The modern multinational corporation is described as having originated when the owner-managers
of nineteenth-century British firms carrying on international trade were replaced by teams of
salaried managers organized into hierarchies. Increases in the volume of transactions in such firms
are commonly believed to have necessitated this structural change. Nineteenth-century inventions
like the steamship and the telegraph, by facilitating coordination of managerial activities, are
described as key factors. Sixteenth-and seventeenth-century chartered trading companies, despite
the international scope of their activities, are usually considered irrelevant to this discussion: the
volume of their transactions is assumed to have been too low and the communications and
transport of their day too primitive to make comparisons with modern multinationals interesting.
In reality, however, early trading companies successfully purchased and outfitted ships, built and
operated offices and warehouses, manufactured trade goods for use abroad, maintained trading
posts and production facilities overseas, procured goods for import, and sold those goods both at
home and in other countries. The large volume of transactions associated with these activities
seems to have necessitated hierarchical management structures well before the advent of modern
communications and transportation. For example, in the Hudson’s Bay Company, each far-flung |