Abstract: Nineteenth-Century Greek Diaspora Trading Houses of the Black Sea Region: From Individual Entrepreneur to Multi-Person Organization

Ioanna Pepelasis Minoglou and Stavros Ioannides

Abstract

The first aim of the paper is to propose a conceptual framework for the analysis of the process through which the implementation of an entrepreneurial idea may or may not lead to a hierarchical organization like the corporate firm. We argue that firm-like organization—defined as corporate ownership of non-human assets—is less likely a) the more specific and unchanging over time is the entrepreneurial project pursued, and b) when the human constituents of the entrepreneurial venture do not obtain new knowledge during the venture's operation. The second aim is to explore the historical relevance of this schema. To this end, we have chosen the example of nineteenth-century trading companies. These entities, some of which were enormous and highly diversified, never made the transition to the corporate formula. The literature tends to explain this puzzle on the basis of the transaction costs arising from the ubiquitous possibility of post-contractual opportunism. However, evidence from the Trading/Merchant Houses of the Greek Diaspora of the Russian Black Sea—­which were even less hierarchical—seems to suggest one further characteristic of closed networks: that they ensure that new entrepreneurial discoveries—that is, entrepreneurial learning—will stay within a peer group of agents.