MIGRATING EMERGING MARKET MULTINATIONALS
ORIGINS OF THE MIGRATING
MULTINATIONAL
Although the current trend started in the 1990s and involves
mainly multinationals from lower income countries, it has a
long history. The US agro-processing firm Bunge started out as
a Dutch firm in 1818, became Argentinian in 1884, and American
in 1994. The British multinational John Morrell & Co1 (now
Smithfield Foods) entered the US in 1871 as the affiliate of a UK
company, and by 1928 had become American with the bulk of its
activities and managers in the US.
Crossing the Atlantic in the opposite direction, British American
Tobacco2 was first registered in the UK in 1902, and initially
the headquarters, managers and dominant shareholding were
from the United States. By the 1920s the British managers and
shareholders were dominant, and it became (and remains) a
British multinational.
1 Wilkins, M. (2004) The History of Foreign Investment in the United States,
1914‑1945. Cambridge MA: Harvard.
2 Jones, G. (2006) The End of Nationality? Global Firms and "Borderless Worlds".
Zeitschrift fur Unternehmensgeschichte / Journal of Business History, 51(2): 149‑65.
Finally, cost is another big factor. Relocating your headquarters
to a global hub means paying much higher rents and salaries
than those in your company’s country of origin.
EMB: Aside from these costs and rewards, what other impact
does migrating have on emerging market multinationals?
HB: The short term impact on business can be limited. Often,
the majority of shareholders will still be locally-based, the
bulk of sales will still be made locally, and key decisions will
still be made by people from the country in question. Where it
starts to be consequential is a few years down the line, when
real decisions begin to migrate and the network in which an
emerging market multinational was embedded begins to
erode or weaken. Ultimately, what this speaks to is that the
home country is not adequately attractive for businesses,
so there’s work to be done at the national level in terms of
assessing what it would take for the country in question to
become a magnet for economic activity.
EMB: Beyond the multinationals themselves, how does a
company’s decision to migrate impact its home economy as
well as the market it is shifting its headquarters to? HB: By
and large, the countries that host migrating headquarters,
such as London or New York, stand to gain. The job creation
and positive economic impact that results from the arrival
of an EMMNC might be negligible, but the move reinforces
the host country’s status as a dynamic center of economic
activity and spurs other companies to consider shifting their
headquarters there too. For an EMMNC’s home economy,
however, the scenario is more complex.
The emergence of migrating multinationals is not great news
for policymakers in their countries of origin. Previously, an
emerging market firm had little choice but to engage with the
local infrastructure. For example, if skills were not available,
the firm had to implement training programs and develop
bursary or internship schemes. In the process, local skills were
upgraded and entrepreneurs could start businesses to help
68 Emerging Markets Business Summer 2016 • Issue No. 1