Agents with Principles: The Control of Labor in the Dutch East India Company, 1700-1796

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2017

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Abstract

Principal-agent problems plagued early modern corporations. The existing literature emphasizes the potential benefits provided by private trade in aligning the interests of company agents to those of their principals. We contribute to this line of work by analyzing the organizational and social mechanisms that may help address principal-agent problems in the presence of private trading opportunities. Drawing on personnel records of more than half a million seafarers employed by the Dutch East India Company (VOC) over nearly a century, we show that monitoring was effective in reducing desertion when private trade was conceived as a market activity subordinated to hierarchy. Social bonds were more effective in preventing desertion when the company elevated private trade above hierarchy. Our analysis clarifies how early corporations could maintain control over a geographically dispersed and diverse labor force in the absence of modern tools of organizational governance.

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10.1177/0003122417718165

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Wezel, F, and M Ruef (2017). Agents with Principles: The Control of Labor in the Dutch East India Company, 1700-1796. American Sociological Review, 82(5). pp. 1009–1036. 10.1177/0003122417718165 Retrieved from https://hdl.handle.net/10161/26749.

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Ruef

Martin Ruef

Jack and Pamela Egan Distinguished Professor of Entrepreneurship

My research considers the social context of entrepreneurship from both a contemporary and historical perspective. I draw on large-scale surveys of entrepreneurs in the United States to explore processes of team formation, innovation, exchange, and boundary maintenance in nascent business startups. My historical analyses address entrepreneurial activity and constraint during periods of profound institutional change. This work has considered a diverse range of sectors, including the organizational transformation of Southern agriculture and industry after the Civil War, African American entrepreneurship under Jim Crow, the transition of the U.S. healthcare system from professional monopoly to managed care, and the character of entrepreneurship during early mercantile and industrial capitalism.


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