Business History, April 2000 v42 i2 p17
Multinational Enterprise in Ancient Phoenicia
Karl James Moore and David Charles Lewis
* 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 ...
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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.