ENFORCING PROPERTY RIGHTS THROUGH REPUTATION: MEXICO'S EARLY INDUSTRIALIZATION, 1878–1913

Abstract

Mexico's initial industrialization was based on firms that were “grouped”: that is, linked to other firms through close affiliations with a common bank. Most explanations for the prevalence of groups are based on increasing returns or missing formal capital markets. We propose a simpler explanation that better fits the facts of Mexican history. In the absence of secure property rights, tangible collateral could not credibly be offered to creditors; but there remained the possibility of using reputation as a form of intangible collateral. In such circumstances, firms had incentives to group together for purposes of mutual monitoring and insurance.

Shades of FDI Capital, Business Group Affiliation and Excess Value Creation

“…Internal market of business group provides managerial competency and expertise in various areas that gives advantage to BG affiliated firm in labor market. Internal market of business group provides reputation, brand equity and BG affiliated firm gets benefited in product market [51]. The positive value is generated to a particular firm through mimicking the market mechanism by their business groups in incomplete and inefficient market.…”

Risk Planning, Takeover, and Stabilizing Performance in Transition Economies

“…The internal market of foreign investment provides managerial competency and expertise in various areas that gives advantage to MFC-affiliated firms in the labor market. The internal market of multicriteria analysis provides reputation and brand equity, and MFC affiliated-firms benefit in the product market (Maurer and Sharma, 2001). The positive value is generated to a particular firm through mimicking the market mechanism by their multicriteria analysis in incomplete and inefficient market.…”

Law and Finance c. 1900

“…Most of the papers in this literature use estimates of private credit over GDP rather than bond markets as the dependent variable. Private credit to GDP is a better measure of credit market development, but it is not clear that it should be related to differences in legal traditions because bank and other forms of private credit do not need formal contract enforcement mechanisms in order to grow, personal connections and other forms of cooperation between banks and companies usually being relied upon to facilitate the enforcement of such contracts (Petersen and Rajan, 1994;Maurer and Sharma, 2001).…”