What major advantages of corporations have given rise to their dominance as a form of business organization?

2 Answers

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The two most important advantages of incorporation have to do with liability for investors and with raising capital.

Corporations have an easier time raising capital than other forms of organization.  They can, for example, issue stocks to the general public.  They are also generally more capable of getting loans from banks.

In addition, people who invest in corporations have only limited liability.  If the firm goes bankrupt, the investors' personal wealth cannot be taken to pay the firm's debts.  The investors are only liable to lose what they have put into the firm, nothing else.

junepinto00's profile pic

junepinto00 | (Level 1) eNoter

Posted on

Well, the biggest advantage is that the owners can lessen their personal risk by keeping their individual profits.

 

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