The Role of Economic Groups in Latin America

The largest firms in Latin America are a mix of subsidiaries of foreign multinational enterprises, government-owned companies such as oil companies, and locally-owned Grupos that are involved in multiple businesses. Among private-sector, locally-owned firms, the grupos are the dominant structure in Latin America for very large firms. This chapter explores the grupo form, which also dominates in many other countries around the world. Latin American grupos are often family-based or owned by a few dominant owners. The Latin American grupos tend to possess competitive strengths such as domination of local distribution channels and diversification of industry sectors, which are often difficult to replicate overseas. A set of major grupos from several countries - including Ardila Lulle, Carso, Cisneros, Luksic, and Techint - are described and common competitive strengths identified. This form is likely to persist for a long while in Latin America, and the challenge for these firms is to build competitive advantages that are transferable across national boundaries.