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"Multinational Corporations and Business Negotiation Under the Monroe Doctrine: Lord Cowdray and Oil Politics in Colombia"

Marcelo Bucheli

 

First Author :

Marcelo Bucheli
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street, MC 706
Champaign, IL 61820
USA

217-244-0208
217-244-7969 (Fax)

mbucheli@uiuc.edu

http://www.business.uiuc.edu/facultyprofile/faculty_profile.aspx?ID=10771

 
 
Abstract :
 
The bargaining power of a multinational corporation negotiating with a poor country in the extractive sector can be determined by the host country’s local politics, the relationships between the host country and the multinational’s home country, and the power of other countries. This paper explores the negotiations for oil concessions between the British oil firm Pearson and Son (owned by Weetman Pearson –Lord Cowdray) and the Colombian government in 1913. Despite the mutually beneficial terms of the contract negotiated between the company and the government, the negotiations failed. I argue that the collapse of the negotiations was a result of the company’s little understanding of Colombia’s domestic politics (this was the Pearson’s first experience at negotiating in a poor country with strong legal political parties), its underestimation of United States opposition to Pearson’s encroachment into “US territory,” and a narrow-minded British policy of protection of British investors abroad.
 
 
Keywords :
 
Business History, Colombia, Negotiations, Oil Industry, Political Economy of Foreign Direct Investment, Standard Oil Company (New Jersey), Weetman Pearson
 
 
Footnotes & Acknowledgements :
 
Draft for comments. Do not cite without author’s permission.
 
 
Manuscript Received : 2007
Manuscript Published : 2007
 
 
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