Multinational strategies have figured prominently in nearly all of the world's most dynamic manufacturing industries since the late nineteenth century. The firms that pioneered the capital-intensive technologies of the Second Industrial Revolution of the late nineteenth century—chemicals, electricals, and machinery—rapidly expanded into international markets. The automobile producers followed in their path, as did their post-World War II successors in computers, pharmaceuticals, and telecoms.
The scale and significance of multinational manufacturing raises key issues in international business. Why did entrepreneurs choose to build factories in foreign countries rather than export their products or license their technologies? How and why did multinational investment become so important in the world's leading industries? How were complex technologies and brands transferred between countries by firms?
There appears to have been no case of multinational manufacturing before the nineteenth century. The first instances appeared during the 1830s. Among the pioneers were Swiss cotton firms, which built plants in neighboring southern Germany (Schröter 1993b). These investments, like many of the earliest attempts, were short-lived, but mid-century saw direct investments in manufacturing which were more durable. During the 1850s Siemens and Halske, the German firm which pioneered the development of telegraph and cable equipment, established workshops in St. Petersburg, Russia and London, England to install and maintain products manufactured in Berlin. In 1863 the company went further, and built its own cable factory near London, designed to ensure independence from the prices and quality of existing suppliers (Feldenkirchen 2000). Singer, the sewing machine company, has often been regarded as the first successful US multinational manufacturer. By 1914 it had built an extensive international business (see Box 4.1).
There were many examples of multinational manufacturing before 1914. In Europe, a 'foreign' investment could be very geographically proximate. Swiss investments in foreign countries were sometimes within walking distance from the Swiss border.