TY - JOUR AU - Guinnane,Timothy AU - Harris,Ron AU - Lamoreaux,Naomi R. AU - Rosenthal,Jean-Laurent TI - Putting the Corporation in its Place JF - National Bureau of Economic Research Working Paper Series VL - No. 13109 PY - 2007 Y2 - May 2007 UR - http://www.nber.org/papers/w13109 L1 - http://www.nber.org/papers/w13109.pdf N1 - Author contact info: Timothy Guinnane Department of Economics Yale University PO Box 208269 New Haven CT 06520 E-Mail: timothy.guinnane@yale.edu Ron Harris Faculty of Law Tel Aviv University Tel Aviv 69978 Israel E-Mail: harrisr@post.tau.ac.il Naomi R. Lamoreaux Department of Economics Yale University 27 Hillhouse Ave., Rm. 39 Box 208269 New Haven, CT 06520-8269 Tel: 203-432-3625 Fax: 203-432-3635 E-Mail: naomi.lamoreaux@yale.edu Jean-Laurent Rosenthal Division of Humanities and Social Sciences California Institute of Technology 1200 E. California Blvd. MC 228-77 Pasadena, CA 91125 Tel: 626/395-4058 Fax: 626/395-4065 E-Mail: jlr@hss.caltech.edu AB - This article challenges the idea that the corporation is a globally superior form of business organization and that the Anglo-American common-law is more conducive to economic development than the code-based legal systems characteristic of continental Europe. Although the corporation had important advantages over the main alternative form of organization (partnerships), it also had disadvantages that limited its appeal to small- and medium-sized enterprises (SMEs). As a result, when businesses were provided with an intermediate choice, the private limited liability company (PLLC) that combined the advantages of legal personhood and joint stock with a flexible internal organizational structure, most chose not to organize as corporations. This article tracks the changes that occurred in the menu of business organizational forms in two common-law countries (the UK and the US) and two countries governed by legal codes (France and Germany) and presents data showing the rapidity with which firms in each country responded to enabling legislation for PLLCs. We show that the PLLC was introduced first and most easily in a code country (Germany) and last and with the most difficulty in a common-law country (the US). Late introduction was associated with prolonged use of the partnership form, suggesting that the disadvantages of corporations did indeed weigh heavily on SMEs. ER -