Birth of the Multinational ~ 3

Multinational Enterprise in Ancient Phoenicia

Karl James Moore and David Charles Lewis

Business History, April 2000 v42 i2 p17

* Excerpts:

International trade began to develop in the Near East around 3500 BC. By the second millennium BC the city-states of Sumer, Assyria and Babylon lay at the centre of a network of trade in copper, tin, silver, foodstuffs and textiles that stretched from Egypt and Crete to the Indus River Valley and Afghanistan. ...

State-supported but family-owned and managed firms headquartered in the Old Assyrian capital of Ashur opened subsidiary trading and manufacturing offices in Babylon, Syria, other parts of northern Iraq, and, most importantly, the city of Kanesh in Cappadocia, from which a number of smaller offices in Anatolia (modern Turkey) were managed. Similar multinational firms, on a smaller scale, were found in Babylonia under Hammurabi and, later, the Kassite kings who set up subsidiary trading offices on Bahrain in the Arabian Gulf.

Virtually all of the second-millennium and even early first-millennium BC business cultures of the ancient Near East were mixed economies. Private landholdings, markets and private, usually family-owned, firms operated in close harmony with royal and temple enterprises. Phoenicia was no exception. ...

In ancient Phoenicia private commerce and the temple-state were partners whose functions and roles overlapped and interlocked. A pyramid structure with the Prince of Ugarit, Byblos, or Tyre and the high priest of the city's patron deity at the top, followed by the bureaucracy led by the vizier and his harbourmaster, then the landed nobles and the major merchant-princes, known as mkrm, and their firms, followed by the lesser firms or bidaluma, craft guilds, peasants, serfs and slaves. Private and public executive roles were never sharply defined. Commerce in the city-states was dominated by an assembly of private and royal merchant princes. In Phoenicia, as in Babylonia, and even modern Britain, merchants could enter the aristocracy and aristocrats could take up commerce. ...

At its peak, Phoenician businessmen directed intercontinental enterprises trading in silver from Spain, tin from Britain, ivory from Africa, copper from Cyprus, iron from Syria, and textiles and manufactured goods from all over the Mediterranean. Their investments reached from the Atlantic to the Assyrian Empire. ...

Having established their own lucrative firms by the year 1000 BC, the merchants of Tyre rapidly began to outdistance all other Phoenician traders. Placed on an offshore island with a well-protected harbour, Tyre was naturally endowed for long-distance maritime trade. ...

In the period between 1000 and 500 BC, the merchants of Tyre achieved dominance in, if not control over, international trade in the Near East, the Mediterranean, and, for a time, even the Indian Ocean and its tributaries ...

The climactic Intercontinental-Multinational Phase, 840-538 BC, of Tyrian trade and investment expansion began on the heels of Jehu's revolt and culminated in the period of the Neo-Assyrian Empire in the eighth and seventh centuries BC. Phoenician investment not only flowed into Assyria and Babylonia but even reached across the central and western Mediterranean to North Africa and the Atlantic coast of Spain. The rise of Assyria was the major catalyst of the new Phoenician strategy.

In the days of Itobaal, the armies of Ashurnasirpal II and Shalmaneser III marched westward across the Euphrates, exacting tribute from terrified Phoenician rulers. The Assyrian presence became much more immediate after 733 BC when the armies of Tiglath-Pileser III, Shalmaneser V, Sargon II and Sennacherib conquered Syria and Israel. Assyrian influence over Phoenicia reached its peak under Esarhaddon (680-69 BC). Mainland Phoenicia was divided into three Assyrian provinces called Simya, Sidon and Ushu, and many of the inhabitants were deported. Tyre kept her independence, but only under the harsh terms of a vassal treaty dictated by Esarhaddon to the Tyrian Prince Ba'alu. ...

Assyria's efforts to monopolise Tyre's trade with the rest of Asia, ironically, permitted Phoenician commerce to seduce even the might of Nineveh. Assyria's landlocked kings left their western trade in the hands of the people who knew and managed it best, be they settlers or deportees. A firm run by the Sidonian Hanunu became chief supplier of the Empire's dyed fabrics; Oubasti, exiled to Nineveh by Sennacherib as a youth, became the city's chief porter. The eastern network of merchants, organised in the time of Itobaal, in Cilicia, Aleppo, Carchemish and now even Nineveh and Babylon continued to ship goods to and from points west, leaving them in the hands of Phoenician companies, their partners and subsidiaries.

The Tyre-Nineveh partnership followed a commercial pattern established centuries before, when Babylonian and Ugaritic merchants joined hands to finance large-scale trade between Mesopotamia and the West. Bulk shipments of metals, textiles, foodstuffs and processed goods, including purple dye, plied up and down the Euphrates and crossed Syrian mountains and plains, paid for in silver and textiles by consortia of Canaanite, Babylonian and Assyrian merchants. Babylonian and Assyrian firms and their employees formed price-fixing partnerships to purchase Phoenician goods and distribute them to their subcontractors.

Temples of Ashur, Marduk and Melkart provided capital, direction and storage facilities. In the eighth and seventh centuries BC, Babylonia was now a vassal of Assyrian kings using the Euphratean trading system for their own ends. Tyre became Assyria's source not only of huge quantities of dyed garments but also silver and iron. Lacking the iron deposits needed to equip their vast armies or the silver to finance them, the kings of Nineveh turned to their Tyrian vassals and clients to supply them, much as Germany in the Second World War turned to Sweden for iron ore and Switzerland for hard currency.

Assyrian control of Near Eastern markets and resources encouraged Tyre's merchants to embark upon an ambitious new strategy. Becoming Nineveh's supplier and banker preserved Tyre's independence while guaranteeing it a vast market on the Assyrian-held mainland. The potential profits from selling precious metals, raw materials and finished goods to the Assyrian Empire in bulk were sufficient to justify creation of the first intercontinental multinational enterprises.

The advanced stage of Tyrian commerce and its relationship with Assyria offered Tyrian firms just the right combination of advantages, described in Dunning's eclectic paradigm, to make multinational investment on a larger scale than ever before expedient and profitable. Tyre's firms possessed ownership-specific advantages in the form of the finest merchant marine in the world, the skills of its sailors, smiths, financiers and a powerful, well-organised network of shipping and trading companies, supported by both the crown and supervised by a multi national temple hierarchy.

The location-specific variables were also favourable for the creation of a sea-based empire: being headquartered on an almost impregnable island with direct access to the ports, trade routes and resources of three continents were ideal for any firms interested in overseas investment. Most importantly, the ability of Tyre's business establishment to invest abroad on a large scale in the form of managed hierarchies and partnerships provided internalisation advantages over Greeks, Egyptians or any other potential competitors. Unlike these others, Tyre's business establishment, directed by the Melkart hierarchy, would possess sufficient capital to minimise risk and circumvent market failure through its state-supported merchant fleets. ...

Led by Tyre, the city-states of ancient Phoenicia became the greatest seafaring traders of ancient times.

IMG: Phoenicia and Its Colonies

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Birth of the Multinational ~ 2

The First Multinationals: Assyria circa 2000 B.C

Management International Review, April, 1998

Karl Moore, David Lewis


* Assyrian International Trad:

The ancient city of Ashur, around 100 km south of the modern Iraqi city of Mosul, was situated on the banks of the river Tigris at the intersection of a number of important long-distance trade routes. At the beginning of the second millennium B.C. it became self governing, following the collapse of the so-called Third Dynasty of Ur, to which it had belonged. Early rulers, such as Ilu-shuma and his son Erishum I (c. 1939-1900 B.C.), did much to exploit the commercial potential offered by the geographic location of Ashur. Inscriptions have been recovered which record the granting of tax and other concessions to traders from the more southerly cities of Mesopotamia.

However, the richest source of documentation comes not for Ashur itself but from a city 1200 km. away: the ancient site of Kanesh, chief city of what was later known as the kingdom of Cappadocia, near the modern Turkish city of Kayseri. Nearly 20,000 clay tablets with texts in Assyrian cuneiform have been unearthed at the site. Of the documents which have been published from Kanesh, over 85% are of an economic nature, attesting to the existence of a thriving trade center, active between around 1910 and 1830 B.C. (Veenhof 1995).

Not merely a way station for traders, the lower city of Kanesh was largely given over to a permanent settlement of international businesspeople, especially Assyrian businesspeople from Ashur (Veenhof 1995). Archaeological evidence elsewhere from this period, states Veenhof, "at Acemhuyuk; ancient Puruskhanda, south of the Salt Lake - reveal business connections with Mari and Karkamish on the Euphrates as well ... [it was] a great trading city with a network of international relations" (1995, p. 862). It is this network of international activity to which we will return presently.

A key economic element of the region was tin, which had probably been imported to Ashur from Afghanistan. It was wrapped in saleable textiles and transported by donkey caravan for the five- or six-week journey to Kanesh, where it, the textiles and the donkeys were sold for silver, copper and finished bronze goods. The tablets record the day-to-day business transactions of the Ashur merchants and others involved in this trade.

Assyria was chosen as the subject for this article because there is more evidence that MNEs existed in this region than for other nations of antiquity. The first known human system of writing was invented in Southern Mesopotamia around 3100 B.C. (Hawkins 1979) in order to record economic and accounting transactions. Several even more ancient sites than Kanesh have produced an abundance of tablets (Adams/Nissen 1972). However, the site of Kanesh provides the first detailed evidence of large-scale multinational private enterprise, albeit with some "state assistance". (3)

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Birth of the Multinational ~ 1

Birth of the Multinational:

2000 Years of Ancient Business History,

From Ashur to Augustus

Karl James Moore and David Charles Lewis

* Excerpts from pp. 46-48:

Arising in the mid-fourth millennium BC, Sumer and its daughter civilizations of Babylon and Assyria led Western civilization for three thousand years, half of recorded human history.

Why did Mesopotamian Iraq come to excel in world politics and trade while richer lands like Egypt, India and China played more peripheral roles? The answer, once again, appeared to rest in the comparative historical geography of these cradles of civilization. ...

History took a different course in Sumer, Babylon and Assyria, which were ultimately destined to become the true cradles of private initiative and capitalism, the evidence for which in Mesopotamia is as old as writing itself.

The oldest written documents of human civilization itself, dating from 3200 BC if not earlier, evoke the crude and primitive business transactions of the very ancient communities arising just north of what was then the swampy coastline of the Arabian gulf. Far more suited as a source of irrigation water than the swift-flowing Tigris, the Euphrates in the fourth millennium BC became the major locus of settlement in Sumer.

Even though at first there was human life along the lower Tigris, both rivers and their adjoining canals constituted an interlocking web of land and water routes that would eventually "tend to strengthen local or regional units and impede the trend towards unification" permitting the rise of multiple power centers.

It would be too simple to assume, however, that geography of and by itself led to the rise of capitalism in Mesopotamia; it merely removed a major bureaucratic obstacle by preventing any single municipality or settlement from monopolizing access to the outside world.

Instead of encouraging a one-state monopoly upon trade and commerce, the terrain of Mesopotamia permitted an environment of competition to develop among various Sumerian towns that would help generate the revolution in technology, which, after 3100 BC, would usher in the Bronze Age. ...

Sumerian, Anatolian and other smiths, long accustomed to forging primitive Copper tools, began around that time to discover that when they mixed their soft red-brown Copper ore together with sufficient amounts of Tin in a super-hot furnace, they would produce a harder alloy called Bronze.

The more Tin they mixed with red Copper, the yellower and harder the new metal, known as Bronze became. The invention of Bronze alloys in foundries where the fires were heated to between 590 and 790 degrees centigrade made it possible for professional Metallurgists to mold soft Copper and Tin into sturdy plows, building tools, kitchen ware and other Items destined to vastly increase human productivity in a manner comparable to that of the Industrial Revolution of modern times.

The very map of Mesopotamian civilization itself was redrawn after 3100 BC. Sumerian farmers could now plow their lands to grow enough food to enable others to enter more specialized occupations and live off the new surplus produced by an increasingly capitalized agriculture.

An urban, commercial and money economy was thus made possible through the molding of Bronze ploughs, sickles and the invention of wheeled donkey-carts, all of which made it possible for the Sumerian farmer to send his excess Wheat and Barley to feed the new sculptors, carpenters, leather-workers, brick-layers, scribes and others now able to earn a living in places like Ur.uk. ...

In the Copper Age before 3100 BC, the people of Southern Mesopotamia dwelt, as did the rest of humanity in the Near East, in an almost completely rural subsistence economy. Sumerians and others lived in towns along or near their river valleys or wherever sufficient rainfall and moisture permitted them. Only one or two of these towns such as Eridu and Uruk merited the title of city.

The Sumerian landscape then changed dramatically between 3100 and 2900 BC as the Bronze Age Urban Revolution began to gain momentum.

The Tigris-Euphrates and western Iran quickly acquired dense clusters of concentrated farms and towns and a dozen growing cities like Kish, Ur, Lagash, Umma, Awan, Hamazi and Shuruppak.

The same phenomenon would, within several centuries, come as well to other regions: Northern Mesopotamia and Syria, Anatolia, the Indus Valley, but not before the Sumerians, crowding into their cities in search of new economic opportunities and military security, had clearly taken the lead in capital formation, technology and urban development. ...

The Urban Revolution gave birth to forms of politics, diplomacy, war and business, which, if different from our own, are, for the first time recognizable.

Evolving from pictograms, which appeared at the end of the Uruk Period (3500-3200 BC), the cuneiform alphabet of 3200-2900 was sufficiently streamlined and detailed enough to provide an eyewitness commentary upon early Dynastic civilization.

Humanity's first urban and capitalist civilization and its development were revealed day-by-day in the tablets of the time as well as in the silent testimony of the ruins of its royal tombs and impressive buildings. Decorated with images of ears of Corn and stalks of Wheat, the vases of Uruk spoke as much about the nature of its economy as volumes of tablets.

In the center of the developing institutions of these emerging sophisticated urban communities were the temples of their gods and the palaces of their Lugals, "big men" or Kings.

Following the work of Sumerologist Anton Deimel in 1931, five decades of scholars believed that the city-states of the ancient Near East were "socialist" theocracies in which the temple exercised supreme political power and owned all of the land.

Private ownership of lands was felt to be nonexistent until it was recognized in the early 1960s that city-states such as Lagash controlled large tracts of rural territory owned by family groups.

Individual and family property and commercial markets were an integral part of the Mesopotamian economy from the beginning, existing alongside and in perfect harmony with the public enterprises of the palace and temple.

The average Sumerian peasant was more than capable of supporting himself and his family from his irrigated plot on which he usually grew vegetables and wheat while raising chickens. Documents from Lagash prove that most of these plots were privately owned, even by the poor, and that Real Estate was a thriving business even in early Dynastic times.

If the urban Mesopotamian economy rejected communism, it was by no means a laissez-faire system either. Tablets from both Sumer and Ebla picture a very patrician and paternalistic form of mixed economy, which gave entrepreneurs certain freedoms within a mercantilist framework of strongly regulated commerce, much of which was still state-run. ...

The history of the ancient Near East between 3000 and 2000 BC was one of expanding trade and commerce, growing social inequality and the rise and fall of centralized bureaucratic governments many of whose functions were later assumed by new commercial organizations in the Assyro-Babylonian private sector.

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Iraq: The Cradle of Civilization

Europeans have a saying that 'all roads lead to Rome.' From a European standpoint they may look as if they do. But Europe is one of the fringes of the Old World, and eccentric position produce distorted views.

Plant yourself, not in Europe, but in ‘Iraq, which is the historic center of our Oikoumene. Seen from this central position, the road-map of the Old World will assume a very different pattern. ...

Civilization in the Old World seems to have started in ‘Iraq about 5000 years ago, and in the meantime it has spread from ‘Iraq both eastwards and westwards.

Eastwards it has spread to Persia, Afghanistan, the Indo-Pakistani Subcontinent, Central Asia, Eastern Asia. Westwards it has spread to Egypt, Anatolia, the Aegean, North-West Africa, Europe, Russia.

This progressive spread of civilization from its birth-place in ‘Iraq to the ends of the Earth has turned the Oikoumene into a house of many mansions.

-- Arnold J. Toynbee,

Between Oxus and Jumna , p. 1.

Michael Wood Legacy: The Origins of Civilization

We humans have been on the Earth for more than a million years, but civilization – life in cities – has come about only in the last 5,000. Through history civilizations have rose and fell, carved out of nature, dependent on nature, in the end – nature took them back. But in the past few hundred years, one form of civilization – that of the West – has changed the balance of nature forever. And now it is civilization itself that has become the central problem of our planet.

To understand why, we must look afresh at how we see history. Host Michael Wood traces the rise of both Asian and Western civilization in one global perspective in these thought-provoking videos. From the crumbling ruins in the Iraqi desert to those of Greece and Rome, viewers contemplate thriving cities and complex societies that have vanished, a reminder that other nations prospered for thousands of years. Now all that remains is their legacy.

Iraq:

The Cradle of Civilization

After thousands of years as a hunter/gatherer, man built the first cities 5,000 years ago on the banks of the Euphrates River. Civilization as we know it began with the glorious cultures of Ur, Nineveh, and Babylon.

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