Abstract: This chapter argues that a focus on big business has distorted the understanding of the legal history of the corporation. The relevant context for understanding the evolution of the form must be broadened to include two related but somewhat contradictory trends: first, the democratization of the corporate form of enterprise (that is, its adoption by increasing numbers of small businesses); and second, a growing tendency in the general culture to see enterprises as manifestations of collective action rather than individual initiative. These trends forced courts and policy makers to reconsider the nature of corporations and also created considerable confusion about how corporations differed from the other main organizational form employed by small businesses — partnerships. The end result of this reconsideration was a rigid definition of the two forms that severely limited the contractual freedom of small businesses.

Keywords: corporation, partnership, big business, small business, personhood, entity theory, artificial person, natural person, antitrust,