Article | Entreprises et histoire | December 2007

Learning to Live with Governments: Unilever in India and Turkey, 1950-1980

by G. Jones

Abstract

A noteworthy characteristic of the contemporary global economy is the uneven distribution of world foreign direct investment (FDI). In 2007 three-quarters of world FDI was located in developed countries. The residual was concentrated in a small number of emerging countries. Large countries with little inward FDI included India and Turkey. This is puzzling, given that both countries have greatly liberalized their regulations on inward FDI. After 1945 many developing governments pursued policies which restricted foreign-owned firms. India and Turkey were among the countries with particularly difficult policy environments. This paper explores why Unilever, the Anglo-Dutch consumer products company, was able to sustain large businesses in developing countries such as India and Turkey. The paper argues that the explanation is multi-causal. Unilever held first-mover advantages, but was also prepared to accept low dividend remittances for years. It pursued flexible business strategies beyond its "core" business, even distributing condoms. It maintained a high standard of corporate ethics. It was effective at building contacts with local business and government elites, primarily through localization of management.

Keywords: Developing Countries and Economies; Ethics; Foreign Direct Investment; Governing Rules, Regulations, and Reforms; Business and Community Relations; Business and Government Relations; Consumer Products Industry; India; Turkey;

Format: Print Find at Harvard

Citation:

Jones, G. "Learning to Live with Governments: Unilever in India and Turkey, 1950-1980." Entreprises et histoire 49 (December 2007).

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Geoffrey G. Jones
Isidor Straus Professor of Business History
General Management

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