Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization

38 Pages Posted: 7 Dec 2006

See all articles by Aldo Musacchio

Aldo Musacchio

Brandeis University- International Business School; National Bureau of Economic Research

Ian Read

University of California, Berkeley

Multiple version iconThere are 2 versions of this paper

Date Written: 2006


The historiographies of Mexico and Brazil have implicitly stated that business networks were crucial for the initial industrialization of these two countries. Recently, differing visions on the importance of business networks have arisen. In the case of Mexico, the literature argues that entrepreneurs relied heavily on an informal institutional structure to obtain necessary resources and information. In contrast, the recent historiography of Brazil suggests that after 1890 the network of corporate relations became less important for entrepreneurs trying to obtain capital and concessions, once the institutions promoted financial markets and easy entry for new businesses. Did entrepreneurs in Brazil and Mexico organize their networks differently to deal with the different institutional settings? How can we compare the impact of the institutional structure of Mexico and Brazil on the networks of entrepreneurs and entrepreneurial finance in general? We explore these questions by looking at the networks of interlocking boards of directors of major joint stock companies in Brazil and Mexico in 1909. We test whether in Mexico businessmen relied more on networks and other informal arrangements to do business than in Brazil. In Brazil, we expect to find less reliance of businesses on networks given that there was a more sophisticated system of formal institutions to mediate transactions and obtain capital and information. Our hypothesis is confirmed by three related results: 1) the total number of connections (i.e., the density of the network) was higher in Mexico than Brazil; 2) In Mexico there was one dense core network, while in Brazil we find fairly dispersed clusters of corporate board interlocks; and most importantly, 3) politicians played a more important role in the Mexican network of corporate directors than their counterparts in Brazil. Interestingly, even though Brazil and Mexico relied on very different institutional structures, both countries grew at similar rates of growth between 1890 and 1913. However, the dense and exclusive Mexican network might have ended up increasing the social and political tensions that led to the Mexican Revolution (1910-1920).

Keywords: Brazil, Mexico, Networks, economic sociology, business history, institutions, informal institutions, regulation of entry

JEL Classification: N26, N46, N86, O17, K22

Suggested Citation

Musacchio, Aldo and Read, Ian, Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization (2006). Available at SSRN: or

Aldo Musacchio (Contact Author)

Brandeis University- International Business School ( email )

415 South Street MC 32
Waltham, MA 02454-9110
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States


Ian Read

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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