Corporate organization and the failure of collective action: Colombian business during the presidency of Ernesto Samper (1994--1998)

This dissertation analyzes the failure of Colombian business associations to mount an effective collective response to the political crisis set off by the drug-scandal surrounding the administration of President Ernesto Samper (1994--1998). This failure of business collective action contrasts with the far more effective challenge mounted by the associations to the Rojas Pinilla dictatorship in 1957, which resulted in the ousting of General Rojas Pinilla and the return to civilian rule. The dissertation argues that the difference in outcomes in the two political crises is explained by the emergence of large business conglomerates (grupos) in Colombia in the intervening decades. The behavior of the grupos in the 1990s, who opted in favor of supporting the administration, ultimately undermined the, attempt by the business associations to muster a collective response to the political crisis, against the background of an acute economic downturn and the prospect of U.S. economic sanctions. The direct political access enjoyed by the grupos and their weight within their respective economic sectors, it is argued, represent key factors in explaining the inability of the business associations to promote the interests of Colombian business as a collectivity.; In addition to explaining how grupos undermine business collective action, the dissertation analyzes why the grupos supported Samper. In part, grupos benefited from the substantial opportunities for investment offered under the Samper administration as part of an ongoing privatization process. Also, grupos had contributed generously to Samper's campaign, bolstering their interest in maintaining him in power in the hope he would deliver on grupo interests. Yet explanations centered on rent-seeking and on sunk costs are not sufficient to explain grupo support of the president. This dissertation suggests that the more important reason underlying grupo behavior in the crisis was their unique dependence on the state. By the nature of their main economic activities (telecommunications, financial sector) and their size, grupos depend on the state for credit, contracts, and regulation like no other business actor in Colombia. Hence, " grupos," a form of business organization prevalent throughout Latin America, are less inclined to act as an independent economic pressure group when confronted with political crises.