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Institutions, the social capital structure, and multilevel marketing companies

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  • Lofthouse, Jordan K.
  • Storr, Virgil Henry

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.

Suggested Citation

  • Lofthouse, Jordan K. & Storr, Virgil Henry, 2021. "Institutions, the social capital structure, and multilevel marketing companies," Journal of Institutional Economics, Cambridge University Press, vol. 17(1), pages 53-70, February.
    • Handle: RePEc:cup:jinsec:v:17:y:2021:i:1:p:53-70_4
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    Cited by:

    1. Ioana-Mădălina Purcaru & Ana-Maria Urdea & Cristinel Petrişor Constantin & Gabriel Brătucu, 2022. "Building Long-Term Business Sustainability: The Influence of Experiential Marketing on Sales Representatives’ Loyalty to Multi-Level Marketing Systems," Sustainability, MDPI, vol. 14(15), pages 1-16, August.

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