The Supportive Factors of Firms’ Collusive Behavior: Empirical Evidence from Cartels in the European Union

What is it about?

While cartels can be highly detrimental to society and create important economic and social costs for different stakeholders, the literature on organization studies has focused very little on cartels to date. In particular, we still do not know much about firms’ reasons for taking part in cartels. In this study, we build on the rational choice perspective in organizational misconduct to investigate the conditions supporting firms’ collusive behavior. We organize our theoretical arguments around the factors related to motivation and opportunity. Using a sample of cartels in the European Union, our empirical analysis gives evidence for our main arguments: the propensity to participate to a cartel is supported not only by the characteristics of the firm, but also by internal factors interacting with the attributes of the environment in which the firm is embedded. Implications for firms and policy makers are discussed.

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