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The Formative Years of the Modern Corporation: The Dutch East India Company VOC, 1602-1623

  • Oscar Gelderblom
  • Abe de Jong
  • Joost Jonker

    (Universiteit Utrecht and Erasmus University Rotterdam)

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    With their legal personhood, permanent capital with transferable shares, separation of ownership and management, and limited liability for both shareholders and managers, the Dutch East India Company (VOC) and subsequently the English East India Company (EIC) are generally considered a major institutional breakthrough. Our analysis of the business operations and notably the financial policy of the VOC during the company’s first two decades in existence shows that its corporate form owed less to foresight than to constant piecemeal engineering to remedy original design flaws brought to light by prolonged exposure to the strains of the Asian trade. Moreover, the crucial feature of limited liability for managers was not, as previously thought, part and parcel of that design, but emerged only after a long period of experimenting with various, sometimes very ingenious, solutions to the company’s financial bottlenecks.

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    File URL: http://www.cgeh.nl/sites/default/files/WorkingPapers/CGEH%20WP%20No36%20Gelderblom%20deJongJonker%2008%202012.pdf
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    Paper provided by Utrecht University, Centre for Global Economic History in its series Working Papers with number 0036.

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    Length: 61 pages
    Date of creation: Aug 2012
    Date of revision:
    Handle: RePEc:ucg:wpaper:0036
    Contact details of provider: Postal: University of Utrecht, Drift 10, The Netherlands
    Web page: http://www.cgeh.nl

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    1. Timur Kuran, 2010. "The Scale of Entrepreneurship in Middle Eastern History: Inhibitive Roles of Islamic Institutions," Working Papers 10-14, Duke University, Department of Economics.
    2. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
    3. S R H Jones & Simon P Ville, . "Efficient Institutions or Rent Seeking Monopolists? The Rationale for Early Chartered Trading Companies," Working Papers ec7/95, Department of Economics, University of Lancaster.
    4. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-83, June.
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