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A company’s founding philosophy: The cross-border exchange of ideas and trade is integral to progress — and peace
A man and woman working in a computer room

On a June day in 1917, Hollerith tabulating machines made by the Computing-Tabulating-Recording Company, later to become known as IBM, arrived at a port in Rio de Janeiro. A Brazilian businessman named Valentim Fernandes Bouças had personally arranged the sale of the machines, the first of their kind in the country, after traveling to New York to urge Thomas J. Watson Sr. to expand his business to Brazil. The enterprising Bouças would go on to run IBM’s first Brazil branch office and then its Brazil subsidiary. After a revolution in 1930 threatened the company’s presence in the country, he would even manage to persuade the new regime to continue using IBM products. His offer: IBM would provide the machines free of charge until they proved their value. The pitch worked.

IBM’s early years in Brazil are emblematic of the company’s long-standing approach to doing business around the world: Be ambitious. Arrive early. Employ locals as managers. And don’t give up when conditions get tough.

Even during his earliest days at C-T-R — first as general manager, then as president — Watson espoused global aspirations. He pushed the business to grow beyond operations in the US, Canada, Germany and Britain to several countries across Europe and South America. He also changed the name of the company to International Business Machines to reflect his global vision. By the late 1930s, the company owned and operated factories in 10 cities and six countries. By the late 1940s, IBM’s reach extended to 78 countries and territories.

Arthur Watson and the IBM World Trade Corporation

In 1949, Watson established the IBM World Trade Corporation, a wholly owned subsidiary with headquarters near the United Nations in New York City, and installed his second son, Arthur K. Watson, as an executive. (Later, he would become president.) Until that point, IBM’s international branches had run as separate ventures. Watson believed an organization focused exclusively on international development would help disparate operations run more smoothly and efficiently and also provide the company additional security in the decades to come. “The United States has 6% of the world’s population, and the rest of the world has 94%,” he said. “Someday the World Trade company is going to be larger than the US company.”

Watson’s gamble paid off, establishing IBM as one of the first truly multinational corporations

It was an unlikely time for bold business decisions. Much of the world was reeling in the aftermath of World War II. But Watson’s gamble soon paid off, establishing IBM as one of the first truly multinational corporations with a focus on promoting non-Americans to important executive positions. “I do not believe we will be permanently welcome anywhere unless national employees of our companies — be they British, Japanese or American — can look forward to careers that will take them anywhere and as far and fast as their talents permit,” explained Arthur Watson in a 1974 THINK magazine interview. “This kind of policy is simple justice — and good sense. It is also the only way to develop a real-world constituency for international cooperation.”

From the beginning of his tenure, Arthur Watson thrived in his role to diversify the company and its revenue, pushing international sales from USD 50 million a year in 1949 to more than USD 2.5 billion in 1970, when he stepped down. By 1975, revenue from foreign sales had overtaken those from the US operations.

This kind of policy is simple justice — and good sense. It is also the only way to develop a real-world constituency for international cooperation. Arthur K. Watson President, IBM World Trade Corporation
Global business, global citizenship

In recent decades, IBM’s international presence has become even more robust. The World Trade Corporation concept gave way to a more encompassing, international approach, and in 2005 the company declared itself a globally integrated enterprise. Organized around the principle that IBM should perform work where the jobs could be done best, the concept became a reality with the launch of service delivery centers around the world. Now, IBM operates in more than 170 countries and territories and boasts a thriving global workforce. IBM has more employees in India than in the United States and operates a network of 12 research labs on six continents that feature the designs of internationally acclaimed architects, including Marcel Breuer, Eero Saarinen and Ludwig Mies van der Rohe.

IBM’s global footprint has not only bolstered the company’s success; it has also fostered a sense of global citizenship and led to the development of innovative technological systems to handle localized issues. In 2007, for example, IBM launched its Global Citizens Portfolio to empower employees to help grow businesses and buoy government services in developing countries. The company also created Smarter Cities command centers to help Rio de Janeiro and other Brazilian metropolises handle a crush of visitors for the 2014 World Cup and the 2016 Olympic Games. The systems were designed to integrate real-time data from urban systems, such as civil defense, transportation and meteorology, to build a sustainable operations infrastructure and create the most seamless experience possible for locals and tourists alike.

From the beginning, Watson’s vision for IBM was not merely to become a multinational corporation, but rather, to create an international hub of ideas — one that would foster world peace through world trade, as he would often say. That conceit continues to endure and serve as the guiding light that IBM follows to this day.

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