Hostname: page-component-78c5997874-m6dg7 Total loading time: 0 Render date: 2024-11-18T16:56:03.220Z Has data issue: false hasContentIssue false
  • English
  • Français

Control, Performance, and Knowledge Transfers in Large Multinationals: Unilever in the United States, 1945–1980

Published online by Cambridge University Press:  08 April 2017

Geoffrey Jones
Geoffrey Jones
Affiliation:
GEOFFREY JONES is professor of business administration atHarvard Business School.
Get access Rights & Permissions [Opens in a new window]

Extract

This article considers key issues relating to the organization and performance of large multinational firms in the post-Second World War period. Although foreign direct investment is defined by ownership and control, in practice the nature of that “control” is far from straightforward. The issue of control is examined, as is the related question of the “stickiness” of knowledge within large international firms. The discussion draws on a case study of the Anglo-Dutch consumer goods manufacturer Unilever, which has been one of the largest direct investors in the United States in the twentieth century. After 1945 Unilever's once successful business in the United States began to decline, yet the parent company maintained an arms-length relationship with its U.S. affiliates, refusing to intervene in their management. Although Unilever “owned” large U.S. businesses, the question of whether it “controlled” them was more debatable.

Type
Articles
Information
Business History Review , Volume 76 , Issue 3 , Autumn 2002 , pp. 435 - 478
Copyright
Copyright © The President and Fellows of Harvard College 2002

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Wilson, Charles, The History of Unilever, 3 vols. (London, 1954, 1968)Google Scholar; Chandler, Alfred D. Jr., Scale and Scope (Cambridge, Mass, 1990), 378–89Google Scholar.

2 van Hoesel, Roger and Narula, Rajneesh, eds., Multinational Enterprises from the Netherlands (London, 1999)CrossRefGoogle Scholar, especially ch. 8.

3 Fieldhouse, D. K., Merchant Capital and Economic Decolonization—The United Africa Company 1929–1987 (Oxford, U.K., 1994)Google Scholar.

4 Wilkins, Mira, The History of Foreign Investment in the United States to 1914 (Cambridge, Mass., 1989), 340–2Google Scholar.

5 “The 100 Largest Foreign Investments in the US,” Forbes (6 July 1981).

6 Wilkins, Mira, “Comparative Hosts,” Business History 36, no. 1 (1994)CrossRefGoogle Scholar; Jones, Geoffrey, The Evolution of International Business (London, 1996)Google Scholar.

7 The concept of “advantage” originated with the pioneering contribution of Stephen Hymer and is a basic component of the eclectic paradigm developed by Dunning, John H.. See Dunning, , Multinational Enterprises and the Global Economy (Wokingham, U.K., 1992)Google Scholar.

8 Jones, Geoffrey and Gálvez-Muñoz, Lina, eds., Foreign Multinationals in the United States (London, 2001)Google Scholar.

9 Grubert, H., Goodspeed, T., and Swenson, D., “Explaining the Low Taxable Income of Foreign-Controlled Companies in the United States,” in Giovannini, A., Hubbard, R. Glenn, and Slemrod, J., eds., Studies in International Taxation (Chicago, 1993)Google Scholar; R. J. Mataloni, “An Examination of the Low Rates of Return of Foreign-Owned US Companies,” Survey of Current Business (2000): 55—73.

10 R. J. Mataloni, “An Examination of the Low Rates of Return.”

11 Ghoshal, S. and Bartlett, C. A., “Creation, Adoption, and Diffusion of Innovation by Subsidiaries of Multinational Corporations,” Journal of International Business Studies 19 (Fall 1988): 365–88CrossRefGoogle Scholar; Zander, U. and Kogut, B., “Knowledge and the Speed of the Transfer and Imitation of Organizational Capabilities,” Organizational Science 6 (Jan.–Feb. 1995): 76–92CrossRefGoogle Scholar; Gupta, A. K. and Govindarajan, V., “Knowledge Flows within Multinational Corporations,” Strategic Management Journal 21 (April 2000): 473–963.0.CO;2-I>CrossRefGoogle Scholar.

12 Sölvell, O. and Zander, I., “International Diffusion of Knowledge: Innovating Mechanisms and the Role of the MNE,” in Chandler, Alfred D. Jr. et al. , The Dynamic Firm (New York, 1998), 402Google Scholar.

13 Wilson, History of Unilever, 1, 204.

14 Chandler, Scale and Scope, ch. 5; McCraw, Thomas K., American Business, 1920–1980: How It Worked (Wheeling, Ill., 2000)Google Scholar, ch. 3.

15 Wilson, , The History of Unilever, vol. 2, 344Google Scholar; Chandler, Scale and Scope, 385–8; Jones, Geoffrey, “Foreign Multinationals and British Industry before 1945,” Economic History Review 41, no. 3 (1988): 429–53CrossRefGoogle Scholar.

16 “History of Lever Brothers USA, 1912–1952,” Unilever Economics and Statistics Department, 18 Dec. 1953, Unilever Historical Archives London (UAL). The archives contain two unpublished draft chapters on the history of Unilever in the United States (dated January 1990). The author would like to thank Unilever PLC and N.V. for permission to read this draft, which draws heavily on confidential interviews with former executives.

17 Peiss, Kathy, “On Beauty and the History of Business,” in Beauty and Business, ed. Scranton, Philip (New York, 2001), 15Google Scholar.

18 Wilson, , History of Unilever, vol. l, 284–7Google Scholar; “History of Lever Brothers USA, 1912–1952,” UAL.

19 Memo on Lever Brothers, c. 1964, UAL.

20 The classic case study of the launch and marketing of Crisco is by Strasser, Susan, Satisfaction Guaranteed (New York, 1989)Google Scholar.

21 McCraw, American Business, 47–8.

22 Special Committee Minutes, 3 Aug. 1944, UAL.

23 Luckman's autobiography presents his case for this episode. See Luckman, Charles, Twice in a Lifetime: From Soap to Skyscrapers (New York, 1988), 202Google Scholar, 230–40.

24 George Fry and Associates, “Report on Relocation of Headquarters,” AHK 2117, Unilever Historical Archives Rotterdam (UAR).

25 Spencer Klaw, “The Soap Wars,” Fortune (June 1963).

26 Puplett, P. A. R., Synthetic Detergents (London, 1957), 59–60Google Scholar.

27 I owe this point to Ben Wubs.

28 Luckman, Twice in a Lifetime; Wall Street Journal, 25 Jan. 1950; Time (30 Jan. 1950).

29 Klaw, “Soap Wars.” The figures are from testimony in the 1963 All antitrust case.

30 Ibid.

31 Marketing Magazine (1 Oct. 1967).

32 “Unilever: A Multinational's New Route to Profits,” Business Week (13 Apr. 1974).

33 McKinsey & Co. to Thomas S. Carroll, 15 Jan. 1974, UAL.

34 “Unilever Fights Back in the US,” Fortune (26 May 1986).

35 Editors of Advertising Age, The House That Ivory Built (Lincolnwood, Ill., 1988), 33Google Scholar.

36 Memo concerning Unilever research in relation to the American business, M. Mum ford, 20 July 1964, Special Committee Supporting Documents; McKinsey Report, 1973, UAL.

37 Visit to North America, Sir Ernest Woodroofe's Report to the Board, 5 Oct. 1973, Conference of Directors Files, UAL.

38 McKinsey Report, 1973.

39 In 1950 Unilever's sales were $2,087 million and P&G's were $861 million. In 2000 Unilever's sales were $43,680 million and P&G's were $38,125 million.

40 The House that Ivory Built, 203.

41 “P&G in North America, 1985,” Misc. Competitors: P&G, UAL.

42 The House that Ivory Built, 88–9.

43 For accounts of the growth of this industry in the United States, see especially Peiss, Kathy, Hope in a Jar (New York, 1998)Google Scholar, and Scranton, Philip, ed., Beauty and Business (New York, 2001)Google Scholar. Koehn, Nancy F., Brand New (Boston, 2001)Google Scholar, has a chapter on the growth of Lauder, Estée; and Tedlow, Richard S., Giants of Enterprise (New York, 2001)Google Scholar, discusses the early history of Revlon.

44 Brothers, Salomon, P&G—The Ultra Consumer Products Company (New York: Salomon Brothers, 1995)Google Scholar.

45 Report on Visit to USA, by H. M. Threlfall, March–April 1961, UAR.

46 “Competition in the US Toothpaste Market, 1960–1985,” Unilever Economics Department Paper ES 86073, UAR.

47 Special Committee Minutes, 3 Aug. 1947, UAL.

48 Special Committee Minutes, 1 July 1948, UAL; Wall Street Journal, 25 Jan. 1950.

49 Wilson, , The History of Unilever, vol. 3, 199Google Scholar.

50 “Unilever in North America. Some Financial Possibilities and Impossibilities,” C. Stenham, 3 Nov. 1970, UAL.

51 Luckman, Twice in a Lifetime, 219.

52 Lever Brothers Company, U.S. Foods Division, Margarine Business Proposal, Paper 7861, prepared for Special Committee Meeting, 12 Dec. 1980, UAL.

53 Notes on Visit to the United States of America, April–May 1957, AHK 2118, UAR.

54 Notes on Visit to the United States and Canada, 8–2 5 Feb. 1963, AHK 2118, UAR.

55 Wilkins, History of Foreign Investments, 311–12.

56 Wilson, , History of Unilever, vol. 2, 259Google Scholar.

57 Nancy F. Koehn, “Henry Heinz and Brand Creation in the Late Nineteenth Century: Making Markets for Processed Food,” Business History Review (Autumn 1999): 349–93.

58 Chandler, Scale and Scope, 383–4.

59 Peter Matthias, Retailing Revolution, 245–50; memo by J. F. Knight on Allied Suppliers, 13 Feb. 1968; memo by Financial Group on Allied Suppliers Ltd., 4 Aug. 1970, UAL.

60 Meeting of the Special Committee, 4 June 1942, UAL.

61 Sutton, John, Sunk Costs and Market Structure (Cambridge, Mass, 1991)Google Scholar.

62 Beck, W. J., History of Research and Engineering in Unilever, 1911–1986 (Rotterdam, 1996), 3, 12Google Scholar.

63 Sundry Foods and Drink Co-ordination Marketing and Sales Directors' Visit to T. J. Lipton, Inc., April–May 1979, UAL.

64 “US Lipton. Background Material for Strategic Issues,” Unilever Economics Department, Oct. 1980, UAL.

65 Reinders, Pim, Licks, Sticks and Bricks (Rotterdam, 1999), 239Google Scholar.

66 “Lipton Goes on the Offensive,” BusinessWeek, 5 Sept. 1983.

67 Report by Lord Heyworth at the Directors Conference on 9 Jan. 1959, UAL.

68 “Detergents Co-ordination Longer Term Plans,” UAL.

69 Memo by Maurice Zinkin to Special Committee on Reporting Arrangements-North America, 5 Feb. 1976, UAL.

70 Minutes of the Special Committee, 9 Sept. 1976, UAL.

71 “Dr. Woodroofe's Visit to USA,” Report to the Board, 17 Sept. 1971.

72 Stopford, John M. and Wells, Louis T., Managing the Multinational Enterprise (London, 1972)Google Scholar, ch. 2.

73 Ghoshal and Bartlett, “Creation, Adoption, and Diffusion.”

74 Kipping, M. and Byarnar, O., eds., The Americanization of European Business (London, 1998)Google Scholar; Zeitlin, J. and Herrigal, G., eds., Americanization and its Limits (Oxford, U.K., 2000)Google Scholar.

75 Comments by Wilson, Charles, in Geoffrey Heyworth, Baron Hey worth of Oxton. A Memoir (London, 1985)Google Scholar.

76 Financial Times, 23 May 1950.

77 Advertising Age, International Database, 1999.

78 Klaw, “The Soap Wars.”

79 “Ex-Justice Abe Fortas Dies at 71,” Washington Post, 7 Apr. 1982.

80 An address to the Board by Abe Fortas on Anti-Trust, 25 Sept. 1959, UAL.

81 Talk to Unilever Board, by Abe Krash, 25 June 1971, UAL.

82 See the chapters by Jim Bamberg and Ty Priest in Jones and Gálvez-Muñioz, eds., Foreign Multinationals.

83 Notes on discussion held on 11 April 1962, UAL.

84 Zander and Kogut, “Knowledge and the Speed of the Transfer and Imitation,” 78.

85 Dr. Woodroofe's report to the Directors Conference, 11 Dec. 1964, on his visit with Mr. Tempel.

86 Conference of Directors, 30 July 1971.

87 J. P. Erbé to Special Committee, 5 Dec. 1973, UAR.

88 Memo by H. Meij to Special Committee, 20 Jan. 1977, UAR.

89 Frank Greenwall, “Yesterday, Today, Tomorrow. The Story of National Starch and Chemical Corporation,” n.d.

90 “Unilever: A Solid Acquisition Outside the Home Market in Europe,” BusinessWeek, 23 Jan. 1978.

91 “National Starch Does It the Old Way,” Chemical Week, 13 Oct. 1982.

92 Krug, J. A. and Nigh, D., “Top Management Turnover: Comparing Foreign and Domestic Acquisitions of US Firms,” in Woodward, D. and Nigh, D., eds., Foreign Ownership and the Consequences of Foreign Direct Investment in the United States (Westport, Conn., 1998)Google Scholar.

93 Private Note of Discussions, 27 July 1977, UAL.

94 “Unilever Fights Back in the US,” Fortune (26 May 1986).

95 Brewer, Thomas L. and Boyd, Gavin, eds., Globalizing America. The USA in World Integration (Cheltenham, U.K., 2000), 41CrossRefGoogle Scholar.