Corporate Crime - Compliance or Deterrence - Essay Example

Criminology – Corporate Crime: Compliance or Deterrence? In the current competitive business environment, organizations not only had to be economically successful, but also ethically correct. That is, it has to carry out ethically correct business practices, like aptly taking care of its employees, following fair trade practices with the customers, environment friendly practices, etc. Instead, if the organization and its management carry out unethical and unfair business practices, most of the times, it will constitute as a corporate crime, leading to problems from all sides. Corporate crime in any industrial sector including sweatshops is characterized as illegal as well as harmful acts, which could be committed by the leaders and even the employees of the corporations, with the intention to promote their personal as well as corporate interests, to the detriment of many stakeholders. As these crimes could wreck the corporation, shrinking its profits, destroying its brand image, negatively impacting employees’ livelihood and in worst case scenarios total shutting down of the corporation, constructive steps will be normally taken, both by the corporations themselves as well as external stakeholders like governments. On those lines, corporate crimes can be prevented by implementing regulatory strategies or policies, which border on compliance and deterrence. Although, both these policies have advantages as well as disadvantages, compliance would be a better strategy to combat corporate misconduct particularly in sweatshops. Compliance regulatory strategy puts the onus on the sweatshops themselves, while deterrence regulatory strategy brings in the role of external prosecution agencies. Compliance strategy concentrates on the power of regulatory agencies to encourage corporations or sweatshops “to comply with the law before crimes are committed”, on the other hand, deterrence strategy “rely on criminal prosecutions to prevent corporate crime after the crime has already been committed.” (Coleman, 2008). Thus, the basic difference as well as advantage is, compliance strategy through regulatory agencies as well as self-regulation could preempt and prevent the crime as well as other violations from taking place, while deterrence focuses on aftermath of those crimes or violations. In line with the old adage of “Prevention is better than Cure”, it would be better to prevent crimes as well as human or employee rights’ violations, and that is particularly applicable to sweatshops, which employs sizable number of employees and where chances of violation of employee rights is more than finance based corporate crimes. Sweatshops in both the “parent” country as well as in the outsourced countries could employ high number of employees, and as it is the norm in the sweatshops, the working environment could be dangerous, unhealthy, thereby breaching basic human rights. Thus, in order to facilitate or even force sweatshops to function in an ethical manner, governments, or parent corporations, or sweatshops themselves, or all these main stakeholders together, will establish a compliance regulatory under which a set of regulations for ethical behavior will be formulated for implementation, and also an external player will be involved to audit whether those regulations are aptly implemented. (Rosen, 2002). The advantage with this process of involving all the key stakeholders in the formulation as well as the implementation of the compliance strategy is, as all the stakeholders have participated in the formulation, they have to naturally implement it. “This is an example of a number of transnational areas in which codes have been developed through co-operation and negotiation between industry players, trade unions and other interested NGOs”, with the government actors playing a key supportive role, thereby actualizing “a mixed system of public-private regulation”, which is a “hallmark of successful industry self-regulation initiatives.” (Bartle, & Vass, 2005). This strategy of implementing self-regulatory compliance is visible in majority of the sweatshops, and with all the key stakeholders making an active contribution instead of confrontation; it is bound to be successful. The development of compliance based corporate codes suggested a slight shift in the locus of political struggle to the market. (Fudge, 2001) Along with the above discussed reasons, the reason why compliance strategy could be the preferred strategy because if compliance is encouraged among the sweatshops, and prosecution is used as the last resort, then the management inside the sweatshops would place more respect and importance on the regulations, thereby implementing it without fail. The other thinking that could arise among the management in favor of the compliance strategy is, sweatshops could “actually benefit from increased regulation because without it they would face more civil suits from workers or consumers, and possibly avoid the possibility of criminal prosecution.” (Coleman, 2008). In addition, external regulatory agencies can be involved as part of overseeing as well as auditing the day to day operations of the sweatshops particularly any chances of violations or crimes. The reason why these external regulators can be involved as “watchdogs agencies”, instead of bringing in the criminal prosecutors at a later stage is, these regulators or regulating agencies being specialized experts would have better understanding of the way sweatshops will function. “Regulators would be visible entities within the organization with inside knowledge of its business practices, increasing the likelihood that illegal activity by corporate executives would be detected.” (Coleman, 2008). Although, these regulators have less power than the federal prosecutors, as mentioned above, they have in-depth knowledge about the business process as well as resources needed for monitoring those processes. The other limitation is, there has been criticism among the business community including sweatshops that compliance regulatory strategy could create “tension between laissez faire principles and the free market in which business operates”, with sweatshops complaining that “too much regulation serves as a barrier to the pursuit of free enterprise.” (Coleman, 2008). However, this limitation can be managed, if these compliance regulations are formulated in such an optimal way, so there is a fine and effective balance between the interests of the sweatshops as well as the employees, public, etc. From the above analysis, it can be assumed that compliance regulatory strategy can be the apt strategy that can be implemented in the sweatshops to prevent corporate crimes particularly employee rights violations. Although, there are some limitations with this policy, those can be managed or solved with apt correction strategies. As the compliance strategy could preempt and prevent crimes or violations from taking place, involves all the key stakeholders, utilize equipped and effective external regulators, etc., it can be the best strategy for sweatshops. References Bartle, I & Vass, P. (2005). Self-Regulation and the Regulatory State. Retrieved from: http://www.bath.ac.uk/management/cri/pubpdf/Research_Reports/17_Bartle_Vass.pdf Coleman, K. (2008). Controlling Corporate Crime: An Analysis of Deterrence versus Compliance. Retrieved from: http://www.cics.northwestern.edu/documents/nilr/v1n1Coleman.pdf Fudge, J. (2001). “Consumers to the Rescue? Corporate Campaigns against Labour Abuse.” In S. B. Boyd, D. Chunn and B. Menzies, eds., Abusing Power (146-59). Fernwood. Rosen, E. I. (2002). “Apparel Retailing in the United States.” In Making Sweatshops. University of Press. Read More