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

Author

Listed:
  • Oscar Gelderblom
  • Abe de Jong
  • Joost Jonker

    (Universiteit Utrecht and Erasmus University Rotterdam)

Abstract

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.

Suggested Citation

  • Oscar Gelderblom & Abe de Jong & Joost Jonker, 2012. "The Formative Years of the Modern Corporation: The Dutch East India Company VOC, 1602-1623," Working Papers 0036, Utrecht University, Centre for Global Economic History.
    • Handle: RePEc:ucg:wpaper:0036
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    References listed on IDEAS

    as
    1. S R H Jones & Simon P Ville, "undated". "Efficient Institutions or Rent Seeking Monopolists? The Rationale for Early Chartered Trading Companies," Working Papers ec7/95, Department of Economics, University of Lancaster.
    2. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    3. 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.
    4. Jones, S. R. H. & Ville, Simon P., 1996. "Efficient Transactors or Rent-Seeking Monopolists? The Rationale for Early Chartered Trading Companies," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 898-915, December.
    5. 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.
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    Cited by:

    1. Stephanie Decker & Matthias Kipping & R. Daniel Wadhwani, 2015. "New business histories! Plurality in business history research methods," Business History, Taylor & Francis Journals, vol. 57(1), pages 30-40, January.
    2. Oscar Gelderblom & Joost Jonker, 2013. "Early Capitalism in the Low Countries," Working Papers 0041, Utrecht University, Centre for Global Economic History.
    3. Bogdan-Radu HERZOG, 2022. "The Removal of Economic Barriers in the Process of Social Deconstruction. Legal Precedents Created by Prosbul, the VOC and Loi le Chapelier," International Investment Law Journal, Societatea de Stiinte Juridice si Administrative (Society of Juridical and Administrative Sciences), vol. 2(2), pages 127-136, July.

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    Keywords

    Dutch East India Company (VOC); corporate governance; Dutch Republic; financial markets; colonial expansion;
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