Journal of Institutional Economics (2021), 17,53–70 doi:10.1017/S1744137420000284 RESEARCH ARTICLE Institutions, the social capital structure, and multilevel marketing companies Jordan K. Lofthouse1* and Virgil Henry Storr2 1The Mercatus Center at George Mason University, Arlington, Virginia, USA and 2Department of Economics, George Mason University, Fairfax, Virginia, USA *Corresponding author. Email:
[email protected] (Received 12 January 2020; revised 14 May 2020; accepted 16 May 2020; first published online 14 July 2020) 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. Key words: Social capital; multilevel marketing; network marketing; Mormon church; LDS church; MLM 1. Introduction In multilevel marketing companies (MLMs), also known as network marketing or direct selling, member-distributors earn income both from selling products and recruiting new members (Liu, 2018; Sparks and Schenk, 2001).