THE FORMATION AND DETERRENCE OF ROGUE BUSINESS GROUPS

Abstract

I develop an analysis of rogue behavior in business settings by analogy with gangs as these are more widely understood. Apparently irrational behavior in rogue settings can signal possession of skills of particular value to a group. Gangs form around traits that are useful to a subgroup, giving a gap between the characteristics of gang members and mainstream society or the parent organization. The comparison suggests that business gangs deserve no more sympathy than other gangs. Some policy responses for firms are investigated. One policy, offering amnesties to whistleblowers, requires caution as it can result in incentives for temporary membership of the gang.