The Strategic Imperative of Transnational Criminal Violence: An International Business Perspective

Abstract

Drawing on ideas from transaction cost economics, competitive strategy, and state complicity, we examine the determinants of levels of transnational criminal violence, a significant element of SDG 16 Peace, Justice and Strong Institutions. Within illegitimate markets, criminal enterprises face restricted choices in both contract enforcement (private ordering), and competitive responses. This limited choice set helps explain the value to transnational organized crime groups (TOCGs) of stability, enabling a focus on production rather than the diversion of resources into less productive uses. Disruption of formerly stable equilibria trigger resort to violence where TOCGs face restricted strategic options. Because disturbances to the various equilibria that sustain state-criminal relationships are a key determinant of changing levels of criminal violence, understanding their likely impacts should underpin policies. Applying these insights, we offer implications for legitimate MNEs operating in the same locales and for policy approaches to the control of transnational organized crime.

Keywords: Transnational crime, Criminal violence, Transaction costs, Criminal competition, State complicity, SDG16