Extant research has highlighted the impact of legal innovations on the organizational choices made by entrepreneurs and traced the diffusion of new business forms across international borders, such as the private limited liability company (PLLC). This paper uses a newly compiled database of all firms operating in Vienna between 1900 and 1936 to examine the PLLC’s impact on the Austrian business landscape following its introduction. Its findings reveal that the PLLC quickly replaced other legal forms. While suitable for a wide range of sectors, the PLLC was particularly attractive to new industries burdened by machinery investment rather than wage costs. By empirically demonstrating that the PLLC filled a critical gap in the legal framework of Austria, this study highlights the broader importance of legal forms as instruments for fostering entrepreneurial activity, shaping economic structures, and driving development.
