Sanction Threats and Appeals to Morality: Testing a Rational Choice Model of Corporate Crime

Abstract

We specify and test a rational choice model of corporate crime. This model includes measures of the perceived costs and benefits of corporate crime (for both the firm and the individual), perceptions of shame, persons' assessment of the opprobrium of the act, and contextual characteristics of the organization. Consistent with this model, we find that intentions to commit four types of corporate crime are affected by sanction threats (formal and informal), moral evaluations, and organizational factors. Net of the various incentives and disincentives for corporate crime, persons' personal moral code was found to be a very important source of inhibition. In fact, when moral inhibitions were high, considerations of the cost and benefit of corporate crime were virtually superfluous. When moral inhibitions were weak, however, persons were deterred by threats of formal and informal sanctions and by organizational context. We contend that theoretical models of corporate crime and public policy efforts must contain both instrumental (threats of punishment) and deontological (appeals to morality) factors.