Partners in Crime: The Effects of Diversity on The Longevity of Interfirm Misconduct
Author:
Dr. Fabrice LUMINEAU
Assistant Professor
Krannert School of Management
Purdue University
Abstract:
Despite the importance of organizational misconduct, we still do not know much about collective misconduct between firms. In this study, we get a better understanding of how the profile of the partners involved in collective misconduct affects the longevity of their joint activity. Drawing upon diversity theory, we leverage a distinction between three types of diversity—i.e., variety of experience, cultural separation and power disparity—in collective organizational misconduct between firms and we study their respective influence on the longevity of interfirm misconduct. Using a sample of cartels in the European Union, our empirical analysis gives support to our main arguments: the longevity of interfirm misconduct tends to be increased by the level of variety of experience and power disparity between partners but reduced by their level of cultural separation. Implications for the literature on organizational misconduct and organizational diversity are discussed.
