Business Investment Abroad: The Infrastructure for Analysis

Jean Jacques Servan-Schreiber wrote a book entitled, Le Défi Américain (The American Challenge)1 that sold more than half a million copies to Frenchmen warning them of the dangers of too great a role for American subsidiary corporations in the French economy (as well as about a million copies in other languages). He told France to ‘wake up’ and, since that time, has become the leader of an important political party. His book was castigated by no less a critic than Nobel laureate Paul A. Samuelson who ‘tore into’ the logical and factual basis of Servan-Schreiber’s thesis.2 The incompatibility of the thinking of these two eminent men can be traced to the fundamental problem involved in any analysis or understanding of international business. Is a wholly-owned American subsidiary located in France, employing French labour (except perhaps for the top executives) and paying French taxes, a French or an American concern? Does geography or equity ownership determine nationality? If the subsidiary of an American parent is American even though located on French soil, then Samuelson’s critique misses the point.