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The author thanks Gerben Bakker, Tirthankar Roy, Alejandra Irigoin, Naomi Lamoreaux, Oscar Gelderblom, and Joost Jonker for valuable comments at different points of the project, as well as participants at the Economic History Society Annual Conference 2014, the Business History Conference Annual Meeting 2014, the Business and Economic History Conference 2014, and the LSE Economic History graduate seminar and Business History Unit Seminars. This work was supported by the Economic and Social Research Council through a three-year Ph.D. studentship.
The rescinding of the monopoly held by the East India Company (EIC) on trade between Britain and India in 1813 opened new prospects for British trading firms. Subsequently, the value of the Anglo-Indian trade grew extensively and the range of products imported and exported became progressively more varied, enabling increased opportunities for specialization and integration. In the years after 1840, tea gradually became one of the leading Indian export products. Firms undertaking the production and marketing of tea used a range of ownership and organizational forms, including the partnership, joint-stock, and hybrid models. The selection of ownership form became a major choice for entrepreneurs in the mid-nineteenth century after significant changes in company legislation lowered the costs of incorporation.1Entrepreneurs had to weigh the pros and cons of the partnership and joint-stock forms.
The most notable trend regarding the choice of ownership in this period was the widespread adoption of a hybrid form known as managing agents. Organized as partnerships, through a range of governance mechanisms, the managing agents controlled a portfolio of joint-stock firms. This allowed small numbers of partners to channel investment into a range of industries through the joint-stock firms, reducing their risk and exposure to capital-intensive investments, but retaining close control over the firms. Through this model, the managing agents came to dominate the ownership and organization of Indian industry toward the end of the nineteenth century.2The question of why the managing agents succeeded and the joint-stock form as a stand-alone entity failed in India has been widely debated.
Various hypotheses have been advanced to explain the emergence and proliferation of the form. Lokanathan pointed to their capacity to provide managerial expertise, as well as capital and credit,...