Introducing the Fraudulent Power Model: The Unquestioned Power Behind Corporate Crimes in Japan

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Join the GW Sigur Center for Asian Studies for an event featuring visiting speakers Asuka Takaoka and Takahiro Endo. The discussion will be moderated by Professor Hiromi Ishizawa, associate professor of sociology and chair of the Columbian College Department of Sociology.

As corporate fraud can pose serious problems for firms’ stakeholders and employees, the public, and society, fraud prevention is important on the global agenda. Unlike street crimes, corporate crimes happen due to power rather than personal motives (Stoddard, 1968; Maric et al., 2010). Hence, what are the types of power and the mechanisms that make employees violate the law, even when they know that such actions might deprive them of all they have built up to that point? Previous research has examined this power dynamic between two individuals (Albrecht et al., 2015; Kraus et al., 2018; Schnatterly et al., 2018), but few studies have comprehensively considered the power mechanism among multiple stakeholders involved in organisational crimes. Therefore, this study examined 133 corporate crimes in Japan to identify the power types and mechanisms behind them.

Specifically, the study analysed 133 third-party committee fraud reports written by third-party lawyers during 2015–2020 using grounded theory (Glaser and Strauss, 1967; Strauss and Corbin, 1990; Locke, 2001). The resulting fraudulent power model identified 10 types of power grouped into four core categories: formal, informal, norm, and neglect power. Norm and neglect power were newly identified. Norm power is perceived by employees as a forced norm; therefore, they naturally follow it, resulting in fraud. Examples include sales/profit supremacy, excessive error-free policy, non-intervention, and blind obedience to customers’ requests. Neglect happens due to organisational malfunctions, leaders’ negligence, and intentional silence.

This study makes two contributions to the literature. First, it identified 10 types of power grouped into four core categories as an empirically grounded framework, adding to the research on fraud models and organisational power. Second, firms can refer to these types of power in practice as fraud risk indicators to assess their status quo and take preventive measures to address latent fraud causes.

Registration is free and open to the public.

This event will be recorded and will be available on the Sigur Center YouTube channel after the event.