Networks and entrepreneurship: The modernization of the textile business in Porfirian Mexico

Business History Review

Volumn 82, Issue 3, 2008, Pages 475-502

  Gómez Galvarriato, Aurora ^a  

^a CENTRO DE INVESTIGACIÓN Y DOCENCIA ECONÓMICAS   (Mexico)

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EID: 57849160392     PISSN: 00076805     EISSN: None     Source Type: Journal    
DOI: 10.1017/s0007680500082611     Document Type: Review

References (92)

1. Alfred D. Chandler Jr. has written that the combined impact of technology and market growth facilitated the rise of U.S. managerial business enterprises during the late nineteenth century. In textiles, a labor-intensive industry, the large, integrated firm had few competitive advantages. However, the emergence of large-scale manufacture in the New England textile industry, carried out by limited liability corporations, has been considered part of the same process. See Alfred D. Chandler Jr., Scate and Scope: The Dynamics of Industrial Capitalism (Cambridge, Mass., 1990), 235-94;
2. and William Lazonick, Competitive Advantage on the Shopfloor (Cambridge, Mass., 1990).
3. However, firms in diverse countries and regions adapted to the new technologies in various ways, depending on the particular conditions they faced. Regional variations in the textile industry have been studied by Phillip Scranton, who examined its evolution in Philadelphia, and by Mary B. Rose, who has written about its history in Great Britain. See Phillip Scranton, Proprietary Capitalism: The Textile Manufacture at Philadelphia, 1800-1885 (Cambridge, U.K., 1983);
4. Mary B. Rose, Firms, Networks, and Business Values (Cambridge, U.K., 2000).
5. Although immigrants came from several villages in the valley of Ubaye, they have been called Barcelonnettes because this was the most important village in the area.
6. As defined in Mark Granovetter, "The Strength of Weak Ties," American Journal of Sociology 78 (May 1973): 1360-80.
7. Institutions are defined as those imposing formal and informal rules that constrain individual behavior and shape human interaction. Douglass C. North, Institutions, Institutional Change and Economic Performance (Cambridge, Mass. 1990), 1-5.
8. Rose, Firms, Networks, and Business Values, 9.
9. Mark Casson, The Entrepreneur (London, 1982), 302-7,
10. and The Economics of Business Culture: Game Theory, Transaction Costs, and Economic Performance (Oxford, 1991).
11. Granovetter, "The Strength of Weak Ties."
12. Mark Casson, "Institutional Economics and Business History: A Way Forward?" Business History 39 (Oct. 1997): 151-71.
13. Mary B. Rose, "International Competition and Strategic Response in the Textile Industries since 1870," Business History 32 (Oct. 1990): 1-8.
14. In the putting-out system, middlemen residing in a commercial center coordinate the various stages of production, from the purchase of raw materials to the sale of finished products, supplying, or "putting out," raw materials to artisans who manufacture the products in their households. See Guy Thomson, "The Cotton Textile Industry in Puebla during the Eighteenth and Early Nineteenth Centuries," in The Economies of Mexico and Peru during the Late Colonial Period, 1760-1810, ed. Nils Jacobsen and Hans Jurgen Puhle (Berlin, 1986);
15. and Manuel Miño Grijalva, La Protoindustria Colonial Hispanoamericana (Mexico City, 1993).
16. Rafael Dobado, Aurora Gómez-Galvarriato, and Jeffrey Williamson, "Mexican Exceptionalism: Globalization and Deindustrialization, 1750-1877," Journal of Economic History 68 (Sept. 2008): 1-53.
17. Aurora Gómez-Galvarriato, "Industrial Development under Institutional Frailty: The Development of the Mexican Textile Industry in the Nineteenth Century," Revista de Historia Económica, 17 (Special Issue, 1999): 191-223.
18. According to John Coatsworth, railroad direct benefits explain between 29 percent and 50 percent of the economic growth during the Porfirian era. John H. Coatsworth, Growth Against Development: The Economic Impact of Railroads in Porfirian Mexico (Delkalb, 111., 1981), 116-17.
19. Carlos Marichal, "Obstacles to the Development of Capital Markets in Nineteenth-Century Mexico," in How Latin America Fell Behind, ed. Stephen Haber (Stanford, 1997), 127-32.
20. Edward Beatty, "Commercial Policy in Porfirian Mexico: The Structure of Protection," in The Mexican Economy, 1870-1930, ed. Jeffrey L. Borzt and Stephen Haber (Stanford, 2002), 205-52.
21. Noel Maurer and Tridib Scharma, "Enforcing Property Rights through Reputation: Mexico's Early Industrialization, 1878-1913," Journal of Economic History 61 (Dec. 2001): 925-55.
22. Noel Maurer and Stephen Haber, "Institutional Change and Economic Growth: Banks, Financial Markets, and Mexican Industrialization, 1878-1913," in The Mexican Economy, 1870-1930, ed. Jeffrey Borzt and Stephen Haber (Stanford, 2002), 23-49.
23. Aldo Musacchio and Ian Read, "Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil during Early Industrialization, " Enterprise and Society 8 (Dec. 2007): 842-80.
24. Gonzalo Castañeda, "The Barcelonnettes: An Example of Network-Entrepreneurs in Nineteenth-Century Mexico: An Explanation Based on a Theory of Bounded Rational Choice with Social Embededness," document de treball no. 04/2, Department d'Economia de !'Empresa, Universitat Autònoma de Barcelona (Nov. 2004).
25. Patrice Gouy, Péregrigations des "Barcelonnettes" au Mexique (Grenoble, 1980), 21-38.
26. Jean Meyer, "Les Français au Mexique au XIXe Siècle," Cahiers des Ameriques Latines 9-10 (1974): 43-86.
27. See, for example, "L'aventure du départ," "Les difficultés rencontrées au Mexique," "Les Lavergans àMorelia," and "Extraits de lettre et entretiens," in Maurice Proal and Martin Charpenel, L'Empire Barcelonnette au Mexique (Marseille, 1986), 104-21;
28. Meyer, "Les Français au Mexique au XIXe Siècle," 58-59.
29. Aurora Gómez-Galvarriato, "The Impact of Revolution: Business and Labor in the Mexican Textile Industry, Orizaba, Veracruz, 1900-1930," Ph.D. diss., Harvard University, 1999.
30. Chandler, Scale and Scope, 332-34.
31. Auguste Genin, Les Français au Mexique du XVIe siècle a nos jours (Paris, 1931), 364.
32. Meyer, "Les Français au Mexique au XIXe Siècle," 62.
33. Jean-Louis D'Anglade, Un Grand Patron Barcelonnette au Mexique: Joseph Ollivier et sa famille (Sabença de la Valéia, 2006), 35-51.
34. Ibid., 59-62.
35. Javier Pérez Siller, "Inversiones Francesas en la Modernidad Porfirista: Mecanismos y Actores," in México y Francia: Memoria de una Sensibilidad Común-Siglos XIX-XX, vol. 2, ed. Javier Pérez-Siller and Chantal Cramussel (Mexico City, 2004), 95.
36. From 320 francs to 20 francs for 100 kilograms of merchandise. Meyer, "Les Français au Mexique au XIXe Siècle," 63.
37. D'Anglade, Un Grand Patron, 65.
38. Ibid., 76-79;
39. Archivo de Notarías de la Ciudad de México, Fondo Antiguo, Notary Ignacio Cossio, Acta 5 no. 57, 3 July 1868.
40. This is one of the main features of the Barcelonnette network according to the model developed by Castañeda in "The Barcelonnettes: An Example of Network-Entrepreneurs in XIX Century Mexico."
41. D'Anglade, Un Grand Patron, 110-14.
42. Archivo de Notarías de la Ciudad de México, Fondo Antiguo, Notary Ignacio Burgoa, Acta 255, 3 June 1879.
43. D'Anglade, Un Grand Patron, 200-2.
44. Ibid., 173-92.
45. Ibid., 165-68.
46. Meyer, "Les Français au Mexique au XIXe Siècle," 64;
47. Luis Everaert, Centenario, 1889-1989 (Mexico 1989), 60.
48. The new association was formed by J. Ollivier and Co.; J. Tron and Co.; J. B. Ebrard and Co.; Signoret-Honnorat and Co., Lambert-Reynaud and Co., Garcin-Faudon and Co., S. Robert and Co., Richaud-Aubert and Co., and N. Bellon and Payan and Co. François Arnaud, Documents et Notices Historiques sur la Valée de Barcelonnette (Marseille, 1981), 58.
49. Gómez-Galvarriato, "The Impact of Revolution," 74;
50. Everaert, Centenario, 64-67.
51. Alejandro Reynaud, Eugenio Signoret, Sebastián Robert, Fermín Manuel, Paulino Richaud, and José Jacques. Ciudad Mendoza Veracruz, Actas de la Asambla General (hereafter AAG), Asamblea Constitutiva (organization meeting), 24 Nov. 1896, art.1, Archivo de la Compañía Industrial Veracruzana (hereafter CV).
52. El Economista Mexicano, 6 July 1904, 401.
53. Twenty-four companies (twelve Barcelonnnette, twelve made up of other nationalities) grouped together in 1889 to appoint Manuel Pérez and M. Dávila to recover their default credits. D'Anglade, Un Grand Patron, 152.
54. Ibid., 148.
55. Ibid., 249.
56. Gouy, Péregrigations des "Barcelonnettes," 60.
57. The data from the Mexico City Notarial Archive were taken from a database built with information taken from twenty notaries. In 1907 these notaries made up 95 percent of the total firm contracts of 1907. There were seventy-six notaries working in Mexico City during this period. The secondary sources I used were: Erika Y. Galán Amaro, "Los Barcelonnettes en Mexico, un ejemplo de espíritu empresarial (1821-1930)," B.A. thesis, Universidad de las Américas Puebla, 2005;
58. Leticia Gamboa Ojeda, Au-Delà de Lócéan: Les Barcelonnettes à Puebla, 1845-1928 (Sabença de Ia Valéia, 2004);
59. and D'Anglade, Un Grand Patron;
60. Pérez-Siller, "Inversiones Francesas en la Modernidad Porfirista," in La Banca Regional en México (1870-1930), ed. Mario Cerutti and Carlos Marichal (Mexico City, 2003). In the case of banks, I only included Barcelonnette partners.
61. This measure is the binary density reported by the UCINET 6 software for Social Network Analysis.
62. Musacchio and Read, "Bankers, Industrialists, and their Cliques," 860.
63. This finding would qualify the importance of government officials in Porfirian business networks argued in Armando Razo, Social Foundations of Limited Dictatorship: Networks and Private Protection During Mexico's Early Industrialization (Stanford, 2008).
64. I follow the methodology used in Musacchio and Read, "Bankers, Industrialists, and Their Cliques."
65. Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 209-24.
66. François Arnaud, "Description des Magasins," quoted in Proal and Charpenel, L 'Empire Barcelonnette au Mexique, 104.
67. "Le Premier Grand Magasin Construit à Mexico," Le Mexique, 1904, quoted by Gouy, Péregrigations des "Barcelonnettes," 60-62.
68. Proal and Charpenel, L 'Empire Barcelonnette au Mexique, 34-60.
69. Le Mexique, 1904, quoted in Gouy, Péregrigations des "Barcelonnettes," 60-63.
70. Ibid.
71. Mario Cerutti, Burguesía, Capitales e Industria en el Norte de México (Mexico City, 1992), 231-32.
72. Armando Razo and Stephen Haber, "The Rate of Growth of Productivity in Mexico, 1850-1933: Evidence from the Cotton Industry," Journal of Latin American Studies 30 (Oct. 1998): 481-517.
73. Gómez-Galvarriato, "The Impact of Revolution," 86-87.
74. Price list, 1907, CV. It includes 74 different items.
75. Dawn Keremitsis, La Industria Textil Mexicana en el Siglo XIX (Mexico City, 1973), 102;
76. and Ernesto Galarza, La Industria Eléctrica en México (Mexico City, 1941), 12.
77. Mario Trujillo Bolio, "La Fábrica Magdalena Contreras (1836-1910)," in Historia de las Grandes Empresas en México, 1850-1930, ed. Carlos Manchal and Mario Cerutti (Mexico City, 1997), 245-74.
78. Galarza, La Industria Eléctrica en México, 12-14.
79. Stephen Haber, "Financial Markets and Industrial Development: A Comparative Study of Government Regulation, Financial Innovation, and Industrial Structure in Brazil and Mexico, 1840-1930," in How Latin America Fell Behind, ed. Stephen Haber (Stanford, 1997), 163.
80. They were the companies listed in Table 3, with the exception of San Ildefonso (which produced woolens) and the addition of La Hormiga S.A. "Manifestaciones presentadas por los fabricantes de hilados y tejidos de algodón durante enero a junio de 1912," Archivo General de la Nación, Fondo Departamento del Trabajo, 5/4/4.
81. This argument is developed convincingly by Naomi Lamoreaux, The Great Merger Movement in American Business, 1895-1904 (Cambridge, Mass., 1989).
82. Chandler, The Visible Hand, 9-10.
83. Asamblea Constitutiva, 24 Nov. 1896, Art. 35, General Shareholders Meeting minutebook, CV.
84. This was the case for Joseph Signoret, president of the CTVSA board in 1897 and 19061907. He was head of A. Reynaud & Co. in Mexico and manager of Las Fábricas Universales. Sébastian Robert was vice president of the CIVSA board in 1896; from 1897 to 1911 the vice president was his associate, Emile Meyrán, head of S. Robert & Co. in Mexico and manager of El Centro Mercantil and La Valenciana.
85. Board Meeting, minute-book, 3 Sept. 1900, CV (henceforth AC).
86. AC, 19 Jan. 1897, CV.
87. Anexos a la declaración del Income-Tax, Resumen de Profesionistas, Empleados y Obreros con los emolumentos que percibieron en el año de 1926, CV.
88. AC, 28 Mar. 1911;
89. AAG, 25 Apr. 1910, CV.
90. For example, in 1917, CIVSA's general manager asked the Advisory Committee in Paris to approve the $2.50 dividend per share suggested by the board. AC, 12 Apr. 1917, CV.
91. Although CIVSA got several short-term loans from banks, which facilitated day-to-day operations, its investment capital came from the shares bought mostly by Barcelonnette entrepreneurs. The cases of CIDOSA and CIASA were similar. See Aurora Gómez-Galvarriato and Gabriela Recio, "The Indispensable Service of Banks: Commercial Transactions, Industry, and Banking in Revolutionary Mexico," Enterprise and Society 8 (Mar. 2007): 84-91. In the case of smaller textile mills, some investment capital came from banks, yet even in that case the Barcelonnette network was crucial, since insider lending prevailed, as described in Haber and Maurer, "Institutional Change and Economic Growth."
92. Haber, "Financial Markets," 163.