Businesses that are engaged with the community and are focused on sustainability may be less likely to be involved in white-collar crime, according to a SUNY Canton assistant professor’s research.
Brian K. Harte, who teaches criminal justice, criminal investigation, and business courses at the College, will be receiving the Overall Best Applied Paper Award from the International Academy of Management and Business (IAMB) for his studies on the impact of federal regulations on corporate-level crime.
He said his topic of study was timely because the general public has shown outrage against unscrupulous companies, and demanded greater transparency of corporate behaviors.
“The lack of strong corporate ethics and fiscally responsible behaviors within corporations over the last decade has created the need for more external governmental controls,” Harte said. “I analyzed the behaviors and environments of Fortune 500 Companies to statistically find correlation between practices and conviction.”
Using statistical analysis, Harte was able to lend support to his hypothesis that businesses with greater access to resources are less likely to engage in corporate criminal activity. Additionally, businesses with a high level of corporate social responsibility are also less likely to be charged with corporate business felonies. “Examples of corporate social responsibility are far-ranging, and can include green initiatives, community involvement, and corporate stewardship,” he said.
He studied notable companies that had been investigated for fraudulent activities, including Enron, Worldcom, and Healthsouth.
“There were substantial differences in the corporate social responsibility reports of companies that had been indicted and those that hadn’t,” Harte said. “It supports the theory that businesses with a commitment to social responsibility are more apt to operate within the law.”
Financial measures and overall company size were not a clear indicator of illegal corporate activity, but instability, and market position may influence decisions to break business laws. Prior to the Sarbanes-Oxley Act of 2002, which was developed in reaction to several high-profile corporate and accounting scandals, it was commonly believed that larger companies were more likely to engage in illegal corporate behavior. Harte found after the regulatory measures were passed, smaller companies were more likely to be convicted of crimes. “One possible explanation is larger firms have more resources, and have the ability to avoid detection of illegal acts more than smaller, financially transparent firms,” he said.
Another area of Harte’s research evaluates the effectiveness of the Sarbanes-Oxley Act, sometimes referred to as Public Company Accounting Reform and Investor Protection Act. He’s trying to determine what, if any impact the act had – or if it is just business as usual in corporate America.
“The bottom line impacts all corporate decisions and the end goal is to generate revenue,” he said. “More and more I’m finding that businesses that can do that while giving back to their communities or support sustainable growth are the ones that operate within ethical boundaries. If a firm can do both then it is really a win-win scenario.”
Harte will receive his award and present his research Jan. 18 at a ceremony in Orlando, Fla., at an international conference of academic scholars from 20 countries. The IAMB is a professional association dedicated to advancing the research, teaching and practice of management and business worldwide through both academic publications and conferences.
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