findings from the empirical literature imply that the traditional deterrence model is severely challenged. In this chapter I offer explanations for why criminal sanction threats fail to deter corporations and their managers from violating the law. These interpretations range from suggestions that the problem does not rest with the deterrence model per se but rather with how the criminal justice system responds to the corporate offender, to arguments that theoretical deterrence and its rational-choice assumptions are fundamentally flawed.

Two levels of analysis are relevant for our discussion. We first review why criminal law fails to deter the corporate entity and then shift to a discussion of deterrence and the corporate manager.

Criminal law and the corporation

A common explanation for the failure of corporate deterrence is that criminal penalties are not imposed often or severely enough to insure compliance. If, the argument goes, criminal sanctions were threatening enough that firms and their representatives were forced to take notice of them, deterrence would work. This reasoning deserves greater examination.

Legal system problems

Implementation failure. This position, rather than dismissing the deterrence doctrine out of hand, asserts that formal legal punishment has not been implemented properly. The costs of punishment are not salient enough to discourage criminal conduct. This is true at the levels of both sanction certainty (i.e., firms are unlikely to be caught when laws are violated) and severity (criminal sanctions often represent little more than the proverbial slap on the wrist for most corporations).