American Enterprise in Foreign Markets

In 1914 the two largest firms in Russia were subsidiaries of American companies. Remarkably, they were almost as large as their parent companies, striking testimony to the potential of the underdeveloped Russian market. Fred Carstensen provides detailed histories of the movement of International Harvester and Singer into this new, profitable, and somewhat forbidding territory.

Describing how both sales organizations evolved in Russia, Carstensen relates their development to overall company histories, worldwide growth, changing sales strategies and structures, recruitment and training of employees, and corporate leadership in America and abroad. He finds that both firms entered the Russian market because they needed new outlets to sustain high levels of production and sales. Although there are parallels in their experiences, Carstensen identifies how the responses of the two corporations differed, reflecting the varying strategies and perceptions of company management.

Together the case studies provide a test for many of the supposed qualities and patterns of Russian economic history. Contrary to accounts of the experiences of other companies, these firms found the Russian market remarkably rich, developing a level of sales that might have surpassed the American market if war had not erupted. In contrast to the standard view of foreign enterprise, neither company came to Russia because of government invitation or influence but rather because of the intrinsic attractiveness of the markets, and neither firm found the government bureaucracy graft-ridden or the customers dishonest.

Carstensen shows that International Harvester and Singer Sewing Machine clearly influenced Russia in a positive way. Both trained large numbers of Russians in modern industrial and marketing procedures and both provided an extraordinary volume of credit on comparatively easy terms to encourage purchase of their products. Indeed, the success of their approach suggests that Russian economic development may have been limited not by weak aggregate demand but by the relative absence of sources of credit.

Originally published in 1984.

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