SOCIAL LEARNING THEORY IN WHITE-COLLAR CRIME-ENRON SCANDAL

Social Learning Theory In White-Collar Crime-Enron Scandal

Social Learning Theory In White-Collar Crime-Enron Scandal

Introduction

Unlike conventional or street crime, white collar crime does not strike fear in the hearts of the American people. In the past few decades, the threat of conventional crime has driven people behind gated communities and into the perceived sanctuary of Suburbia. Yet white-collar crime has cost the USA several times more monetarily to each and every one of us than all conventional and street crimes combined, not to mention the social cost of losing faith in our corporations. This is demonstrated by the history of financial malfeasance on Wall Street, including the insider trading scandals of the 1980s as well as more current cases in financial institutions such as the alleged wrongdoings in the Bear Stearns debacle of this year. Financial crime globally is rapidly more visible as exemplified by the alleged failure of Britain's regulatory agencies to control institutions like HBOS and the Bank of England (Seib, 2008). Additionally the Royal Bank of Scotland scandal demonstrated poor internal regulatory practices. The purpose of this paper is to offer diagnostic tools and treatment suggestions that corporations can implement to help prevent financial crimes from happening within their own walls.

Frequently, corporate malfeasance and social indiscretions are handled in civil rather than criminal court, and rarely broadcasted as often for mass consumption on television news programs as conventional crime, save the occasional magazine article devoted to the topic (Morris, 2008). Diverting white collar crime to civil court generally results in modest fines and little retribution, when compared to the revenue and assets of guilty corporations and their ability to pay. When criminal prosecution is pursued, plea-bargaining is common (Shapiro, 1984). The larger issue is that criminality is rarely viewed in the context of organizational structure: “Common images of deviance focus [only] on people acting individually or in small groups.” (Ermann and Lundman, 1996, p. 3). Because corporate misdeed is rarely if ever committed by all members of an organization, we should examine individual behavior and the competitive structure of corporate life that contributes to malfeasance. By “diagnosing” the root causes of corporate crime, there are better opportunities for successful “treatment.”

White collar criminality - the individual

Even though organizational and institutional theories are among the most advanced areas of sociology, those in the social sciences have done little to assist in policy making or theory building in the case of unethical behavior, whether from the standpoint of individual deviance. Collins (1975, p. 286) noted that within the discipline of sociology, the study of organizations stands isolated from other aspects of sociology, “even though most of the other things sociologists study - stratification, politics, education, deviance, social change - are based on organizations or take place in them.” Sutherland (1973) claimed that economists did not look at business from a standpoint of criminality, while criminologists largely failed to examine crime committed during the course of conducting business. When Sutherland coined the term “white-collar crime,” he may not ...