The Rationalization Variable: Donald Cressey Study

The Rationalization Variable
In 1953, Donald Cressey conducted an experiment on convicted embezzlers (Friedrichs, 2010). Through this study, Cressey assigned particular importance to the rationalization of the offenders. Cressey proposed that there were three necessary conditions for embezzlement to occur; “A non-sharable financial problem must exist, individuals and groups must have knowledge necessary to commit the embezzlement, and suitable rationalizations for such behaviors must be available to the actors” (Leclair, 2015). However, Cressey stated the last condition was the most important (Schlegel & Weisburd, 1992; Friedrich, 2010; Leclair, 2015). Rationalization is the way that individuals negate standards that condemn criminal behavior

(Leclair, 2015). At Enron, Lay, Skilling, Fastow, and Pai rationalized their behavior by continuously telling themselves that what they were doing was for the good of the company. The documentary made this evident whenever Skilling was testifying. Skilling stated, “" I do not believe...I did not do anything wrong that was not in the interest for Enron Corporation, it was in the interest of the shareholders of the company." Skilling rationalized his behavior and neutralized it (Leclair, 2015). Skilling did not perceive what he was doing as being a “criminal action” because he continuously told himself what he was doing was in the best interest of the company. As the analyst put it in the documentary, the fraud perpetuated by Lay, Skilling, and Fastow was a bizarre realty, and as long as they were able to keep the fraud going they were doing nothing wrong.
Differential Association Theory
Edwin Sutherland wanted to explain criminal behavior. His theory states that all criminal behavior is learned through associations (Schlegel & Weisburd, 1992; Friedrichs, 2010; LeClair, 2015). As a learning theory, Sutherland explains that we learn through associations within social groups, family, friends, peers, etc (Schlegel & Weisburd, 1992; Friedrichs, 2010; LeClair, 2015). Moreover, Sutherland (1949) states that "criminal behavior is learned in association with those who define such behavior favorably and in isolation from those who define it unfavorably, and that a person in an appropriate situation engages in such criminal behavior if, and only if, the weight of the favorable definitions exceeds the weight of the unfavorable definitions" (LeClair, 2015). At Enron, the behavior of Kenneth Lay, Jeffery Skilling, Andrew Fastow and Lou Pai were defined as favorable. Everyone involved in the criminal actions of Enron learned their behavior from each other, starting with the behavior of Louis Borget. Borget was found to be diverting the money of Enron to off-shore accounts, making Enron tons of money. An employee of Enron observed this behavior as unethical and illegal, and reported it to Kenneth Lay. These traders were called to Houston to meet with Lay, but he defined these behaviors as favorable, and told the traders to continue to “make millions.” Eventually, the traders gambled away all of Enron’s money. Borget had to bluff the market before Enron had to file for bankruptcy. Borget was eventually caught, sent to prison, and Lay claimed he had no idea that anything was happening. At this point, Lay approved of the behavior of Borget and wanted it to continue. Lay hired Skilling to continue the company in the path of Borget, and then Skilling hired Fastow. The company of Enron was set up as a hierarchy, with Kenneth Lay at the top. Each individual idolized the person in front of them on the pyramid; the Investors (Citi, JP Morgan, Merrill Lynch) idolized Fastow, Fastow idolized Skilling, and Skilling idolized Lay. In the end, the problem that led to the demise of Enron can be traced back to Kenneth Lay. He defined the behaviors of the executives and encouraged them to act in the ways that they did.
Macro-Level Explanations
Social Disorganization Theory
Edwin Sutherland introduced social disorganization theory to give an explanation as to why individuals and group decisions lead to crime.

Sutherland believed that social forces could support and individual’s criminal behavior, and ability to commit crimes and deviant acts (Leclair, 2015). One of the reasons that Sutherland gave to why individuals commit crimes was because of industrialization, and the rise of capitalism. Moreover, the rise of capitalism and the increase in industrialization caused more social mobility (Schlegel & Weisburd, 1992). Before the rise in capitalism, individuals were satisfied with meeting the economic and social needs of their family. These people were not motivated by the need to make money and have material things (Schlegel & Weisburd, 1992). In contrast, as capitalism and industrialization moved into society, social disorganization began; meaning, ones values, attitudes, and beliefs changed. The primary agents of social control; such as, family and homogenous neighborhoods, broke down as a result of social mobility (Schlegel & Weisburd, 1992). Individuals began to be influenced by the power of wealth and materialism, this encouraged criminal behavior. The executives of Enron (Lay, Skilling, Pai, and Fastow) were motivated by power and greed. They were caught up in the capitalist ideal to make as much money as possible and to be powerful. Lay, Skilling, Pai, and Fastow came from respectful families. The documentary gave insight into the life of Kenneth Lay. He came from a religious family. He was the son of a Baptist preacher. However, it seemed that Lay always had a motivation to achieve more in his life. Ultimately, he forgot his ideals, primary agents of socialization, and went into the world of business. Sutherland would say this increase in social mobility has increased his propensity to commit crimes. He let his motivation for power and wealth cloud his judgement and ability to think clearly. Another example of the breakdown of

the main form of social control, the family, was Lou Pai and his obsession with strippers. Pai would frequent these strip clubs, and he would bring other traders from Enron to these clubs. This caused the other individuals of Enron to break down their own social forces. Pai was married, he had a family, and in the end he gave this up. Pai divorced his wife so he could marry his stripper girlfriend. Forgetting the ideals of the family. Social disorganization, namely mobility and the increase of greed causes more individuals to commit crimes.
Organizational Behavior Theory
The organizational behavior theory focuses on the corporation (organizational actions) rather than those of the individual actions (Schlegel & Weisburd, 1992). There are three main categories of organizational attributes (organizational goals, organizational environment, and organizational structure) that help criminologist understand white collar crime (Schlegel & Weisburd, 1992; Leclair, 2015). The first organizational attribute is organizational goal. Organizational goals can be set in a way that provides pressures to engage in illegal behavior (Schlegel & Weisburd, 1992; Leclair, 2015). For Enron, the goals that the corporation set for themselves was to be the world’s leader in energy.