COMPANY HISTORY: BACKGROUND, ORIGINS AND EVOLUTION - HISTORY - 2025

The history of the company ranges from the dynamics of the Phoenicians to the complex structures that are in operation today. In order to explain this background, it is important to understand that a company is an economic unit made up of people and capital destined to obtain an economic benefit.

The company at present can be categorized according to its economic activity, according to the way in which it has been created and according to its size. Depending on the sector of the economy to which it is dedicated, companies can be in the primary sector (obtaining raw materials), secondary (manufacturing industry) and tertiary (providing a service).

The origins of the company date back to the Phoenicians, who are considered the first merchants. Source: pixabay.com

According to its form of creation, a company can exist under the form of an individual company, which is that of a single person; or as a public limited company, which is the most common form of company today and its main characteristic is that the partners contribute a certain capital, responding only for the capital they have contributed.

It can also be a limited liability company, very similar to the corporation but used mostly in small and medium-sized companies; or a cooperative, where all members have the same rights and obligations.

According to their size, companies can be called large companies -this definition is subject to annual turnover and varies according to each country- and SMEs -small and medium-sized companies according to their acronyms-, whose annual turnover is below that established for so-called large companies..

Historical background

It could be said that the first company is the family nucleus. In ancient times the family exchanged goods and food to satisfy their needs: the mother cooked, the father hunted and provided the children with food, clothing and a house to satisfy their most basic needs.

This responds to the most basic and primitive concept of a company: a group of people brought together to obtain a common good; in this case, meet your basic needs.

When the needs of the family nucleus were satisfied, surplus food or tools were exchanged with other families in the towns or villages.

With evolution, individuals were developing new needs, which gave way to apprenticeships. The individual was forced to move to other towns to obtain different goods or to offer his work. This movement of people and products gave way to commerce.

First traders

The first registered merchants are the Phoenicians. These individuals were great strategists in the commercial sphere since they established their settlements near the sea to facilitate the transport of goods themselves.

They were strategically located between Egypt and Assyria, from there they were commercial conquerors of the Mediterranean. They made long sea voyages, carrying wood, brightly colored fabrics, gold pendants and jugs, among other items.

Their travels were not limited to taking products to one place and returning home, but they became intermediaries of merchandise: they took products to one place and were loaded with new ones to take them to the next destination, until returning home.

The commercial success of the Phoenicians was based on two aspects: their mastery of navigation and their lack of interest in conquering towns; They were not great soldiers since their only interest was to trade.

After the Phoenicians, another important group of merchants were the Arameans. Unlike the Phoenicians, the Arameans did the transport of goods by land.

Origin of the first company

The first company known and established under the company parameters that we know today was the Roman State. The municipality was seen as an independent legal person capable of owning assets and contracting independent obligations to the natural persons that constituted it.

Going back a little more to the past and following what was defined before in the historical antecedents, in Roman law the first company is defined as the union of the children around the inheritance after the father's company.

The second known company arose from the need to exchange goods and the third, which we will refer to as the first existing formal company, corresponds to the societates publicanorum.

The societates publicanorum arose in the year 215 a. C., their main function was to collect taxes for the State but they also participated in public bids for work contracts. It can then be said that the societates publicanorum were the first known public treasury.

Netherlands East India Company

The Netherlands East India Company was the world's first multinational company, as well as the first to disclose the value of its assets. It was founded in 1602 and for almost 200 years it was the largest trading company in the world.

They began successfully thanks to the great capital from Holland, taking control of the trade in fine species and later obtaining the monopoly of nutmeg, mace and nails.

They moved about 70,000 tons of merchandise and their shares were valued at almost $ 8 million.

Like a modern company, the company's capital was divided into shares. Its shareholders were influential people, members of royalty and great merchants. His intention was never to conquer tracts of land; like the Phoenicians, they only wanted to have a commercial monopoly.

For almost 200 years, the Dutch East India company was the largest merchandise trader between Asia and Europe, being at the time the only one to have contact with Japan.

End of company

Over the years, the company was not the only one doing trade between Asia and Europe. The trade routes were expanding and new competition entered that made the power of the Dutch company diminish.

In 1780 the company was nationalized due to the great debts they had. Some attribute this to a poor distribution of dividends, others to the company's location in Indonesia, which made travel logistically very difficult.

Others attribute the failure to how poorly paid their employees were, a fact that led to corruption in the company. The decline was probably a sum of all these reasons.

Evolution to the present

From the family considered as the most primitive company, through the Roman collection companies and up to the present time, the concept of company has evolved according to the historical moment and social needs.

Mercantilism

Mercantilism is based on obtaining wealth based on trade. This current of thought was the predominant one during the 16th, 17th and part of the 18th centuries. Under this premise, companies and the State were enriched through international trade with the exchange of goods, mainly by sea.

Mercantilism was a system that could not be sustained over time, and with events such as the French Revolution and the independence of the United States, it saw its end.

Industrial capitalism

Industrial capitalism saw its beginnings with the English Industrial Revolution. The companies stopped being commercial units to be industrial centers of production. In this period they were mainly dedicated to converting raw materials into finished products.

The first companies to emerge during industrial capitalism are textiles; they were the first to invent great revolutionary machinery at that time. The second group of companies were those dedicated to the railway sector and the third group to the iron and oil industry.

This evolutionary stage within companies caused the bankruptcy of small artisan companies. The leaders were companies with large capital flows, large numbers of employees and machinery that could carry out these new manufacturing processes.

The evolution of the company in industrial capitalism also ushered in a new stage in banking.

Banks were previously used to finance great war crusades; In the stage of industrial capitalism, banks financed capital for these new industrial enterprises. Industrial capitalism came to an end after the First World War.

Financial capitalism

With the growth of industrial companies at the beginning of the 20th century, the differentiation between the company and the entrepreneur began to emerge, the basic concept of a public limited company of separating the natural person from the entrepreneur with the legal entity of the company.

This growth and evolution led to what is known as a corporate monopoly. The corporate monopoly required a large amount of financing to be able to invest in new countries, enter new markets, and partner with new companies.

All this made the role of banks even more important at this stage of business evolution.

Present

Today the company is a complex gear that clearly separates the figure of the entrepreneur from that of the company. It is this businessman who coordinates all the activity with all these new concepts.

With technological advances, globalization, competition and the creation of new needs, the company has to take into account many more factors than were considered in ancient times.

Companies are no longer just machines that convert raw materials into finished products. They have financial, marketing and IT departments, among others, and they keep the economic purpose of it very present.

References

1. Arias Bonet, Juan Antonio “Societas Publicanorum” (1948) at the University of La Rioja. Retrieved on April 06, 2019 from Universidad de la Rioja: unirioja.es
2. Cisa, Javier “Phoenicians, gentlemen of the Mediterranean” (June 12, 2917) in La Vanguardia. Retrieved on April 6, 2019 from La Vanguardia: láguardia.com
3. Church, Roy “History of the company: content and strategy” (November 1992) in Cuadernos de Estudios Empresariales NY 4, 253-271, Edit. Complutense, Madrid 1994. Retrieved on April 06, 2019 from Cuadernos de Estudios Empresariales: magazines.ucm.net
4. Gaastra, Femme “verenigde oost indische compagnie” in Tanap. Retrieved on April 06, 2019 from Tanap: tanap.net
5. Rojas Rojas, Jorge “El Mercantilismo” (April 2004), Working Document 243 of the Pontificia Universidad Católica del Perú. Retrieved on April 06, 2019 at Pontificia Universidad Católica del Perú: pucp.edu.pe
6. Taylor, Bryan. “The First and the Greatest: The Rise and Fall of the Vereenigde Oost- Indische Compagnie” (2013) in Global Financial Data. Retrieved on April 06, 2019 in Global Financial Data: globalfinancialdata.com