Business Enterprises and Entrepreneurship
Edited by Geoffrey Jones and Andrea Lluch
Chapter 3: Multinationals, business groups, and Chile’s energy politics
This chapter studies the relationship between Chilean business groups, foreign oil multinationals, and Chile’s energy politics between 1913 and 2005. The chapter employs Nathaniel Leff’s definition of business groups as a ‘multicompany firm which transacts in different markets . . . under a common administrative and financial control [where] participants are linked by relations of interpersonal trust, on the basis of similar personal, ethnic, commercial, background’. Business groups have been crucial actors in the industrialization process of the major Latin American and Asian countries. They are characterized for having their roots in the family business, a diversified portfolio of investments in a wide variety of sectors (banking, manufacturing, and trade), and close relationship with policy makers. In this chapter I show how business groups can become an important tool for industrializing net oil-importing countries aiming to increase domestic control of the oil industry, without expropriating foreign property. The Chilean state forced the multinationals to create a cartel with a domestic firm, and initially the foreign companies opposed this. In the long term, however, the multinational enterprises (MNEs) benefited from this arrangement because of the domestic firm’s affiliation with the local business groups.
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