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The Use of Nonmarket Strategies for the Maintenance of a Cartel in the Oil and Gas Sector

Castro, A; Phillips, A; (2018) The Use of Nonmarket Strategies for the Maintenance of a Cartel in the Oil and Gas Sector. In: Proceedings of Strategic Management Society 38th Annual Conference. SMS: Paris, France. (In press). Green open access

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Abstract

Corruption is one of the greatest afflictions to affect the world. One form of corruption occurs when firms start to incur in corrupt non market strategies. Although we have seen a rise in interest in corruption topic among management scholars with special editions of journals focusing on the topic in the Academy of Management Review (2008), Organization Studies (2015), and the Journal of Management Inquiry (2017), strategy scholars have barely begun to debate the dark side of business strategy. How corrupt non-market strategies lead to erosion of government (i.e Nigeria) and companies (i.e Siemens and Unaoil) is a grand challenge that needs to be understood by scholars and practitioners. In this research we explain how corruption it is maintained and how corrupt non market strategies are employed to maintain a cartel. In this study, we analyze data from one of the most publicized corruption investigations in the world: the “Lava Jato” (Car Wash). The investigation took place in Brazil and has led to hundreds of arrests and a large financial loss to shareholders. In particular, we look at corrupt nonmarket strategies adopted by management teams and firms in the energy sector in Brazil. One of the great challenges in studying corruption relates to the difficulty in collecting reliable data demonstrating illegal activities and corrupt practices. We use non-traditional data from publicly available and verifiable court decisions, plea agreements and parliamentary commission of inquiry and financial databases. Such rich data offers the chance to ‘peer’ inside a corrupt network and view some of the practices that are not often publicized. There are few empirical papers that delve into the topic generally rely on macro data from broad surveys (i.e. Birhanu, Gambardella, 2016) although corruption also happens at the individual and firm level. We expand the literature of nonmarket strategy by analyzing other scenarios which have not been studied empirically, such as the antecedents of nonmarket strategy choice. We also develop framework to explain how this corrupt non market strategies were managed over time. We offer practitioners insights into the mechanisms that could in the future be used to develop better anticorruption measures by firms.

Type: Proceedings paper
Title: The Use of Nonmarket Strategies for the Maintenance of a Cartel in the Oil and Gas Sector
Event: Strategic Management Society 38th Annual Conference
Location: Paris
Dates: 22 September 2018 - 25 September 2018
Open access status: An open access version is available from UCL Discovery
Publisher version: https://www.strategicmanagement.net/paris/overview...
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > The Bartlett Sch of Const and Proj Mgt
URI: https://discovery.ucl.ac.uk/id/eprint/10072672
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