The Evolution of Business Structures Number
TheEvolution of Business Structures
TheEvolution of Business Structures
Oneof the oldest activities to have been practiced by man is thebusiness activities. Since the history, of man, he has participatedin different forms of business activities. Some of the oldest formsof business include entails the famous barter trade. However, the setor the organization of business varied from one place to the other asdifferent people had different approach to business activities. In abrief definition, a business structure is the framework that isrecognized within a particular jurisdiction for conducting commercialactivities, with examples such as corporations, partnerships,sole-proprietorship among others. Business structures have undergonenumerous evolutions to the currently recognized ones. One of thedriving activities that contributed to the changing is the Greecetrading history. The Greeks contribution to the business developmenthas been tremendous and cannot be overlooked. Business structures incurrent times have played a key role in how business enterprises areorganized or managed, such as the case of either a centralized ordecentralized structure.
ThesisStatement: sincethe history of mankind, business structures have undergone numerousevolutions, the Greeks tremendously contributed into the businessworld, through their operations. Evolution of business structure andthe modern structures in business owes a lot to the ancient Greekbusiness structures.
Businessstructures used in recent times have their history related to theancient business operations, and especially the Greek’s way ofconducting their businesses. Business structure can as well bedefined as the policies and rules that were set to determine how abusiness was to carry out its functions. Mediaeval people wereinvolved in distinct forms of trade for acquisition of resourceslacking in their respective borders. Most of these transactions werecarried out as barter trade. These trades not only enhancedrelations, but also ensured sustainability of states. Although therewere no written records on business structures there was an organizedsystem in which business was run, which led to the gradualdevelopment of the modern day business organization. This reportshall dwell more on ancient Greece to determine its contribution tothe evolution of business structures, which are critical to modernbusiness. In addition the report will investigate the factorssurrounding ancient trade environment to determine what led to thedevelopment of modern structures. This paper will focus on theevolution of the business structures from ancient structures to themodern ones, with reference to the Greeks way of doing their businessas well as their contribution in the business world.
Itis important to note the distinct underlying principles, whichinitiated the modes of conducting business in an organized manner.The establishment of trade networks is also an important factor toconsider in evaluating business structures relative to differentterritories. The report also recognizes the existence of local,regional, and international trade dating back to ancient Greece. Inaddition, the modern business structures are analyzed in order toillustrate their relation with the ancient and modern tradingsystems. This research will therefore focus on the ancient Greece andhow it shaped today is business structures.
Inmodern economics, business structures are classified into four maincategories: sole proprietorship, partnerships, limited liabilitycompanies and corporations[ CITATION Mic l 1033 ].Different business structures are recognized by law which clearlydefines their roles and the legal requirements for theirestablishment. Each business structure has unique operations relativeto theoutlined requirements by law. There have been different factors thatcontributed to the evolution of the business structures from theancient recognized structures to the ones recognized in the modernday. One of the key factors is the technology inventions which haveincreased the movement of people and goods from one place to theother. Other factors include improved transport and communicationsystem, increased production of goods as well as the impacts ofglobalization.
TradeIn Ancient Greece
Borderingthe Mediterranean and Aegean seas, gave Greece an added advantage interms of trade because traded goods could be transferred by usingboth land and sea. Therefore trade was carried out at local, regionaland international levels from 700BC. Much of it was carried out as abarter trade because different regions were rich in different items.However, the spread of the coinage as a standard unit of measurefurther amplified this trade. Construction of high standardtravelling vessels in the 600BC, for example the merchant ships, andimproved road infrastructure, contributed to the growth of trade dueto the easy and convenient means of transport.
Thedifferent periods marking the Greece history contribute to thedifferent trading environments attributed to the political regimes,social and cultural activities that were present. Trade took place inmarket places called agorai in major urban centers[ CITATION Kim11 l 1033 ].One of the major characteristics of the business operations inancient Greece is that, they were established along their transitroutes. Initially, there were no formal accepted structures thatcould be used to define their operations, but as time moved and thebusiness operations become more complicated, they established definedstructures.
Someof the oldest used structures include the open field establishments,or structures, where the buyers and the sellers used to meet. Greekwas well known for its agriculture produces, this farming practicesled to the establishment of small manageable business entities. Thesewere usually owned by the wealthy farmers, who stocked their farmproduce for sale. Despite the increased demand of agriculturalproducts, there was no enough capital to set upmanufacturing/processing plants for the increasing farm produce.This, in turn, resulted in the establishment of small factories forthe farm produce, which were individually owned. This gave rise tothe individual owned business entities, which are commonly known as asole proprietorship in the current world. Some of the individuallyowned business enterprise in ancient times continued to developforming larger processing companies. However, the majority of theestablishments never lasted long enough. Different harsh factorscontributed to their diminishing.
Asstated earlier, trade in Greece varied from local, regional tointernational. Within the local market Greeks traded cereals, cheese,honey, wine, meat, pottery and perfumes. Exports included pottery inAfrica, especially Egypt, wine, marble, olive and bronze works.Imports included wheat, grain and salt fish from the Black Sea andwood from Macedonia. Wood was especially useful for construction ofships. Other imports were papyrus, textiles, glass, spices and metalssuch as iron, copper, tin, gold and silver. Slave trade was alsorampant and Greeks sourced slaves from Egypt[ CITATION Sar13 l 1033 ].The type of goods, traded in the ancient Greek, heavily contributedto the type of structure to be used. Large business enterprises suchas factories, needed law materials, this in turn contributed to thetype of Business Corporation will establish. Despite no regulations,or rules governing formation of partnerships, business operations inancient times were made of the partnership. These were formed byindividual business owners, who came together with an intention ofexpanding their business territories. However, these partnershipswere mostly associated with well-known and wealthy people in thesociety.
TradeOrganization in Ancient Greece
Tradein ancient Greece has can be traced back to the 3000BC. Althoughthere were no written or formal arrangements of conducting business,the trade operations of that period created a strong foundation forthe development of modern business structures. Profit was consideredthe acquisition of resources that they lacked. Therefore the tradersenjoyed mutual benefits until the introduction of the coin currency,which served as a standard of measure.
Thedivision of society into classes of the rich, who was commonlyreferred to as the elite or the aristocrats, and the poor, saw tradebeing conducted by the rich because they naturally had the capital.Aristocrats were mainly rulers and other powerful people who workedin the political circle. They were regarded as royalty. Thesearistocrats controlled the trade and also participated actively inpolitics, to advocate for policies to strengthen their trade.However, it should be noted that the difficult tasks of trade werecarried out by hiring of slave workers[ CITATION Kim11 l 1033 ].Therefore,this class formed what may be referred to as the management team inmodern day business structure.
Merchantswere also very actively involved in trade and they did notnecessarily originate from the aristocrat class. Ancient Greeceencouraged trade activities and therefore any individual who wascapable of conducting business was free to do so. This was especiallypossible for indigenous Greeks who had not migrated into Greece.Therefore, it was possible for individuals to own and run their ownbusiness as long as it was in line with the leadership of the time[ CITATION Kim11 l 1033 ].
Thestate was involved in the trading activities in running a business,formulating policies and collecting taxes. The rulers, especiallycontrolled the trade of cereals so as to ensure food security withthe fast growing population. This is similar to state ownedcorporations which control the trade of delicate goods. A 10% tax wasrequired from traders, especially those using the sea fortransportation, and a levy on imports and exports. This went to thegovernment and also to the employed laborers. Maritime courts wereestablished to deal with those who obstructed the law. Banks werealso established and they provided funds for business in terms ofloans and also provided safe storage of currency by way of deposits[ CITATION Kim11 l 1033 ].
FactorsThat Led To Evolution of Business Structures
Theevolution of the business structures, however, was determined bydifferent factors, during the ancient times. Some of the factorscontrolled the types of business entities that could be established,as well as what to produce, and how to be managed. These factorsinclude aspects such as
Culture:the rich Greek culture enabled them to create pieces of art whichwere unique and attracted neighboring states thus offsetting trade.So as to ensure loyalty in business, there were selected individualswho ensured order and honesty. This sense of hierarchy in terms ofcontrolling trading operations led to the establishment of businessstructures. Politics:the government was actively participating in trade and the kings andrulers especially controlled trade. The policies they formulated wereimportant in ensuring smooth running of business. In addition,failure to adhere to the laws in place was a punishable crimeaccording to the courts. These laws are an important background indefining business structures, as well as participation of thegovernment.
Wars:wars were rampant in ancient Greece and conquests of differentterritories often led to decline in trading activities. Therefore,there was need to establish firm trade territories which wouldsurpass any war. This led to improved business relations andterritorial contacts which were meant to mutually benefit all tradingparties despite the wars. These relations form an important principlein the formation of organized business structures. Guilds:ancient Greeks recognized the importance of coming together as onetrading entity so as to safeguard their interests through guilds.These guilds are equivalent to modern day trade unions. Theyprotected their rights and clearly pointed out the required ethics inconducting business. These ethical issues are important as theyestablished a strong foundation where modern business structuressprouted.
However,in the modern business world, other factors have contributed to theevolution of the business structures. These factors include aspectssuch as globalization, technology advancement, improved transport andcommunication lines. In addition, the economic stability of a countryhas had an impact on the types of business structures used in thecountry. With the formation of business law, the business structuresin recent times are well recognized by the law, and hence it’seasier to identify which structure is used, in any business entity.
Theancient Greek trade had no defined structural organization ofconducting business, but contributed greatly to the evolution and theestablishment of the modern day business structures due to thefollowing factors[ CITATION Sar13 l 1033 ].The modern business environmentis rich with different well defined structures, with well set rulesand requirements of each. Some of the business structures in themodern world include structures such as: Sole proprietorship,Partnerships, Corporation, and Limited Liability Companies. There arefour main types of business structures recognized under law and whoseoperations differ in terms of taxation and tasks as expounded below[ CITATION Mic l 1033 ].
Oneof the prominent and widely used business structures in the modernbusiness world is the Soleproprietorship.This is the simplest business structure in which an enterprise issolely owned and run by the owner. This business is mostlyestablished from owners’ savings. Self-employment taxes andbusiness taxes are payable annually. All profits are enjoyed by theowner, and on the other hand losses are also suffered by the owner.Secondly, there are the Partnerships.These are business entities owned by several individuals.Partnerships require greater starting capital due to higher legal andaccounting fees. General partners manage the business, hence areinvolved in the formulation of policies, and limited partners serveas passive investors. Taxation is on the basis of profits and losses.Partnerships are lucrative business structures as members enjoy thepool of resources. Additionally, there are also the Corporations.A corporation is a complex business entity independent of its owners.Thus, it requires more starting capital alongside greater taxing andaccounting requirements. Corporations are experiencing doubletaxation: the corporate tax is payable as well as income tax by theshareholders. Corporations are beneficial to shareholders becausethey enjoy dividends but do not risk losing their personal assets dueto the independence. Lastly, there is the LimitedLiability Companies (LLC).These are business entities that allow for shareholders toparticipate actively in running the business and enjoy dividendswithout suffering double taxation. In addition, business owners inLLCs enjoy liability protection. There is no limit to the number ofshareholders, although LLCs lack perpetual life and are subject todissolve.
Thetrading history of Greece is a fundamental landmark to modern dayentrepreneurs, businessmen and economists. The wide variety of goodstraded is important in understanding the vast world of business whichis rich in opportunities. It is important to recognize how the aspectof scarcity in ancient Greek, is coined to create tradingopportunities to acquire the resources they lacked. Also, theunwritten, almost natural business ethics are important inunderstanding how business should be conducted. The trade routeswhich had an efficient and effective system of administration,especially the sea routes, are foundations of creating good businessrelations. In addition, the participation of the government increating laws and policies for trade, and also allowing individualtrading freedom, is a strong background upon which legislations areformed. It’s clear evidence from the paper, different has over timecontributed to the numerous business evolutions. Different factorsgradually contributed to the establishment of defined and refinedbusiness structures which are recognized in different jurisdictionstoday. The underlying issues surrounding these operations have agreat influence in the way businesses are structured today.Therefore, it is important to recognize the great role played by theancient Greece trading activities in steering the evolution ofbusiness structures.
Covert, K. (2011). Ancient Greece: Birthplace of Democracy. Caapstone Press.
Pomeroy, S. B., Burstein, S. M., Donlan, W., Roberts, J. T., & Tandy, D. W. (2013). A Brief
History of Ancient Greece: Politics, Society and Culture. Oxford University Press.
Spadaccini, M. (2007). Business Structures How to form a Corporation, LLC, Partnership or
Sole Proprietorship. Entrepreneur Press.