Organized Crime and Firms: Evidence from Anti-Mafia Enforcement Actions

70 Pages Posted: 23 Sep 2018 Last revised: 27 Sep 2019

See all articles by Pablo Slutzky

Pablo Slutzky

University of Maryland - Robert H. Smith School of Business

Stefan Zeume

University of Illinois at Urbana-Champaign

Date Written: September 25, 2019

Abstract

We exploit staggered municipality-level anti-mafia enforcement actions over the period 1995–2015 in Italy to study the effect of organized crime on firms. Following anti-mafia enforcement actions, we find increases in competition among firms, innovation activity, and competition for public procurement contracts. Firms that do not exit after a weakening of organized crime shrink in size and experience a reduction in profitability, particularly subsequent to higher enforcement intensity. These results are more pronounced among firms founded during the heyday of the mafia and operating in the non-tradable sector. Our findings are consistent with accounts of organized crime groups acting as a barrier to entry and affecting economic growth.

Keywords: Organized Crime, Corruption, Competition, Innovation, Money Laundering

JEL Classification: G30, G39, K42

Suggested Citation

Slutzky, Pablo and Zeume, Stefan, Organized Crime and Firms: Evidence from Anti-Mafia Enforcement Actions (September 25, 2019). Available at SSRN: https://ssrn.com/abstract=3242495 or http://dx.doi.org/10.2139/ssrn.3242495

Pablo Slutzky

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Stefan Zeume (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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