top of page
  • Writer's pictureStudentGuiders


The discipline of International Business would benefit from saying more about crises, shocks, black swans, and rare events. As I argued in an earlier volume, the fact that the major theories in the field developed from the 1960s onwards had a distinctive impact on the field’s intellectual trajectory (Jones, 2021). It was an era when globalization was always growing, evolving over time from primarily a North American–European phenomenon to incorporating almost all the world, as countries such as the People’s Republic of China and the former Soviet Union abandoned state socialism and opened their borders. Multinationals were also always growing in this era. The discipline’s theories naturally explained such a linear world. Entry strategies attracted scholars, not exits. Exogenous shocks were noted in empirical studies, of course, but more as annoying interludes than as a phenomenon requiring theory building. Although many shocks are noted in the epic textbook of Dunning and Lundan (2008), for example, there is no chapter as such on crises and international business. The neglect of shocks is especially odd as the concept of risk is represented strongly in the literature. Recent events, from the growth of populism to the COVID-19 pandemic, and their impact on global business, however, have shown the fallacy of assuming linear growth, and the need for a theoretical toolkit to understand the role of crisis in international business.

In this respect, I was fortunate to come to international business through the study of the history of global business. This is because history is replete with crises, and it is difficult to miss their significance. In any period, a crisis of one sort or another will happen because of the imperfections of human beings, and especially their inability to organize societies in a perfect fashion, as well as the vagaries of the natural environment. Multinationals cannot shield themselves from the crises surrounding them, and indeed by operating in multiple geographies, expose themselves to heightened encounters with crises. Mira Wilkins’s pioneering account of the history of US multinationals before 1914 is full of incidents of them facing or succumbing to crises, whether financial panics in multiple countries, or anti-trust rulings which broke up J. D. Rockefeller’s Standard Oil in 1911 (Wilkins, 1970).

A decade later, my first book (Jones, 1981) gave me the opportunity to see at first hand the impact of crises on the development of international business. The study was on the early history of the oil industry, and focused on the question how a large British-owned oil industry emerged during the first three decades of the twentieth century in a country with no indigenous oil fields. As I delved into the research, I saw that World War I (1914–1918) changed everything, and it changed it permanently. Shortly before the war broke out, the British government had taken a 51 percent equity stake in the Anglo-Persian Oil Company, a Britishowned oil company that had discovered oil in Iran, but had no downstream facilities to market it to anyone but the British Admiralty. It was a minnow compared to the global giants Royal Dutch Shell and Standard Oil of New Jersey (Exxon). When the war came, the British government expropriated the large Germanowned oil assets in British, including a tanker company and a marketing company called British Petroleum (BP), and gave them to Anglo-Persian, so transforming the little company into an integrated oil major. BP became, and has remained, one of the top three oil companies. The collapse of the Ottoman Empire as a result of the war gave Britain, France, and eventually the United States free reign to carve up the oilfields of the Middle East, especially Iraq. A handful of western oil companies – the “Seven Sisters” – profited from the region for decades, at the expense of the locals, who continue to suffer until this day because of how nation states were carved out of the old Ottoman Empire. Meanwhile, the expropriation of the largest Western oil company investments in Russia, the world’s second biggest oil producer, set a precedent for expropriation that was to become a standard political risk for oil companies over the next generation. The crisis of World War I, then, wholly shifted the trajectory of the world oil industry.

In later research, I argued that World War I fundamentally changed the nature of risk for multinationals as a whole. It shifted from the management of distance to the management of political risk (Jones & Lubinski, 2012). This remained true at least until the neo-liberal era beginning in the 1980s, and it has become true again in the last decade. I have long been interested in crises related to changes in political risk. In my next big monograph after the oil book, I looked at the history of the Imperial Bank of Persia, a British-owned and managed bank that served as the state bank of Iran after 1889, and introduced modern banking into that country (Jones, 1986). The study, based on extensive research in HSBC’s historical archives, enabled me to take a detailed look at the early history of transnational banking, and its impact on a host developing country. Over the course of its history, the bank experienced just about every type of crisis it was possible to have, as Iran had an unstable political structure and countless institutional voids. The bank’s problems culminated after 1928 when it faced a crisis of legitimacy with a sustained campaign to restrict it so tightly that it would leave the country. It eventually exited in 1952. Having once believed, naively, that multinationals were powerful entities that set their own destinies, this story forcibly brought home to me how vulnerable they were to changes in their contexts, especially if the change took the form of a crisis. The Imperial Bank had put the right systems in place to manage a multinational banking business in a country with challenging conditions, but this did not matter once the politics changed.

I was now hooked on the service sector, which seemed so much less explored and explained in the international business literature than manufacturing. It was also much more vulnerable to crises. Jones (1993) provided the first history of British-based multinational banking between the 1830s and the present day. I followed this up with Jones (2000) which provided the first history of British-based trading companies over the same lengthy period. The history of both sets of institutions emerged as one of almost constant crises – there were frauds, financial crises, defaults, commodity booms and busts, two world wars, the Great Depression, decolonization, and expropriations. I was struck by the resilience of some multinational institutions in the face of repeated crises. Jardine Matheson, founded in 1832 to smuggle Indian grown opium to China, is still (in 2021) a major Asian Pacific conglomerate, owned by the same Scottish family. HSBC, founded in 1865, remains among the world’s largest banks. I was able to assemble data on the financial performance of both sets of institutions over the long term. It showed striking variations in the performance of different businesses when faced by the same exogenous crises, such as a commodity price collapse, or a financial crisis. I proposed no grand theory to explain such inter-firm differences, but it was evident that crisis management capabilities differed widely between firms. In the cases I looked at, the most important explanations seemed to be found within corporate cultures and hiring practices. While international business scholars are quite focused on the strategies of firms, there is much room for more research and theorizing about organizational cultures and human resource policies inside firms.

In Jones (2005), I provided a synthesis of the business history of multinationals over the last two centuries. I used prevailing theories and concepts in international business to explain their growth, in natural resources and services as well as manufacturing, their organizational structures, their impact on home and host economies, and interaction with public policy. The word crisis is not in the index of the book, but crises, shocks, black swans, and rare events are all over the analysis. The organizing principle of the book is based around waves of globalization. I introduced the idea (now commonly accepted) that there was a first global economy between 1880 and 1929, decades of de-globalization between 1930 and 1979, and a second wave of globalization since 1979. More recently, I have suggested that this second wave of globalization ended in 2008, and a new era of de-globalization started (Jones, 2019). I saw multinational strategies as driven by the globalization waves that were in turn shaped by technological and financial shocks. Financial crises have been especially important in ending globalization. The Wall Street crash in 1929 (and not World War I) ended the first wave of globalization. It was the global financial crisis in 2008 that ended the second wave of globalization.

Over the last decade, I have been exploring global business in the context of emerging markets. I started and now co-direct the Creating Emerging Markets project at the Harvard Business School. This project involves lengthy interviews by Harvard faculty with highly impactful leaders or former leaders of for-profit businesses based in Africa, Asia, Latin America, and the Middle East. The interviewees are required to have had at least three decades of experience. The project does not have a specific research agenda, but instead is designed to generate research and teaching materials on emerging markets, which anyone anywhere is free to use. As of June 2021, there are 152 interviews posted on the website. Many of the business leaders interviewed have built extensive international businesses, and so the interviews provide unique case study evidence on how they did that (Creating Emerging Markets).

The materials generated by the project say a lot about crises. Businesses based, and operating, in many emerging markets, and especially Africa and Latin America, have typically faced a constant environment of crises arising from, especially, institutional instability and frailty. The reasons for this instability are manifold. They reflect aspects of the colonial legacy, as well as the huge problems in state building after Independence. As many emerging economies grew as commodity exporters, they also experienced regular crises caused by volatility in world commodity markets. Discordant policy-making and weak legal systems have been the regional norms, rather than exceptions (Austin, Davila, & Jones, 2017; Jones & Lluch, 2015).

The interviews are replete with comments about the regular crises faced by business in emerging markets. The founder of the agribusiness company Danper described her home environment in Peru as “tremendously uncertain.” The former chair of the faucet and plumbing company Ferrum, commented, in Argentina, “planning is useless, because developments just disrupt all plans.” The Sri Lankan tea entrepreneur who built the remarkable Dilmah tea brand observed that “fear of certain things” happening unexpectedly constantly loomed over his business decisions. The founder of the diversified consumer electronics company Abans who built her business during decades of civil war in Sri Lanka explained that:

you get used to it, knowing that one bomb has gone off here, then everything goes down, business gets slack for a month or two, people forget it and then again it starts.

Multiple other interviews describe kidnappings, episodes of hyperinflation, arbitrary government decisions, and much more (Jones & Comunale, 2018). Businesses found ways to manage crises, which ranged from developing innovative accounting systems to relocating to other countries. They also invested in their reputations that served as a buffer in high risk and uncertain conditions (Gao, Zuzul, Jones, & Khanna, 2017). Emerging markets offer rich evidence on the frequency of crises in international business, and rich lessons on how successful businesses can nonetheless be built despite such regular crises.

The main point coming out of this brief description of my own intellectual journey is to emphasize that crises have been the norm rather than the exception in the history of international business. They have taken many forms, and building a typology of crises would be a helpful next step in new research. Meanwhile, although we lack a predictive theory of crises, various conditions in the contemporary global economy, especially gross income and opportunity inequalities and multiple geo-political tensions, are suggestive of a prolonged period going forward when global business may encounter turbulence and crisis. Climate change is an even more robust predictor of major crises ahead. Haueter and Jones (2017) noted that the reinsurance industry, which is one of the few industries whose models reach beyond the 2050s, has been urgently highlighting for some time the likely dire effects of rising sea levels and shifts in temperature and precipitation levels.


Austin, G., Davila, C., & Jones, G. (2017). The alternative business history: Business in emerging markets. Business History Review, 91(3), 537–569.

Creating Emerging Markets. Retrieved from default.aspx

Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy. Cheltenham: Edward Elgar.

Gao, C., Zuzul, T., Jones, G., & Khanna, T. (2017). Overcoming institutional voids: A reputation-based view of long run survival. Strategic Management Journal, 38(11), 2147–2167.

Haueter, N. V., & Jones, G. (Eds.). (2017). Managing risk in reinsurance. From city fires to global warming. Oxford: Oxford University Press.

Jones, G. (1981). The state and the emergence of the British oil industry. London: MacMillan.

Jones, G. (1986). Banking and empire in Iran. Cambridge: Cambridge University Press.

Jones, G. (1993). British multinational banking 1830–1990. Oxford: Clarendon Press.

Jones, G. (2000). Merchants to multinationals. British trading companies in the nineteenth and twentieth centuries. Oxford: Oxford University Press.

Jones, G. (2005). Multinationals and global capitalism. From the nineteenth to the twenty-first century. Oxford: Oxford University Press.

Jones, G. (2019). Origins and development of global business. In T. D. S. Lopes, C. Lubinski, & H. J. S. Tworek (Eds.), The Routledge companion to the makers of global business (pp. 17–34). New York, NY: Routledge.

Jones, G. (2021). Renewing the relevance of IB: can some history help?. In A. Verbeke, R. van Tulder, E. L. Rose, & Y. Wei (Eds.), The multiple dimensions of institutional complexity in international business research (pp. 77–92). Bingley: Emerald Publishing.

Jones, G., & Comunale, R. (2018). Business, governments and political risk in South Asia and Latin America since 1970. Australian Economic History Review, 58(3), 233–264.

Jones, G., & Lluch, A. (Eds.). (2015). The impact of globalization on Argentina and Chile. Cheltenham: Edward Elgar.

Jones, G., & Lubinski, C. (2012). Managing political risk in global business: Beiersdorf 1914–1990. Enterprise & Society, 13(1), 85–119.

Wilkins, M. (1970). The emergence of multinational enterprise. American business abroad from the colonial era to 1914. Cambridge, MA: Harvard University Press.

Recent Posts

See All

When infusing pantoprazole, use a separate IV line, a pump, and an in-line filter. A brown wrapper and frequent vital signs are not needed. A client has gastroesophageal reflux disease (GERD). The pro

Your paragraph text(10).png
bottom of page