Only one way to raise capital? Colombian business groups and the dawn of internal markets

Abstract: What was the relationship between the sources of capital and the creation of internal markets in business groups in Colombia? A detailed history of the evolution of ownership schemes and capital structure of the 25 largest Colombian business groups between 1950 and 1975 answers this question. The business history and varieties of capitalism literatures have identified this organisational structure as one of the key characteristics of Latin American business and economic development. Business groups in Colombia have been key players since the second half of the twentieth century, when they adopted a new organisational structure that allowed the internalisation of capital provided by new financial legislation promoted by the World Bank. Analysis of previously unknown historical evidence explains the capital structure of the group-affiliated firms. Examples of specific groups illustrate the analysis.