Partners in crime: The effects of diversity on the longevity of cartels

Abstract

Despite the importance of organizational misconduct, still not much is known about coordinated misconduct between firms. In this study, we seek a better understanding of how the profile of the partners involved in cartels affects the longevity of their joint misconduct activities. Drawing upon diversity theory, we leverage a distinction between three types of diversity-variety of age-based experience, separation in uncertainty avoidance, and power disparity-in collective organizational misconduct between firms, and study their respective influence on the longevity of cartels. Our empirical analysis gives support to our main arguments: the longevity of cartels tends to be increased by the level of variety of age-based experience and power disparity between partners but reduced by their level of separation in uncertainty avoidance. Implications for the literature on organizational misconduct are discussed.