Legal Forms of Firm Organization, Corporate Governance, and Business Expansion in the Middle East between 1887 and 1950

University Of Arizona, Tucson AZ

Investigators

Abstract

Despite extensive studies on the adoption of legal forms of business organization and its relation to commercial expansion in the U.S. and Western Europe, the evolution of firm organization in the Middle East has received little attention. Due to the Middle East's important status in the past and present world economy, and its long and varied history of economic reforms, a greater understanding of Middle East economic history will yield insights about the region's historical development as well as determinants of business growth today. This project examines how legal institutions affect business formation and expansion, and more generally, what types of legal rules might be effective in fostering investment and commercial growth. Understanding the legal structures that promote business growth and establishment of a robust private sector reveals political and legal insights that promote successful enterprise. This project explores these questions by constructing a large, novel dataset of Turkish and Egyptian partnerships and corporations at the firm level between 1887 and 1950. The main sources of this dataset are business directories and commercial newspapers that published partnership contracts and corporation charters. The investigator will use this firm-level dataset to develop and test a theory of partnership formation and dissolution; examine the relationship between legal forms of firm organization, transplantation of European law, and business expansion; explore the links between corporate governance, industrialization and the political economy of these two countries; and investigate the disappearance of non-Muslim enterprises which had long dominated the Middle East's commercial life. The examination of corporations and their boards of directors, especially the formation of an interlocking directorate made up of securities underwriters and government members, will reveal the role of corporate governance and the state in industrialization, industrial organization, and firm performance.