Path dependence, change and the emergence of the first joint-stock companies

Nicholas Kyriazis and Theodore Metaxas

Business History, 2011, vol. 53, issue 3, 363-374

Abstract: This paper presents a model of path dependence and change and focuses on the gaining of new institutional knowledge. The main thesis is that in 'extraordinary' historical situations the possibility of change increases as a result of external pressure and successful adaptation to it. The model is tested applying it to the case study of seventeenth-century United Provinces (Dutch Republic). Such a situation existed in the sixteenth-seventeenth-century United Provinces, due to their uprising against Spanish rule. Because there existed no strong central authority, the decision-makers had to develop new institutions in order to successfully capture the lucrative spice trade from their enemies. The solution was the joint-stock company, which, through the phases of a continuous decision-making procedure, developed into the 'permanent' Dutch East India Company (VOC) in parallel also to the development of the Amsterdam Stock Exchange.

Keywords: path dependence and change; institutions; joint-stock companies; sixteenth-seventeenth century; United Provinces (Dutch Republic); VOC (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (10)

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DOI: 10.1080/00076791.2011.565513

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