The Organizational Structure and the Army of the East India Company Department


TheOrganizational Structure and the Army of the East India Company


TheOrganizational Structure and the Army of the East India Company

Theimportance of the organizational structure of any entity cannot begainsaid as far as the growth, development and profitability of suchan entity is concerned. Indeed, this becomes pretty evident rightfrom the definition of organizational structure, which revolvesaround the technique through which an organization undertakescommunication and distribution of responsibility, as well as adaptsto changes in the business environment. It may also underline themanner in which a company makes use of the resources that are at itsdisposal so as to allow for the achievement of its goals andobjectives in the long-term and the short-term. Scholars haveacknowledged that it is imperative that any business entity ensuresthat its structure remains dynamic so as to allow or give it thecapacity to respond to the varied aspects that would have an effect,whether positive or negative on the entity1.It goes without saying that a business entity that has the capacityto adapt has a better capability for survival. Further,organizational structure would offer members a clear guidelineregarding the manner in which they should tackle varied issues evenin instances where they have never encountered the same in the past.On the same note, it would give identity and meaning to theindividuals that join the entity thereby binding the memberstogether. Structure would have to underline three elements includinggovernance, distribution of tasks, as well as the rules by which thebusiness entity would function. This is irrespective of the type oforganization in question. Scholars have acknowledged that regardlessof the size, a business entity must have a formal task completion,decision-making and communication system that is in line with itsneeds so as to operate in an efficient and effective manner2.For a large number of organizations, the structure matches the goalsand objectives that they are supposed to accomplish. This is the casefor the army of the East India Company.

Overviewof the Army East India Company

TheEast India Company is primarily known and famous for the capture ofIndia. Indeed, centrally to the popular belief, the British Army didnot accomplish the capture of India rather the East India Companyprivate armies did. The army had the primary objective of protectingtheir trading empire. Founded by the legendary Robert Clive the smallforce of adventurers and mercenaries has grown both in size andstrength to the point of eventually becoming an army that was largerthan those of any Sovereign European state3.They were highly professional and disciplined and fought persistentlyfor more than a hundred years before the Great Mutiny of 1857resulted in its disbandment, after which the troops were passed tothe crown service. Part of the reason for its success was theorganizational structure that had clear guidelines pertaining to theroles and responsibilities of the varying individuals occupyingdifferent positions in the entity4.

OrganizationalStructure of EIC

Ithas been well acknowledged that the EIC encountered numerous issuesparticularly with regard to the enforcement of regulations in theIndies from London. Nevertheless, the fact that the company was inexistence for over two centuries should underline the effectivenessof its administrative and organizational structure. The EIC needed tocome up with a policy where appropriate policy decisions could bemade and power and authority delegated to the servants. Further,there needed to be proper mechanisms for the task of control andcommunication. The administrative structure pertaining to the Army ofEast India Company may be best described as taking up a top-down andstrongly hierarchical structure on the basis of a military model.Nevertheless, the decision-making mechanisms took the form of acombination of centralized and decentralized structure where eachbattalion had to operate within the laid out objectives of the Courtof Directors but still have the unit leaders as responsible for theactions of the subordinates. It is noted that the decision-making wascarried out at two levels including the Court of directors, which wasthe superior entity in London and a subordinate one situated in Asia,while the next level was the president and his council in everyseparate region of the company. Nevertheless, the company tended tolean towards the centralized form considering that the Court ofDirectors incorporated the highest authority as far as themodification and setting of goals of the company were concerned, aswell as the suspension of all activities of the company. Thepresidencies in Asia, however, had some restricted powers and had thecapacity to modify their actions, of course, within the limitsproscribed. In essence, it comes out clearly that the parent companyincorporated immense control over the subsidiaries.

Thedecentralized organizational structure, which was constructed througha blend of company and private trade, is seen as the fundamentalpillar of the East India Company’s persistent adaptability andexpansion in the two centuries as a commercial and military entity.Through the fostering of the utilization of social networks and thecohesive internal structures pertaining to the link between ports andships, the decentralized structures adopted by the Company and itsprivate armies managed to simultaneously integrate and expand theoperations of the company in the East5.It is noteworthy that the social networks that the company adoptedtransferred crucial information between the employees, resulting inthe incorporation of numerous other ports to the larger Company tradenetwork. The increased ports came with new markets, newopportunities, as well as new forms of commodities. Further, thedecentralization that took the form of private trade allowancesserved as a motivation for the employees to stay for longer in theEast, connecting the existing English settlements in a considerablytighter communication network and exploring new ports. This fed backinto and promoted the lateral information transfer process which wasthe result of incorporation of considerable autonomy in the hands ofthe company’s local agents.

Inthis regard, scholars have underlined that the magnitude ofdecentralization alongside its systematic impacts on the conduct ofthe company trade meant that the remarkable expansion and growth ofentity did not emanate from centralization of the administrativeforms or imperialism rather profit-sharing and decentralization inthe larger organizational framework came with a creative capacitythat was crucial to the firm’s success in the long-term.


TheEIC had three separable components under its control. First, therewas social, political and economic environment , which had an effecton the internal state of the company. Second, there was thedecision-making component which, essentially, was the regulating andcontrolling mechanism. Lastly, there was the operational componentwhich took up the physical elements of the trade6.On the same note, scholars have underlined that the environmentalfactors came up as endogenous and exogenous to the internaloperations of the company. Further, the weather fluctuations, waroutbreaks, and failures of harvests that affected the economicposition of the company amounted to exogenous factors or inputs fromthe environment. It is also noteworthy that noteworthy and decisionsof the company that have an effect on the systematic external aspectslike consumer behavior and government policies amounted to outputsthat emanate from the trading system of the company, in which casethey were endogenous.

Governanceof the EIC

TheEast India Company had come up with numerous rules, orders,constitutions and by-laws aimed at safeguarding good governance andensuring the management of all its activities. For instance, thecommon seal of the company had to be under three locks held by threedirectors who were appointed by the Court of Directors every now andthen. This seal would only be opened in the presence of any two ofthese directors. On the same note, the Court of Directors wasrequired to keep a register pertaining to every bond for moniesborrowed at interest, as well as another register pertaining to allinstruments and bonds. These should be kept within the inspection ofthe directors who possessed custody of the company seal.

Onthe same note, no servant or officer affiliated to the company wasallowed to take any present, reward or fee, whether directly orindirectly, unless it was directly allowed by the statutes of theCourt of Directors. Further, none of the finances pertaining to thecompany could be invested at any place, whether in the stocks or inshipping without the permission of the General Court7.The directors were to be elected on an annual basis, with a publicnotice being given at least seven months prior to the electionperiod. This was to be delivered alongside the list of names ofmembers qualified to vote and followed up with a two-weeks notice forthe same.

Inaddition, the General Court was held on an annual basis in June. Inthis regard, a Committee of Seven was selected, out of which four ofthem formed a quorum and had the capacity or powers to inspect therules and by-laws8.They were also empowered to make enquiries regarding the executionand observance of the by-laws, as well as consider any additions,modifications and subtractions that should be made. Further, theywere to make a periodic report to the General Court regarding thesematters.

Inessence, it is clear that the Army of East India Company incorporateda well-defined code of governance comparable to the code of corporategovernance pertaining to a large number of present day corporations9.As much as there is historical evidence depicting the presence of alarge number of violations of this code, as well as the use of thesame by numerous top officials of the company through themanipulation of the orders and laws, the company incorporatedimmensely well-defined codes of corporate governance10.

Placeof the Private Army in the East India Company

Questionshave been asked regarding the role that the private army played inthe East India Company. Nevertheless, scholars have acknowledged thatCharles II’s charter to the company gave the entity the capacity tomake use of military force when necessary in the establishment oftrading stations11.This came in handy in the establishment of a large number ofwell-fortified trading posts in India. Further, the private armygained immense use in the 18thcentury when the autonomous regional princes were taking power awayfrom the declining Mughal Emperor in Delhi. The company, havingbecome increasingly unhappy with this development utilized theprivate army in the establishment of governmental control overimmense territories in India12.Indeed, the company had managed to conquer close to half of Indiawith some assistance from the British Army.

Further,it is noteworthy that all officers in the private army held dualranks, including a rank in the army and another one in theirregiment. Their position or rank in the regiment determined thethings that they did on a daily basis. The regiments did notincorporate the purchase system rather they based their promotions onthe seniority of an individual in the regiment, which amounted to oneof the fundamental reasons for the importance of the rank of theofficer in the regiment13.In instances where an officer had a position in the army for a longerperiod in the regiment, it was likely as a result of not having beentaken or posted to the regiment for a period when they were initiallycommissioned. As much as there existed no formal purchase system,there existed an informal system in the East India Company Army inwhich the senior officers were given a monetary incentive by thelower rank officers to retire so as to allow junior officers to makea step up14.


Banerjee,D.N. EarlyAdministrative System of the East India Company in Bengal,Vol I (1765-1774), Longman, Green &amp Co. Ltd, 1943.

Carey,W.H. TheGood Old Days of Honorable John Company,Edited by Prof. Nisith R. Ray, Riddhi India Calcutta, First Edition1882, Riddhi Edition 1980.

Chaudhuri,K.N. TheEnglish East India Company: The Study of an Early Joint StockCompany, 1600-1640,Frank Cass &amp Co Ltd, London, 1965.

Chaudhuri,K.N. TheTrading World of Asia and the English East India Company- 1660-1760,Cambridge University Press, Cambridge, 1978.

Edwardes,Michael.A History of India,The New English Library, London, 1967.

Farrington,Anthony. Trading Places: the East India Company and Asia, HistoryToday,2002.

Keay,John. TheHonourable Company, A History of The East India Company,Harper Collins, London, 1993.

Kortmann,Sebastian.&nbspTheRelationship between Organizational Structure and OrganizationalAmbidexterity A Comparison between Manufacturing and Service Firms.Wiesbaden: Springer Gabler, 2012

&nbspLawson,Philip. TheEast India Company-A History,Longman Group, UK, 1993

Micklethwait,John &amp Adrian Wooldridge. TheCompany: A short history of a revolutionary idea,Modern Library Chronicles, 2003.

Wilson,John E. AnEmpire of Free Trade: The East India Company and the making of theColonial Marketplace,Addison Wesley Longman Higher Education, 2003.

1 Kortmann, Sebastian.&nbspThe Relationship between Organizational Structure and Organizational Ambidexterity A Comparison between Manufacturing and Service Firms. Wiesbaden: Springer Gabler, 2012

2 Kortmann, Sebastian.&nbspThe Relationship between Organizational Structure and Organizational Ambidexterity A Comparison between Manufacturing and Service Firms. Wiesbaden: Springer Gabler, 2012

3 Farrington, Anthony. Trading Places: the East India Company and Asia, History Today, 2002.

4 Edwardes, Michael. A History of India, The New English Library, London, 1967.

5 Keay, John. The Honourable Company, A History of The East India Company, Harper Collins, London, 1993.

6 Wilson, John E. An Empire of Free Trade: The East India Company and the making of the Colonial Marketplace, Addison Wesley Longman Higher Education, 2003.

7 Keay, John. The Honourable Company, A History of The East India Company, Harper Collins, London, 1993.

8 Micklethwait, John &amp Adrian Wooldridge. The Company: A short history of a revolutionary idea, Modern Library Chronicles, 2003.

9 Carey, W.H. The Good Old Days of Honorable John Company, Edited by Prof. Nisith R. Ray, Riddhi India Calcutta, First Edition 1882, Riddhi Edition 1980

10 Chaudhuri, K.N. The Trading World of Asia and the English East India Company- 1660-1760, Cambridge University Press, Cambridge, 1978.

11 Chaudhuri, K.N. The Trading World of Asia and the English East India Company- 1660-1760, Cambridge University Press, Cambridge, 1978.

12 Carey, W.H. The Good Old Days of Honorable John Company, Edited by Prof. Nisith R. Ray, Riddhi India Calcutta, First Edition 1882, Riddhi Edition 1980

13 Banerjee, D.N. Early Administrative System of the East India Company in Bengal, Vol I (1765-1774), Longman, Green &amp Co. Ltd, 1943.

14 &nbspLawson, Philip. The East India Company-A History, Longman Group, UK, 1993