There are good reasons to believe that a tide of organizational crime is occurring; criminal opportunities have increased as oversight has not kept pace, and competition is stoked to new intensity by globalization of production and markets. Research into criminal deterrence suggests that the certainty of threatened punishment has a modest deterrent effect, but the severity of threatened punishment has little if any.
II. Counting and Mapping Organizational Crimes
Organizational crime is the violation of criminal statutes committed in pursuit of the goals of legitimate organizations, organizational subunits, or work groups. Individuals and groups commit organizational crime when they transgress not primarily from self-interests but instead in pursuit of organizational ones. Reasons for interest in distinguishing and examining organizational crime begin with the fact that when individuals commit criminal acts, they do so while at work, in their employment roles. In the industrialized and postindustrialized world, overwhelmingly these are situated in organizations, whether they be charitable organizations, universities, religious organizations, military units, or other legitimate organizations. In contrast to crime, organizational illegalities are violations of state-enacted and state-enforced rules that do not rise to the level of criminal offenses. They consist primarily of violation of administrative or regulatory rules of the kind that are ubiquitous in modern states. They are regarded as civil violations and typically are met with warnings or minor civil fines. Diverse forms of rule breaking, from the felonious to the unethical, however, almost certainly have their origins in similar organizational contexts and conditions. Industries and organizations where there are high levels of crime almost certainly are places where illegalities are more common also. Historically, the study of organizational crime and illegalities has been seen as part of the effort to understand and explain white-collar crime.
One of the principal rationales for distinguishing organizational crime from other types of crime is the heavy financial, physical, and emotional toll it exacts from victims. In marked contrast to street crimes, the cost and impact of some organizational crimes can range into millions of dollars and victimize entire nations. Another reason for isolating organizational crime for study is the fact that organizational properties and dynamics can be autonomous and significant causes of it and the response it elicits. Characteristic features of organizations, from authority differentials and an emphasis on loyalty to task specialization and the situational importance of secrecy, can affect the odds of crime commission. By itself, hierarchy, which essentially provides that some will control the work activities of others, may do so. Organizational arrangements can obscure decision-making participation and dynamics and thereby increase the difficulties of oversight. They also can diffuse responsibility for misconduct, which may facilitate individual willingness to participate. The potential importance of organizational conditions as causes of crime is most obvious where there are long-standing patterns of criminal violation in organizations. In these circumstances, the pathologies of individuals fail as explanation.
The causes of organizational crime need not be confined to the organizations’ internal worlds, however; the nature and dynamics of organizational environments also affect the odds of crime. This is exemplified by industries where there is evidence of significant criminality over many years or where there are recurring cycles of crime and prosecution. The category of organizational crime excludes crime committed in the context and in pursuit of goals of organizations in which crime is the principal means of livelihood and collective success. The crimes of international drug smugglers and other syndicated criminals, for example, are organized, but they are not organizational crime.
Corporate crime is a subtype of organizational crime that occurs in profit-seeking organizations. It is distinguished from the parent category because of belief that criminogenesis is unusually characteristic of corporations and their environments. The emphasis in for-profit organizations, for example, of unalloyed economic calculation coupled with possibly distinctive structural and cultural features are examples of this.
The pages that follow describe sources of data and methods used in studies of organizational crime. They show that both aggregate rates of organizational crime and criminal participation by individual organizations vary substantially. Risk and protective factors that contribute to this variation are summarized and examined, and rational choice theory as an organizing framework for them is demonstrated. This is followed by description of what is known about state and private responses to organizational crime and illegalities. The research paper concludes by examining effects of economic globalization on competition, oversight, and the dominant regulatory approach to illegalities and organizational crime.
II. Counting and Mapping Organizational Crimes
Few sources of information or data on crime categorize and report information specifically on organizational crimes. Most reporting categories instead are based on and reflect statutory crime definitions. Fraud and antitrust offenses are prime examples. This means that investigators interested in organizational crime must construct a picture inferentially, however tentative, of the problem and key aspects of it. Many, if not most, investigators are more interested in corporate crime specifically, instead of organizational crime generally, but the two usually are treated as coextensive. Studies of corporate crime make up by far the largest part of what is known about organizational crime.
Official data on organizational crime and criminals pale in quality, comprehensiveness, and analytic utility beside data on street crime. Through its Bureau of Justice Statistics, the U.S. Department of Justice annually issues a torrent of information on robbers, burglars, drug offenders, and other street criminals. It publishes next to nothing on organizational or corporate crime. Information on illegalities is more bountiful and accessible; annual reports by federal and state regulatory agencies detail the number and types of regulatory violations recorded in the preceding year. Increasingly, these reports on illegalities are available on the Internet. The net result of shortcomings in data is inability to measure with comprehensiveness or confidence the volume and distribution of organizational crime.
Past research on organizational crime includes a high proportion of case studies. Journalists and academics alike have provided detailed descriptions and post-mortem analyses of some of the most egregious, destructive, and costly organizational crimes. The crimes of Enron Corporation, for example, were the subject of several detailed print media reports, insider accounts, and cinematic productions in the years following its collapse. Industries in which notable crimes or long-term or cyclical patterns of criminality occur have been examined as well. What is often obscured through attention to newsworthy organizational crimes are the mundane organizations and crimes that more typically draw attention from regulators, police, and prosecutors. Case studies are useful, however, for the insight they provide on organizational and interpersonal dynamics that can result in crime. Some shed light also on the dynamics of denial and cover-up.