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The organization of Danish gangs: a transaction cost approach

Abstract

How do criminal groups organize, operate, and govern in Denmark? We argue that organized crime groups face governance challenges in the form of principal-agent problems and transaction costs. Based on interviews with law enforcement officers, former gang members, and prisoners, we provide evidence for how people involved in crime respond to these organizational dilemmas. We find that the more severe the principal-agent problem, the more gangs vet possible members during recruitment. We also find that as transaction costs rise, people who are engaged in illicit activities that are more complicated will rely more on internal structure and centralization. Our findings support existing rational choice theories of criminal organizations.

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Notes

  1. All interview respondent names are pseudonyms.

  2. The Bandidos motorcycle gang have an extra layer during recruitment: a “probation” period. People on probation are members of the gang, but they do not have the right to vote for six months (Daniel; Brian).

  3. Civil associations are protected by the Danish constitution as a civil right. It is embedded in the culture, and thus makes it almost impossible to ban associations such as motorcycle gangs.

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Correspondence to David Skarbek.

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Our research project complied with the guidelines of the Copenhagen Business School, and Brown University approved the information sharing agreement for using the interview data in this paper.

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All respondents provided informed consent to be interviewed.

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Sløk-Madsen, S.K., Skarbek, D., Hansen, A. et al. The organization of Danish gangs: a transaction cost approach. Trends Organ Crim 24, 361–377 (2021). https://doi.org/10.1007/s12117-021-09409-y

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Keywords

  • Organized crime groups
  • Outlaw motorcycle gangs
  • Rational choice theory