DEVELOPMENT OF BUSINESS GROUPS IN BRAZIL

Abstract

Objective: This work aims to understand and analyze the development of large business groups, or Business Groups (BG) in Brazil. Methodology: The article is based on a historical analysis focused on the longitudinal analysis of cases from the Brazilian context to uncover the development trajectories of BG. Results: The historical analysis reveals that BGs in Brazil benefited from institutional failures, some of which were generated in times of crisis, and knew how to take advantage of dynamic institutional arrangements during pro-market reforms, such as the use of government incentives to leverage their participation in the privatization process. Consequences of this capacity include the accelerated growth of several groups without the need for dispersion of capital and control, and the successful implementation of strategies such as vertical integration through acquisitions. Originality and value: By showing how BGs emerged and developed in Brazil, taking advantage of opportunities offered by local institutional arrangements, the study presents the mechanisms that explain the persistence of BGs' superior performance over a long period of time.