Managing Political Risk in Global Business: Beiersdorf 1914–1990

Abstract

This article is concerned with business strategies of political risk management during the twentieth century. It focuses especially on Beiersdorf, a pharmaceutical and skin care company in Germany. During World War I, the expropriation of its brands and trademarks revealed its vulnerability to political risk. Following the advent of the Nazi regime in 1933, the largely Jewish owned and managed company faced a uniquely challenging combination of home and host country political risk. This article reviews the company's responses to these adverse circumstances, challenging the prevailing literature that interprets so-called “cloaking” activities as one element of businesses' cooperation with the Nazis. We also depart from the previous literature in assessing the outcomes of the company's strategies after 1945 and examine the challenges and costs faced by the company in recovering the ownership of its brands. While the management of distance became much easier over the course of the twentieth century because of communications improvements, this article shows that the management of governments and political risk grew sharply.