How and why have the forms of business organization used to manage business commerce changed over time?

The development of forms of business organization went through very winding roads because the change of forms of organizations led to the change of money owners, so power also changed (Brigham, 2008). It’s no secret that politics is always based on money, on economy, respectively, politics depends on people who have money and their power, in turn, will determine their influence on public policy.

The biggest part of the civilized human history was characterized by the concentration of funds in the same hands. This form was called Sole Partnerships. A sole proprietorship is a form of business organization when business is owned and managed by one individual. This form is not a legal entity. It refers to a person who owns the business and is personally responsible for the debts (Piper, 2007). Thus, the right of forces completely guaranteed a relatively stable existence of such an order. But as time passed, the science strongly extended the borders of human existence, put them in front of the most difficult tasks that could not be implemented with even the richest owners without the mass support of people.

Thus arose the first General Partnerships – the state needed to build railways and any budget, any rich family could not afford to implement such an ambitious project alone.
There appeared the need to engage ordinary people. Even though each of them possessed small means, but all together they could make a plan feasible. General Partnerships gradually took over more and more of market space.

General partnership is a form of business partnerships, whose members, in accordance with the contract between them, are engaged in entrepreneurial activities on behalf of the partnership and are liable for its obligations not only in the amount of contributions to the share capital but all property belonging to them, that is full, unlimited responsibility (Callison, 2004).

The next form of business organization used to manage business commerce was
Limited Liability Company. Limited liability company is a founded by one or several legal and / or natural individuals commercial company whose charter capital is divided into shares; members of society are not liable for its obligations and bear the risk of losses associated with the company’s activities within the value of their shares in the share capital of company (Wood, 2001).
Further development of international trade and, in particular, joint-stock companies has led to appearance of international corporations. Today, corporations dominate on any more or less significant international market, because the effect of scale works for them more than for any other form of business organization. Corporation is a legal entity, which, being the union of individuals, is independent of them (ie, self-governing). In a broad sense, the corporation can be understood as any association with the economic objectives (Jackman, 2010).
Modern corporations are often compared with states in the states. Many of them have their own small armies to protect the property and interests in unstable regions of the world. Many of them can easily compete with some states in amount of money and sometimes it is not clear where corporation ends, and where state, which, in theory, should monitor the corporation, starts.


Brigham, E.F., Houston, J. F. (2008). Fundamentals of Financial Management. p. 6.
Callison, J.W., Sullivan, M.A. (2004). Partnership Law and Practice: General and Limited Partnerships. Thomson/West. p. 17.
Jackman, W.J. (2010). Corporations: Organization, Finance and Management. p. 369.
Piper, M. (2007). Surprisingly Simple: Independent Contractor, Sole Proprietor, and LLC Taxes Explained in 100 Pages or Less. p. 45.
Wood, R.W. (2001). Limited Liability Companies: Formation, Operation, and Conversion. pp. 426-427.

Leave a Reply