Business Financial Crime: Theories of Motivation

1. Business Financial Crime: Theories of Motivation

2. 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)

3. 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)

4. 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)

5. ‘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)

6. 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

7. 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.

8. Corporate crime • Offences against employees • Offences against investors • Offences against consumers • Offences against the public • Offences against the state

9. Understanding corporate crime • Organisational goals: • profit, growth, market control • Individual characteristics: • anomie of success = unlimited ambition, shrewdness and moral flexibility

10. 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

11. 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

12. Edwin Sutherland Theory 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

13. 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

14. 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.

15. 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.

16. 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.

17. 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.

18. 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.

19. 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".

20. 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

21. 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

22. 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

23. Rationalisations • Rationalisations are not after the fact but an integral part of an “actor’s” motivation (most common are) • Just borrowing the money • Denial of harm i.e.. No-one gets hurt • Unjust laws i.e. Government interference • Act necessary to achieve economic goal or to survive i.e. therefore must comply especially in work environment • Transfer of responsibility i.e. everyone is doing it • Deserve the money

24. 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

25. 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)

26. 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

27. 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.

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. Shover and Hochstetler (2006) • Concept of rational choice