Another Path to the Joint-Stock Company

Abstract

Common wisdom views the 17th century English and Dutch East India companies as key institutional innovations based on the commenda commercial contracts. We mobilize historical, legal and economic literatures to characterize an alternative path to the joint-stock company in Southern Europe. A medieval institution, the pariage, gave birth to large-scale business organizations similar to joint-stock companies as early as the 14th century in Genoa and in Toulouse. Pariage originated in the Roman rule of equal inheritance that led to the division of assets into theoretical shares. When the asset includes a business activity, pariage as an institution becomes closer to a modern joint-stock company. We show that, at the eve of the industrial revolution, these companies display a higher level of institutional modernity than East India-type companies. These observations have implications for the debate regarding the links between institutions and economic development.

Keywords: Joint-Stock Company, Business Organizations, Medieval Institutions, Little Divergence

JEL Classification: G30, K22, N23, 016