Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcast
  • Managing the Future of Work Podcast
  • About Us
  • Book
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Podcasts
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
  • Browse All
    Multinational Strategies and Developing Countries in Historical Perspective
    08 Apr 2010Working Paper Summaries

    Multinational Strategies and Developing Countries in Historical Perspective

    by Geoffrey Jones
    HBS professor Geoffrey Jones offers a historical analysis of the strategies of multinationals from developed countries in developing countries. His central argument, that strategies were shaped by the trade-off between opportunity and risk, highlights how three broad environmental factors determined the trade-off. The first was the prevailing political economy, including the policies of both host and home governments, and the international legal framework. The second was the market and resources of the host country. The third was competition from local firms. Jones explores the impact of these factors on corporate strategies during the three eras in the modern history of globalization from the nineteenth century until the present day. He argues that the performance of specific multinationals depended on the extent to which their internal capabilities enabled them to respond to these external opportunities and threats. The paper highlights in particular the changing nature of political risk faced by multinationals. The era of expropriation has, for the moment, largely passed, but multinationals now experience new kinds of policy risk, and new forms of home country political risk also, such as the Alien Tort Claims Act in the United States. Key concepts include:
    • The strategies of multinationals in the developing world have changed over time. Initially they sought access to resources through exclusive contracts. As anti-globalization policies increased, they needed enhanced political contacts, and strengthened local managements. The pursuit of markets and lower cost labor is now the central focus. They still need local political and business contacts, but also have to respond to local competition and demands to incorporate local relevance into global products.
    • Multinationals initially enjoyed insider advantages in colonial regimes. With decolonization, political risk rose sharply. They were often expropriated, and many divested. Now multinationals face regular, adverse shifts in policy by host governments.
    • The recent period of globalization has also seen the growth of home country political risk. In particular, multinationals face criticism and legal action for real or alleged environmental or human rights abuses in developing countries.
    • Developing countries, or at least the larger and more fast-growing ones in Asia and Latin America, are increasingly seen as indispensable by multinationals in every industry. However recent decades have seen a sharp growth of highly competitive local firms, who can compete with frugal engineering, and are going global.
    LinkedIn
    Email

    Author Abstract

    This working paper offers a historical analysis of the strategies of multinationals from developed countries in developing countries. The central argument is that strategies were shaped by the trade-off between opportunity and risk. Three broad environmental factors determined the trade-off. The first was the prevailing political economy, including the policies of both host and home governments, and the international legal framework. The second was the market and resources of the host country. The third factor was competition from local firms. The impact of these factors on corporate strategies is explored during the three eras in the modern history of globalization from the nineteenth century until the present day. The performance of specific multinationals depended on the extent to which their internal capabilities enabled them to respond to these external opportunities and threats. 58 pages.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: March 2010
    • HBS Working Paper Number: 10-076
    • Faculty Unit(s): Entrepreneurial Management
      Trending
        • 23 May 2023
        • Research & Ideas

        Face Value: Do Certain Physical Features Help People Get Ahead?

        • 30 May 2023
        • Research & Ideas

        Can AI Predict Whether Shoppers Would Pick Crest or Colgate?

        • 02 May 2023
        • What Do You Think?

        How Should Artificial Intelligence Be Regulated—if at All?

        • 31 May 2023
        • HBS Case

        From Prison Cell to Nike’s C-Suite: The Journey of Larry Miller

        • 25 Jan 2022
        • Research & Ideas

        More Proof That Money Can Buy Happiness (or a Life with Less Stress)

    Geoffrey G. Jones
    Geoffrey G. Jones
    Isidor Straus Professor of Business History
    Contact
    Send an email
    → More Articles
    Find Related Articles
    • History
    • Corporate Strategy
    • Globalization

    Sign up for our weekly newsletter

    Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    ǁ
    Campus Map
    Harvard Business School Working Knowledge
    Baker Library | Bloomberg Center
    Soldiers Field
    Boston, MA 02163
    Email: Editor-in-Chief
    →Map & Directions
    →More Contact Information
    • Make a Gift
    • Site Map
    • Jobs
    • Harvard University
    • Trademarks
    • Policies
    • Accessibility
    • Digital Accessibility
    Copyright © President & Fellows of Harvard College