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Why did corporations emerge?

Learning

In this lecture, Francisco offers a brief account of how corporations came to be and what the logic of production prevailing in the economy at the time of their emergence looked like. This recap helps us to understand better the substantial paradigm shift that has played into the hands of startups and the enormous opportunity that entrepreneurs can unlock by adopting this new mind frame.

Corporations are typically considered the most salient organizational form for businesses. Notwithstanding their obvious visibility as players in the economy, corporations have not existed forever. They emerged because of the need to acquire vast amounts of capital that would enable the large-scale production of uniform, less expensive consumer goods, thereby catering to the needs and aspirations of a growing middle class.

But the world has both steadily and radically evolved since the emergence of corporations. Today, while marginal costs of production continue to decrease, many people claim that exponential technologies will bring them down to –almost– zero. Production can be easily outsourced, and the magic of product customization helps companies extend their offering and target different market segments.

Nonetheless, we continue to operate with an outdated road map –the all too familiar sequence of planning, budgeting, money allocation, execution and result–, that was devised by corporations who needed to raise an initial capital.

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