The Legal Form of Enterprise

Abstract The legal form of enterprise—whether a firm is a sole proprietorship, a partnership, a corporation, or something else—shapes its internal structure and its interactions with owners and creditors. While business and economic historians display keen interest in the corporation, few have devoted much attention to other enterprise forms. This article surveys a recent literature that remedies that deficit. I emphasize a major innovation, the private limited-liability company (PLLC), a hybrid between the corporation and the partnership. The PLLC emerged in the late nineteenth century. Intended originally to offer smaller enterprises the benefits of incorporation without losing the flexibility inherent to partnerships, the PLLC came to dominate new enterprise creation. Today it is the most numerous enterprise form in many countries. The PLLC’s history poses important challenges both for the Chandlerian focus on the largest enterprises, and for the “Law and Finance” project’s claims about flexibility in civil-law systems.