Abstract: The Growth of Dutch Multinationals in Germany: The Case of Philips, 1920-1960

Ben Wubs

Abstract

This paper aims to find out how Philips could grow so luxuriantly in Germany during the 1920-1960 period, despite the existence of strong local competitors like Siemens and AEG, and their subsidiaries Osram and Telefunken. What motives did Philips have for the initial investment in Germany and what was its strategy? The conclusion I draw in this paper is that unexpected favorable historical conditions created opportunities for the Dutch electronics firm. Both world wars created competitive advantages for Philips over its local rivals. Close business relations with the American GE, the development of its own Physics Laboratory, and extremely good financial results during and right after the First World War made an international expansion possible. Philips was not hampered by Allied restrictions, as had been the case for its German rivals. Becoming a member of the international Phoebus Cartel offered Philips the opportunity to diversify. Later cartel agreements with Telefunken further consolidated Philips' position in Germany. After the Second World War the company was seen as a part of the Allied bloc, whose industrial expansion could not be stopped by associations and cartel agreements of German electronic firms.