Why Managers Commit Fraud*
| Author | Donald R Cressey |
| Published date | 01 December 1986 |
| Date | 01 December 1986 |
| DOI | http://doi.org/10.1177/000486588601900402 |
| Subject Matter | Original Articles |
AUST
&NZ
JOURNAL
OF CRIMINOLOGY (December 1986) 19 (195-209) 195
WHY MANAGERS COMMIT FRAUD*
Donald RCresseyt
The Western world has effectively reduced the incidence of malaria, tuberculosis
and
other
infectious diseases. It has done so by developing valid knowledge about
disease causation and then using the knowledge in preventive programmes for
eliminating the causes. Sooner or later, street crime will be controlled by the same
procedure. Management fraud, too, will decline in frequency and severity when we
develop knowledge about its causes and then use the knowledge in prevention
programmes.
Given the present state of behavioural science and of politics, we must continue
our efforts to reduce management fraud by the hit-or-miss punitive and defensive
measures which have been so notably unsuccessful with reference both to street
crime and to white-collar crime. These include punishing and incapacitating
violators, minimizing trust and freedom by close surveillance, and barricading
wealth with burglar-proof strong boxes, electronic locks and tamper-proof
computers. But when efficiency in reducing the incidence of management fraud
becomes a high priority societal goal, such programmes of punishment and
incapacitation will be supplemented, even replaced, with interventionist measures
based on knowledge of why managers steal. Accordingly, the first step in a practical
programme for reducing the management fraud rate is production of better
information about the cause of this kind of criminal behaviour.
Scientists concerned with causation in other fields have made important
contributions to policy.
For
example, public health policies as well as personal
hygiene practices pertaining to malaria are effective _because contemporary
scientists and others understand what causes malaria. This understanding, in turn,
rests on the shoulders of the 19th century scientists who developed the so-called
"germ theory" of disease, a set of propositions about the cause of infectious
diseases.
Behavioural and social scientists are far from an understanding which would
make it possible to control crime in this scientific sense. More specifically,
criminologists have not developed an accepted general theory of crime causation
comparable to the "germ theory" of disease and so have not developed generally
accepted explanations of specific kinds of criminal behaviour such as burglary or
management fraud either.
Nevertheless, one body of criminological theory makes good sense of
management fraud and other crimes. This theory, originally and usually called
"differential association" but now occasionally called "social learning theory" as
well, supports the notion that if management fraud is to be reduced significantly,
the ethics of business personnel will have to change significantly.
The differential association principle tells us that individuals violate the law
because their social world contains multiple moralities, not a single one. People
promote the idea that crime and criminality are indecent, bad, immoral, illegaL If
'"
Thirteenth Annual John Barry Memorial Lecture, delivered at the University of Melbourne,
26 August 1986. The Lecture is based on testimony presented to the Judiciary Committee, United
States Senate, 11 March 1986.
tProfessor-of Sociology, University of California, Santa Barbara; President, the Institute for Financial
Crime Prevention, Austin, Texas; 1986 Visiting Fellow, in the Department of Sociology,
ANU,
Canberra.
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