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The rise and fall of one of the first global corporations: The Dutch East India Company

During the 17th and 18th centuries, the Dutch East India Company, also known as the Verenigde Oostindische Compagnie or VOC in Dutch, was a corporation whose primary mission was to engage in commercial activity, as well as exploration and colonisation of new lands. It was established in 1602 and continued to function until 1800.

It is widely acknowledged as being among the first and most successful examples of multinational enterprises. At the height of its power, the Dutch East India Company had established headquarters in a number of different nations, held a monopoly on the trade of spices, and possessed semi-governmental powers such as the ability to start wars, prosecute convicts, negotiate treaties, and establish colonies. It also had a monopoly on the trade of spices.

The Development of the Dutch East India Company Throughout History

The Portuguese were the predominant force in the spice trade across Europe in the 16th century, despite the fact that the spice trade was expanding throughout the continent. In spite of this, by the late 1500s, the Portuguese were having difficulty producing enough spices to fulfil demand, which led to an increase in spice costs.

Because of this, in addition to the fact that Portugal joined forces with Spain in 1580, the Dutch were inspired to participate in the spice trade, despite the fact that at the time, the Dutch Republic was at war with Spain.

By the year 1598, the Dutch were already dispatching a large number of commercial vessels, and in March of 1599, Jacob van Neck's fleet was the first to arrive at the Spice Islands (the Moluccas of Indonesia). In 1602, the Dutch government played a role in the establishment of the United East Indies Company, which would eventually be renamed the Dutch East India Company.

This was done with the intention of establishing a monopoly in the spice trade and so stabilising revenues. The Dutch East India Company was granted the authority to construct forts, maintain soldiers, and negotiate treaties at the time of the company's establishment. The duration of the charter was to be 21 years. ​

In the year 1603, the Dutch founded their first permanent trade station in Banten, which is located in West Java, Indonesia. This region is now part of Indonesia's Batavia province. After establishing this first town, the Dutch East India Company established a number of other colonies around the region during the early 1600s. The early organisation had its headquarters at Ambon, Indonesia, from 1610 to 1619.

Between the years 1611 and 1617, the English East India Company posed a significant threat to the Dutch East India Company's market share in the spice trade. A partnership between the two firms was established in 1620, and it remained in effect until 1623 when the Amboyna massacre prompted the English East India Company to relocate its trade stations away from Indonesia and into other parts of Asia.

During the whole decade of the 1620s, the Dutch East India Company continued its colonisation of the islands of Indonesia, and the number of Dutch plantations cultivating cloves and nutmeg for sale increased across the area. Gold and silver were the primary forms of currency utilised by European commercial businesses during this time period, including the Dutch East India Company.

In order for the corporation to acquire the metals, it was necessary to run a trade surplus with the other European nations.

The Governor-General of the Dutch East India Company, Jan Pieterszoon Coen, devised a plan to establish a trading system within Asia so that the profits from that system could be used to finance the European spice trade. This was done to circumvent the fact that the Dutch East India Company could only obtain gold and silver from other European nations.

After some time, the Dutch East India Company began doing business over the whole of Asia. In the year 1640, the firm extended its operations to the island of Ceylon. The Portuguese had held sway over this region, but by the year 1659, the Dutch East India Company had established control over almost the whole coast of Sri Lanka.

In the same year, 1652, the Dutch East India Company built an outpost in southern Africa at the Cape of Good Hope in order to offer supplies to ships that were travelling to eastern Asia. In later years, this outpost developed into a colony that came to be known as the Cape Colony.

As a result of the Dutch East India Company's ongoing expansion, trade stations were created in a variety of locations, some of which are included here: Persia, Bengal, Malacca, Siam, Formosa (Taiwan), and Malabar. By the year 1669, the Dutch East India Company had become the most prosperous corporation in the whole globe.

A falling down in the fortunes of the Dutch East India Company

The economic success and expansion of the Dutch East India Company started to slow down around the year 1670, despite the company's achievements in the middle of the 1600s. This decline began with a decrease in trading with Japan, and it was followed by the loss of the silk trade with China after 1666.

Trade with Europe was severely hindered as a result of the Third Anglo-Dutch War, which took place in 1672. Subsequently, in the 1680s, other European trading enterprises started to expand, which put more strain on the Dutch East India Company. In addition, the demand in Europe for Asian spices and other items started to shift about the middle of the 18th century.

The Dutch East India Firm saw a brief recovery in dominance at the turn of the 18th century; but, in 1780, another conflict broke out with England, and the company started to experience significant financial difficulties around the same time. The assistance provided by the Dutch government allowed the business to continue operating throughout this period (Towards a New Age of Partnership).

In spite of the difficulties the company was experiencing, the Dutch government decided to extend the charter of the Dutch East India Company until the year 1798. In later years, it was extended once more until the 31st of December in 1800.

During this period, however, the firm's capabilities were considerably diminished, and the business started firing staff and dismantling its headquarters. As time went on, it too lost its colonies, and in the end, the Dutch East India Company went out of business.

Setting up shop as the Dutch East India Company

During the height of its power, the Dutch East India Company had a convoluted hierarchy in place for its employees. There were two distinct categories of stockholders in the company. Both parties were referred to by their respective names, the participants and the bewindhebbers.

The participants were not involved in the management of the business, but the bewindhebbers were. The fact that the responsibility of these stockholders in the firm was limited to the amount that they had invested in it was one of the factors that contributed to the success of the Dutch East India Company.

The structure of the Dutch East India Company consisted of its shareholders as well as six chambers located in the towns of Amsterdam, Delft, Rotterdam, Enkhuizen, Middleburg, and Hoorn.

Hoorn was the only city that did not have a chamber. Each of the chambers had representatives that were selected from among the bewindhebbers, and the chambers were responsible for raising the first operating capital for the firm.

The Role That the Dutch East India Company Plays in Today's World

The company known as the Dutch East India Company is significant because it pioneered a sophisticated approach to doing business that is being used by many companies today. One early example of a limited-liability business was the Dutch East India Firm, which had stockholders who were personally responsible for the company's debts.

In addition, the firm was very well structured for the time period, and it was one of the first businesses to gain a monopoly over the spice trade. Furthermore, it was the first global corporation in the history of the globe.

Additionally significant was the role that the Dutch East India Company had in the dissemination of European culture and technology across Asia. This led to the expansion of European exploration as well as the colonisation and commercialization of previously uncharted territories.

Briney, A. (2013, March 8). The Rise and Decline of the Dutch East India Company. ThoughtCo.