Competitive Pressure and Corporate Crime

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may September 2013Abstract This paper explores the relationship between the intensity of competition in product markets and firms' incentives to lower their production costs by illegal means. Our framework combines a Salop circle with a crime modelà la Becker, allowing us to differentiate between several measures for the intensity of competition. We establish that more firms in the industry (i.e., lower entry costs) reduce the crime rate. Furthermore, whether more intense competition due to the increased substitutability of products raises or lowers the prevalence of criminal behavior can be clearly linked to the impact of such behavior on firms' production costs. Finally, we find that stricter law enforcement may entice more firms to enter the market, despite the higher expected sanction in the event of wrongdoing.

Corruption and innovation: the importance of competition

“…Firms in competitive markets are far less lucrative, although perhaps the desire to innovate is greater to find ways to race ahead of the pack [1]. In such cases, firms could be willing to pay large bribes to overcome bureaucratic obstacles (Dechenaux and Samuel, 2018; Diaby and Sylwester, 2015) or to reduce costs (Baumann and Friehe, 2016; Shleifer, 2004) to obtain advantages over their rivals. Monopolists could have less desire to innovate but rather enjoy the status quo.…”

Job demands and burnout: The multilevel boundary conditions of collective trust and competitive pressure

“…It can be advantageous for organizations’ research and development processes and for innovative product development (Boone, 2000). However, increased competitive pressure may be problematic in other respects, such as pressure to reduce costs can sometimes motivate people to resort to unlawful practices (Baumann and Friehe, 2016). It is worth noting that competitive pressure is distinct conceptually from internal competitive climate, which has been investigated within the JD-R framework (see Jaworski and Kohli, 1993; Spurk et al, 2021); further, that the link between external competitive pressure and employee well-being may not be as inconsistent as it appears.…”

Self‐reporting and Market Structure

“…Although previous literature has examined some aspects of optimal enforcement in oligopolies (e.g. Baumann and Friehe 2016), no study considers characteristics of the optimal market size in relation to enforcement. As we see, studying this problem reveals an important finding concerning the benefit of self-reporting.…”