The Early Evolution of Business Organization in France

Abstract

National divergencies in economic development produce variant national patterns of business organization. But the reverse is also true. In France, the legal structuring of business has been a causative factor of some importance, imparting a distinctive character to the timing and nature of French economic growth. At the same time, however, the history of organizational evolution in France has a certain universality. Here, as elsewhere, such evolution essentially has taken the form of a series of compromises between the need for greater corporate flexibility and the fear of abuse. From 1673, when the unlimited liability of partners was affirmed, the pressures of economic expansion produced a succession of devices aimed at facilitating the flow of investment funds into commerce and industry. When, however, that point was finally reached where limited investor liability, freely negotiable shares, and recognition of a corporate autonomy had been achieved, fear of fraudulent practice became a dominant factor. Legislative steps to protect the investing public introduced rigidities into French business at the very time when internal growth and international competition for markets called for a highly adaptable business system.