What effects did the pirate organizational structure have on the crew?
Pirates’ democratic organization had at least two major effects on the crew. First, it empowered pirates to popularly elect and depose important officers, which gave pirates great control over their ‘leaders.’ This in turn created strong incentives for pirate ‘leaders’ to wield their power in the crew’s interest rather than against the crew’s interest for personal benefit. Second, since pirates’ democratic organization extended to their method of pay as well–each pirate received a roughly equal share of the booty–it created several “collective action problems” for pirates that they needed to solve. For instance, this method of payment encouraged crewmember shirking, which pirates overcame by instituting a system of social insurance and bonuses. What lessons can today’s managers learn from pirates? Among the most significant modern management lessons from 18th-century pirates is the importance of letting the pursuit of profit determine ideas about a firm’s organizational features rather
