The Rise of Spanish Multinationals, European Business in the Global Economy
Mauro F Guillén, Cambridge University Press, 2005, ix + 268 pages, £30.00.

With Spanish firms once again increasingly making headlines for their efforts at making cross-border acquisitions in Europe as well as in Latin America, Mauro F Guillén’s book is well timed.

The Rise of Spanish Multinationals was expressly written with the purpose of debunking three myths regarding the internationalization of Spanish firms over the last decade. These widely-held myths are that (1) the internationalization process was driven by the adventurous investments of a small cadre of “new conquistadors”; (2) Spanish firms have mainly invested in Latin America, the reason being shared language and culture; and (3) Spanish foreign direct investment is “anomalous” (and perhaps doomed to ultimately fail) because Spanish firms lack the required technological and managerial skills to compete in the global economy.

Guillén analyses the cross-border expansion of Spanish multinationals in the context of the tendency towards family ownership, low levels of research and development investment, regulated markets and euro area membership. Of note, EU and euro area membership are seen as both a stick and a carrot for Spanish corporate activity abroad. Closer economic integration in Europe and deregulation in Spain has raised the question of survivability for Spanish corporates – which tend not to be large in comparison to their European competitors – leading to a certain ‘grow or die’ mentality in Guillén’s eyes. At the same time, the depth of European financial markets gave Spanish multinationals unprecedented access to capital with which to pursue previously unobtainable objectives. Although not a subject focused-on explicitly by Guillén, this linkage is particularly interesting in the context of the imbalance currently indicated by Spain’s balance of payments, where the financial account shows substantial net capital inflows, but net FDI outflows.

Guillén’s work can be viewed either as a concise contextual insight into the evolution of Spanish multinational business or as a review of multinational business theory with unusual case studies. Indeed, one of the several areas where Guillén moves beyond the analytical focus of the text to advance his own position is that, outside Spanish business schools, relatively few case studies on Spanish multinationals are available. For this aspect alone The Rise of Spanish Multinationals is to be recommended, but the book certainly will be of interest to any student of European business or the European economy.

Ed Teather
European Economist, UBS