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

Asked on by pamela0317

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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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.

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