A Look into Multinational Business Practices and International Assignment Policy – 14th Century Style

by David Roberts, Kstudioassociato, Milan
(Kstudioassociato in Italy is a KPMG International member firm)

While it may seem a modern phenomenon, the problems faced by expatriates and the issues surrounding expatriate policies have actually been around for hundreds of years. David Roberts takes a good-humored look at the problems of 14th century Tuscan expatriates.

For anybody with a passing interest in Italian history, Iris Origo's The Merchant of Prato: Francesco Di Marco Datini, 1355-1410, is a "must read." Written not quite 50 years ago and based on original archives—letters, ledgers, and official documents that were discovered in the 19th century—it recreates in great detail, the daily life and times of 14th century Tuscan merchant Francesco di Marco Datini. Interestingly, it also sheds some light on the practices and policies for Tuscan employees assigned abroad, some of which still ring true today.

Datini was a 14th century merchant trading in wool, cloth, armor, and other luxury goods throughout the Mediterranean area and as far a field as London, Paris, and Bruges. As his business grew, he established three trading stations (fondaci) in Majorca, Barcelona, and Valencia. The fondaco normally consisted of a group of buildings including a shop, a warehouse, and a dwelling, and served as a place where merchants could transact their business under the protection of their own Consul. Each fondaco had its own employees—the fattori—the men responsible for carrying out the instructions of the company and for managing the foreign branch. They were generally salaried employees, who were given full powers of attorney, but received no share in the profits. In some companies, including Datini's, the employee received a bonus (gratifica) for the hazards and discomforts of living abroad—a very early example of a hardship or cost of living allowance.

According to a treatise of the time, a number of requisites were necessary to become a successful merchant abroad. One requisite was the ability to speak one or more foreign languages. (There are no records which indicate whether or not language training was provided as part of the "package".) If one was to be able to market, transact and sell, and deal with local suppliers and customers, knowing the host country language was crucial, at least back then. In today's world, it helps to know the host country language, but with just a few languages dominating the world of business, such knowledge and fluency are less critical than in the 14th century.

Also important were a familiarity with foreign currencies and the capability of reporting back to head office on commodity prices, rates of exchange, and market fluctuations. The good merchant had to "keep himself on good terms with foreign rulers and rivals, to adapt himself to local customs and laws." Therefore, even in the 14th century, there seems to have been a need for expatriates to possess a certain skill set, in addition to flexibility and aptitude, that would enable them to thrive abroad—regretfully, there is no surviving evidence as to whether they were assisted with any cross-cultural training or other professional development.

Although, visas and passports, border controls, and residence/work permits seem largely modern 'inventions', the 14th century was not without its restrictions on the free movement of individuals. With the exception of Pisans and Genoans, other Italian merchants in Spain were only allowed to live and trade in Barcelona, Valencia, and the island of Majorca. Moreover, they were subject to considerable restrictions on whom they could trade with and what they could trade in. Even then, they still ran the risk of banishment, and arbitrary or prohibitive taxation. (At this point, they would probably have been very grateful for a single provider who could handle their immigration and residence matters and deal with the local tax authorities on their behalf.)

Some expatriates settled in to their new homes, others did not. One of Datini's men, sent to the island of Ibiza, claimed, "This land is unhealthy, the bread is bad, the wine is bad—God forgive me, nothing is good." (Such sentiments might have been avoided with more adequate pre-departure aptitude counseling or even an orientation visit.) On the other hand, some of those Tuscan expatriates in Barcelona settled in so well that they subsequently had no desire to leave. "Hardly had they discovered the warmth and freedom of Catalonia, they cast off their Tuscan parsimony and honesty, and became young madmen, mastered by their desires and hot blood." (Clearly, a short-term assignment may have been more appropriate for them, or failing that, a localization policy would have been useful.)

Fourteenth century Europe was fraught with almost constant local wars and outbreaks of the plague. One of Datini's employees wrote to him regarding his son who was stranded in plague-stricken Barcelona saying, "I told you of Pier's good intention to stay quiet, and to obey, and not fear the plague… But I beseech you… Permit him to go away for a fortnight or a month to some place nearby." It is difficult to say what kind of medical attention 14th century expatriates got from host country doctors and hospitals. Datini's company clearly needed some sort of crisis/emergency evacuation plan to assist employees facing difficult or crisis situations, health or other.

In today's world, super highways, extensive rail systems, and flight, make travel between expatriate locales swift and largely safe. But, in the 14th century, travel could be difficult, to say the least. "Between the comparatively safe territories immediately surrounding a city or great abbey stretched great areas of wild forest or swamp, the home of the outcast and outlawed." The roadways, such as they existed, were vulnerable to dangerous "highwaymen" and robbers. The seas were plagued by pirates. Datini's partner in Avignon, was captured by Corsican pirates and had to be ransomed. (Clearly, nobody in Datini's company was doing risk assessments for the employees; one wonders whether kidnap insurance had been invented.)

Finally, as proof that home country tax returns have always been a problem, one of Datini's employees had omitted to pay his taxes at home and Datini had to pay them for him "that your people at home not be molested every day." Most of today's multinational employers provide home and host country tax return services to their expatriate employees, so that their employees can focus on their key duties and responsibilities on the company's behalf in the host location.

When all is said and done, the problems and challenges facing 14th century expatriates were not so different to those of today. With the benefit of hindsight, Datini's company could have avoided, or surmounted, a lot of these issues had there been a well-written and comprehensive expatriate policy in place—and the assistance of a global IES network.

All quotes are from Iris Origo's "The Merchant of Prato: Francesco Di Marco Datini, 1335 - 1410." Available from various publishers.