Corporate Compliance and Conformity

6  Stigma or Competition Effect

DOI: 10.4324/9781003379249-8

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. On the basis of 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 ...