This article puts the well-known Coasean concept of the firm into the concrete historical environment of the nineteenth-century Ottoman Balkans. The goal is to test whether it can explain the establishment of the first modern firms in conditions predominated by a self-sufficient semimarket economy. On the basis of Bulgarian-owned firms, the authors find that the Coasean concept is useful in explaining the establishment of and the benefits from the firms during the proto-industrial period. The authors contribute to the available literature by adding some clarifications to the main question of Coase concerning the existence of the firms. The firm provides the necessary financial and human capital in sectors such as silk, wool, and textile production and leather goods, where the proto-industrial organization of production is first and foremost applied. The organization of the Bulgarian firms clearly shows the success formula for the presence of a company with small (sometimes even decreasing) capital not only on the relatively huge Ottoman market but even outside it (Wallachia, Georgia) for a long period of time—from approximately the 1820s to the third quarter of the nineteenth century.

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