Dynamics of International Business by Andrea Colli

Author:Andrea Colli
Language: eng
Format: epub
Publisher: Routledge

Conclusion

Multinational trading companies and free-standing companies, the two main protagonists of this chapter, can, to some extent, be considered to be the microeconomic outcome of the epochal transformations introduced by the First Industrial Revolution in the complex framework of the first global economy. It would have been difficult, almost impossible, for either of these organisational forms to have developed without the revolution in transport and communications which took place in the central decades of the century, and, at least in the case of the free-standing companies, these organisations were also among the main promoters of the revolution itself. Both mobilised huge quantities of resources, both in financial terms and in terms of human capital and technical skills, to an extent never experienced in the previous centuries. Both rose as particularly efficient devices in the global economy, and contributed in a clear way to the consolidation of the Western leadership in the first decades of the process known today as the “great divergence”. Both, however, had either almost disappeared or been radically transformed by the first decades of the twentieth century, especially after the outbreak of the First World War. This metamorphosis is particularly striking because of its rapidity: once dominant, the free-standing company had become a relatively rare species by the 1930s, while the majority of the trading companies described above had undergone the inexorable process of transformation into multinational business groups.

Clearly, such a rapid change – which sharply reduced the variety in the forms of international business which were considered to be proper throughout the whole of the modern and early contemporary period – was determined by the decline of some of the conditions in which the previous forms had prospered, to wit, the unique framework of the first global economy described above. It was, however, also determined by the emergence of new forms of enterprise, in their turn generated by new technological breakthroughs, which profoundly altered the existing conditions of international business.

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