Big business and small states: Unilever and Norway in the interwar years

Abstract

In 1930, Unilever tried to take control of Lilleborg, Norway's most important producer of soap and vegetable oil, with the aim of wiping out most of Norway's independent margarine and soap industry. However, as the purchase was dependent on government concession, Unilever became embroiled in a power struggle with the Norwegian political authorities. The company was strongly criticized by Norwegian nationalists. The question of whether or not to let Unilever go forward became one of the most contested questions in Norwegian politics in the period. In the end, Unilever was allowed to go ahead with the purchase, but in return the company was forced to make substantial concessions. Expanding on Jones's framework for understanding the balance of power between multinationals and host governments, in this article it is argued that we must look beyond firm specific assets and a cost-benefit oriented analysis of the relationship between multinationals and host countries to understand the end result. In this case, nationalism had a decisive impact. Unilever's acquisition of Lilleborg and the Norwegian response thus contributes to our understanding of the nature of multinational enterprise in the interwar period and of the political economy of foreign direct investment in general.