Barriers to the Emergence of a
Middle Eastern Business Corporation
It was in the late sixteenth century that European commercial enterprises started being organized as corporations. The voyages of global discovery and the consequent invigoration of overseas trade formed the impetus for this development. The commercial expansion relied on capital outlays for unusually long periods and from growing numbers of investors. However, various practices essential to the workings of the business corporation had already emerged over preceding centuries. The early variants of the business corporation combined known organizational features, though in novel ways.
Some of those features did not emerge at all in the Middle East. Others did, but their applications were suppressed for political reasons. The resulting deficiencies explain why Sirket-i Hayriye could not have been founded as a corporation and why, in instituting their corporate laws, Turkey and Egypt looked abroad for a model. Equally telling is that the Turkish and Egyptian transplants were accompanied by complementary institutional reforms. Evidently there were multiple obstacles to the indigenous emergence of the corporation.
As a prelude to developing these points, we must familiarize ourselves with the European path to the modern business corporation. Its most salient aspect is the organizational dynamism of various business communities. Diverse organizational forms were tried, by combining organizational features in distinct ways. Why analogous organizational dynamism was lacking in the Middle East requires investigation. The key issue is not why any particular