ABSTRACT
It is an interesting research issue whether competitors lose or gain when an industry peer is hit by a scandal such as white-collar and corporate crime. Traditionally, it is assumed that the negative stigma effect is more common among others in the same industry rather than the positive competition effect where non-accused firms gain from the accused firm’s loss. Recent research has suggested a U-shaped relationship where increasing product market overlap first causes a stigma effect and then causes a competition effect. Based on seven cases from seven different countries, this chapter suggests that the U-shape might be influenced by the local extent of white-collar and corporate crime. Specifically, this chapter suggests the following hypothesis for future research: The product market overlap between a non-accused firm and an accused industry peer will exhibit a U-shaped effect on the non-accused firm’s market depending on the extent of product market overlap, where the negative stigma effect will be stronger in countries characterized by more corruption and other forms of white-collar and corporate crime, while the positive competition effect will be stronger in countries characterized by less corruption and other forms of white-collar and corporate crime.
