The enterprise model of organized crime grew from the realization that the regulatory framework and economic factors were the primary determinants behind the formation of organized criminal groups. Organized criminal groups were found to structure their illicit activities around the demands of customers e.g., for illicit drugs, firearms, or stolen property. The groups find ways to supply those goods and services while navigating among the risks posed by law enforcement, as well as legal and illegal competitors (e.g., other illicit products and groups). Their ultimate objective is to make a profit out of these activities.
Organized crime versus legitimate business
According to the enterprise perspective, organized criminal groups form and thrive in the same way that legitimate businesses do: they respond to the needs and demands of suppliers, customers, regulators and competitors. The only difference between organized criminal groups and legitimate business is that organized criminals deal in illegal products and services, whereas legitimate businesses normally do not (Smith, 1980; Smith, 1990).
The enterprise model of organized crime focuses on how economic considerations lie at the heart of the formation and success of organized criminal groups, more importantly than hierarchical or cultural considerations, The enterprise model labels economic concerns as the primary cause of organized criminal behaviour. In a study of drug markets, for example, it was found that groups consisted of "individual entrepreneurs and small organizations rather than massive, centralized bureaucracies," which were "competitive" rather than "monopolistic" in nature (Adler, 1985).
Other studies found that the supply of illegal goods is usually provided by small-scale criminal groups, and highlighted that the illegal economy functions like the legal one: it involves supply and demand, customer preferences and competition. These factors, rather than relationships based on hierarchical or cultural ties dictate the operation and organization of organized criminal groups (Paoli, 2002; Rege and Lavorgna, 2017). The enterprise model sees organized criminal groups as the product of illicit market forces, similar to those that cause legitimate businesses to flourish or die in the legal sector of the economy (Gottschalk, 2009; Reuter, 1983; Reuter, 1993; Windle, 2013; Yeager, 2012). The centrality of economic relationships, rather than personal relationships, was found even in accounts of contract killers, who described it as paramount in profiting from and surviving a vicious way of life (Shaw, 2017; Carlo, 2009).