What Explains the Patterns of Diversification in Drug Trafficking Organizations

Abstract : The purpose of this thesis is to identify the factors that influence drug trafficking organizations motivations to diversify their operations. With that in mind, the thesis seeks to answer the question: What explains the patterns of the drug trafficking organizations diversification? For this thesis, I have used sources found on corporate diversification, in addition to sources that I have found for three Mexican drug trafficking organizations (DTOs): the Sinaloa, Los Zetas, and Tijuana, to highlight the similarities and the differences in patterns among the three. The thesis concludes that various factors allow the DTOs to diversify into new businesses. First, as is the case in Mexico, the state has to be weak to provide opportunities for the clandestine organizations to diversify. Second, DTOs find opportunities through economic globalization and abundance of organizational resources that they use to motivate themselves to diversify. Moreover, to acclimate to the ever-changing clandestine landscape, DTOs require a decentralized internal structure. DTOs diversify to maximize their ability to cross-subsidize their revenue to combat state suppression. Rather than using hard power to cripple the DTOs, the Mexican government needs to understand their operation to hit them where it hurts, in their profits, by better understanding their operation.