The Growth and Performance of British Multinational Firms before 1939: The Case of Dunlop

Abstract

Onn the basis of a case study of the Dunlop Rubber Company this article examines two aspects of the growth of British multinational enterprise before the Second World War. First, why did British manufacturing firms establish factories in foreign countries? Second, what did firms gain from this strategy? The first question has attracted some comment, although generalizations have continued to rest on a combination of inadequate secondary literature and a few scholarly business histories of large firms. 1 The second question has received hardly any attention. The Macmillan Committee on Finance and Trade in I93I seems to have assumed that both the private and social rates of return from foreign direct investment exceeded those from portfolio investment overseas, and this was probably the general view in business circles in the interwar period.2 However, there was no systematic attempt to measure the gains to British firms of their foreign direct investments until the investigation by Prof. Reddaway of the performance of a sample of British multinational firms over the period I955-64.3 Dunlop grew from a small firm launched in Dublin in i889 to the eighth largest British company, measured in terms of estimated market value, in I930.4 The firm became the largest tyre and rubber goods manufacturer in Britain. Dunlop also made substantial foreign direct investments. The firm acquired its first foreign factories in the i89os alongside other early British multinationals such as Lever Brothers and J & P Coats.5 Within three years

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