The creation of the British India S.N. Co and the take-over of the Netherlands India S.N. Co were acts of personal and familial business diversification. The partners in the Mackinnon-Hall merchant houses, together with other members of their families, used their profits from mercantile endeavour, as well as financial credit from sources available to them, to take control of the two steamer companies through minority holdings. Of the three family firms, only Wm. Mackinnon & Co held any equity in the steamship concerns – NISM shares worth £2,750 and representing only 12 per cent of its ‘outside’ investments in 1868. Clearly, then, BI and NISM were not subsidiaries of the Mackinnon-Hall merchant partnerships in the normal sense. Rather they were ‘free-standing companies’, legally and organisationally independent, and lacking ownership by any parent company. To concentrate on legal formalities, however, would be to miss the fact that the two incorporated steamship concerns were the products of networking activities which defined their strategic purposes and directions, and that the business network responsible for this was created by the Mackinnon-Hall families and controlled by William Mackinnon. In essence, the steamship companies were affiliates or associates within a larger grouping of commercial and financial interests which controlled and guided their operations.

Our understanding of international business diversification processes have been greatly enhanced in recent years by advances in scholarship on two fronts. First came the realisation that what is called ‘foreign direct investment’ (or FDI) was carried out by British capitalism in the nineteenth century by different techniques from those of the large multinational manufacturing concerns which established foreign subsidiaries and affiliates in the twentieth century. The identification of up to thirty British-based ‘investment groups’ engaged in the financing of new enterprises in distant parts of the world, and the discovery that the thousands of ‘free-standing companies’ incorporated in Britain as vehicles for international operations were organised into distinctive clusters, drew attention to the very large numbers of British firms engaged in overseas direct investment between roughly 1850 and 1930, and to the great diversity of the new enterprises which they established. These studies also to pointed to the fact that merchant houses or trading companies, as well as financial institutions, supplied the active core of such ‘groups’ or ‘clusters’.