New research on service stations that cheat on auto emissions explores the connection:
The upshot is that firm misconduct appears to increase with the threat of losing customers to rivals, which has implications for both business managers and government regulators. Managers should be aware that fostering a culture of intense competition, in an honest attempt to motivate employees, may instead induce unethical behavior.
At the same time, they need to consider the possibility that their rivals are misbehaving in the name of competition—and to keep an eye on them. "The failure to do so may allow these rivals to gain advantage through illicit strategies, particularly under institutional regimes where regulatory monitoring or enforcement is weak," the paper states. For government agencies, the findings indicate the importance of monitoring firm behavior in highly competitive markets—and the importance of realizing when a policy is what creates intense market competition in the first place.
The Dish 