Corporate crime

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In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corporation or other business entity (see vicarious liability and corporate liability). For the worst corporate crimes, corporations may face judicial dissolution, sometimes called the "corporate death penalty", which is a legal procedure in which a corporation is forced to dissolve or cease to exist.

Contents

Some negative behaviours by corporations may not actually be criminal; laws vary between jurisdictions. For example, some jurisdictions allow insider trading.

Corporate crime overlaps with:

Definitional issues

An 1886 decision of the United States Supreme Court, in Santa Clara County v. Southern Pacific Railroad 118 U.S. 394 (1886), has been cited by various courts in the US as precedent to maintain that a corporation can be defined legally as a "person", as described in the Fourteenth Amendment to the U.S. Constitution. The Fourteenth Amendment stipulates that,

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

In English law, this was matched by the decision in Salomon v A Salomon & Co Ltd [1897] AC 22. In Australian law, under the Corporations Act 2001 (Cth), a corporation is legally a "person".

Criminal capacity

The concepts of crime and punishment, as they apply to individuals, cannot be easily transferred to the corporate domain. [1] International treaties governing corporate malfeasance thus tend to permit but not require corporate criminal liability. Recently a number of countries and the European Union have been working to establish corporate criminal liability for certain offences. "Liability of Legal Persons for Corruption Offences". 2021-05-13. United States law currently recognizes corporate criminal capacity, although it is extremely rare for corporations to be litigated in criminal proceedings. [2] French law currently recognizes corporate criminal capacity. German law does not recognize corporate criminal capacity: German corporations are however subject to fining for administrative violations (Ordnungswidrigkeiten)

Enforcement policy

Corporate crime has become politically sensitive in some countries. In the United Kingdom, for example, following wider publicity of fatal accidents on the rail network and at sea, the term is commonly used in reference to corporate manslaughter and to involve a more general discussion about the technological hazards posed by business enterprises (see Wells: 2001).

In the United States, the Sarbanes-Oxley Act of 2002 was passed to reform business practices, including enhanced corporate responsibility, financial disclosures, and combat fraud, [3] following the highly publicized and extremely harmful (to victims) scandals of Enron, WorldCom, Freddie Mac, Lehman Brothers, and Bernie Madoff. Company chief executive officer (CEO) and company chief financial officer (CFO) are required to personally certify financial reports to be accurate and compliant with applicable laws, with criminal penalties for willful misconduct including monetary fines up to $5,000,000 and prison sentence up to 20 years. [4]

The Law Reform Commission of New South Wales offers an explanation of such criminal activities:

Corporate crime poses a significant threat to the welfare of the community. Given the pervasive presence of corporations in a wide range of activities in our society, and the impact of their actions on a much wider group of people than are affected by individual action, the potential for both economic and physical harm caused by a corporation is great (Law Reform Commission of New South Wales: 2001).

Similarly, Russell Mokhiber and Robert Weissman (1999) assert:

At one level, corporations develop new technologies and economies of scale. These may serve the economic interests of mass consumers by introducing new products and more efficient methods of mass production. On another level, given the absence of political control today, corporations serve to destroy the foundations of the civic community and the lives of people who reside in them.

Criminalization

Behavior can be regulated by the civil law (including administrative law) or the criminal law. In deciding to criminalize particular behavior, the legislature is making the political judgment that this behavior is sufficiently culpable to deserve the stigma of being labelled as a crime. In law, corporations can commit the same offences as natural persons. Simpson (2002) avers that this process should be straightforward because a state should simply engage in victimology to identify which behavior causes the most loss and damage to its citizens, and then represent the majority view that justice requires the intervention of the criminal law. But states depend on the business sector to deliver a functioning economy, so the politics of regulating the individuals and corporations which supply that stability become more complex. For the views of Marxist criminology, see Snider (1993) and Snider & Pearce (1995), for Left realism, see Pearce & Tombs (1992) and Schulte-Bockholt (2001), and for Right Realism, see Reed & Yeager (1996). More specifically, the historical tradition of sovereign state control of prisons is ending through the process of privatisation. Corporate profitability in these areas therefore depends on building more prison facilities, managing their operations, and selling inmate labor. In turn, this requires a steady stream of prisoners able to work. (Kicenski: 2002)

Bribery and corruption are problems in the developed world, and the corruption of public officials is thought to be a serious problem in developing countries, and an obstacle to development.

Edwin Sutherland's definition of white collar crime also is related to notions of corporate crime. In his landmark definition of white collar crime he offered these categories of crime:

Corruption and the private sector review

One paper discusses some of the issues that arise in the relationship between private sector and corruption. The findings can be summarized as follows:

Organi-cultural deviance

Cesare Beccaria (1738-1794) pioneered the study of crime. Cesare Beccaria.jpg
Cesare Beccaria (1738-1794) pioneered the study of crime.

Organi-cultural deviance is a recent philosophical model used in academia and corporate criminology that views corporate crime as a body of social, behavioral, and environmental processes leading to deviant acts. This view of corporate crime differs from that of Edwin Sutherland (1949), [6] who referred to corporate crime as white-collar crime , in that Sutherland viewed corporate crime as something done by an individual as an isolated end unto itself. With the Organi-cultural deviance view, corporate crime can be engaged in by individuals, groups, organizations, and groups of organizations, all within an organizational context. This view also takes into account micro and macro social, environmental, and personality factors, using a holistic systems approach to understanding the causation of corporate crime. [7] :4

The term derives its meaning from the words organization (a structured unit) and culture (the set of shared attitudes, values, goals, and practices). This reflects the view that corporate cultures may encourage or accept deviant behaviors that differ from what is normal or accepted in the broader society. [7] :140 Organi-cultural deviance explains the deviant behaviors (defined by societal norms) engaged in by individuals or groups of individuals. [7]

Because corporate crime has often been seen as an understudy of common crime and criminology, it is only recently that the study of corporate crime been included in coursework and degree programs directly related to criminal justice, business management, and organizational psychology. This is partly due to a lack of an official definition for crimes committed in the context of organizations and corporations.

The social philosophical study of common crime gained recognition through Cesare Beccaria during the 18th century, when Beccaria was heralded as the Father of the Classical School of Criminology.[ citation needed ]

However, corporate crime was not officially recognized as an independent area of study until Edwin Sutherland provided a definition of white collar crime in 1949. Sutherland in 1949, argued to the American Sociological Society the need to expand the boundaries of the study of crime to include the criminal act of respectable individuals in the course of their occupation. [8] :3

In 2008, Christie Husted found corporate crime to be a complex dynamic of system-level processes, personality traits, macro-environmental, and social influences, requiring a holistic approach to studying corporate crime. Husted, in her 2008 doctoral thesis, Systematic Differentiation Between Dark and Light Leaders: Is a Corporate Criminal Profile Possible?, coined the term organi-cultural deviance to explain these social, situational and environmental factors giving rise to corporate crime. [7] :178

Application

Renée Gendron and Christie Husted, through their research conducted in 2008-2012, expanded the concept of organi-cultural deviance, in papers presented the Academy of Criminal Justice Sciences conference Toronto, Canada, the American Association of Behavioral and Social Sciences Annual Conference, Las Vegas, Nevada, the General Meeting of the Administrative Sciences Association of Canada, in Regina, Saskatchewan, Canada, and The Humanities conference in Montréal, Canada. [9] The term organi-cultural deviance incorporated the terms group think, and yes-men, to explain decision-related cognitive impairments inherent of corporations engaging in corporate crime. The researchers have found several interconnected dynamics that increase the likelihood of white-collar crime. The researchers have found specific group dynamics involved in white collar crime are similar to the group dynamics present in gangs, organized crime organizations as well as cults. Moreover, the researchers have found that there are systems-level forces influencing the behaviors and cognitions of individuals. [10]

The subject of organi-cultural deviance was first taught in business management, leadership classes, and in a class titled Corporate Misconduct in America, at Casper College during 2008-2009. Organi-cultural deviance was introduced to students as a social philosophical term used to help describe, explain, and understand the complex social, behavioral, and environmental forces, that lead organizations to engage in corporate crime.

Social dynamics

The term organi-cultural deviance was later expanded and published in a 2011 paper titled Socialization of Individuals into Deviant Corporate Culture. [11] Organi-cultural deviance was used to describe how processes of individual and group socialization, within deviant corporate cultures, serve to invert Abraham Maslow's (1954) Hierarchy of Needs into a theoretical "Hierarchical Funnel of Individual Needs". [12] [11]

Organi-cultural deviance was further explored by Gendron and Husted, [11] using a micro-environmental approach, identifying social dynamics within deviant organizations believed to lure and capture individuals. However, through the social processes inherent of organi-cultural deviance, social pressures and influences force the individual to vacate aspirations to reach self-actualization and become complacent on satisfying lower needs, such as belongingness. In organi-cultural deviance, social dynamics and micro-environmental forces are believed, by Gendron and Husted, to result in the individual's dependence upon the organization for their basic needs. [11]

Organizations engaging in organi-cultural deviance use manipulation and a façade of honesty, with promises of meeting the individual's needs of self-actualization. The social forces such as the use of physical and psychological violence to maintain compliance with organizational goals within deviant organizations secure the individual's dependence upon the organization for satisfaction of their basic needs. As the process of organi-cultural deviance escalates, the complacency to meet mid-level needs becomes a dependency on the organization to satisfy the lower needs of the pyramid, the individual's basic needs. In the paper Using Gang and Cult Typologies to Understand Corporate Crimes, Gendron and Husted found organizations engaging in organi-cultural deviance used coercive power, monetary, physical and/or psychological threats, to maintain their gravitational hold on the individual. [10]

In the 2011 paper, Using Gang and Cult Typologies to Understand Corporate Crimes, [10] organi-cultural deviance was used to compare the cultures of: mafias, cults, gangs and deviant corporations, each of which was assumed to be a type of deviant organization. In these types of organizations, organi-cultural deviance was found to be present. In engaging in organi-cultural deviance, these organizations leverage four resources: information, violence, reputation and publicity. These types of organizations engaging in organi-cultural deviance were found to contain toxic leadership. Deviant organizations, engaging in organi-cultural deviance, were found to leverage their reputation through publicity to attract members. The combination of adverse psychological forces, combined with the real need for its employees to survive (earn a living, avoid bullying) act as a type of organizational gravitational pull. The concept of organi-cultural deviance includes both micro (personal, psychological or otherwise internal forces exercising influence over an individual's behavior) and macro influences (group dynamics, organizational culture, inter-organizational forces as well as system pressures and constraints, such as a legal system or overall economic environment).

Environmental influences

In a 2012 paper titled Organi-cultural Deviance: Economic Cycles Predicting Corporate Misconduct?, Gendron and Husted found economic cycles result in strain, seen as a precipitating factor in organi-cultural deviance. [13] Organi-cultural deviance is based on the premise social pressure and economic forces exert strain on organizations to engage in corporate crime. Strain creates motivating tension in organi-cultural deviance. Robert Merton championed strain theorists in the field of criminology, believing there to be "a universal set of goals toward which all Americans, regardless of background and position, strive, chief among these is monetary success". [14] [15] Economic cycles result in observable patterns which are indicative of organi-cultural deviance.

Organi-cultural deviance is likely to occur at different points in an economic cycle and system. The specific location of an economy in the economic cycle tends to generate specific kinds of leaders. Entrepreneurial leaders tend to be most visible at the bottom of an economic cycle, during a depression or recession. Entrepreneurial leaders are able to motivate their employees to innovate and develop new products. As the economy strengthens, there is a marked increased of bureaucratic leaders who standardise and operationalise the successes of entrepreneurial leaders. As the economy reaches the apex of the economic cycle, pseudo-transformational leaders are likely to emerge, promising the same, if not higher, rates of return in a booming or peaking economy. Often, these pseudo-transformational leaders engage in deviant practices to maintain the illusion of rising rates of return. [13]

See also

Related Research Articles

<span class="mw-page-title-main">Organized crime</span> Groupings of highly centralized criminal enterprises

Organized crime or organised crime is a category of transnational, national, or local group of centralized enterprises run to engage in illegal activity, most commonly for profit. While organized crime is generally thought of as a form of illegal business, some criminal organizations, such as terrorist groups, rebel forces, and separatists, are politically motivated. Many criminal organizations rely on fear or terror to achieve their goals or aims as well as to maintain control within the organization and may adopt tactics commonly used by authoritarian regimes to maintain power. Some forms of organized crime simply exist to cater towards demand of illegal goods in a state or to facilitate trade of goods and services that may have been banned by a state. Sometimes, criminal organizations force people to do business with them, such as when a gang extorts protection money from shopkeepers. Street gangs may often be deemed organized crime groups or, under stricter definitions of organized crime, may become disciplined enough to be considered organized. A criminal organization can also be referred to as an outfit, a gang, crime family, mafia, mob, (crime) ring, or syndicate; the network, subculture, and community of criminals involved in organized crime may be referred to as the underworld or gangland. Sociologists sometimes specifically distinguish a "mafia" as a type of organized crime group that specializes in the supply of extra-legal protection and quasi-law enforcement. Academic studies of the original "Mafia", the Italian Mafia generated an economic study of organized crime groups and exerted great influence on studies of the Russian mafia, the Chinese triads, the Hong Kong triads, and the Japanese yakuza.

<span class="mw-page-title-main">White-collar crime</span> Financially motivated nonviolent crime committed by business and government professionals

The term "white-collar crime" refers to financially motivated, nonviolent or non-directly violent crime committed by individuals, businesses and government professionals. It was first defined by the sociologist Edwin Sutherland in 1939 as "a crime committed by a person of respectability and high social status in the course of their occupation". Typical white-collar crimes could include wage theft, fraud, bribery, Ponzi schemes, insider trading, labor racketeering, embezzlement, cybercrime, copyright infringement, money laundering, identity theft, and forgery. White-collar crime overlaps with corporate crime.

Articles related to criminology and law enforcement.

<span class="mw-page-title-main">Differential association</span> Theory in crimonology

In criminology, differential association is a theory developed by Edwin Sutherland proposing that through interaction with others, individuals learn the values, attitudes, techniques, and motives for criminal behavior.

<span class="mw-page-title-main">Edwin Sutherland</span> American criminologist (1883–1950)

Edwin Hardin Sutherland was an American sociologist. He is considered one of the most influential criminologists of the 20th century. He was a sociologist of the symbolic interactionist school of thought and is best known for defining white-collar crime and differential association, a general theory of crime and delinquency. Sutherland earned his Ph.D. in sociology from the University of Chicago in 1913.

<span class="mw-page-title-main">Conflict criminology</span> School of criminology

Largely based on the writings of Karl Marx, conflict criminology holds that crime in capitalist societies cannot be adequately understood without a recognition that such societies are dominated by a wealthy elite whose continuing dominance requires the economic exploitation of others, and that the ideas, institutions and practices of such societies are designed and managed in order to ensure that such groups remain marginalised, oppressed and vulnerable. Members of marginalised and oppressed groups may sometimes turn to crime in order to gain the material wealth that apparently brings equality in capitalist societies, or simply in order to survive. Conflict criminology derives its name from the fact that theorists within the area believe that there is no consensual social contract between state and citizen.

<span class="mw-page-title-main">State-corporate crime</span>

State-corporate crime is a concept in criminology for crimes that result from the relationship between the policies of the state and the policies and practices of commercial corporations. The term was coined by Kramer and Michalowski (1990), and redefined by Aulette and Michalowski (1993). These definitions were intended to include all "socially injurious acts" and not merely those that are defined by the local criminal jurisdiction as crime. This is not universally accepted as a valid definition so a less contentious version has been adopted here. As an academic classification, it is distinguished from:

<span class="mw-page-title-main">Marxist criminology</span> School of criminology

Marxist criminology is one of the schools of criminology. It parallels the work of the structural functionalism school which focuses on what produces stability and continuity in society but, unlike the functionalists, it adopts a predefined political philosophy. As in conflict criminology, it focuses on why things change, identifying the disruptive forces in industrialized societies, and describing how society is divided by power, wealth, prestige, and the perceptions of the world. "The shape and character of the legal system in complex societies can be understood as deriving from the conflicts inherent in the structure of these societies which are stratified economically and politically". It is concerned with the causal relationships between society and crime, i.e. to establish a critical understanding of how the immediate and structural social environment gives rise to crime and criminogenic conditions.

<span class="mw-page-title-main">Right realism</span>

Right realism, in criminology, also known as New Right Realism, Neo-Classicism, Neo-Positivism, or Neo-Conservatism, is the ideological polar opposite of left realism. It considers the phenomenon of crime from the perspective of political conservatism and asserts that it takes a more realistic view of the causes of crime and deviance, and identifies the best mechanisms for its control. Unlike the other schools of criminology, there is less emphasis on developing theories of causality in relation to crime and deviance. The school employs a rationalist, direct and scientific approach to policy-making for the prevention and control of crime. Some politicians who ascribe to the perspective may address aspects of crime policy in ideological terms by referring to freedom, justice, and responsibility. For example, they may be asserting that individual freedom should only be limited by a duty not to use force against others. This, however, does not reflect the genuine quality in the theoretical and academic work and the real contribution made to the nature of criminal behaviour by criminologists of the school.

<span class="mw-page-title-main">Integrative criminology</span> Interdisciplinary paradigm

Integrative criminology reacts against single theory or methodology approaches, and adopts an interdisciplinary paradigm for the study of criminology and penology. Integration is not new. It informed the groundbreaking work of Merton (1938), Sutherland (1947), and Cohen (1955), but it has become a more positive school over the last twenty years.

<span class="mw-page-title-main">Feminist school of criminology</span> School of criminology

The feminist school of criminology is a school of criminology developed in the late 1960s and into the 1970s as a reaction to the general disregard and discrimination of women in the traditional study of crime. It is the view of the feminist school of criminology that a majority of criminological theories were developed through studies on male subjects and focused on male criminality, and that criminologists often would "add women and stir" rather than develop separate theories on female criminality.

<span class="mw-page-title-main">Strain theory (sociology)</span> Theory that social structures within society may pressure citizens to commit crime

Strain theory is a theoretical perspective in Sociology and Criminology that aims to explain the relationship between social structure, social values or goals, and crime. Strain theory was originally introduced by Robert King Merton (1938), and argues that society's dominant cultural values and social structure causes strain, which may encourage citizens to commit crimes. Following on the work of Émile Durkheim's theory of anomie, strain theory has been advanced by Robert King Merton (1938), Albert K. Cohen (1955), Richard Cloward, Lloyd Ohlin (1960), Neil Smelser (1963), Robert Agnew (1992), Steven Messner, Richard Rosenfeld (1994) and Jie Zhang (2012).

<span class="mw-page-title-main">Social disorganization theory</span> Sociologic theory on crime and neighbourhood ecology

In sociology, the social disorganization theory is a theory developed by the Chicago School, related to ecological theories. The theory directly links crime rates to neighbourhood ecological characteristics; a core principle of social disorganization theory that states location matters. In other words, a person's residential location is a substantial factor shaping the likelihood that that person will become involved in illegal activities. The theory suggests that, among determinants of a person's later illegal activity, residential location is as significant as or more significant than the person's individual characteristics. For example, the theory suggests that youths from disadvantaged neighborhoods participate in a subculture which approves of delinquency, and that these youths thus acquire criminality in this social and cultural setting.

Stuart Henry is professor emeritus, Criminal justice and former director of the School of Public Affairs, San Diego State University (2006–17). He has also been visiting professor of criminology at the University of Kent's School of Social Policy, Sociology and Social Research from 2008 to 2013 and visiting research scholar in sociology at the University of Hawaii, Manoa, 2017.

<span class="mw-page-title-main">Deviance (sociology)</span> Action or behavior that violates social norms

Deviance or the sociology of deviance explores the actions and/or behaviors that violate social norms across formally enacted rules as well as informal violations of social norms. Although deviance may have a negative connotation, the violation of social norms is not always a negative action; positive deviation exists in some situations. Although a norm is violated, a behavior can still be classified as positive or acceptable.

Radical criminology states that society "functions" in terms of the general interests of the ruling class rather than "society as a whole" and that while the potential for conflict is always present, it is continually neutralised by the power of a ruling class. Radical criminology is related to critical and conflict criminology in its focus on class struggle and its basis in Marxism. Radical criminologists consider crime to be a tool used by the ruling class. Laws are put into place by the elite and are then used to serve their interests at the peril of the lower classes. These laws regulate opposition to the elite and keep them in power.

<span class="mw-page-title-main">Criminology</span> Study of crime and criminal actions/behavior

Criminology is the interdisciplinary study of crime and deviant behaviour. Criminology is a multidisciplinary field in both the behavioural and social sciences, which draws primarily upon the research of sociologists, political scientists, economists, legal sociologists, psychologists, philosophers, psychiatrists, social workers, biologists, social anthropologists, scholars of law and jurisprudence, as well as the processes that define administration of justice and the criminal justice system.

Green criminology is a branch of criminology that involves the study of harms and crimes against the environment broadly conceived, including the study of environmental law and policy, the study of corporate crimes against the environment, and environmental justice from a criminological perspective.

<span class="mw-page-title-main">Marshall B. Clinard</span> American sociologist who specialized in criminology

Marshall Barron Clinard was an American sociologist who specialized in criminology. Criminological studies spanned across his entire career, from an examination of the Black Market during World War II to much more general treatments of white collar crime. His 1957 textbook Sociology of Deviant Behavior is now in its 15th edition. In addition to studies within the United States, Clinard did research in Sweden, India, Uganda and Switzerland: supported, respectively, by the Fulbright Program, the Ford Foundation, the Rockefeller Foundation and the U. S. National Science Foundation.

<span class="mw-page-title-main">Gregg Barak</span> American criminologist, academic, and author

Gregg Barak is an American criminologist, academic, and author. He is an emeritus professor of criminology and criminal justice at Eastern Michigan University, a former visiting distinguished professor in the College of Justice & Safety at Eastern Kentucky University, and a 2017 Fulbright Scholar in residence at the School of Law, Pontificia Universidade Catholica, Porto Alegre, Brazil. He is most known for his research in the fields of criminology and criminal justice.

References

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  9. Gendron, R. and Husted, C. (2010). Organi-cultural Deviance, Administrative Sciences Association of Canada, Regina, Saskatchewan, 2010.
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  12. Maslow, A. (1954). Motivation and personality (2nd ed.). New York: Harper & Row
  13. 1 2 Gendron, R. and Husted, C. (2012). Economic Cycles Predicting Corporate Misconduct? American Association of Behavioral and Social Sciences, Las Vegas, Nevada. February 16–17.
  14. Merton, R. (1938). Social structure and anomie. American Sociological Review 3, 672-82
  15. Cernkovich, Giordano & Rudolph (2000) Robert Merton, p. 132

Further reading