The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies

Claudia Groß () and Dirk Vriens ()
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Claudia Groß: Radboud University Nijmegen
Dirk Vriens: Radboud University Nijmegen

Journal of Business Ethics, 2019, vol. 156, issue 2, No 3, 333-355

Abstract: Abstract Multi-level marketing companies (MLMs) such as Amway, Herbalife, or Tupperware differ from most other companies. They market their products and services by means of self-employed distributors who typically work from home, sell products to end consumers, and recruit, motivate, and educate new distributors to do the same. Although the industry’s growth seems to illustrate the attractiveness of MLMs, the industry has been facing several legal and ethical problems. In this paper, we focus on these problems and argue that an extended MLM model may help us to understand why such problems continue to occur, despite the countermeasures that have been implemented. By explicating how problems relate to a specific but often overlooked characteristic of MLMs, i.e., the so-called distributor network, we provide an extended understanding of (a) MLMs’ mode of operation, (b) the sources of their legal and ethical problems, and (c) the reason that currently implemented and suggested countermeasures may not suffice. Moreover, based on our extended understanding of MLMs and their problems, we propose additional countermeasures.

Keywords: Corporate ethics; Illegal behavior; Multi-level marketing; Unethical behavior (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10551-017-3556-9

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