Entrepreneurs on the dark side

31 March 2009

The tools used by business and management researchers could be sharpened to help in the fight against organised crime, shows new study from BI researchers.

BI KNOWLEDGE: Figthing organised Crime

Professor Petter Gottschalk and associate professor Jan Terje Karlsen of the BI Norwegian School of  Management in Oslo, suggest that most of the published research on  studies of entrepreneurship engage in a positive enthusiasm about the  role of the entrepreneur.

However, there are entrepreneurs that exist in  the underworld, operating illegal businesses and taking part in less  than wholesome and clean ventures.

The team has now prepared the groundwork for research into career  development in criminal gangs, published in the International Journal of Innovation and Learning.

There exist theories in business studies  of how organised crime operates, but BI researchers Gottschalk and Karlsen are taking  this work a step further to find similarities between the business  "skills" of members of criminal gangs.

Understanding criminal organisations

"To fight organised crime, there is a need to understand criminal organisations in terms of criminal business enterprises," the researchers explain.

Of course, organised crime by criminal entrepreneurs is not a new  phenomenon. Other researchers have described historical cases such as  piracy, slavery and opium smuggling as representative.

However, the  biggest problem facing law enforcers in understanding organised crime is not the word "crime" but the word "organised". Study is further confused by the idiosyncratic and often bizarrely romanticised images conjured up  by words such as ‘mafia’, ‘mob’, ‘gang’, ‘syndicate’, ‘outfit’,  ‘network’, ‘cell’, ‘club’, and ‘cartel’.

Put simply: organised crime is a continuing criminal enterprise that  rationally works to profit from illicit activities that are often in great public demand.

The researchers explain how an entrepreneur is usually a person who  operates a new enterprise or venture and assumes some accountability for  the risk. In the context of the criminal gang, an entrepreneur develops  the enterprise, often starting at the level of group of troublemaking  friends, through criminal network, to established gang.

Similarly, entrepreneurship is often difficult and tricky, as many new  ventures fail, and in the criminal context the risks associated with  failure are well documented in police reports and documentary films.

Career stages in gangs

The researchers suggest a stages-of-growth model for the criminal career in gangs, consisting of four stages:

  1. Gang of friends: This is a group of persons who enjoy each other’s company. When short of excitement, they may use violence or other tools to frighten or achieve power in the neighbourhood. When short of money, they may steal goods and sell them on the black market. The criminal activity is neither planned nor important to the social dynamics in the group. The role of the entrepreneur is to show initiative and courage by being the front figure in both regular and criminal activities.
  2. Troublemakers: At this stage, the group is more conscious about its criminal
    activities and individual criminal behaviour. Personal identity and group identity are linked to criminal activities. Criminal projects such as retail drug commerce, prostitution rings and bank robbery are planned, but not always carried out, and very often not successfully. The entrepreneur brings his or her gang to this stage by internal provocation, through which gang members are challenged and requested to organise and commit more serious crimes.
  3. Criminal network: The gang changes from a group structure based on trust and identity, to profit-seeking behaviour based on competence. While charismatic and later dominating entrepreneurs were successful at Stages 1 and 2, resourceful entrepreneurs enter the management level at Stage 3.
  4. Established gang: At this stage, the gang is concerned with weaknesses and
    strengths, opportunities and threats. Rival gangs have to be beaten, and criminal opportunities have to be identified. Identity becomes important again at this stage, as an established gang tends to be a combination of both shared interests and professional crime. For example, Hells Angels has both the element of identity in Harley-Davidson motorcycles, as well as trafficking and money laundering. Strategic entrepreneurship is needed to develop the gang into this maturity level.

This is just the beginning of an important avenue of research, the team  says. The ultimate aim of the research will be to bring the tools of  business studies to bear on organised crime, and to focus on organisational analysis.

"Organised crime analysis and analysis of  criminal organisations need to be carried out both at the individual and  organisational level, as individual criminals are sentenced to prison,  never criminal organisations," the researchers conclude.



Gottschalk, P. and Karlsen, J.T. (2009): Entrepreneurship in organised crime: career stages in gangs", Int. J. Innovation and Learning, Vol. 6, No. 4, pp.448–460.

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