Making Do with Imperfect Law: Small Firms in France and Germany 1890-1935

3 Pages Posted: 1 Aug 2009

See all articles by Timothy W. Guinnane

Timothy W. Guinnane

Yale University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Jean-Laurent Rosenthal

California Institute of Technology - Division of the Humanities and Social Sciences; Caltech

Date Written: July 31, 2009

Abstract

In 1892 Germany introduced a new legal form for enterprise, the Gesellschaft mit beschränkter Haftung or GmbH. This form was aimed at small and medium-sized enterprises that did not want to be partnerships but did not want to incorporate, either. To understand the value of this innovation we examine the takeup the GmbH in Germany. We then look at how French entrepreneurs in like industries solved their organizational problems. In 1926 France created a new legal form quite similar to the GmbH - the SARL, or Societe Anonyme a Responsabilite Limitee. The French, however, explicitly refused to copy the GmbH but rather created their own statute that appealed to bulk of small multi-owner firms. We then look at how German firms (who did not have access to the SARL) in like industries drew up their articles of association. Our preliminary conclusion is that while both the GmbH and the SARL were remedies to the most severe problems of partnerships and corporations, they differed sufficiently that they had two different constituencies. It is likely that had both forms been available in both countries both would have been used.

Suggested Citation

Guinnane, Timothy W. and Rosenthal, Jean-Laurent, Making Do with Imperfect Law: Small Firms in France and Germany 1890-1935 (July 31, 2009). CELS 2009 4th Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=1442158 or http://dx.doi.org/10.2139/ssrn.1442158

Timothy W. Guinnane

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
(203) 432-3616 (Phone)
(203) 432-3898 (Fax)

HOME PAGE: http://sites.google.com/site/timothywguinnane/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jean-Laurent Rosenthal (Contact Author)

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States

Caltech ( email )

Pasadena, CA 91125
United States
626-395-4058 (Phone)

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