Turning points in leadership: Ship size in the Portuguese and Dutch merchant empires

This paper discusses the implications of organizational control on the race for technological leadership in merchant empires. I provide an illustrative framework in which poor organizations have reduced incentives to invest, which in turn stifle technology improvements making leaders lag new entrants. In the late sixteenth century, Portugal’s large ships carried more merchandise and were more fitting of the monarch’s grandiose preferences, but they also were more prone to disaster. The merchant-controlled Dutch East India Company however, invested in smaller but more seaworthy vessels conducting more voyages at a much lower loss rate. The surviving historical evidence shows Portugal relying on large ships well into the seventeenth century suggesting her technological edge was gone by the time the Dutch dominated the Indian Ocean.