Dynamics of International Business: Comparative Perspectives of Firms, Markets and Entrepreneurship by Andrea Colli (review)

In this compact and quite affordable text, Andrea Colli, an already prolific contributor to the business history of family firms and entrepreneurship, seeks to introduce business and management students to the process of globalization from a historical perspective.

The book emerged from Colli's notes and resources while teaching MBAs at Bocconi University in Milan. The introduction is followed by seven chapters, each of which can become the backbone of a two-hour lecture. Each chapter is about the same length and can be read in a couple of hours. This length is sufficient to provide students with a richly detailed account, while at the same time is in no way taxing for them to prepare from one weekly lecture to the next.

The discussion is framed by the assumptions of market managerialism and that students are familiar with transaction cost economics (TCE). A fundamental tenet of TCE is that the lower the transaction costs (or their near relatives: search and information, bargaining, or policing and enforcement costs), the more likely that the exchange of value will take place through arms-length market transactions coordinated through market-clearing prices. The greater the transaction costs, the more likely that transactions will take place inside organizations, coordinated through managers and hierarchies.

Colli builds on these foundations of TCE to explain the formation of organizational hierarchies leading to the emergence and later evolution of multinational firms. Perhaps the introduction could have done more to provide details of this conceptual framework (including a brief but explicit reference to the work of Ronald Coase, Oliver Williamson, Alfred Chandler, John Dunning, and Mark Casson). Students who are unfamiliar with that framework would certainly welcome that additional explanation. Alternatively, the introduction could have touched, however briefly, on the possibilities of globalization outside the realm of market capitalism or nonmanagerial forms of organization.

Following Geoffrey Jones and others, Colli explains globalization as a phenomenon centered on the emergence and growth of multinational corporations. As preamble and context, chapter 1 provides a view of international business before the Industrial Revolution. It explains that there was intense and widespread international trade but also why that trade was populated by rather small agents. In this chapter, as well as throughout the book, explanations are further illustrated by pertinent and appropriate use of quantitative arguments and "vignettes" of entrepreneurs or entrepreneurial firms. In this regard, Colli alerts the reader to his tendency to use mainly European and Italian examples as illustration. Hence, he is clearly aware that more diversity in these examples would be appreciated by an international audience. The same audience would also appreciate more details as to the different conceptual forms of entrepreneurship (including a more systematic distinction between individual and organizational entrepreneurship throughout the book).

Chapter 2 looks at the era of chartered companies. The narrative tackles head-on the arguments in favor and against considering this organizational form a multinational company. Here more could be said about the long-term legacies of some of the innovations introduced by these companies, such as the civil service and selection exams (i.e., appointing on merit rather than family, kin, ethnicity, gender, religious orientation, skin color, etc.). The title of the chapter could also use some temporal parameters (which the titles of chapters 3 to 7 have).

In chapter 3, Colli labels "the first industrial revolution" the entrepreneurial activity between 1800 and 1870 and reviews the technologies that facilitated communication and transport. I disagree with the label "first," because this neglects the long and dilated process that preceded the economic expansion and process of industrialization during the nineteenth century. Indeed, the so-called period of Smithian growth during the eighteenth century also involved significant innovations in organizational forms, technology, and means of production. More important, that process was also associated with the end of mercantilism and the introduction of capitalism, democracy, the Enlightenment, and liberal...