"Business Responsibility, Human Rights, and the Vertical Integration of Multinational Corporations: US Rubber Company and ‘Red Rubber’ in the Congo Free State, 1900-1910"

This paper studies the decisions by multinational corporations to vertically integrate their operations abroad in the context of issues of business responsibility. Vertical integration has been studied in business history mainly as a strategy to overcome problems of opportunism or lack of reliable agents. In this paper, I show how vertical integration can also be a strategy for a multinational to overcome reputational problems generated from human rights abuses in the supply chain. I use the case of the US Rubber Company and other American rubber interests in the Belgian King Leopold’s Congo Free State. The brutal use of slave labor for King Leopold’s personal enrichment generated an international outrage that led to what is considered among the first human rights campaigns. This posed challenges to US rubber interests looking to gain greater control over their supply of crude rubber, the market for which was characterized by increasing instability and price volatility given the demand for products such as automobile and bicycle tires, industrial belts and hoses, and waterproof boots and coats. The decision by American companies (including US Rubber) to secure access to rubber concessions in the Congo Free State drew motivation from both economic pressures typical of vertical integration (e.g. transaction costs) and social pressures characteristic of more recent notions of business responsibility. Their decision contributed to the improvement of labor conditions in the supply chain. This paper combines archival material with analytical methods developed both in history and managerial studies.