Business Financial Crime: Theories of Motivation

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Defining white collar crime

Not to do with poverty Not to do with social pathology Not to do with physical or psychological

pathology

‘crime committed by a person of high status and respectability in the course of his occupation’ (Sutherland 1949)

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Defining white-collar crime

White-collar crime may be defined approximately as a crime committed by a person of respectability and high status in the course of his occupation. . . the financial cost of white-collar crime is probably several times as great as the financial cost of all the crimes which are customarily regarded as the crime problem. (Sutherland)

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Problems with defining white-collar crime

High-status offender? Definitional ambiguity Little distinction between crimes

committed by businesses and crimes carried out against an organisation

‘crime committed in the course of legitimate employment involving the abuse of an occupational role’ (Croall 1992)

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‘if it can be shown that white collar crimes are frequent, a general theory that crime is to do with poverty and its related pathologies is shown to be invalid’

(Sutherland 1949)

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Definitional

Because of this definitional difficulty Clinar and Quinney (1967) suggested replacing the term white collar crime with two constitutive terms “corporate” and “occupational” crime

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Occupational crime

For personal gain:Employee theft/computer time, telephone

embezzlement etc.Fraud with customers (charging for work

not done)Fiddling expenses, embezzlement, tax

evasion.

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Corporate crime

Offences against employees Offences against investorsOffences against consumers Offences against the public Offences against the state

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Understanding corporate crime

Organisational goals: profit, growth, market control

Individual characteristics: anomie of success = unlimited ambition,

shrewdness and moral flexibility

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Understanding corporate crime The motive:

a rational solution to the corporate problem The means:

ideology – structured immoralities of irresponsibility + a lack of law enforcement

The opportunity:low surveillance

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Why are corporate crimes different ?

Offences tend to be invisible The acts/offences tend to be very

complex There often is no one offender May be no victim or many victims Ambiguous criminal status

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Edwin SutherlandTheory of differential association: Criminal behaviour is learned not inherited Learned in interaction with other persons Carried out within intimate personal groups (i.e.

not from impersonal activities such as films or TV)

Not just techniques that are learned but motivations and rationalisations

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Edwin Sutherland

Direction of motives and drives is learned from definition of legal codes as favourable or unfavourable

Person becomes delinquent when has an excess of definitions favourable to law violation contrasted with definitions unfavourable to violation

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Interactionist theory

The ability to develop shared meanings is the key to understanding human interaction. Our ability to think means what we effectively do, according to Interactionists, is to create a sense of society and culture in our minds. We behave "as if" these things physically exist.

Thus, the world humans inhabit is a social construction. This involves the idea that society is a product of our ability to think and express our thoughts symbolically. The things that we recognise as being "part of our society" or "part of our culture" are simply products of our mind.

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Interactionist theory This is one reason why Interactionists reject the idea

that society has an objective existence that is separate from the people who, through their everyday relationships, create a sense of living in a society. Society is an elaborate fiction we create to help us make sense of our relationships and impose some sort of order on them.

We create this fictional universe to make social life possible, since without a sense of shared meanings about what we see and do, interaction would, at best, be very difficult and, at worst, impossible. Cultures, therefore, represent the general store of shared meanings that people create to give them a feeling of having things in common and as the basis for constructive social interaction.

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Interactionist theory

For example, think of any dealings you have had with people who do not behave in ways that conform to your cultural expectations. People who are drunk, for example, frequently fail to observe expected cultural norms and this makes it very difficult for us to interact with them on anything but a very basic level of understanding.

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Interactionist theory In simple terms, therefore, we have to consider

the process whereby individuals "agree to agree" about what they are doing (the purpose of interaction) and why they are doing it (the meaning of interaction).

Interactionists generally start to explain this process by referring to the concept of a definition of the situation. That is, how we define a situation affects how we behave when we are in that situation. We can look at this process in more detail in the following way.

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Interactionist theory To make sense of the confusing world that we experience on a

daily basis, Interactionists argue that we use a process of categorization and labelling. That is, as we interact we categorise similar experiences in some way. For example, we create categories of people based around our perception of them as: Male or female. Young or old. Employer / employee. Traffic warden / police woman. Husband / wife.

Each category of related phenomena is like a little box that we hold inside our mind and, for our convenience, each little box has:

a. A name or label that identifies it for us b. A set of social characteristics inside. That is, a set of related

ideas that we associate with the label on the box.

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Interactionist theory

Thus, when someone we meet reveals one of their social labels to us ("I'm an accountant", for example) we mentally "open the box" that contains our store of knowledge about “accountants".

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Interactionist Theory of Motivation

Generally “standard” criminals seen as abnormal individuals with significant biological or psychological differences (Coleman, 1987)

Researchers on white-collar crime generally do not take this view nor link to family background or psychological characteristics

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Interactionist Theory of Motivation

Researchers have therefore looked elsewhere to explain motivation.

Interactionist theory seems best suited to white collar crime

Interactionists see motivation as a symbolic construct i.e. the meaning that individuals attribute to a particular situation

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Interactionist Theory of Motivation

This meaning of their social reality in general structures their experience.

It makes certain courses of action seem appropriate while others are excluded.

Cressey (1953) found that embezzlers “adjust” the symbolic construction of their behaviour to fit societal expectations

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Rationalisations

Rationalisations are not after the fact but an integral part of an “actor’s” motivation (most common are)

1. Just borrowing the money2. Denial of harm i.e.. No-one gets hurt3. Unjust laws i.e. Government interference4. Act necessary to achieve economic goal or to

survive i.e. therefore must comply especially in work environment

5. Transfer of responsibility i.e. everyone is doing it6. Deserve the money

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Coleman Interactionists argue that symbolic constructs

are learned from association with others i.e. back to Sutherland’s differential association theory

Coleman argues that the interactionist theory does not explain the motivations of white collar crime

Looks to modern industrial capitalism as a factor

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Culture of Competition

The idea that wealth and success are central goals of human endeavour is part of a larger complex of beliefs that may be termed the “culture of competition”

The pursuit of economic self interest and the effort to surpass their fellows in the accumulation of wealth and status are of critical importance to these … actors (Coleman, ibid)

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Culture of Competition

Creates a pervasive sense of insecurity as an undercurrent in industrial capitalism

This fear of failure permeates every stratum of contemporary society.

It is a corollary of the demand for success. These factors have grown in the 21st

century

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Culture of Competition

Some crimes result from the efforts of individuals trying to live up to expectations of associates and friends.

When viewed at group level the culture of competition still appears.

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Culture of Competition

Anthropological studies of hunting and gathering societies find little of this acquisitive materialism we see in society

First such individualism noted in early days of the modern capitalist society

Previously little surplus wealth existed

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Normative Boundaries

Ethical standards for economic behaviour are easily combined at a theoretical level.

However public see the contradiction between the two ie. “nice guys finish last”

Major conflict in society

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Subcultures

Given this societal conflict there are in addition occupational subcultures present

Each complex organisation has an “ethical tone” that either reinforces or opposes the normative standards for economic behaviour

Industry subcultures Occupational subcultures which cut across

industries and organisations

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Subcultures

Because of this isolation work related subcultures are able to maintain certain criminal activities as acceptable or recognised behaviour.

GE price fixing example – they had forgotten it was illegal

Subcultures can also work to positive effect

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Punishment

The severity of punishment for white-collar crime varies inversely with the power and influence of the typical offender

Studies show that street crimes are punished more severely than occupational crimes.

Stay in nicer prisons Same inverse relationship also applies to likelihood

of prosecution

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Gottfredson and Hirschi (1990)

Self Control Theory State that the absence of self control

combined with opportunity is adequate to explain all crimes at all times.

People with low self control are risk seeking and insensitive to others

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Shover and Hochstetler (2006)

Concept of rational choice