This book is concerned with the evolution and theory of multinational trading companies. The focus is on the twentieth century. Trading companies in the seventeenth and eighteenth centuries—such as the famous East India Companies—have received much attention from historians, but this is far from the case for their modern successors. Although important studies of individual firms and, especially, of Japanese trading companies have been published, only a handful of wider studies exist. There are two monographs by a French and a Korean published in the mid-1980s (Chalmin 1985; Cho 1987) and two Japanese-sponsored edited volumes (Yonekawa and Yoshihara 1987; Yonekawa 1990). The paucity of literature on trading companies reflects a more general bias in the literature on international business towards the manufacturing sector, even though by the 1990s upwards 50 per cent of world foreign direct investment (FDI) was in services (Enderwick 1989). Nevertheless the neglect of trading companies in the international business literature is especially curious for two reasons.
The first reason is their importance in the world economy, both historically and at the end of the twentieth century. In the nineteenth and early twentieth centuries, as will be shown later in this chapter and in subsequent chapters, trading companies were very significant in world trade in commodities and more generally as vehicles for FDI which, by 1914, had risen to a size relative to world output not to be regained until the 1990s (Jones 1996a: 30). In the 1990s Japans nine sogo shosha—general trading companies—handled over 40 per cent of that country’s entire exports and over 70 per cent of its imports. In 1991 their gross sales amounted to a quarter of Japans nominal GNP. A listing of the worlds top 100 multinationals ranked by foreign assets in 1995 included five Japanese sogo shosha: Mitsubishi Corporation, Mitsui Co., Itochu, Nissho Iwai and Marubeni (United Nations 1997). Another sogo shosha, Sumitomo Corporation (ranked 51 in this listing) lost over £1 billion in unauthorised copper trading in a spectacular scandal in 1996 (Financial Times, 21 June 1996). Among other corporate giants in the contemporary world economy are commodity trading companies such as Cargill, the largest private company in the United States, and Glencore International, Switzerland’s second largest company by turnover.