chapter  6
20 Pages

Reinventing the Rio Tinto Company

Spain, Political Risk and Corporate Strategy Before and After the Second World War
ByNeil Forbes

This chapter focusses on the organisational change experienced by the Rio Tinto Company, a British-based multinational enterprise, in the context of an extended period of extreme political risk. As a major international mining company, Rio Tinto controlled the trade in several, strategically important minerals and metals—raw materials used by the armament industries. With major interests in Spain, the company was forced to confront the rise of nationalism and then required to come to terms with the Francoist victory in the Spanish Civil War and operate in the shadow of fascist dictatorship during and after the Second World War. The chapter examines management decision-making as the company was confronted with the dilemma of how it could both protect its investments in a potentially hostile environment and simultaneously contribute to the defence of capitalism and liberal democracy. With the Spanish operations becoming both uneconomical and politically threatened in the post-war years, the company looked to dispose of most of its investments. The chapter analyses how Rio Tinto conducted business in such challenging conditions, which included the threat of expropriation, between the mid-1930s and the early 1950s, and considers how its foreign direct investments were assessed when weighed against such political risks.