A Criminological Perspective on Business Ethics

White-collar crime has a strong influence on business ethics. Joseph Heath uses a criminological perspective to help illuminate some traditional questions in business ethics in his paper: “Business Ethics and Moral Motivation: A Criminological Perspective

Heath starts off with the premise that the ‘‘ethics scandals’’ in the early years of the twenty-first century was not a business ethics failure. What really took place at companies like Enron, Worldcom and Parmalat was high-level, large-scale white collar crime. Their illegal acts were probably surrounded by unethical conduct. But their core actions all involved a failure to comply with the law.

The bulk of the paper is spent looking at the techniques of neutralization that offenders use to deny the criminality of their actions. When white collar crime is viewed from the perspective of techniques of neutralization you can see why bureaucratic organizations such as large companies and the market, might constitute “peculiarly criminogenic environments.”

These are institutional contexts that generate a very steady stream of rather plausible (or plausible-sounding) excuses for misconduct. This is the result of a confluence of factors: first, corporations are typically large, impersonal bureaucracies; second, the market allows individuals to act only on the basis of local information, leaving them in many cases unaware of the full consequences of their actions; third, widespread ideological hostility to government, and to regulation of the market in particular, results in diminished respect for the law; and finally, the fact that firms are engaged in adversarial (or competitive) interactions gives them broader license to adopt what would otherwise be regarded as anti-social strategies.

Denial of responsibility

The offender claims that conditions of responsible agency were not met: it was unintentional; he was insane, he was provoked, he had ‘‘no choice’’ but to do it, it was all an accident, etc.

In a company, an employee can blame his boss for telling him to do something wrong. The boss can pass the blame back down to the worker saying they acted independently.  The competitiveness of the marketplace and the workplace means that if one individual refuses to perform an illegal act, he may feel that he could simply be replaced by someone else who would.

Denial of injury

The offender seeks to minimize or deny the harm done.

Most white collar criminals never meet or interact with those they harmed.  In many cases they wouldn’t even know how to find their victims.  “In these cases, there is potential confusion as to the identity of the individuals who are harmed by the criminal’s actions. In other cases, the mere fact that there is diffusion of the harm over a very large number of persons is appealed to as grounds for denial that anyone was injured by the person’s actions.”

Denial of the victim

The offender acknowledges the injury, but claims that the victim is unworthy of concern because he deserved it.

The underpayment inequity is common. It’s hard to find an employee who believes that an enhancement of  justice in society would require a reduction of his compensation package. On the other hand workers may feel undercompensated, ignoring the difference between the ease with which they can be replaced that determines their wage rate, and their contribution to the company.

It is really easy for workers to convince themselves that they are not stealing. Instead they believe they taking what they are owed, or they are punishing the company for treating employees poorly.

Condemnation of the condemners

The offender attempts to ‘‘turn back’’ the charges by impugning the motives of those who condemn his actions.

The classic examples in corporate crime are the charges fired back at Eliot Spitzer during his time as Attorney General when he exposed a wide range of  practices in the financial services industry. His political ambitions were often discussed side-by-side with his prosecutions.

Appeal to higher loyalties

The offender claims that the action was done out of obedience to some moral obligation that conflicted with the law.

You often hear “I did it for my family.” The offender can see the company as a proxy and serve as an object of higher loyalty. One theory with Ken Lay and Jeffrey Skilling at Enron is that they misled investors for the sake of the company, insisting that it was a great company. There is also the more common business ethics excuse that it was done for profit and the benefit of the shareholders.

Everyone else is doing it

The mere fact that others are breaking the law is used to suggest that it is unreasonable for society to expect compliance.

This is an excuse for all kinds of crime, but it is very common in a business context because of the competitiveness of the business environment.

Claim to entitlement

An offender claims he was acting ‘‘within his rights’’ and that the legal prohibition of his conduct constituted unjust or unnecessary interference.

One of the big differences between corporate crime and street crime is how often white collar criminals deny the authority of the laws that they have broken. The argument is that the government should not regulate certain forms of private transactions.

Folk Tales of Moral Motivation

Heath argues that the focus on these techniques of neutralization are more effective in addressing business ethics and corporate crime than theories of “moral motivation.” The field of criminology has largely discredited those theories as folk tales. It’s not about character, greed, and values.

A criminologist does not think it’s mysterious that some people commit crimes. They find it mysterious that more people do not commit crimes. Only a small percentage of people chose to advance their interests through criminal activity. Even though criminal activity is punished, the chances of getting caught are usually small and the threat of punishment distant.

There are lots of lessons to be learned from this paper by compliance professionals.