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Institutions, the social capital structure, and multilevel marketing companies

Published online by Cambridge University Press:  14 July 2020

Jordan K. Lofthouse  and
Virgil Henry Storr
Jordan K. Lofthouse*
Affiliation:
The Mercatus Center at George Mason University, Arlington, Virginia, USA
Virgil Henry Storr
Affiliation:
Department of Economics, George Mason University, Fairfax, Virginia, USA
*
*Corresponding author. Email: jlofthouse@mercatus.gmu.edu
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Abstract

In multilevel marketing companies (MLMs), member-distributors earn income from selling products and recruiting new members. Successful MLMs require a social capital structure where members can access and mobilize both strong and weak social ties. Utah has a disproportionate share of MLM companies located in the state and a disproportionate number of MLM participants. We argue that Utah's dominant religious institutions have led to the emergence of a social capital structure, making MLMs particularly viable. Utah is the most religiously homogeneous state; roughly half its population identifies as members of the Church of Jesus Christ of Latter-day Saints (LDS Church). The LDS Church's institutions foster a social capital structure where (almost all) members have access to and can leverage social capital in all its forms. LDS institutions encourage members to make meaningful social connections characterized by trust and reciprocity with other church members in local neighborhoods and across the world.

Keywords

Social capitalmultilevel marketingnetwork marketingMormon churchLDS churchMLM
Type
Research Article
Information
Journal of Institutional Economics , Volume 17 , Issue 1 , February 2021 , pp. 53 - 70
Copyright
Copyright © Millennium Economics Ltd 2020

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