Proposal preview

Foreign Multinational Enterprises in Australia

Multinational enterprises (MNEs) have had a long and important history in Australia. For nearly two centuries, they have arrived in waves on Australia’s shores from Britain, USA, Continental Europe, Japan, South Korea and, most recently, China covering many sectors of the economy. Today, they account for more than a third of Australia’s top 2000 firms and possess A$1.1 trillion of assets. Their impacts on the Australian economy are a major area of government policy and a central topic of public debate.

Surprisingly little has been written about MNEs in Australia despite their importance and the fact that the history of international business is a thriving field of research in other nations. The session is part of a larger project that seeks to understand: the magnitude of, and motives for, multinational investment in Australia; the place of Australia in the global strategy of some of the largest world corporations; and to achieve a more informed and policy relevant understanding of their broad impact.

Three innovative aspects of the project are: 1) analysing the impact of MNEs on a successful resource-based economy, thus departing from the more common focus on developing primary producer or developed industrial nations; 2) following the complete history of firms in the country, including the nature of their exit/divestment; and 3) combining FDI measurements, common in economic history analysis, with the firm level perspectives of business historians.

The session comprises a team of outstanding researchers who have worked together and provide complementary expertise. Consistent with the aims of the second call for papers, this session complements sessions already in place. In particular, it complements, ‘Multinationals and the Transformation of the World Economy’ whose purpose is an, ‘understanding of the role of multinational enterprises in the transformation of the world economy from the mid-to-late nineteenth century until the present’. Australia had one of the highest levels of GDP per capita at the turn of the twentieth century and continues to be highly internationalised in terms of investment, labour, and trade. Therefore, an investigation of MNEs in Australia is a highly significant part of the analysis of their global impact. The proposed session is pertinent to several other round 1 sessions: ‘Business History in the Age of Modern Globalization’; ‘Multiple Futures for Business History: Building on Recent Debates and Suggestions’ and ‘Transnational business encounters in the twentieth century: informal company networks, cartels and business interest associations compared’. Between them, participants will analyse most major nations that sent firms to Australia, investigate a number of key industries, and estimate the size of inward foreign direct investment.

Organizer(s)

  • Simon Ville University of Wollongong sville@uow.edu.au Australia
  • David Merrett University of Melbourne dtm@unimelb.edu.au Australia

Session members

  • Monica Keneley, Deakin University
  • Jock Given, Swinburne University
  • Pierre Van der Eng, Australian National University
  • Claire Wright, University of Wollongong

Discussant(s)

  • Mira Wilkins Florida International University wilkinsm@fiu.edu
  • Geoff Jones Harvard Business School gjones@hbs.edu

Papers

Panel abstract

Multinational enterprises (MNEs) have had a long and important history in Australia. For nearly two centuries, they have arrived in waves on Australia’s shores from Britain, USA, Continental Europe, Japan, South Korea and, most recently, China covering many sectors of the economy. Their impacts on the Australian economy are a major area of government policy and a central topic of public debate. Surprisingly little has been written about: the magnitude and motives for investment in Australia; the place of Australia in the global strategy of corporations; and their broad impact on the economy and public policy. Three innovative aspects of the project are: 1) analysing the impact of MNEs on a successful resource-based economy; 2) following the complete history of firms in the country, to their exit/divestment; and 3) combining FDI measurements, common in economic history analysis, with the firm level perspectives of business historians.

1st half

International Business on the Eve of World War One

David Merrett and Simon Ville

We estimate the extent of multinational business activity in Australia on the eve of World War One, a time when most inward foreign investment was assumed to be either portfolio equity or public sector loans. Our database of overseas firms is assembled from a broad range of archival, printed and secondary sources. As a successful resource‐based economy, Australia provides a different host context from the customary attention to developing nations and modern manufacturing economies. We approximate the extent of international business, their home nation origins, and their distribution across sectors. We address common IB agendas, such as the motives and modes of firm entry, and the development question of their role in the shifting structure of the Australian economy in the early twentieth century.

We estimate the extent of multinational business activity in Australia on the eve of World War One, a time when most inward foreign investment was assumed to be either portfolio equity or public sector loans. Our database of overseas firms is assembled from a broad range of archival, printed and secondary sources. As a successful resource‐based economy, Australia provides a different host context from the customary attention to developing nations and modern manufacturing economies. We approximate the extent of international business, their home nation origins, and their distribution across sectors. We address common IB agendas, such as the motives and modes of firm entry, and the development question of their role in the shifting structure of the Australian economy in the early twentieth century.

Magnitudes, Origins and Directions. Foreign Direct Investment in Australia since the 1940s

Claire Wright, Simon Ville, and Pierre van der Eng

We provide the first estimate of inward foreign direct investment (FDI) into Australia throughout the period since World War Two. Utilising various sources, particularly series of the Australian Bureau of Statistics, we calculate the total stock and flow of FDI and its disaggregation by main sender nations and broad industry sectors. Comparisons will be drawn with other sources of investment and its magnitude compared to GDP. A range of methodological issues and challenges are discussed. The estimates will be used to examine questions about the local and overseas drivers of FDI. The distribution of FDI across different industry sectors will address issues of its relationship to the key domestic sources of growth and the role foreign controlled capital has played in the changing structure of the Australian economy.

We provide the first estimate of inward foreign direct investment (FDI) into Australia throughout the period since World War Two. Utilising various sources, particularly series of the Australian Bureau of Statistics, we calculate the total stock and flow of FDI and its disaggregation by main sender nations and broad industry sectors. Comparisons will be drawn with other sources of investment and its magnitude compared to GDP. A range of methodological issues and challenges are discussed. The estimates will be used to examine questions about the local and overseas drivers of FDI. The distribution of FDI across different industry sectors will address issues of its relationship to the key domestic sources of growth and the role foreign controlled capital has played in the changing structure of the Australian economy.

A case of liability of foreignness, or something else Continental European MNEs in Australia

Pierre van der Eng

Jones and Schröter (1993) established that firms from continental European countries were possibly just as active internationalising operations since the 19th century as UK and US firms. Nevertheless, only around 100 established subsidiary firms in Australia before 1950. By 2000, however, continental European MNEs in Australia exceeded 800; more than UK-based MNEs. The paper analyses factors that explain the slow and limited take-up by continental European MNEs of investment opportunities in Australia until the 1950s. Limited access to local funding and a degree of liability of foreignness, partly related to the two World Wars, were relevant. After World War II, European MNEs arrived in two waves: 1950s-1960s manufacturing firms and their suppliers to produce behind Australia’s high tariff walls; 1980s-1990s when a diverse range of continental European MNEs had been bolstered by the process of European integration, while 1980s financial deregulation in Australia allowed them to finance take-overs locally.

Jones and Schröter (1993) established that firms from continental European countries were possibly just as active internationalising operations since the 19th century as UK and US firms. Nevertheless, only around 100 established subsidiary firms in Australia before 1950. By 2000, however, continental European MNEs in Australia exceeded 800; more than UK-based MNEs. The paper analyses factors that explain the slow and limited take-up by continental European MNEs of investment opportunities in Australia until the 1950s. Limited access to local funding and a degree of liability of foreignness, partly related to the two World Wars, were relevant. After World War II, European MNEs arrived in two waves: 1950s-1960s manufacturing firms and their suppliers to produce behind Australia’s high tariff walls; 1980s-1990s when a diverse range of continental European MNEs had been bolstered by the process of European integration, while 1980s financial deregulation in Australia allowed them to finance take-overs locally.

2nd half

British Fire Insurers in Australia

Monica Keneley

The global expansion of British insurers in the nineteenth century has been a feature of insurance history which has highlighted the strategic nature of the multinational enterprise and approaches to the entry into foreign markets. The growth of the Australian colonies from the mid nineteenth century attracted the interest of these overseas insurers. The purpose of this paper is to consider the challenges these firms faced in establishing a presence in colonial markets and the way in which these trials were overcome. A combination of enterprise, an element of luck and a degree of resilience in the face of continued market instability assisted in building a strong industry presence. The experience of British insurers in the colonies sheds light on the processes of MNE expansion into markets beyond their range of tacit knowledge and expertise.

The global expansion of British insurers in the nineteenth century has been a feature of insurance history which has highlighted the strategic nature of the multinational enterprise and approaches to the entry into foreign markets. The growth of the Australian colonies from the mid nineteenth century attracted the interest of these overseas insurers. The purpose of this paper is to consider the challenges these firms faced in establishing a presence in colonial markets and the way in which these trials were overcome. A combination of enterprise, an element of luck and a degree of resilience in the face of continued market instability assisted in building a strong industry presence. The experience of British insurers in the colonies sheds light on the processes of MNE expansion into markets beyond their range of tacit knowledge and expertise.

Localising Multinational Enterprise. Media and Communications in Australia

Jock Given

This paper identifies and analyses the role of multinational enterprises in six sectors of the media and communications business in Australia - publishing, telecommunications, recorded music, film, radio and TV broadcasting, and online - by presenting and comparing snapshots at 20-year intervals from 1880, when only publishing and telecommunications existed as industries and the phonograph had just been invented, to the present. The analysis highlights ownership, location and internalisation factors, finding considerable differences among the sectors and over time. Three case studies of long term relationships between Australian and international enterprises [Ericsson and Telstra; Marconi, RCA and AWA; Warner Bros and Village Roadshow] enrich the higher level analysis of overall sectoral trends.

This paper identifies and analyses the role of multinational enterprises in six sectors of the media and communications business in Australia - publishing, telecommunications, recorded music, film, radio and TV broadcasting, and online - by presenting and comparing snapshots at 20-year intervals from 1880, when only publishing and telecommunications existed as industries and the phonograph had just been invented, to the present. The analysis highlights ownership, location and internalisation factors, finding considerable differences among the sectors and over time. Three case studies of long term relationships between Australian and international enterprises [Ericsson and Telstra; Marconi, RCA and AWA; Warner Bros and Village Roadshow] enrich the higher level analysis of overall sectoral trends.