While corporations in developed countries have diffuse ownership, Business Groups (BGs) in emerging countries usually show high industry diversification, and shareholder concentration. BGs commonly outperform multinational firms in their home country and, sometimes, even
internationally. In order to understand the BG phenomenon, we have analyzed BG development in Brazil from a historical perspective, based on the Institutional Theory. Our research describes how the vast majority of BGs emerged and developed in Brazil under industrial policy benefits,
in the early 20th century while others flourished during the privatization wave in the 1990s. Whether state-owned or private, BGs are a product of deep state intervention in the economy, and they have endured an economic stabilization process, a huge privatization program, and promarket reforms. The historical evolution of BGs in Brazil shows how, from their inception to present days, they have benefited from public policies and thrived on the institutional environment. Our analysis indicates that, in the near future, most Brazilian BGs are likely to experience favorable conditions conducive to expansion.
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