Practice Profile: Corporate Crime Deterrence

These deterrence strategies are formal legal and administrative prevention and control tactics designed to prevent the occurrence of corporate crime. Strategies could include laws, regulatory policies, or punitive sanctions. The practice is rated Ineffective for reducing individual- and company-level corporate crime.

Program Goals

Corporate crime deterrence strategies are formal legal and administrative prevention and control tactics designed to prevent the occurrence of corporate crime. Corporate crime is defined as conduct by a corporation or an employee acting on behalf of the corporation that is punishable by law (Braithwaite 1984).

Corporate crime can include a wide array of illegal activities that are criminally, civilly, and administratively proscribed and may be undertaken by managers, employees, or the corporation as a way to meet organizational goals. Corporate crime can typically be distinguished from white-collar crime, by determining the use of resources and the party that gains from the offense. The use of organizational resources and organizational gains is typically indicative of corporate crime. White-collar crimes generally include offenses in which the gain is personal, not organizational. 

For this review, corporate crime offenses can include offenses in the following categories: administrative noncompliance, environmental violations, financial violations, labor violations, manufacturing violations, and/or unfair trade practices. Each may take many forms. For instance, unfair trade practices can include monopolization, price-fixing, unfair advertising, as well as price discrimination. A key feature of corporate crime offending is the complexity of the crime. While there are exceptions to this, many corporate crime offenses involve multiple interconnected actors and organizations, occur over a long period of time, and entail manipulating companies and billions of dollars (Simpson et al. 2014).

Practice Components

Interventions or strategies targeting corporate crime are typically focused on legal restraints, including laws or regulatory policies. Laws educate the public and corporations about appropriate behavior and dictate the punishments, should wrongdoings occur. Violations of laws can prompt official reaction (filing a case, prosecution, conviction) and/or the application of sanctions.

Alternatively, regulatory policies set guidelines for what firms can and cannot do and set guidelines for behavior. If an organization fails to meet regulatory standards, administrative and civil sanctions may be brought against the organization. Regulatory sanctions occur outside of the criminal justice system and may be handled by administrative agencies (e.g., the Securities and Exchange Commission).

Practice Theory

Corporate crime deterrence is grounded in the deterrence theory. The deterrence theory posits that fear of detection, as well as certainty of severe sanctions for offending, will promote compliance. Corporate laws and regulatory policies that work to prevent corporate crime do so through prevention and deterrence.

Laws can prevent crime by telling people and corporations which behaviors are acceptable or prohibited. Laws can also deter crime by increasing the informal monitoring of behaviors. In other words, when individuals know that a certain behavior is illegal they may be more likely to report it. 

Regulatory policies, such as inspections and warning letters, can educate corporations by identifying their areas of noncompliance. The official sanctions that result from law violations and regulatory policy violations can deter those tempted to commit a crime because of the fear of apprehension. Finally, official sanctions and regulatory actions also increase the risk of reputational damage, which can serve as a powerful deterrence for companies.

Although the meta-analysis evaluated whether or not the effects varied by the unit of analysis (e.g., corporations vs. individuals), for the purposes of this review only corporate-level outcomes were analyzed.

These sources were used in the development of the practice profile:

These sources were used in the development of the practice profile:

Braithwaite, J. 1984. Corporate Crime in the Pharmaceutical Industry. London: Routledge & Kegan Paul.

Institute for Work & Health (IWH). 2015. What Researchers Mean by Cross-Sectional vs. Longitudinal Studies. Accessed October 29, 2015: