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

Published online by Cambridge University Press:  15 November 2013

Oscar Gelderblom ,
Abe de Jong  and
Joost Jonker
Oscar Gelderblom
Affiliation:
Associate Professor of Social and Economic History, Utrecht University, Drift 6, 3512 BS Utrecht, The Netherlands. E-mail: o.gelderblom@uu.nl.
Abe de Jong
Affiliation:
Professor of Finance, Rotterdam School of Management, PO Box 1738, 3000 DR Rotterdam, The Netherlands. Professor of Financial Accounting, University of Groningen, PO Box 72, 9700 AB, Groningen, The Netherlands. E-mail: ajong@rsm.nl.
Joost Jonker
Affiliation:
NEHA Professor of Business History, University of Amsterdam, Faculty of Humanities, Capaciteitsgroep Geschiedenis, Spuistraat 134, 1012 VB Amsterdam, The Netherlands. Associate Professor of Social and Economic History, Utrecht University, Drift 6, 3512 BS Utrecht, The Netherlands, E-mail: j.jonker@uu.nl.
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Abstract

With their legal personhood, permanent capital, transferable shares, separation of ownership and management, and limited liability, the Dutch and English colonial trading companies VOC and EIC are considered institutional breakthroughs. We analyze the VOC's business operations and financial policy and show that its novel corporate form owed less to foresight than to piecemeal engineering to remedy design flaws. The crucial feature of managerial limited liability was not, as previously thought, integral to that design, but emerged only after protracted experiments with various solutions to the company's financial bottlenecks. Legal form followed economic function, not the other way around.

Type
Articles
Information
The Journal of Economic History , Volume 73 , Issue 4 , December 2013 , pp. 1050 - 1076
Copyright
Copyright © The Economic History Association 2013 

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Footnotes

The authors thank participants of the Financial History Workshop in Antwerp (May 2012), the conference, “The History of Business and Finance,” Institute for Advanced Study in Toulouse (April 2012); the Low Countries History and The Economic and Social History of the Pre-Modern World, 1500–1800 Seminar, London (January 2012), the Economic History Society meeting (April 2011) the Economic History seminar of Universidad Pompeu Fabre (Barcelona, April 2011), finance seminar at University of Glasgow, the seminar of the Helsinki Finance Group, Paul Rhode, and two anonymous referees, for helpful comments on earlier versions of this article, and Karen Hollewand for research assistance. Funding: Research for this article was funded by the European Science Foundation (EURYI grant), the Netherlands Organisation of Scientific Research (VIDI grant), and the Rotterdam School of Management.

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