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Summary week 1 and 2 Corporate and White-Collar Crime
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1Summary Corporate Crime and White-collar Crime
Week 1
Reimagining Sutherland 80 years after white-collar
crime by Simpson (2019)
Definition of Sutherland: Crime committed by a person of respectability and high social status in the
course of his occupation. Corporate crime is focused on the proscribed and punishable conduct of a
corporation or of its representatives acting on its behalf to achieve organizational goals. One of
Sutherland’s most important contributions to the study of corporate crime lies with his critique of
official crime data. In his view, the data did not capture crimes by business and resulted in biased
statistics. The source of bias rested in the political and economic power of elites to influence the
administration of justice in their own favor and to create laws that apply exclusively to business and
the professions and which therefore involve only the upper socio-economic classes. Business crimes
differ from ordinary crimes principally in the administrative procedures which are used in dealing
with the offenders and not in the nature of the offending behavior itself.
Tappan argued that white-collar crimes can only be said to have occurred when identified by the
processes and requirements of formal criminal law (deliberate intent and proof beyond a reasonable
doubt). The acts cannot be classified as “crimes” because administrative and civil cases do not rely on
criminal law standards.
Despite their power and mission, federal prosecutors approach corporate prosecutions differently
from individual ones. For individual defendants, federal prosecutors seek convictions and sentences
of imprisonment. For corporations, prosecutors rely on extrajudicial settlements to pursue the types
of compliance and governance reforms one might expect of either civil regulators or litigators in
private lawsuits.
Corporate offenders do not end up in federal criminal courts often. Those that do are smaller,
younger, and less powerful companies or set up as criminal organizations. Compared with corporate
prosecutions, cases for individual fraudsters (whose offenses often are unaffiliated with legitimate
businesses) are much more likely to be prosecuted criminally. In cases where individuals were named
respondents, only one third included top executives (CEO, president, or board chair), another one
third were other line executives/supervisors, and the remaining one third were nonexecutive
employees. Few criminal prosecutions are brought against corporate leaders.
Simpson and Yeager proposed a data integration strategy that would be aimed at capturing
defendant case information from initial charges and counts all the way through case resolution. This
strategy ideally would be used to integrate and link case information across civil, criminal, and
regulatory sources for both firms and responsible managers. This way, we could compare cases and
we would get reliable and valid rates of corporate law-breaking.
The lack of systematic data on corporate offending is consequential. Perhaps most costly is the
general societal impression of crime and the typical offender. Reliance on traditional official data
gives scholars an inaccurate and stereotypical image of crime and the typical criminal.
Acknowledging the harms of corporate crime and regulatory failures, critics have suggested that the
application of law is arbitrary and primarily symbolic. This too has consequences. If corporations are
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too big to fail and too big to jail, there is an increased risk that justice will be undistributed and trust
in society and its institutions likely undermined—an observation also made by Sutherland. Because of
absent consistent and reliable measures; the true costs and consequences (as well as the meaningful
indicators of these) remain obscure.
Data deficiencies also limit our knowledge and understanding of the totality and character of the
societal response to offenders. To what extent are punitive sanctions and other kinds of
interventions levied against offending firms and their officers effective? This knowledge gap means
that empirically based prevention and control policies are, at best, few and far between if not
entirely absent. We know little about why certain cases are forwarded and why others are diverted
or dropped. What, if any, is the effect of firm characteristics on processing decisions? Do companies
that are more powerful get a better deal? Do firm characteristics affect diversion, who handles the
case (civil, criminal, administrative), whether parallel prosecutions occur, and the type and severity of
punishment? We simply do not know the answers to these important questions about corporate
criminal justice because we lack systematic data with which to answer them.
Sutherland observed variations in offending patterns over time, within and between firms, which he
attributed mainly to the location of the company in the broader economic structure. Other potential
factors considered included firm age, size, and top management team characteristics over the firm’s
life history. Sutherland was committed to the idea that differential association and social
disorganization (differential social organization in later works) could explain all types of criminality,
but he acknowledged deficiencies in the two approaches as applied to white-collar crime.
Is offending continuity caused by stable individual traits or characteristics set early in life (persistent
heterogeneity)? Alternatively, is it
influenced by certain life events above and
beyond prior patterns of involvement in
crime (state dependence)? Management
researchers have challenged organizational
life-cycle theory (e.g., not all firms go
through all of the stages, and some of the
predictions of the theory are unsupported).
Yet, the perspective may be used to provide
a meaningful framework in which to analyze
corporate offending patterns. From a state
dependence argument, one might expect
that the early phases of the organizational
life cycle (Birth and Growth phase) and latter
stages (Decline) are most apt to produce higher levels of criminal behavior but for different reasons.
There are high levels of entrepreneurial risk taking, as well as of trial-and-error learning, in the early
phases of the life cycle. These actions occur in the context of few formal bureaucratic controls. As a
firm moves toward maturity, the period of trial and error gives way to fewer surprises, more
organizational controls, responsive management, and thus, less illegal activity. From a
developmental/life-course perspective, these corporate offenders would be similar to Moffitt’s
adolescent-limited delinquents. A shift toward demise, however, can produce external and internal
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