Why didn whaling ventures adopt a corporate organization?
In the early 19th Century, U.S. states began to grant corporate charters to large numbers of businesses. However, corporate organization never caught on among whaling businesses. Why? Eric Hilts argues that corporations were not well equipped to cope with the principal-agent problems created by whaling enterprises. (Incentives in Corporations: Evidence from the American Whaling Industry, NBER w10403, March 2004). U.S. whaling began in the 17th Century as small groups of colonists set out from shore after targets of opportunity. Gradually the business shifted to whaling ships with crews of 30 taking world wide trips lasting years at a time. Despite the 19th Century IT revolution, management of an enterprise like this would pose big challenges. In the typical whaling enterprise a small group owned shares in the vessel. These persons delegated most management decisions to agents, who themselves had significant shares in the operations (“…in some ports the agents retained, on average, 44
