Occupational crimes and corporate crimes are generally considered prominent forms of white-collar crime. Although terms such as white-collar crime, occupational crime, and corporate crime are often used interchangeably, it is important to identify distinctions among these different crimes. Occupational crimes refer to crimes perpetrated during the course of a person’s legitimate occupation by leveraging access within an organization and/or status as a trusted professional for personal gain, often at the expense of the organization itself. Occupational crime can be committed by anyone in an organization ranging from lower level employees stealing money or supplies to executives embezzling money for personal gain. In contrast to occupational crimes that focus primarily on individuals, corporate crimes refer to crimes committed by a company through the collective harmful actions of many individuals throughout an organization who make conscious decisions to engage in crimes to further either their own goals or those of the organization. Generally, corporate crime consists of socially harmful actions taken on behalf of the corporation, presumably to further the organization’s interests but which ultimately may cause tremendous harm not only to society at large but also to the organization itself. An important distinction is also appropriate between occupational and corporate crime and other types of deviance (violations of behavioral norms) occurring in occupational settings (e.g., sexual harassment and alcohol or illicit drug use). These actions may or may not constitute criminal offenses, but they are considered inappropriate in the workplace. Similarly, other conventional street crimes (e.g., homicide, assault, vandalism) can occur in the workplace but are not considered occupational or corporate crimes. This entry provides an overview of the impacts, characteristics, and motivations of occupational and corporate crimes, then examines the types of occupational and corporate crime that are most common.
Impacts
Occupational and corporate crimes result in substantial societal harm ranging from individual monetary losses to adverse macroeconomic, human health and safety, and environmental impacts. Due to their complexities and the substantial dark figure of crime (where only a small portion of crime becomes known to law enforcement and thus reflected in official records), the scope and scale of the damages to consumers, employees, businesses, investors, and society from occupational and corporate crime is impossible to fully measure. Undoubtedly, the total impact of these crimes is more widespread than what is known.
Occupational and corporate crimes take many forms and have been persistent throughout history. Many early corporate crimes centered on trade manipulation by restricting access to food and supplies for economic or political gain. One case that shaped contemporary ideas of corporate crime was the South Sea Company Bubble in London in the early 1700s, whereby the company’s stock price was artificially inflated through excessive speculation over the course of a decade, eventually leading to its collapse and massive losses. The crime was facilitated by insider trading and corruption through bribery of politicians and other officials. In the United States, some of the most egregious corporate crimes have included the railroad scandals of the mid-1800s, bank collapses in the 1920s and 1930s (contributing to the onset of the Great Depression), the savings and loan crisis in the 1980s, large-scale corporate frauds of the early 2000s (e.g., Enron, WorldCom, Tyco, Global Crossing, Adelphia), and the subprime mortgage crisis in the late 2000s, which nearly led to the collapse of the global financial system. These crimes resulted in various regulatory reforms of the legal structure dictating corporate governance and criminal liability.
Characteristics
Occupational and corporate crimes exhibit several notable characteristics. Occupational and corporate crimes rely on a false sense of legitimacy, restricting the ability to detect them, particularly in the short term. This false legitimacy requires the use of deception. Offenders often disguise their true intentions and maintain an upstanding, professional outward persona to gain seemingly legitimate access to potential victims. These victims are often employers, employees, investors, customers, vendors, or others who regularly associate with the offenders. Interactions tend to occur during routine, day-to-day activities that fail to arouse suspicions.
In addition to legitimate access, occupational and corporate crimes involve deliberate and calculating attempts to conceal the crime, both during its commission and after it is uncovered. Elaborate concealment techniques coupled with the legitimate appearance of the offense make detection especially difficult. Technological advances, including the widespread use of electronic transactions, have made it easier for offenders to engage in crime virtually, maintaining substantial distance from their victims. Detecting cyber crimes can be particularly challenging as concealment may involve layers of complex transactions and the collusion of multiple parties.
Another distinctive characteristic of occupational and corporate crime is an abuse of trust in the offender–victim relationship. It is impossible to navigate the intricacies of modern society without the ability to trust professionals to care for various aspects of life. For example, doctors are relied upon to diagnose and treat illnesses; banks, investor– brokers, or financial advisers to manage and protect money; lawyers to provide sound legal advice; and auto mechanics to properly repair vehicles. These trust-based relationships stem from knowledge or information asymmetry, where experts in various professions maintain an advantage over those whose expertise lies in other areas. This trust is therefore necessary for society to thrive, while simultaneously generating perpetual opportunities for abuse when personal interest conflicts with a professional’s fiduciary responsibility.
Finally, occupational and corporate crimes are difficult to detect, prevent, and sanction and have not received as much attention as conventional street crimes. Although originally meant to bring attention to the crimes of powerful individuals of higher social status who were not receiving adequate attention in the criminal justice system, many have adopted an offense-based approach to white-collar crime, focusing on the specific type of crime as opposed to the socioeconomic status of the offender. While these offenders sometimes have high socioeconomic status, most convicted offenders are not powerful elites but instead are middle-class individuals involved in more mundane crimes. Corporate crime offenders found in official records are not necessarily well-known multinational corporations but are more typically small- to medium-sized businesses. One reason for this is that there are more smaller businesses than larger corporations, making it more likely that their criminal activities will be identified and represented in official records. Another is the power differential between large and small businesses, where large corporations use their influence to avoid criminalization of their harmful actions.
Motivations and Rationalizations
Humans are driven by the desire not only to better their lives but also to be socially accepted and viewed as successes in the eyes of their peers. Similarly, since the dawn of the corporate organization, there has been a drive to gain and maintain strategic advantage to survive and thrive in a competitive environment. These pressures are a tremendous incentive to bend or break the rules, regardless of the negative impacts on others. Occupational and corporate criminals are not always greedy one-time offenders but consist of intermittent opportunists as well as chronic repeat offenders. While economic gain is often the primary motivating force behind these crimes, many motivations can compel professionals to act unlawfully. For instance, what is commonly perceived as greed-based behavior could also be interpreted as the fear of failing to meet expectations or maintain the status quo and/or social status. Various other forces influence criminal behavior, including personal emergencies, interpersonal conflicts, and changing external environments.
In addition to individual motivations, organizational characteristics (e.g., history, structure, processes, and culture) motivate and/or encourage rationalizations legitimizing criminal behavior. Organizational history includes the development and changes to the organization over time, including types and numbers of workers, leadership, and significant events influencing where an organization has been and what its future in relation to the rest of the world will be. In addition to history, corporations have varying structures, ranging from pyramidal and centralized to flat and decentralized. Depending on the specific structure, allocation of authority, and channels of communication throughout the organization, there may be greater or fewer opportunities and incentives for crime.
Organizational culture is highly complex with both internal and external pressures interpreted differently by individuals throughout the organization. An organization’s profit-oriented culture is one of these crime-conducive characteristics. As organizations are primarily evaluated by how efficiently and effectively they achieve their economic goals, considerable pressure is placed on employees to meet high expectations with regard to profitability, market share, brand recognition, and financial capital. Culture is generally dependent on the tone set at the top of the organization.
Management decisions and policies prescribe organizational goals and dictate the acceptable means to achieve them. Employees can be socialized into conformity through patterned interactions with one another, which can result in an increased likelihood of groupthink, or lack of individual discernment. Many come to the belief that preserving the organization’s reputation, maintaining market share, preventing investor losses, or advancing their career is more important than other priorities, including adhering to the law. This is not to say that executives and managers are explicitly promoting criminal behaviors, but inaction or indifference is sometimes sufficient to propagate a deviant organizational culture. Cultural transmission, thereby, plays a role in pulling individuals toward a mental state where certain departures from conventional societal norms are accepted to achieve organizational goals.
Various justifications and excuses are used to neutralize the potential impacts of occupational and corporate crimes. One of the most common rationalizations is the denial of responsibility, whereby offenders deny culpability for their actions and shift blame elsewhere. This is easy to accomplish in the context of an organization where multiple actors are involved and a scapegoat is readily identifiable. It is common for offenders to diffuse the harm resulting from their crimes across numerous victims by arguing that each individual victim experienced little or no actual damage. This is common when the crimes victimize many investors or employees or when taxpayers are the primary victims. Taken together with limited direct contact and the difficulty in identifying victims, offenders can often neutralize any guilt for their actions.
External influences further impact rationalizations for occupational and corporate crimes. The complexity of laws and regulations often results in frustration and apathy, with many perceiving the law as illegitimate or unreasonably inhibiting their ability to succeed in a free market economy. Similarly, they may perceive law enforcement as incompetent and untrustworthy, condemning those who are accusing them of wrongdoing. Frequent regulatory changes in certain industries can also serve as an excuse for crime due to unfamiliarity with new rules.
These characteristics of corporate organizations influence offenders’ rationalization processes, which in turn allow them to reinterpret their situation as exceptions to their underlying moral beliefs, thus justifying their criminal behavior. Furthermore, given the difficulties in detecting and prosecuting occupational and corporate crimes (especially in terms of establishing motivation and intention), these organizational characteristics represent frequently used (and often successful) strategies for avoiding criminal liability for occupational and corporate crime.
Common Offense Types
Occupational and corporate crime take numerous forms including embezzlement; bribery and corruption; economic espionage; fraud (e.g., securities fraud); insider trading; tax avoidance; antitrust violations; and health, safety, and environmental violations. This should not be considered an exhaustive list but instead an illustration of several common types of occupational and corporate crime.
Embezzlement
Embezzlement is the misappropriation of money and/or personal properties belonging to an organization by offenders who leverage positions of trust to perpetrate the theft, such as when an executive siphons money from a company for their personal use.
Bribery and Corruption
Bribery (e.g., kickbacks) typically involves two or more parties in a quid pro quo relationship, where one party offers something of benefit (often money) in exchange for a specific outcome, such as a business deal, favorable treatment, or a change in the law or other rules.
Economic Espionage
Espionage refers to the theft or misappropriation of intellectual property, typically by selling it to a foreign government or competing organization. While traditionally thought to mainly impact technology companies (particularly those with defense contracts), any industry can be affected.
Theft of proprietary products, trademarks, and manufacturing processes are increasingly prevalent, as evidenced by widespread cases of product counterfeiting.
Fraud
Fraud is an all-encompassing umbrella term used for various illegal activities involving the use of deception and/or concealment to misrepresent information to achieve some type of illicit gain. Such deception can vary in scale and across various industries. For example, securities fraud (i.e., stock or investment fraud) involves the misrepresentation of commodities or stocks to entice investors. Many high-profile corporate crimes have involved fraudulent financial statements (e.g., Enron, WorldCom, Freddie Mac, Lehman Brothers).
Insider Trading
Insider trading represents a breach of fiduciary responsibility by individuals with special access to information that is either confidential or has not yet been publicized. These offenders take advantage of their privileged knowledge by trading the company’s securities at strategic times for personal financial gain.
Tax Avoidance
Tax avoidance is the deliberate underpayment or nonpayment of taxes owed to governmental entities. This can include the use of tax shelters, although the complexity of tax codes often provides these methods the appearance of legality. Failure to report income gained through illegitimate means (e.g., committing other crimes, such as drug trafficking) is also considered tax avoidance.
Antitrust Violations
Antitrust violations refer to the creation of monopolies that interfere with legitimate market competition. Examples of anticompetitive conduct may include exclusive dealing arrangements, mergers and acquisitions designed to monopolize market share, and price discrimination.
Health, Safety, and Environmental Violations
Corporations are subject to laws and regulations designed to protect the public interest, human health and safety, financial stability, and consumer and environmental protection. Crimes are often committed by companies violating the letter and/or spirit of these laws.
References:
- Barak, G. (Ed.). (2015). The Routledge international handbook of the crimes of the powerful. New York, NY: Routledge.
- Benson, M. L., & Simpson, S. S. (2009). White-collar crime: An opportunity perspective. New York, NY: Routledge.
- Geis, G. (2007). White-collar and corporate crime. Upper Saddle River, NJ: Pearson Prentice Hall.
- Pontell, H. N., & Geis, G. (Eds.). (2007). International handbook of white-collar and corporate crime. New York, NY: Springer.
- Shover, N., & Wright, J. P. (Eds.). (2001). Crimes of privilege: Readings in white collar crime. New York, NY: Oxford University Press.