White-collar Crime: Theories and ideas that have been used to explain why some managers commit white-collar crimes
What costs and benefits do white-collar criminals typically weigh in deciding whether to commit a crime?
Seminararbeit 2011 25 Seiten
Table of Contents
1.1 What is White -collar Crime?
1.2 The next steps
2 General view over the Theories of Crime
3 Traditional Theories of Crime
3.1.1 Theory of Differential Association
3.2.1 Anomie Theory
4 Rational Choice Paradigm
4.1.2 Cornish and Clark
4.1.4 Cohen and Felson
5 Pragmatic approaches
5.1 Fraud Triangle
5.2 „Leipziger Verlaufsmodell“
Criminal managers cause damage amounting to billions of dollars due to fraud, espionage, manipulated balance sheets. With a view to the huge economic dam- age, White-collar Crime is a highly charged issue. The financial loss amounted approximately 5, 57 billions of euros per enterprise, resulting from a study of the auditing company PricewaterhouseCoopers (PWC). In addition to the great fi- nancial damages, there are also non-material damages for instance loss of image and decrease of work ethics. 1
Here, the question arises why in spite of the economic importance there is simply few scientific knowledge to explain the motivation of the offenders. To this day, there is neither a unified definition of White-collar Crime nor a special generally accepted theory to explain this kind of crime. Even the fundamental questions „„Why?”, „Why do people commit crime?”, „Why do others conform?”” 2 , remain unanswered. It is our intension to work out whether there is a theory to „decipher the phenomenon” of White-collar Crime.
1.1 What is White-collar Crime?
The concept of White-collar Crime was first conceived by Edward Alsworth (1907). But it was Edwin Sutherland, who first popularized the term „Whitecollar Crime” in 1939, defining such a crime as one „committed by a person of respectability and high social status in the course of his occupation.” 3 Sutherland wanted to remove the wide spread prejudice about the assumption that criminal behavior occurs only in lower classes. 4
Today his definition is somewhat outdated. There is rather a distinction between the terms „occupational crime” and „corporate crime”. What they have in com- mon is their reference to the company. The former term, as a further development of Sutherland, refers to criminal behavior in business, to gain an individual bene- fit. The latter one assumes that corporations per se commit a crime to pursue economic intentions.
The above mentioned three terms are not congruent. Rather, they have to be seen in connection with the respective theory to explain crime, which means that the definition of White-collar Crime is dependent on the associated theory.
1.2 The next steps
First, we give a short overview of the several theories of crime in Chapter 2. Without going into details to much, we decide to work with five theories and ide- as to explain white-collar crime in the following chapters. In Chapter 3, we re- view two traditional theories, the Theory of Differential Association by Suther- land as well as the Anomie Theory by Merton. Chapter 4 deals with the Rational Choice Paradigm. At chapter last but one, we work on two newer approaches to give a new way of thinking about the explanation of White-collar Crime, Fraud Triangle and Leipziger Verlaufsmodell. Finally, we summarize our findings and try to find an answer to the questions posed at the beginning.
2 General view over the Theories of Crime
Crime and the causes of crime are multilayered and complex. There are a number of various theories to explain criminal behavior. On this account, it is really diffi- cult to classify criminological theories. One possible criterion for classification is the fundamental assumption of the theory or the unit of measurement on which the theory focuses either individual/micro-level or group/macro-level. 5 We decided to classify the theories of crime in rank order of their popularity for White-collar Crime (low to high). The classification is as follows: biological, labeling, conflict, strain, social learning, social control, rational choice.
The biological Theories are considered to be the first scientific theories, having their roots in the 19th century. Cesare di Beccaria (1738-1794) and Cesare Lom- broso (1835-1909) could be considered as “Pioneers of criminology”. Lombroso assumed that there is connection between genetic factors and crime. Further- more, he maintained the view that a criminal could be identified because of his or her external features for example large hands and feeds. 6 There are other im- portant approaches for example, twin studies (Johannes Lange 1929, Friedrich Stumpl 1936) and adoption studies (Mednick, Gabrielle, Hutchings 1982).
The Labeling Theory (Tannenbaum1938, Becker 1963) assumes that criminal behavior is not produced by social failure of people. Being labeled as a „deviant”, leads a person to engage in deviant behavior. The result of this is a criminal self-image, which causes in more delinquency.
Social conflict theory was developed by Karl Marx in the mid 1800's and expanded upon by many sociologists. The underlying principle of social conflict is, that the lower class is competing for resources against an upper class that controls the government, courts and industry. 7 The four types of social-conflict theory are radical criminology, based on class warfare; radical feminism, or discrimination against women; left realism, which believes that most crimes are acts against individuals and not against the state; and peacemaking criminology, where protests against war becomes worse than war itself.
The strain theories assume that crime is a result of lower-class frustration. They focus on culturally defined goals of success and culturally prescribed means for obtaining success. One of the most important approaches is Merton´s anomie theory, which will be explained separately in later chapters.
The social learning theory assumes that people are born with no tendency toward or away from committing crime. These approaches explain that most human be- haviors are learned through the process of observing others forms of how behav- iors are performed and perceived, this in the future serves as a guide for our own actions. 8 Edwin H. Sutherland is regarded as the founder of social learning theo- ry. His Theory of Differential Association will be clarified in the subsequent sec- tion. Another approach is the technique of neutralization which suggests that de- linquents develop a special set of justifications for their behavior when such be- havior violates social norms. Such techniques allow delinquents to neutralize and temporarily suspend their commitment to societal values, providing them with the freedom to commit delinquent acts. An important representative is James Coleman (1926-1995). He discovered that white-collar criminals used techniques of neutralization to justify their criminal acts. 9
The social control theory does not analyze why people commit crime, but rather explain why people behave law-abiding. There are a great many of control theo- ries. Control theorists believe that conformity to the rules society is produced socialization and maintained by ties to people and institutions. The most well- known version of control theories is Travis Hirschi´s social bond theory (1969). He assumes that a person will engage in delinquent behavior when the social bond to society is weakened.
Finally, Rational Choice Theory tries to explain why people commit crime. It follows the principle of a cost and benefits analysis and will be exemplified separately in later sections.
3 Traditional Theories of Crime
In this section, we consider the theories that have been proposed for White-collar Crime. Because we are not yet at a position where it is possible to determine the theoretical approach that provides a generally accepted explanation, it is neces- sary to get an overview of the several approaches that have been tried to explain the issue White-collar Crime. From the mass of traditional criminological theo- ries, we review two fundamental approaches in the following subchapters.
Edwin H. Sutherland (born August 13, 1883, Gibbon, Nebraska, U.S. - died Oc- tober 11, 1950, Bloomington, Indiana) was an American sociologist and crimi- nologist, often called the „Dean of Criminology” 10 because of his pioneering work in the area. Sutherland received his Ph.D. from the University of Chicago in 1913 in sociology and political economy. After teaching at various other uni- versities, Sutherland took a position at Indiana University in 1935, where he re- mained until his death. He is considered as one of the most important criminolo- gists of the twentieth century. In appreciation of his great influence for the under- standing of crime, the most important annual award of the American Society of Criminology is named after him. 11
3.1.1 Theory of Differential Association
Sutherland´s Theory of Differential Association is said to be the first and serious effort for explaining criminal behavior and at the same time one of the most influential social learning theories of crime.
The theory went through different stages of development. Sutherland first evolved seven statements in the 1939 edition of „Principles of Criminology” then develop these into the final form of nine statements in the fourth edition in 1947. 12
Principles of Differential Association:
1. Criminal behavior is learned.
This assumption presents a considerable difference to the classical criminological theories. Lombroso for example defended the opinion that criminality is inherited, and someone is a „born criminal”. 13
2. Criminal behavior is learned in interaction with other persons in a pro-
cess of communication.
Sutherland postulated that communication is essential in learning criminal behavior. The term „association” stands for the contacts with others re- spectively their behavior, as an explanation for the name of the theory.
3. The principal part of the learning of criminal behavior occurs within inti- mate personal groups.
The most intimate social contacts as family, friends or peer have the greatest influence on deviant behavior. Impersonal communication, such as movies or newspapers hardly play a role in committing criminal behav- ior.
4. When criminal behavior is learned, the learning includes:
(a)Techniques of committing the crime, which are sometimes very com- plicated, sometimes very simple
(b)The specific direction of motives, drives, rationalization, and attitudes.
5. The specific direction of motives and drives is learned from definitions of
the legal codes as favorable or unfavorable.
Sutherland´s central statement is derived from the deliberation that every person has both definitions favorable to violation of law and definitions unfavorable to violation of law. This statement explains the term „differential” in the name of the theory.
6. A person becomes delinquent because of an excess of definitions favorable
to violation of law over definitions unfavorable to violation of law.
The sixth statement embodies „the principle of differential association”. 14 People become criminal because of contacts with criminal patters but also because of isolation from non-criminal patterns.
7. Differential association may vary in frequency, duration, priority, and in- tensity.
Sutherland assumed that all associations do not carry equal weight and that their quality influence whether a person becomes criminal or not. Fre- quent contacts have greater effects then infrequent contacts. Those of long duration have a greater influence than those of short duration. Priority re- fers to the time that particular associations are initiated. Childhood experi- ences have a greater impact than experiences in later life. Finally intensity explains the degree of identification with special associations. For exam- ple, the influence of a close friend outweighs the impact of small ac- quaintance.
8. The process of learning criminal behavior by association with criminal and anticriminal patterns involves all of the mechanisms that are involved in any other learning.
This statement emphasizes that learning criminal behavior do not vary from any other learning processes, such as writing, painting or reading.
9. While criminal behavior is an expression of general needs and values, it is not explained by those general needs and values, since noncriminal behavior is an expression of the same needs and values.
The final statement of differential association suggests that both criminal behavior and common behavior are products of similar needs and values. Regarded as an example, thieves generally steal in order to save money, but likewise honest employees work in order to money.
In summarizing Sutherland´s Theory of Differential Association posits that „criminal behavior is learned in association with those who define such criminal behavior favorably and insolation from those who define it unfavorably, and that a person in an appropriate situation engages in White-collar Crime if, and only if, the weight of definitions favorable exceeds the weight of the unfavorable defini- tions.” 15
The major criticism of Sutherland´s theory relate to the empirically testability. The concept of definitions favorable of crime is vaguely and not precisely ex- plained. 16 Furthermore, the statement leaves the question about the „.
1 Vgl. Nestler / Salvenmoser / Bussmann (2009) S.11ff.
2 Brown/ Esbensen/ Geis (2010) S.134
3 Sutherland (1983) S.7
4 Vgl. Kaiser/ Schöch (1994) S.149
5 Vgl. Tibbetts, Hemmens S.5ff.
6 Vgl. Schwind (2011) S.91 ff.
7 Vgl. Allan (2010) S.236ff.
8 Vgl. Tibbetts (2011) S.141ff.
9 Vgl. Regoli/ Hewitt/ Delisi (2010) S.202ff.
12 Sutherland/ Cressey (1947) S.75 f.
13 Lilly/ Ball/ Cullen (2011) S.23 ff.
14 Sutherland/ Cressey (1974) S.75
15 Benson/Sally (2009) S.55
16 Matsueda (1988) S.296