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Income inequality, social cohesion, and crime against businesses: Evidence from a global sample of firms.

ABSTRACT: Rising inequality is one of the grand societal challenges of our time. Yet, its effects on firms - including multinational enterprises (MNEs) - and their operations have not been widely examined by IB scholars. In this study, we posit that income inequality within a country is positively associated with the incidence and severity of crime experienced by businesses. Further, we propose that this relationship will be negatively moderated by social cohesion (in the form of greater societal trust and lower ethno-linguistic fractionalization) in these countries, such that social cohesion helps to offset the negative impacts of inequality on crime against businesses. We test these hypotheses using a comprehensive data set of 114,000 firms from 122 countries and find consistent support for our theses. Our findings, which are robust to different alternative variables, model specifications, instrumentation, and estimation techniques, unpack the intricate ways through which inequality affects businesses worldwide and the associated challenges to MNEs. They also offer important managerial and policy insights regarding the consequences of inequality and potential mitigation mechanisms.

Supplementary information

The online version contains supplementary material available at 10.1057/s41267-022-00535-5.

SUBMITTER: Krammer SMS

PROVIDER: S-EPMC9187503 | biostudies-literature | 2022 Jun

REPOSITORIES: biostudies-literature

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Income inequality, social cohesion, and crime against businesses: Evidence from a global sample of firms.

Krammer Sorin M S SMS Lashitew Addisu A AA Doh Jonathan P JP Bapuji Hari H

Journal of international business studies 20220611 2

Rising inequality is one of the grand societal challenges of our time. Yet, its effects on firms - including multinational enterprises (MNEs) - and their operations have not been widely examined by IB scholars. In this study, we posit that income inequality within a country is positively associated with the incidence and severity of crime experienced by businesses. Further, we propose that this relationship will be negatively moderated by social cohesion (in the form of greater societal trust an ...[more]

PMID: 35729969

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Project description:BackgroundPhysical inactivity is a global pandemic associated with a high burden of disease and premature mortality. There is also a trend in growing economic inequalities which impacts population health. There is no global analysis of the relationship between income inequality and population levels of physical inactivity.MethodsTwo thousand sixteen World Health Organisation's country level data about compliance with the 2010 global physical activity guidelines were analysed against country level income interquantile ratio data obtained from the World Bank, OECD and World Income Inequality Database. The analysis was stratified by country income (Low, Middle and High) according to the World Bank classification and gender. Multiple regression was used to quantify the association between physical activity and income inequality. Models were adjusted for GDP and percentage of GDP spent on health care for each country and out of pocket health care spent.ResultsSignificantly higher levels of inactivity and a wider gap between the percentage of women and men meeting global physical activity guidelines were found in countries with higher income inequality in high and middle income countries irrespective of a country wealth and spend on health care. For example, in higher income countries, for each point increase in the interquantile ratio data, levels of inactivity in women were 3.73% (CI 0.89 6.57) higher, levels of inactivity in men were 2.04% (CI 0.08 4.15) higher and the gap in inactivity levels between women and men was 1.50% larger (CI 0.16 2.83). Similar relationships were found in middle income countries with lower effect sizes. These relationships were, however, not demonstrated in the low-income countries.ConclusionsEconomic inequalities, particularly in high- and middle- income countries might contribute to physical inactivity and might be an important factor to consider and address in order to combat the global inactivity pandemic and to achieve the World Health Organisation target for inactivity reduction.

Project description:Small-scale fisheries are critically important for livelihoods around the world, particularly in tropical regions. However, climate variability and anthropogenic climate change may seriously impact small-scale fisheries by altering the abundance and distribution of target species. Social relationships between fishery users, such as fish traders, can determine how each individual responds and is affected by changes in fisheries. These informal cooperative and competitive relationships provide access, support, and incentives for fishing and affect the distribution of benefits. Yet, individuals' actions and impacts on individuals are often the primary focus of the economic analyses informing small-scale fisheries' formal management. This focus dismisses relevant social relationships. We argue that this leads to a disconnect between reality and its model representation used in formal management, which may reduce formal fisheries management's efficiency and efficacy and potentially trigger adverse consequences. Here, we examine this argument by comparing the predictions of a simple bioeconomic fishery model with those of a social-ecological model that incorporates the dynamics of cooperative relationships between fish traders. We illustrate model outcomes using an empirical case study in the Mexican Humboldt squid fishery. We find that (1) the social-ecological model with relationship dynamics substantially improves accuracy in predicting observed fishery variables to the simple bioeconomic model. (2) Income inequality outcomes are associated with changes in cooperative trade relationships. When environmental temperature is included in the model as a driver of species production dynamics, we find that climate-driven temperature variability drives a decline in catch that, in turn, reduce fishers' income. We observe an offset of this loss in income by including cooperative relationships between fish traders (oligopoly) in the model. These relationships break down following species distribution changes and result in an increase in prices fishers receive. Finally, (3) our social-ecological model simulations show that the current fishery development program, which seeks to increase fishers' income through an increase in domestic market demand, is supported by predictions from the simple bioeconomic model, may increase income inequality between fishers and traders. Our findings highlight the real and urgent need to re-think fisheries management models in the context of small-scale fisheries and climate change worldwide to encompass social relationship dynamics.Supplementary informationThe online version contains supplementary material available at (10.1007/s10113-021-01747-5).

Dataset Information

Income inequality, social cohesion, and crime against businesses: Evidence from a global sample of firms.

Supplementary information

Publications

Income inequality, social cohesion, and crime against businesses: Evidence from a global sample of firms.

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