The emergence of counterfeit trade: a literature review

Purpose - Trade in counterfeit goods is perceived as a substantial threat to various industries. No longer is the emergence of imitation products confined to branded luxury goods and final markets. Counterfeit articles are increasingly finding their way into other sectors, including the fast-moving consumer goods, pharmaceutical, and automotive industries - with, in part, severe negative consequences for consumers, licit manufacturers, and brand owners alike. This paper seeks to shed light on the economic principles of counterfeit trade and the underlying illicit supply chains. Design/methodology/approach - An extensive literature review was conducted that comprised contributions from different strands of management research. Findings - Though governments as well as management have clearly identified the problem, very little is known - both in practice and theory - about the mechanisms and structure of the illicit market, the tactics of counterfeit producers, consumer behavior with respect to imitation products and the financial impact on individual companies. The diversity of the counterfeit phenomenon underlines the need for further research in this area and the development of company-specific measures for fighting product piracy. Research limitations/implications - The clandestine nature of the counterfeit market limits direct accessibility to the phenomenon. Consequently, the existing body of literature does not necessarily cover all aspects of counterfeit activities. The review helps to highlight existing research gaps but may not be able to identify additional aspects of the phenomenon that, thus far, have not been deemed relevant. Originality/value - The paper critically reviews the current state of research across different management-related disciplines. From an academic perspective it may serve as a starting point for a future research agenda that addresses the current knowledge gaps. From a practitioner's perspective it is helpful for understanding the relevant influence factors and for developing appropriate, state-of-the-art counterstrategies.