The forgotten managing agency system: a nineteenth century model of Indian corporate governance

Purpose – The purpose of this paper is to show that there did exist a typical “managing agency system” in pre-independent corporate India, which itself was a significant and powerful system of corporate governance. Design/methodology/approach – This is a qualitative exploration and analysis of the nineteenth century model of corporate governance and its impact on industrialisation in pre-independent India. Findings – Initially, the system of managing agency was instrumental in improving the performances of companies through economies of scale and scope and other best practices. Gradually, over the century it became corrupt and opposed to the interests of majority of the stakeholders. However, the superstructure of the system, even though not backed by any legal framework, has been found to be solid and not inferior to the present day corporate governance system and practices. Research limitations/implications – Because of the absence of corporate data warehousing, and lack of presence of corporate and business literature in the nineteenth century, the research could not be made empirical. Much of comparisons could not be made between the now and then corporate practices, management style and financial performances. Practical implications – The findings and analysis of this paper provide a direction to the policy makers, governments and researchers in formulating an alternative model of corporate governance for sustainable development of the society. Originality/value – The paper is one of the few attempts made so far on the subject and rediscovers “managing agency system” in the light of the corporate governance practices of modern times. It has paved the path for further meaningful and value adding deliberations and researches.