What drives wealthy and powerful people to white-collar crime? Why They Do It is a breakthrough look at the dark side of the business world.
From the financial fraudsters of Enron, to the embezzlers at Tyco, to the insider traders at McKinsey, to the Ponzi schemer Bernie Madoff, the failings of corporate titans are regular fixtures in the news. In Why They Do It, Harvard Business School professor Eugene Soltes draws from extensive personal interaction and correspondence with nearly fifty former executives as well as the latest research in psychology, criminology, and economics to investigate how once-celebrated executives become white-collar criminals.
White-collar criminals are not merely driven by excessive greed or hubris, nor do they usually carefully calculate costs and benefits before breaking the law. Instead, Soltes shows that most of the executives who committed crimes made decisions the way we all do-on the basis of their intuitions and gut feelings. The trouble is that these gut feelings are often poorly suited for the modern business world where leaders are increasingly distanced from the consequences of their decisions and the individuals they impact.
The extraordinary costs of corporate misconduct are clear to its victims. Yet, never before have we been able to peer so deeply into the minds of the many prominent perpetrators of white-collar crime. With the increasing globalization of business threatening us with even more devastating corporate misconduct, the lessons Soltes draws in Why They Do It are needed more urgently than ever.
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About the Author
Eugene Soltes is the Jakurski Family Associate Professor of Business Administration at Harvard Business School. His research on corporate malfeasance has been cited by the Wall Street Journal, Financial Times, USA Today, and Bloomberg News. Professor Soltes teaches in Harvard Business School's executive education programs and is the recipient of the Charles M. Williams Award for Outstanding Teaching. He received his PhD and MBA from the University of Chicago Booth School of Business and his AM in statistics and AB in economics from Harvard University.
Table of Contents
Prologue: Managing in the Gray 1
Part I The Struggle to Criminalize
1 "Not… bucket-shop operators, dead-beats, and fly-by-night swindlers": Pillars of the Community 13
2 "Guys… don't drop out of windows for no reason": Creating the White-Collar Criminal 33
Part II Nature Or Nurture? Reasoning Or Intuition?
3 "Inherently inferior organisms": Bad People Making Bad Decisions 47
4 "I thought it was all going to pass": A Press Release with Consequences 65
5 "If you don't take it then you will regret it forever": The Triumph of Reason 81
6 "I never once thought of the costs versus rewards": Intuitive Decisions 99
7 "I never felt that I was doing anything wrong" Overlooking Harm 115
8 "If there was something wrong with this transaction, wouldn't people have told me?": The Difficulty of Being Good 131
Part III The Business of Malfeasance
9 "You can't make the argument that the public was harmed by anything I did": Misleading Disclosure 165
10 "Unfortunately, the world is not black and white": Financial Reporting Fraud 175
11 "You go from just being on top of the world": Insider Trading 201
12 "I thought we were freakin' geniuses": Deceptive Financial Structures 227
13 "You couldn't stop because you would wreck everything": The Ponzi Scheme 257
14 "When I look back, it wasn't as if I couldn't have said no": Bernie Madoff 287
Conclusion: Toward Greater Humility 309
Illustration Credits 337
Most Helpful Customer Reviews
As the Director of the first ministry in the U.S. created to support individuals and families with white-collar and nonviolent incarceration issues, and as someone who served time in a Federal prison for a white-collar crime I committed when I was a lawyer, I can state unequivocally that Professor Soltes's methodology and his conclusions are "pure rubbish." Why They Do It, and the press releases and media attention surrounding it, are shamelessly exploitive and are designed solely to sell books; they inflame bigotry and hatred and paint people with a broad brush designed to promote stigma, shunning and Schadenfreude (unfortunately, themes for our time it seems). I am sure if we re-interviewed his subjects, most or all would say they had been duped into letting down their guards in sharing intensely personal details of their lives and feelings on the promise and belief that Soltes's book would be fair and balanced. We have worked with hundreds of men, women and families involved in and suffering from these matters, and most are not the subjects of the sensationalized headlines that Soltes claims to have interviewed. In fact, the overwhelming majority are ordinary people, professionals who live down the street, whose children play with yours, who simply got in over their heads due to desperation, addiction, compulsion or mental illness. Most didn't have the ego strength to simply talk to their spouses and admit that life was not going the way they had hoped and dreamed, until they had stepped over the line and it was too late. Contrary to Soltes's core thesis statement, almost all are mired in shame, guilt and remorse and are going through some kind of transformation from a material life to a more spiritual one. What other choice do they (we) have? Especially when treated more harshly than persons convicted of murder and other violent crimes. Our society has evolved enough to give violent criminals a second chance, and indeed everyone deserves our empathy, compassion and kindness. But white-collar criminals have little such chance, largely because of the kind of book written by Professor Soltes. Rev. Jeff Grant, JD, M Div Founder/Director, Progressive Prison Ministries, Inc., Greenwich CT & Nationwide, prisonist.org