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New study proposes a 12-step model to understand white-collar crime.

Researchers expose a pattern for white-collar crime

by Hans Villarica
Oct 28, 2009

The 12 steps embroiled in white-collar crime involve positions of power, feelings of superiority and the need for control, according to a new study. 

Researchers examined roughly 80 cases of white-collar crime all over the world and talked to dozens of the perpetrators to identify events that typically transpire during episodes of criminal behavior.

Their research included many high-profile cases involving companies such as Hollinger International Inc., which formerly owned the Sun-Times Media Group, and Enron Corp.

“I saw a pattern that repeated in cases where managers engaged in white-collar crime,” said researcher Carey Stevens, a Canadian clinical psychologist who has consulted for large corporations for over 15 years. “It was clear to me that the dynamic between individuals in the organization was a critical factor in these managers’ fall from grace.”

Stevens collaborated with Canadian researchers Ruth McKay, a business professor at Carleton University in Ottawa, and Jae Fratzl, a workplace bullying expert and psychotherapist. Their paper will appear in the International Journal of Business Governance and Ethics.

The researchers analyzed nearly 50 cases of white-collar crime through face-to-face discussions with employees of companies facing white-collar crime, incarcerated people who participated in white-collar crime and whistle-blowers. The researchers also examined 30 first-person accounts and court records involving other criminal cases, including cases that bilked Barings Bank, WorldCom Inc. and Enron Corp.

The study proposes the following 12-step process of white-collar crime:
  1. Perpetrator is hired into a position of power
  2. Perpetrator develops a sense of superiority and engages in illegal activity
  3. Co-workers recognize perpetrator’s misconduct and become passive participants
  4. Passive participants recognize opportunity
  5. Passive participants reluctantly follow the perpetrator
  6. Perpetrator distrusts followers and feels the need for control
  7. Perpetrator senses his power over followers and is emboldened
  8. Perpetrator bullies followers and relishes his hold on them
  9. Perpetrator intensifies white-collar crimes as followers feel increasingly trapped
  10. Followers struggle with the conflict between their values and actions
  11. Perpetrator loses control as a whistle-blower steps forward
  12. Perpetrator denies or admits to wrongdoing and shows lack of remorse
The researchers believe organizations could use this pattern to identify symptoms of white-collar crime and to prevent its occurrence.

“The model really indicates the need for organizations to consider the relationships between those at the senior level of an organization and those at the controls of the organization,” Stevens said. “Maybe we need to question the paradigm of business where entitlement is an indicator of success. The financial crisis has made governments and financial institutions revisit the pay structures for executives and all organizations should be doing this.”

Business academics, however, are divided in their assessment of the study, with some expressing concern regarding the methodology.

“Rather than being described as a ‘study’ in the academic sense, I would call this an expression of ideas based on the authors’ observations and readings,” stated Neal Ashkanasy, a management professor at the University of Queensland in Brisbane, Australia.

Bruce Gurd of the University of South Australia agreed in an email. “The article uses informal case evidence,” he noted. “This is very useful but academics often look at a large number of cases and come up with more generalizable findings.”

McKay maintains that the study was only intended to explain the phenomenon of white-collar crime and that further research is being conducted to address these limitations.

“The research was initially qualitative in nature,” she said. “Qualitative research is not designed to be vastly generalizable.”

Still, Giles Burch of the University of Auckland in New Zealand stated that the study is “significant” as there is considerable interest in white-collar crime.

“I think their 12-step process breaks down these kinds of behaviors into useful chunks, which help clarify what is going on,” he said.