ALL IN THE FAMILY
When the Egibi family wealth was
divided among the fourth-generation sons,
the family owned 16 houses in the capital
city and a major rural town, along with other
agricultural land, as well as having control
over more than 100 employees.
In some ways, this story is certainly
not a unique one of a rise to wealth for
a family over many generations; but the
diversity of organisational arrangements,
the movement from agricultural production
through contracted government service
to real estate management, and the range
of financial instruments that accompanied
these developments are worthy of attention,
because the Egibi family lived during the
century from 626 BCE to around 540 BCE
in Babylon. It is almost chastening to realise
that many of the business and financial
contractual arrangements that we consider
‘modern’ were in regular use at least 2500
years ago – and indeed, some were already
at least a millennium old at that time. We can
still learn a great deal from history.
Source: Wunsch, Cornelia,’Neo-Babylonian Entrepreneurs’ in Landes,
David S., Mokyr, Joel, and Baumol, William J. (eds). The Invention
of Enterprise Entrepreneurship from Ancient Mesopotamia to
Modern Times (Princeton and Oxford: Princeton
University Press, 2010: pp.41–61.ASSIGNMENT
1 Do you think that the use of family
relationships to build a business
overcame agency issues?2 If you were to take the role of financial
adviser to the Egibi family with respect
to its real-estate rental arrangements,
what would you consider to be the
risks associated with the loan-rental
mortgage transaction they set up with
the administrator of the crown prince’s
palace?
3 What other examples can you think of
in which there is a sacrifice of short-term
profits for long-term higher expected
gains?