Effects of the environment on illegal cartel activity
Abstract
Purpose
Using resource dependency theory, the purpose of this paper is to examine what elements in the business environment may be associated with the formation and continuance of cartels.
Design/methodology/approach
The authors employ a unique data set of 148 cartel data points from the 1970s to 2008 which have at least one American company involved to quantitatively test causal relationships. The authors also interview key class action anti-trust attorneys for their views and opinions on the impact of these environmental factors on cartel formation and continuance.
Findings
The authors find statistically significant relationships between the pursuit and maintenance of industry profits and the dynamism in the industry, and illegal behavior as represented through price fixing by business cartels. The authors find that in the attorneys’ opinion, it is also the pursuit of individual corporate profits and munificence that are associated with these cartels.
Practical implications
This research furthers the understanding of organizational deviance which is critical given its impact on organizations, individuals, regulators, law enforcement, and the general public.
Originality/value
This research is a first step in considering cartel activity in a way that encompasses external influences in a new and innovative manner and as a tool to help researchers and practitioners better understand how organizational deviance, as manifested through illegal corporate activity, can be anticipated, identified, and prevented.
Keywords
Citation
Kunsch, D.W., Schnarr, K. and Rowe, W.G. (2016), "Effects of the environment on illegal cartel activity", Journal of Strategy and Management, Vol. 9 No. 3, pp. 344-360. https://doi.org/10.1108/JSMA-09-2015-0075
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited