Abstract

http://ssrn.com/abstract=2005779
 
 

References (47)



 
 

Citations (1)



 


 



Customer-Driven Misconduct: How Competition Corrupts Business Practices


Victor Manuel Bennett


Duke University - Fuqua School of Business; Duke Innovation & Entrepreneurship Initiative

Lamar Pierce


Washington University, Saint Louis - John M. Olin School of Business

Jason Snyder


University of California, Los Angeles (UCLA) - Anderson School of Management

Michael W. Toffel


Harvard Business School (HBS) - Technology & Operations Management Unit

October 8, 2012

Management Science 59 (8), 1725-1742

Abstract:     
Competition among firms yields many benefits but can also encourage firms to engage in corrupt or unethical activities. We argue that competition can lead organizations to provide services that customers demand but that violate government regulations, especially when price competition is restricted. Using 28 million vehicle emissions tests from more than 11,000 facilities, we show that increased competition is associated with greater inspection leniency, a service quality attribute that customers value but is illegal and socially costly. Firms with more competitors pass customer vehicles at higher rates and are more likely to lose customers whom they fail, suggesting that competition intensifies pressure on facilities to provide illegal leniency. We also show that, at least in markets in which pricing is restricted, firms use corrupt and unethical practices as an entry strategy.

Number of Pages in PDF File: 33


Open PDF in Browser Download This Paper

Date posted: February 16, 2012 ; Last revised: December 11, 2013

Suggested Citation

Bennett, Victor Manuel and Pierce, Lamar and Snyder, Jason and Toffel, Michael W., Customer-Driven Misconduct: How Competition Corrupts Business Practices (October 8, 2012). Management Science 59 (8), 1725-1742. Available at SSRN: http://ssrn.com/abstract=2005779 or http://dx.doi.org/10.2139/ssrn.2005779

Contact Information

Victor Manuel Bennett
Duke University - Fuqua School of Business ( email )
Box 90120
Durham, NC 27708-0120
United States
HOME PAGE: http://sites.duke.edu/bennett/
Duke Innovation & Entrepreneurship Initiative ( email )
215 Morris St., Suite 300
Durham, NC 27701
United States

Lamar Pierce
Washington University, Saint Louis - John M. Olin School of Business ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-5205 (Phone)
Jason Snyder
University of California, Los Angeles (UCLA) - Anderson School of Management ( email )
110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
Michael W. Toffel (Contact Author)
Harvard Business School (HBS) - Technology & Operations Management Unit ( email )
Boston, MA 02163
United States
617.384.8043 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 1,433
Downloads: 276
Download Rank: 78,438
References:  47
Citations:  1

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.250 seconds