Networking capability building in the multinational enterprise: ITT and the Spanish adventure (1924–1945)

Abstract

This article goes into the renewed main theories on the evolution of the multinational enterprise (MNE) providing evidence about how MNEs develop networking capabilities to strengthen their position in host markets characterised by uncertainty. In particular, the operations in Spain of the largest telecom group of the interwar period, ITT, are examined through an extensive use of both diplomatic and corporate records. It is argued that the alliances developed by the multinational around the host market's political and business elite, enhanced by the support given by the US government, allowed ITT to preserve their interests in the country in turbulent times characterised by rising economic nationalism and instability in international and local markets. The alliances set around locals, furthermore, compensated ITT's lack of both institutional and business market knowledge, that is, ITT's liability of foreignness and outsidership when entering Spain.