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The Pitfalls of Internationalization: The Experience of American Life Insurers in Australia, 1885–1905

Published online by Cambridge University Press:  08 January 2018

MONICA J. KENELEY*
Affiliation:
Monica J. Keneley is Professor in Finance at Deakin University, Victoria, Australia. She has published in the area of business and insurance history. The focus of her research has been on the impacts of financial deregulation, the nature of organizational change, and adaptive and innovative responses to change. Contact info: Department of Finance, Deakin Business School, Deakin University Warrnambool, Victoria 3280. E-mail: mkeneley@deakin.edu.au

Abstract

In the latter part of the nineteenth century, the three largest life insurance companies had a presence in more than forty countries. In the 1880s they turned their attention to the Australian colonies, in which life insurance markets were expanding. The venture, however, was met with unexpected market resistance, and the expectations of the Big Three were never fully met. An eclectic paradigm provides an explanatory tool, which is applied to an investigation of the experiences of American companies. These companies were not able to realize the ownership and location, or internalize the advantages, needed to build a sustainable presence in the Australian life insurance market.

Type
Articles
Copyright
Copyright © The Author 2018. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved. 

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References

Bibliography of Works Cited

Bartlett, Christopher, and Ghoshal, Sumantra. Managing across Borders: The Transnational Solution, 2nd ed. Cambridge, MA: Harvard Business School Press, 1998.Google Scholar
Birchall, Johnston, ed. The New Mutualism in Public Policy. Abingdon, UK: Routledge, 2001.Google Scholar
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Butlin, Noel G. Investment in Australian Economic Development 1861–1900. Cambridge: Cambridge University Press, 1964.Google Scholar
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Hansmann, Henry. The Ownership of Enterprise. Cambridge, MA: Harvard University Press, 1996.Google Scholar
Hendricks, Francis. Preliminary Report of the Investigation into the Management of the Equitable Life Assurance Society of the United States. New York: Spectator Company, 1905.Google Scholar
Keller, Morton. The Life Insurance Enterprise 1885–1910. Cambridge, MA: Harvard University Press, 1963.CrossRefGoogle Scholar
NSW Government Statistician. Returns under the Census and Industrial Return Act–Life Assurance. Sydney: Government Printer, 1893.Google Scholar
Stalson, J. Owen. Marketing Life Insurance: Its History in America. Cambridge, MA: Harvard University Press, 1942.Google Scholar
Supple, Barry. The Royal Exchange Assurance: A History of British Insurance 1720–1970. Cambridge: Cambridge University Press, 1970.Google Scholar
Teece, Richard. Mortality Experience Australian Mutual Provident 1849–1903. Sydney: W. E. Smith, 1911.Google Scholar
Ville, Simon, and Withers, Glenn, eds. Cambridge Economic History of Australia. Port Melbourne: Cambridge University Press, 2015.Google Scholar
Adams, Michael, Andersson, Lars Frederik, Lindmark, Magnus, and Veprauskaite, Elena. “Competing Models of Organizational Form: Risk Management Strategies and Underwriting Profitability in the Swedish Fire Insurance Market between 1903 and 1939.” Journal of Economic History 72, no. 4 (2012): 9901014.CrossRefGoogle Scholar
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Blair, Mark. “Choice of Ownership in the Australian Life Insurance Industry.” PhD diss., University of Sydney, 1991.Google Scholar
Buckley, Peter J. “The Limits of Explanation: Testing the Internalization Theory of the Multinational Enterprise.” Journal of International Business Studies 19, no. 2 (1988): 181193.CrossRefGoogle Scholar
Carment, David. “Life Assurance in Australasia.” Proceedings of the Fourth International Congress of Actuaries (1904): 521549.Google Scholar
Da Silva Lopes, Teresa. “The Entrepreneur, Ownership Advantages and the Eclectic Paradigm.” Multinational Business Review 18, no. 2 (2010): 7188.CrossRefGoogle Scholar
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Katrishen, Frances A., and Scordis, Nicos A.. “Economies of Scale in Services: A Study of Multinational Insurers.” Journal of International Business Studies 29, no. 2 (1998): 305323.CrossRefGoogle Scholar
Keneley, Monica. “Business Strategies under Conditions of Uncertainty, The Rise of Mutual Life Insurers in Colonial Australia.” In Corporate Forms and Organizational Choice in International insurance, edited by Pearson, Robin and Yoneyama, Takau, 169192. Oxford: Oxford University Press, 2015.CrossRefGoogle Scholar
Keneley, Monica. “The Evolution of the Australian Life Insurance Industry.” Accounting Business and Financial History 11, no. 3 (2001): 145170.CrossRefGoogle Scholar
Keneley, Monica. “In the Service of the Society: The Labour Management Practices of an Australian Life Insurer to 1940.” Business History 48, no. 4 (2006): 529550.CrossRefGoogle Scholar
Keneley, Monica. “Marketing the Message: The Making of the Market for Life Insurance in Australia 1850–1940.” Enterprise & Society 16, no. 4 (2015): 926956.CrossRefGoogle Scholar
Li, Jaitoa. “Foreign Entry and Survival: Effects of Strategic Choices on Performance in International Markets.” Strategic Journal of Management 16, no. 5 (1995): 333351.Google Scholar
Lilljegren, Josef, and Andersson, Lars Frederik. “Variation in Organizational Form Across Lines of Property Insurance: Sweden, 1913–1939.” Financial History Review 21, no. 1 (2014): 77101.CrossRefGoogle Scholar
Lundan, Sarianna M. “What Are Ownership Advantages?” Multinational Business Review 18, no. 2 (2010): 5170.CrossRefGoogle Scholar
Lyons, Mark. “The History of Non-Profit Organizations in Australia as a Test of Some Recent Non-Profit Theory.” Voluntas: International Journal of Voluntary and Nonprofit Organizations 4, no. 3 (1993): 301325.CrossRefGoogle Scholar
Mata, José, and Portugal, Pedro. “Closure and Divestiture by Foreign Entrants: The Impact of Entry and Post Entry Strategies.” Strategic Management Journal 21, no. 5 (2000): 549562.3.0.CO;2-F>CrossRefGoogle Scholar
Megaw, Ruth. “Some Aspects of the United States Impact on Australia 1901–1923.” PhD diss., University of Sydney, 1966.Google Scholar
McLean, Ian W. “Australian Economic Growth in Historical Perspective.” Economic Record 80, no. 250 (2004): 330345.CrossRefGoogle Scholar
Nobbs, Raymond. “Provident Venture: Friendly Societies and Life Assurance.” The Insurance Record, November (1983): 450455.Google Scholar
North, Douglass. “Capital Accumulation in Life Insurance between the Civil War and the Investigation of 1905.” In Men in Business Essays on the Historical Role of the Entrepreneur, edited by Miller, Henry, 238253. New York: Harper Row, 1952.Google Scholar
North, Douglass. “Entrepreneurial Policy and Internal Organization in the Large Life Insurance Companies at the Time of the Armstrong Investigation of Life Insurance.” Explorations in Entrepreneurial History 5, (1953): 138161.Google Scholar
North, Douglass. “Life Insurance and Investment Banking at the Time of the Armstrong Investigation of 1905–1906.” Journal of Economic History 14, no. 3 (1954): 209228.CrossRefGoogle Scholar
Pearson, Robin. “Organizational Forms in Insurance: A Comparison of the USA and Germany during Industrialization.” In Corporate Forms and Organizational Choice in International insurance, edited by Pearson, Robin and Yoneyama, Takau, 114141. Oxford: Oxford University Press, 2015.CrossRefGoogle Scholar
Rajshekar, Raj G., Griffith, David, and White, Steven. “An Empirical Examination of Factors Influencing the Internationalization of Service Firms.” Journal of Services Marketing 17, no. 2 (2003): 185201.Google Scholar
Rugman, Alan, M. “New Theories of Multinational Enterprise: An Assessment of Internalization Theory” Bulletin of Economic Research 38, no. 2 (1986): 101118.CrossRefGoogle Scholar
Wilkins, Mira. “Multinational Enterprise in Insurance: An Historical Overview.” Business History 51, no. 3 (2009): 334363.CrossRefGoogle Scholar
Wright, Robert E. “Insuring America: Market, Intermediated and Government Risk Management Since 1790.” In Encuentro Internacional sobre la Historia del Seguro, edited by Caruana, L., 239298. Madrid: FundacioMapfre, 2010.Google Scholar
Australasian Insurance and Banking Record (AIBR), 1879–1905.Google Scholar
Sydney Morning Herald , 1889.Google Scholar
Sunday Times , 1889.Google Scholar
AMP, Sydney.Google Scholar
Bartlett, Christopher, and Ghoshal, Sumantra. Managing across Borders: The Transnational Solution, 2nd ed. Cambridge, MA: Harvard Business School Press, 1998.Google Scholar
Birchall, Johnston, ed. The New Mutualism in Public Policy. Abingdon, UK: Routledge, 2001.Google Scholar
Blainey, Geoffrey. The History of the AMP. Sydney: Allen & Unwin, 1999.Google Scholar
Brash, Donald T. American Investment in Australian Industry. Cambridge, MA: Harvard University Press, 1966.Google Scholar
Buley, R. Carlyle. The Equitable Life Assurance Society of the United States 1859–1964, Vol. 1. New York: Appleton-Century-Crofts, 1967.Google Scholar
Butlin, Noel G. Investment in Australian Economic Development 1861–1900. Cambridge: Cambridge University Press, 1964.Google Scholar
Coghlan, T. A. Statistical Account of the Seven Colonies of Australasia. Sydney: Government of NSW, 1894–1902/03.Google Scholar
Commonwealth Bureau of Census and Statistics. Commonwealth Year Book No. 1. Melbourne: Commonwealth Bureau of Census and Statistics, 1908.Google Scholar
Gray, A. C. Life Insurance in Australia. Melbourne: Cheshire, 1977.Google Scholar
Hansmann, Henry. The Ownership of Enterprise. Cambridge, MA: Harvard University Press, 1996.Google Scholar
Hendricks, Francis. Preliminary Report of the Investigation into the Management of the Equitable Life Assurance Society of the United States. New York: Spectator Company, 1905.Google Scholar
Keller, Morton. The Life Insurance Enterprise 1885–1910. Cambridge, MA: Harvard University Press, 1963.CrossRefGoogle Scholar
NSW Government Statistician. Returns under the Census and Industrial Return Act–Life Assurance. Sydney: Government Printer, 1893.Google Scholar
Stalson, J. Owen. Marketing Life Insurance: Its History in America. Cambridge, MA: Harvard University Press, 1942.Google Scholar
Supple, Barry. The Royal Exchange Assurance: A History of British Insurance 1720–1970. Cambridge: Cambridge University Press, 1970.Google Scholar
Teece, Richard. Mortality Experience Australian Mutual Provident 1849–1903. Sydney: W. E. Smith, 1911.Google Scholar
Ville, Simon, and Withers, Glenn, eds. Cambridge Economic History of Australia. Port Melbourne: Cambridge University Press, 2015.Google Scholar
Adams, Michael, Andersson, Lars Frederik, Lindmark, Magnus, and Veprauskaite, Elena. “Competing Models of Organizational Form: Risk Management Strategies and Underwriting Profitability in the Swedish Fire Insurance Market between 1903 and 1939.” Journal of Economic History 72, no. 4 (2012): 9901014.CrossRefGoogle Scholar
Berry, Heather. “When Do Firms Divest Foreign Operations?” Organization Science 24, no. 1 (2013): 246261.CrossRefGoogle Scholar
Blair, Mark. “Choice of Ownership in the Australian Life Insurance Industry.” PhD diss., University of Sydney, 1991.Google Scholar
Buckley, Peter J. “The Limits of Explanation: Testing the Internalization Theory of the Multinational Enterprise.” Journal of International Business Studies 19, no. 2 (1988): 181193.CrossRefGoogle Scholar
Carment, David. “Life Assurance in Australasia.” Proceedings of the Fourth International Congress of Actuaries (1904): 521549.Google Scholar
Da Silva Lopes, Teresa. “The Entrepreneur, Ownership Advantages and the Eclectic Paradigm.” Multinational Business Review 18, no. 2 (2010): 7188.CrossRefGoogle Scholar
Dunning, John. “The Eclectic Paradigm as an Envelope for Economic and Business Theories of MNE Activity.” International Business Review 9, (2000): 163190.CrossRefGoogle Scholar
Frost, Lionel. “Urbanization.” In Cambridge Economic History of Australia, edited by Ville, Simon and Withers, Glenn, 245263. Port Melbourne: Cambridge University Press, 2015.Google Scholar
Johanson, Jan, and Jan-Erik, Vahlne. “The Mechanism of Internationalization.” International Marketing Review 7, no. 4 (1990): 1124.CrossRefGoogle Scholar
Katrishen, Frances A., and Scordis, Nicos A.. “Economies of Scale in Services: A Study of Multinational Insurers.” Journal of International Business Studies 29, no. 2 (1998): 305323.CrossRefGoogle Scholar
Keneley, Monica. “Business Strategies under Conditions of Uncertainty, The Rise of Mutual Life Insurers in Colonial Australia.” In Corporate Forms and Organizational Choice in International insurance, edited by Pearson, Robin and Yoneyama, Takau, 169192. Oxford: Oxford University Press, 2015.CrossRefGoogle Scholar
Keneley, Monica. “The Evolution of the Australian Life Insurance Industry.” Accounting Business and Financial History 11, no. 3 (2001): 145170.CrossRefGoogle Scholar
Keneley, Monica. “In the Service of the Society: The Labour Management Practices of an Australian Life Insurer to 1940.” Business History 48, no. 4 (2006): 529550.CrossRefGoogle Scholar
Keneley, Monica. “Marketing the Message: The Making of the Market for Life Insurance in Australia 1850–1940.” Enterprise & Society 16, no. 4 (2015): 926956.CrossRefGoogle Scholar
Li, Jaitoa. “Foreign Entry and Survival: Effects of Strategic Choices on Performance in International Markets.” Strategic Journal of Management 16, no. 5 (1995): 333351.Google Scholar
Lilljegren, Josef, and Andersson, Lars Frederik. “Variation in Organizational Form Across Lines of Property Insurance: Sweden, 1913–1939.” Financial History Review 21, no. 1 (2014): 77101.CrossRefGoogle Scholar
Lundan, Sarianna M. “What Are Ownership Advantages?” Multinational Business Review 18, no. 2 (2010): 5170.CrossRefGoogle Scholar
Lyons, Mark. “The History of Non-Profit Organizations in Australia as a Test of Some Recent Non-Profit Theory.” Voluntas: International Journal of Voluntary and Nonprofit Organizations 4, no. 3 (1993): 301325.CrossRefGoogle Scholar
Mata, José, and Portugal, Pedro. “Closure and Divestiture by Foreign Entrants: The Impact of Entry and Post Entry Strategies.” Strategic Management Journal 21, no. 5 (2000): 549562.3.0.CO;2-F>CrossRefGoogle Scholar
Megaw, Ruth. “Some Aspects of the United States Impact on Australia 1901–1923.” PhD diss., University of Sydney, 1966.Google Scholar
McLean, Ian W. “Australian Economic Growth in Historical Perspective.” Economic Record 80, no. 250 (2004): 330345.CrossRefGoogle Scholar
Nobbs, Raymond. “Provident Venture: Friendly Societies and Life Assurance.” The Insurance Record, November (1983): 450455.Google Scholar
North, Douglass. “Capital Accumulation in Life Insurance between the Civil War and the Investigation of 1905.” In Men in Business Essays on the Historical Role of the Entrepreneur, edited by Miller, Henry, 238253. New York: Harper Row, 1952.Google Scholar
North, Douglass. “Entrepreneurial Policy and Internal Organization in the Large Life Insurance Companies at the Time of the Armstrong Investigation of Life Insurance.” Explorations in Entrepreneurial History 5, (1953): 138161.Google Scholar
North, Douglass. “Life Insurance and Investment Banking at the Time of the Armstrong Investigation of 1905–1906.” Journal of Economic History 14, no. 3 (1954): 209228.CrossRefGoogle Scholar
Pearson, Robin. “Organizational Forms in Insurance: A Comparison of the USA and Germany during Industrialization.” In Corporate Forms and Organizational Choice in International insurance, edited by Pearson, Robin and Yoneyama, Takau, 114141. Oxford: Oxford University Press, 2015.CrossRefGoogle Scholar
Rajshekar, Raj G., Griffith, David, and White, Steven. “An Empirical Examination of Factors Influencing the Internationalization of Service Firms.” Journal of Services Marketing 17, no. 2 (2003): 185201.Google Scholar
Rugman, Alan, M. “New Theories of Multinational Enterprise: An Assessment of Internalization Theory” Bulletin of Economic Research 38, no. 2 (1986): 101118.CrossRefGoogle Scholar
Wilkins, Mira. “Multinational Enterprise in Insurance: An Historical Overview.” Business History 51, no. 3 (2009): 334363.CrossRefGoogle Scholar
Wright, Robert E. “Insuring America: Market, Intermediated and Government Risk Management Since 1790.” In Encuentro Internacional sobre la Historia del Seguro, edited by Caruana, L., 239298. Madrid: FundacioMapfre, 2010.Google Scholar
Australasian Insurance and Banking Record (AIBR), 1879–1905.Google Scholar
Sydney Morning Herald , 1889.Google Scholar
Sunday Times , 1889.Google Scholar
AMP, Sydney.Google Scholar