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Technology Transfers and Organization: The English East India Company and the Transfer of Piedmontese Silk Reeling Technology to Bengal, 1750s–1790s

Published online by Cambridge University Press:  14 August 2017

KAROLINA HUTKOVÁ
KAROLINA HUTKOVÁ*
Affiliation:
Karolina Hutková is an Economic History Society Postdoctoral Fellow at the Institute of Historical Research and the London School of Economics. E-mail: k.hutkova@lse.ac.uk
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Abstract

This article addresses two questions: Why do firms centralize, and what determines the success and failure of technology transfers? First, it argues that centralization decreases the costs of technology transfers, especially if knowledge is tacit, by reducing transaction costs. Second, it argues that an important factor for the success of a technology transfer is the capacity of a firm to mitigate agency problems. The English East India Company (EEIC) is mostly studied as a trading body. This article analyzes the company’s attempt to become a producer of raw silk in Bengal. In order to improve the quality of Bengal raw silk and thus increase the silk’s trading potential, it decided to apply Piedmontese reeling technologies that relied on a centralized system of production, which significantly decreased the transmission costs of the technology transfer and was thus the key for its success. However, because the EEIC’s management system involved in silk manufacturing was not innovated, the transfer’s effectiveness was diminished.

Type
Articles
Information
Enterprise & Society , Volume 18 , Issue 4 , December 2017 , pp. 921 - 951
Copyright
Copyright © The Author 2017. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved. 

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References

Bibliography of Works Cited

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Hejeebu, Santhi. “Contract Enforcement in the English East India Company.” Journal of Economic History 65, (2005): 496–523.Google Scholar
Hertz, Gerald B. “The English Silk Industry in the Eighteenth Century.” English Historical Review 24, (1909): 710–727.Google Scholar
Jensen, Michael C., and Meckling, William H.. “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure.” Journal of Financial Economics 3, (1976): 305–360.Google Scholar
Jensen, Michael C., and Meckling, William H.. “Specific and General Knowledge, and Organizational Structure.” Journal of Applied Corporate Finance 8, (1995): 4–18.Google Scholar
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Marglin, Stephen A. “What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production.” Review of Radical Political Economics 6, (1974): 60–112.Google Scholar
Minard, Philippe, Gervais, Pierre, and Goff, Judith Le. “Colbertism Continued? The Inspectorate of Manufactures and Strategies of Exchange in Eighteenth-Century France.” French Historical Studies 23, (2000): 477–496.Google Scholar
Mukhia, Harbans. “Social Resistance to Superior Technology: The Filature in Eighteenth-Century Bengal.” Indian Historical Review 11, no. 1/2 (1984): 56–64.Google Scholar
Poni, Carlo. “Comparing Two Industrial Districts: Bologna and Lyon in the Early Modern Period.” In Knowledge, Institutions, and the Division of Labour, edited by Porta, Pier Luigi, Scazzieri, Roberto, Skinner, Andrew S., 199–228. Cheltenham, UK: Edward Elgar, 2001.Google Scholar
Ray, Indrajit. “The Silk Industry in Bengal during Colonial Rule: The ‘De-Industrialisation’ Thesis Revisited.” Indian Economic and Social History Review 42, (2005): 339–375.Google Scholar
Rees, Ray. “The Theory of Principal and Agent, Part I.” Bulletin of Economic Research 37 (1985): 3–26.Google Scholar
Styles, John. “Clothing the North: The Supply of Non-Élite Clothing in the Eighteenth-Century North of England.” Textile History 25 (2 1994): 139–166.CrossRefGoogle Scholar
Von Tunzelmann, Nick. “Historical Coevolution of Governance and Technology in Industrial Revolution.” Structural Change and Economic Dynamics 14, (2003): 365–384.Google Scholar
Williamson, Oliver E. “The Economics of Organisation: The Transaction Cost Approach,” American Journal of Sociology 87, (1981): 548–577.Google Scholar
Williamson, Oliver E. “The Organisation of Work: A Comparative Institutional Assessment.” Journal of Economic Behaviour and Organisation 1, (1980): 5–38.Google Scholar
Williamson, Oliver E. “Transaction Cost Economics: The Governance of Contractual Relations.” Journal of Law and Economics 22, (1979): 233–261.Google Scholar
Williamson, Oliver E. “The Vertical Integration of Production: Market Failure Considerations.” American Economic Review 61, (1971): 112–123.Google Scholar
Zanier, Claudio. “Pre-Modern European Silk Technology and East Asia: Who Imported What?” In Textiles in the Pacific, 1500-1900: The Pacific World: Lands, Peoples and History of the Pacific, 1500-1900, edited by Ma, Debin, 105–191. Aldershot, UK: Variorum, 2005.Google Scholar
Davini, Roberto, “Una Conquista Incerta. La Compagnia Inglese delle Indie e la Seta del Bengala, 1769–1833.” Unpublished PhD diss., European University Institute, 1994.Google Scholar
Aglionby, William. “Of the Nature of Silk, as It is Made in Piedmont.” Philosophical Transactions 21 (1699): 183–186.Google Scholar
Crawfurd, John. An Inquiry into some of the Principal Monopolies of the East India Company. London: James Ridgway, 1830.Google Scholar
Geoghegan, J. Some Account of Silk in India, Especially of the Various Attempts to Encourage and Extend Sericulture in that Country. Calcutta: Department of Revenue and Agriculture, 1872.Google Scholar
Lardner, Dionysius. A Treatise on the Origin, Progressive Improvement, and Present State of the Silk Manufacture. Philadelphia: Carey & Lea Chestnut Street, 1832.Google Scholar
British Library, London Google Scholar
Goldsmiths’ Library, University of London, London Google Scholar
London School of Economic (LSE) Archives, London.Google Scholar
Royal Society of Arts, London.Google Scholar
Allen, Douglas W. The Institutional Revolution: Measurement and the Economic Emergence of the Modern World. Chicago: University of Chicago Press, 2012.Google Scholar
Beniger, James R. The Control Revolution: Technological and Economic Origins of the Information Society. Cambridge, MA: Harvard University Press, 1986.Google Scholar
Chaudhuri, K. N. The Trading World of Asia and the English East India Company, 1660–1760. Cambridge: Cambridge University Press, 1978.Google Scholar
Coleman, Donald C. Courtaulds: An Economic and Social History: The Nineteenth Century Silk and Crape, vol. 1. Oxford: Clarendon Press, 1969.Google Scholar
Davies, K. G. Royal African Company. Chippenham, UK: Longmans, Green & Co, 1957.Google Scholar
MacKay, Douglas. The Honourable Company: A History of the Hudson’s Bay Company. Toronto: McClelland & Stewart, 1949.Google Scholar
Mitchell, Brian R. British Historical Statistics. Cambridge: Cambridge University Press, 1988.Google Scholar
Molà, Luca. The Silk Industry of Renaissance Venice. Baltimore, MD: Johns Hopkins University Press, 2000.Google Scholar
Mokyr, Joel. The Gifts of Athena: Historical Origins of the Knowledge Economy. Princeton, NJ: Princeton University Press, 2002.Google Scholar
Pollard, Sidney. The Genesis of Modern Management: A Study of the Industrial Revolution in Great Britain. London: Edward Arnold, 1965.Google Scholar
Rothstein, Natalie. Spitalfields Silk. London: Stationary Office, 1975.Google Scholar
Styles, John. The Dress of the People: Everyday Fashion in Eighteenth-Century England. New Haven, CT: Yale University Press, 2007.Google Scholar
Willan, T. S. The Early History of the Russian Company, 1553–1603. Manchester, UK: Manchester University Press, 1956.Google Scholar
Wilson, Charles. England’s Apprenticeship 1603–1763. London: Longmans, Green & Co, 1971.Google Scholar
Adams, Julia. “Colonialists and Company Men: The Decay of the Colonial Control in the Dutch East Indies.” American Sociological Review 61, (1996): 12–26.Google Scholar
Alchian, Armen A., and Demsetz, Harold. “Production, Information Costs, and Economic Organisation.” American Economic Review 62, (1972): 777–795.Google Scholar
Ambrosoli, Mauro. “The Market for Textile Industry in Eighteenth Century Piedmont: Quality Control and Economic Policy.” Rivista di Storia Economica 16, (2000): 343–364.Google Scholar
Ashworth, William J. “Quality and the Roots of Manufacturing ‘Expertise’ in Eighteenth-Century Britain.” Osiris 25, (2010): 231–254.Google Scholar
Belfanti, Carlo. “Guilds, Patents, and the Circulation of Technical Knowledge: Northern Italy during the Early Modern Age.” Technology and Culture 45, (2004): 569–589.Google Scholar
Berg, Maxine. “Rise of the Factory System.” In The Age of Manufacture, 1700–1820: Industry, Innovation and Work in Britain, edited by Berg, Maxine 162–180. London: Routledge, 1994.Google Scholar
Bhadra, Gautam. “The Role of Pykars in the Silk Industry of Bengal (c.1765–1830), Part 2.” Studies in History 4, (1988): 1–35.CrossRefGoogle Scholar
Bhadra, Gautam. “Silk Filature and Silk Production: Technological Development in the Early Colonial Context, 1768–1833.” In Science and Empire: Essays in Indian Context, 1700–1947, edited by Kumar, Deepak, 59–87. Delhi: Anamika Prakashan, 1991.Google Scholar
Bhattacharya, Sabyasachi. “Cultural and Social Constraints on Technological Innovation and Economic Development: Some Case Studies.” Indian Economic and Social History Review 3, (1966): 240–267.Google Scholar
Coase, Ronald. “The Nature of the Firm.” Economica 4, (1937): 386–405.Google Scholar
Davini, Roberto. “A Global Supremacy: The Worldwide Hegemony of the Piedmontese Reeling Technologies, 1720s–1830s.” In History of Technology, vol. 32, edited by Guagnini, Anna and Molà, Luca, 87–105. London: Bloomsbury Publishing, 2014.Google Scholar
Davini, Roberto. “Bengali Raw Silk, the East India Company and the European Global Market, 1770–1833.” Journal of Global History 4, (2009): 57–79.Google Scholar
Davini, Roberto. “The History of Bengali Raw Silk as Interplay between the Company Bahadur, the Bengali Local Economy and Society, and the Universal Italian Model, c.1750–c.1830.” Commodities of Empire Working Paper 6, (2008): 2–21.Google Scholar
Eisenhardt, Kathleen M. “Agency Theory: An Assessment and Review.” Academy of Management Review 14, (1989): 57–74.Google Scholar
Grossman, Sanford, J., and Hart, Oliver D.. “An Analysis of the Principal-Agent Problem.” Econometrica 51, (1983): 7–46.CrossRefGoogle Scholar
Hejeebu, Santhi. “Contract Enforcement in the English East India Company.” Journal of Economic History 65, (2005): 496–523.Google Scholar
Hertz, Gerald B. “The English Silk Industry in the Eighteenth Century.” English Historical Review 24, (1909): 710–727.Google Scholar
Jensen, Michael C., and Meckling, William H.. “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure.” Journal of Financial Economics 3, (1976): 305–360.Google Scholar
Jensen, Michael C., and Meckling, William H.. “Specific and General Knowledge, and Organizational Structure.” Journal of Applied Corporate Finance 8, (1995): 4–18.Google Scholar
Landes, David S. “What Do Bosses Really Do?” Journal of Economic History 46, (1986): 585–623.Google Scholar
Lemire, Beverly, and Riello, Giorgio. “East & West: Textiles and Fashion in Early Modern Europe.” Journal of Social History 41, (2008): 887–916.Google Scholar
Marglin, Stephen A. “What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production.” Review of Radical Political Economics 6, (1974): 60–112.Google Scholar
Minard, Philippe, Gervais, Pierre, and Goff, Judith Le. “Colbertism Continued? The Inspectorate of Manufactures and Strategies of Exchange in Eighteenth-Century France.” French Historical Studies 23, (2000): 477–496.Google Scholar
Mukhia, Harbans. “Social Resistance to Superior Technology: The Filature in Eighteenth-Century Bengal.” Indian Historical Review 11, no. 1/2 (1984): 56–64.Google Scholar
Poni, Carlo. “Comparing Two Industrial Districts: Bologna and Lyon in the Early Modern Period.” In Knowledge, Institutions, and the Division of Labour, edited by Porta, Pier Luigi, Scazzieri, Roberto, Skinner, Andrew S., 199–228. Cheltenham, UK: Edward Elgar, 2001.Google Scholar
Ray, Indrajit. “The Silk Industry in Bengal during Colonial Rule: The ‘De-Industrialisation’ Thesis Revisited.” Indian Economic and Social History Review 42, (2005): 339–375.Google Scholar
Rees, Ray. “The Theory of Principal and Agent, Part I.” Bulletin of Economic Research 37 (1985): 3–26.Google Scholar
Styles, John. “Clothing the North: The Supply of Non-Élite Clothing in the Eighteenth-Century North of England.” Textile History 25 (2 1994): 139–166.CrossRefGoogle Scholar
Von Tunzelmann, Nick. “Historical Coevolution of Governance and Technology in Industrial Revolution.” Structural Change and Economic Dynamics 14, (2003): 365–384.Google Scholar
Williamson, Oliver E. “The Economics of Organisation: The Transaction Cost Approach,” American Journal of Sociology 87, (1981): 548–577.Google Scholar
Williamson, Oliver E. “The Organisation of Work: A Comparative Institutional Assessment.” Journal of Economic Behaviour and Organisation 1, (1980): 5–38.Google Scholar
Williamson, Oliver E. “Transaction Cost Economics: The Governance of Contractual Relations.” Journal of Law and Economics 22, (1979): 233–261.Google Scholar
Williamson, Oliver E. “The Vertical Integration of Production: Market Failure Considerations.” American Economic Review 61, (1971): 112–123.Google Scholar
Zanier, Claudio. “Pre-Modern European Silk Technology and East Asia: Who Imported What?” In Textiles in the Pacific, 1500-1900: The Pacific World: Lands, Peoples and History of the Pacific, 1500-1900, edited by Ma, Debin, 105–191. Aldershot, UK: Variorum, 2005.Google Scholar
Davini, Roberto, “Una Conquista Incerta. La Compagnia Inglese delle Indie e la Seta del Bengala, 1769–1833.” Unpublished PhD diss., European University Institute, 1994.Google Scholar
Aglionby, William. “Of the Nature of Silk, as It is Made in Piedmont.” Philosophical Transactions 21 (1699): 183–186.Google Scholar
Crawfurd, John. An Inquiry into some of the Principal Monopolies of the East India Company. London: James Ridgway, 1830.Google Scholar
Geoghegan, J. Some Account of Silk in India, Especially of the Various Attempts to Encourage and Extend Sericulture in that Country. Calcutta: Department of Revenue and Agriculture, 1872.Google Scholar
Lardner, Dionysius. A Treatise on the Origin, Progressive Improvement, and Present State of the Silk Manufacture. Philadelphia: Carey & Lea Chestnut Street, 1832.Google Scholar
British Library, London Google Scholar
Goldsmiths’ Library, University of London, London Google Scholar
London School of Economic (LSE) Archives, London.Google Scholar
Royal Society of Arts, London.Google Scholar