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?
We examine whether in Mexico businessmen relied more on
networks of interlocking boards of directors and other informal
arrangements to do business than in Brazil. 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 had 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).