Petsamo. Gemzell, Carl–Axel, Raeder, Hitler und Skandinavien: Der Kampf für einen maritimen Operationsplan (Lund, 1965), 45Google Scholar, and Gemzell, , Organization, Conflict and Innovation: A Study of German Naval Strategic Planning, 1888–1940 (Lund, 1973), 278Google Scholar.

²⁸ Note of a meeting held on 1 January 1918, Historisches Archiv der Gutehoffnungshütte, Oberhausen [hereafter, GHH], 30006/11.

²⁹ Contracts between each German company on the one hand and Gränges (Trafikaktiebolag Grängesberg–Öxelesund, Luossavara–Kirunavara AB) on the other, Archiv der Rohstoff GmbH, Düsseldorf (Thyssen), Schwedenerz 1933–42, compilation dated 1 July 1939.

³⁰ The price of ore class “Kiruna D” was, up to 5 million tons: 17.5 Skr; 5 million tons and above, 16.5 Skr (contract of 11 Nov. 1938, Rohstoff GmbH, Sehwedenerzverträge 1933–42). For the same class “Kiruna D” during the 1920s, GHH had to pay: from 400,000 tons onward, 13 Skr; up to 200,000 tons, 15 Skr; up to 100,000 tons, 17 Skr (all fob Narvik). Contracts, GHH-Gränges, 26 Nov. 1920, 16 Dec. 1920, Archiv of GHH, 30006/17. The contract of Gränges and Thyssen (August Thyssen Hütte; hereafter, ATH) dating from 28 May 1919 was based on the following conditions:

Historical Archive of ATH, A/560/4.

³¹ For example, in the GHH contract of 26 Nov. 1920/16 Dec. 1920 the rates for 1920 were: 100 marks = 80 Skr, rising annually by 1 Skr up to 1927, when 100 marks = 87 Skr. See contract, 26–29 April 1919, GHH archive, 30006/11; corresponding ATH-archive A/560/4, dated 28 May 1919. Like other enterprises, ATH used Dutch credits and paid in Florins (contract of 5 Dec. 1922, ATH-archive A/597/1).

³² Rohstoff GmbH, Schwedenerzverträge, 1933–42.

³³ Title of Milward's, Alan S. contribution in the Scandinavian Economic History Review 15 (1967): 127–38CrossRefGoogle Scholar.

³⁴ Swedish–German Trade Treaty of 1926, Bundesarchiv Koblenz, BA R 43 I/1114, see Ånhlander; British–Swedish Trade Treaty of 15 March 1933, Utrikes Departements Arkiv, Stockholm, HP 64 Ba XVII.

³⁵ Telegram of Gränges to ATH of 28 June 1919. ATH archive A/560/4.

³⁶ Exchange of letters of 20 June 1929, Rohstoff GmbH, Schwedenerzverträge 1933–42.

³⁷ Treue, Wilhelm, Die Feuer verlöschen nie. August Thyssen Ilütte, 1890–1926 (Düsseldorf, 1966), 156Google Scholar.

³⁸ See also the following, Meinhardt, W., Entwicklung und Aufbau der Glühlampenindustrie (Berlin, 1932Google Scholar). The author was Generaldirektor of Osram in the interwar period.

³⁹ Harm G. Schröter, “A Typical Factor of German International Market Strategy: Agreements between the U.S. and the German Electrotechnical Industries up to 1939,” in Teichova, Lévy-Leboyer, and Nussbaum, Multinational Enterprise in Historical Perspective.

⁴⁰ In some cases, small direct investments in a country were made in order to safeguard exports there. If high tariffs or other protectionist barriers were present, modest investment in a small enterprise to carry out finishing or the packing of small units was often sufficient to overcome these disadvantages.

⁴¹ Note dated 29 June 1929 about the talks between Osram and General Electric. Siemens Archiv Akte, Munich [hereafter, SAA], 4/Lt 398 VI.

⁴² The Osram investments were also based on ownership advantage, as Peter Hertner has shown was the case for Bosch and Mannesmann before 1914. See Peter Hertner, “German Multinational Enterprise before 1914: Some Case Studies,” in Hertner and Jones, Multinationals, 113–34, 123.

⁴³ League of Nations Economic Committee, The Coal Problem (Geneva, 1932), 18Google ScholarPubMed.

⁴⁴ See Olsson, Sven-Olof, German Coal and Swedish Fuel, 1939–1945 (Göteborg, 1975Google Scholar).

⁴⁵ Salmon, Patrick, “Polish–British Competition in the Coal Markets of Northern Europe,” Studio llistoriae Oeconomicae 16 (1981): 217–43; 234Google Scholar; Meynen's letter of the German legation in Stockholm to the German Auswärtige Amt, dated 18 May 1934, in which the German share was placed at 8 percent; PA AA, Wirtschaft, Rohstoffe + Waren, Kohle, Bd. 9.

⁴⁶ Polish sea–bound coal exports were to be 21 percent of British exports. Letter of the German ambassador to London to the Auswärtige Amt, 13 Dec. 1934, ibid., Bd. 10. The Polish prices were to be oriented to the British “green list,” letter of the Swedish legation in London to the Utrikes Departement, 31 May 1935, Riksarkiv, HD HA F II aa/153. The Germans viewed it as “…an unperfect bungle, which in the most important question, in that of prices, was totally without impact”—a remark that seems to be quite unfair; internal letter of the German syndicate, 10 Nov. 1936, Historiches Archiv der GHH, 400101320/88; my translation.

⁴⁷ Signed on 11 June 1937, valid from 1 April 1947 to 31 March 1940, with automatic annual prolongation unless cancellation. Quotas: Germany, 48.43%; Great Britain, 20.88%; Holland, 17.8%; Belgium, 9.66%; Poland, 3.20%; Bundesarchiv Koblenz, R 7 /622; Olsson, German Coal and Swedish Fuel, 31, 56, 70.

⁴⁸ As in the case of the world covering potassium syndicate: Schröter, Harm G., Die Internationale Kaliwirtschaft 1918 bis 1939: Zum Verhältnis von industrieller Kartellpolitik und Staatsinterventionismus (Kassel, 1985Google Scholar). The files in no case give a reason why Scandinavia was chosen as a testing ground. I presume cartel partners could agree on this area because during the 1930s it was one of the very few fairly liberal and growing markets in which no partner had a substantial noneconomic advantage.

⁴⁹ Some other Swedish enterprises were included as well as junior partners. See in detail, Glete, Jan, ASEA under 100 År (Västeras, 1983), 98Google Scholar; the main purposes for the cartel are summarized in Glete, Jan, Storföretag i starkström (Västeras, 1984), 98Google Scholar; Schröter, Außenpolitik, 331.

⁵⁰ Voivienti–osuusliike Valio r. 1. Helsinki, a central dairy cooperative, Sitzung des Kaufmännischen Ausschusses der IG Farben, 6 Sept. 1932, BWA 13/9; AIV were the initials of the inventor of the process, Professor A. I. Virtanen of Helsinki University.

⁵¹ BWA Verträge 19, Grünfutterkonservierung 1.

⁵² Sitzung des Kaufmännischen Ausschusses der IG Farben, 6 Sept. 1932, BWA 13/9.

⁵³ Exactly a 3.6 percent share of IG Basle, a subsidiary of IG Farben in Switzerland, set up for the handling of its financial strategies on an international scale; see BWA 91/2, “VoWi-Bericht” Nr. 2815, 30 May 1938.

⁵⁴ In a private and confidential letter of the British Legation in Oslo to the chancery of the British Foreign Office, dated 24 May 1939, this point was stressed: “The French Legation in Oslo at any rate are very uncomfortable on the subject [Norsk Hydro–H.G.S.] and declare that, notwithstanding the French holding of shares in the company, they have no say in the management.” Public Record Office, London [hereafter. PRO], FO 371/23675.

⁵⁵ The French side was represented by ETS Kuhlmann dominating the Centrale des Matières Colorantes. See Schröter, Verena, Die deutsche Industrie auf dem Weltmarkt (Frankfurt, 1984), 295–313Google Scholar.

⁵⁶ Harm G. Schröter, Das internationale Stickstoffkartell, 1929–1933: Privatwirtschaftliche Marktregulierung und staatliche Interessenpolitik (forthcoming, 1989).

⁵⁷ Schröter, Aubenpolitik, 296.

⁵⁸ For example, in the Chinese projects of nitrogen factories in 1935, Stickstoffbesprechung der IG Farben, 23 Oct. 1935, Hoechst Archiv, Frankfurt, 85.

⁵⁹ Norsk Hydro's subsidiary Norsk Tjaereprodukter started to manufacture dyes, which was one of IG Farben's special fields. When this turned out to be profitable, the Norwegian plant was forced to close down in 1936, and the German company paid a minor sum as compensation. Schröter, Außenpolitik, 290; Milward, Facist Economy in Norway, 189.

⁶⁰ It cannot be traced, but perhaps IG Farben's later policy of establishing a dominant role in certain markets—in southeast Europe, for example—already was employed as early as 1927 in this case of Norsk Hydro or in Scandinavia as a whole.

⁶¹ Hertner, “German Multinational Enterprise,” 125–29.

⁶² Note of Dr. Meinen, 23 Dec. 1930, SAA 4/Lt 398, Bd. 3; F. Werner, Mein Werdegang, 84, unpub. MS at SAA.

⁶³ LaCour in vain wanted to avoid a takeover by his sworn competitor, ASEA; see Glete, ASEA, 115.

⁶⁴ Note of the meeting, 23 Dec. 1930, SAA 4/Lt 398, Bd. 3.

⁶⁵ For the ease of Czechoslovakia, see Teiehova, Alice, An Economic Background to Munich: International Business and Czechoslovakia, 1918–1938 (New York, 1974Google Scholar).

⁶⁶ Protokoll des Chemikalien–Ausschusses, 13 April 1927, BWA 134/11; the complicated network is outlined by Schröter, Verena, “The IG Farhenindustrie AG in Central and Southeast Europe, 1926–1938,” in International Business and Central Europe, 1918–1939, ed. Teiehova, Alice and Cottrell, Phillip (Leicester, England, 1983), 139–72Google Scholar; see Hayes, Peter, Industry and Ideology: I. G. Farben in the Nazi Era (New York, 1987Google Scholar), appendix.

⁶⁷ Seventh session of IG Farben's “Metall-Unterkommission,” 31 Jan. 1935, Hoechst Werks-Archiv, No. 32.

⁶⁸ Contracts at BWA, Nr. 19, Polyamide 1 + 2.

⁶⁹ The minimum was to be 200,000 pounds annually; ibid.

⁷⁰ In 1929 the Deutsche Linoleum Werke AG, Berlin, stood for a profit of 90 million Reichsmark (RM) out of a total of 125 million RM for the whole trust. Benni, A. et al. , Internationale lndustrie-Kartelle (Berlin, 1930), 88Google Scholar.

⁷¹ Note of the Statistisches Reichsamt, 1926, PA AA, Sonderreferat, Wirtsehaft, Industrie 20, Bd. 1 Kartelle.

⁷² Stonehill, Foreign Ownership in Norwegian Enterprises, 166.

⁷³ Among these were the following: Elektrokemiska AB, Bohus; Liljeholms Stearinfabrik, Stöms Bruk AB, Svenska Cellulosa AB; Hoechst Werks Archiv, Hö R V A/F 256; BWA 19 Chlor 18.

⁷⁴ Letter of MAN to Keusch, GHH, GHH-Werksarchiv 4001012026/31; see also Glete, ASEA. 99.

⁷⁵ For examples see V Schröter, Weltmarkt, 442.

⁷⁶ Exchange of letters between IG Farben and Anilinkompani between May and November 1937, Hoechst Werks Archiv, R V A/F 256.

⁷⁷ Internal statement of von Schnitzler, 18 Feb. 1937. Hoechst Werks–Archiv, Nr. 801.

⁷⁸ For example, the development of the Finnish electrotechnical enterprise, F. Strömberg OY, which grew after the First World War. During 1919–25, together with AEG and Siemens, ASEA tried to hamper this development—even before the three firms agreed to their cartel.

⁷⁹ See BWA Nr. 19 Chlor 6; note of the commercial secretary of the British legation in Helsinki to the Foreign Office and the Department of Overseas Trade, 1 Aug. 1936, PRO FO 371/20329.

⁸⁰ “The policy of ICI has been directed towards preserving this trade as far as possible, and in the pursuit of such aims they have endeavoured to negotiate longterm contracts with the Finnish mills…. Meanwhile the Chemical Department of the Ministry of Defence has been assiduous in its efforts to persuade ICI to manufacture chlorine locally instead of importing it from the UK and the company, though reluctant to do so, has finally yielded to persuasion in the fear that if they continued to resist it would only be a matter of time before they lose the Finnish market altogether.” Note of the Foreign Office to the Department of Overseas Trade, PRO FO 371/20329.

⁸¹ ICI, Solvay, and IG Farben had a share of one–third each; BWA, Nr. 19 Chlor 17.

⁸² Dated from 28 Nov. 1938, valid from 1 Jan. 1939–31 Dec. 1951; BWA, Nr. 19 Chlor 19.

⁸³ The core of this cartel, called the CIA (Convention de l'Industrie de l'Azote) was the DEN–Group (Deutsch–Englisch–Norwegische Gruppe); see Schröter, Stickstoffkartell.

⁸⁴ Minutes of IG Farben's Stickstoffbesprechungen, 17 Dec. 1936, 22 Feb. 1937, 25 Feb. 1938, Hoechst Werks–Archiv, Nr. 86.

⁸⁵ Ibid., 18 June 1935.

⁸⁶ Ibid., 25 March 1938.

⁸⁷ Ibid.

⁸⁸ Ibid.

⁸⁹ Ibid., 22 Dec. 1937.

⁹⁰ BWA, Nr. 19 Stiekstoff 4.

⁹¹ Because the first fair in 1930 was not very successful, the second one was very well prepared and conducted (24 Sept. 1932–9 Oct. 1932). Combined with the visit of the Prince of Wales, it left a deep impression, a considerable amount of goodwill, and a growing readiness to buy British products. Report of the British Legation in Copenhagen to the Foreign Office/Board of Trade, PRO, BT 60/30/2.

⁹² The Federation of German Industry (RDI) noticed in October 1932: “For much too long a period we looked upon the Northern states as our own backyard [Domäne] and neglected them in propaganda.” RDI Wochenbericht 22/32, 31 Oct. 1932, Krupp, Historisches Archiv, FAH IV E 181.

⁹³ Minute of the meeting, 23 June 1933, SAA 49/Ls 68; for further details, see Schröter, Außenpolitik, 82–84.

⁹⁴ In the 1920s only Germany had the technical installations to consume great amounts of the highly phosphorous Swedish ore.

⁹⁵ This attitude is notably different from that of American firms, as shown by Mira Wilkins in her major books. The Emergence of Multinational Enterprise (Cambridge, Mass., 1970), 77Google Scholar, and The Maturing of Multinational Enterprise (Cambridge, Mass., 1974), 51, 69Google Scholar.

⁹⁶ Teichova, Economic Background to Munich, 61.