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Maturity levels for criminal organizations
ARTICLE IN PRESS
International Journal of Law, Crime and Justice 36 (2008) 106–114
International Journal of Law, Crime and Justice www.elsevier.com/locate/ijlcj
Maturity levels for criminal organizations Petter Gottschalk Norwegian School of Management (BI), Nydalsveien, 0442 Oslo, Norway
Abstract Maturity models have been used widely in organizational research. These models describe the possible evolution of an organization over time. In this paper, a four-stage maturity model for criminal organizations is conceptually introduced. The maturity levels are activity-based, knowledgebased, strategy-based, and value-based criminal organizations, respectively. This model may prove helpful for law enforcement agencies as they try to understand how criminal organizations work to fight organized crime. r 2007 Elsevier Ltd. All rights reserved. Keywords: Organized crime; Criminal activity; Competence; Strategy; Organizational values; Characteristics of criminal organizations; Policing; Law enforcement
1. Introduction Stages of growth models have been used widely in both organizational research and management research. According to King and Teo (1997), these models describe a wide variety of phenomena—the organizational life cycle, product life cycle, biological growth, etc. These models assume that predictable patterns (conceptualized in terms of stages) exist in the growth of organizations, the sales levels of products, and the growth of living organisms. These stages are (1) sequential in nature, (2) occur as a hierarchical progression that is not easily reversed, and (3) evolve a broad range of organizational activities and structures. Benchmark variables are often used to indicate characteristics in each stage of growth. A one-dimensional continuum is established for each benchmark variable. The measurement of benchmark variables can be carried out using Guttman scales E-mail address: [email protected] 1756-0616/$ - see front matter r 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijlcj.2007.12.002
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(Frankfort-Nachmias and Nachmias, 2002). Guttman scaling is a cumulative scaling technique based on ordering theory that suggests a linear relationship between the elements of a domain and the items on a test. Both Finckenauer (2005) and Hagan (2006) have suggested that criminal organizations evolve over time. Building on their work as well as on research by Lampe (2005) and Lampe and Johansen (2003), this paper suggests a maturity model for criminal organizations, which might be applied to determine the organizational maturity level a criminal organization is in. New insights into criminal organizations by classifying them into maturity levels will help fight organized crime in law enforcement. 2. Organizational maturity models Various multistage models have been proposed for organizational evolution over time. For example, Nolan (1979) introduced a model with six maturity levels for information technology use in organizations, which was later expanded to nine levels. Earl (2000) suggested a maturity model for evolving the e-business consisting of the following six levels: external communication, internal communication, e-commerce, e-business, e-enterprise, and transformation, while Rao and Metts (2003) describe a stage model for electronic commerce development in small and medium-sized enterprises. In the area of knowledge management, Housel and Bell (2001) developed a five-level model. In the area of knowledge management systems, Gottschalk (2007) developed a four-stage model applied to knowledge management in law enforcement. Gottschalk and Tolloczko (2007) developed a maturity model for mapping crime in law enforcement, while Gottschalk and Solli-Sæther (2006) developed a maturity model for IT outsourcing relationships. Each of these models identifies certain characteristics that typify firms in different stages of growth. Among these multistage models, models with four stages seem to have been proposed and tested most frequently (King and Teo, 1997). The concept of stages of growth has been widely employed for many years. Already two decades ago, Kazanjian and Drazin (1989) found that a number of multistage models had been proposed, which assume that predictable patterns exist in the growth of organizations and that these patterns unfold as discrete time periods best thought of as stages or levels. These models have different distinguishing characteristics. Maturity levels can be driven by the search for new growth opportunities or as a response to internal crises. Some models suggest that organizations progress through stages while others argue that there may be multiple paths through the stages. Kazanjian (1988) applied dominant problems to stages of growth. Dominant problems imply that there is a pattern of primary concerns that firms face for each theorized stage. In criminal organizations, for example, dominant problems can shift from lack of skills to lack of resources to lack of strategy associated with different stages of growth. Kazanjian and Drazin (1989) argue that either implicitly or explicitly, stages of growth models share a common underlying logic. Organizations undergo transformations in their design characteristics, which enable them to face the new tasks or problems that growth elicits. The problems, tasks or environments may differ from model to model, but almost all suggest that stages emerge in a well-defined sequence, so that the solution of one set of problems or tasks leads to the emergence of a new set of problems and tasks that the organization must address.
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Finckenauer (2005) suggests a distinction between certain crimes that may be extremely complex and highly organized in their commission, but which are not committed by criminal organizations, and true organized crime. Hagan (2006) suggests that ‘‘Organized Crime’’ be used to refer to crime organizations, while ‘‘organized crime’’ will refer to activities, crimes that often require a degree of organization on the part of those committing them. According to him, not all ‘‘organized crime’’ is committed by ‘‘Organized Crime’’ groups. Also, the committing of ‘‘organized crime’’ does not make a group an ‘‘Organized Crime’’ group, he says. While ‘‘organized crime’’ refers to crimes that are organized, ‘‘Organized Crime’’ refers to Organized Crime groups. While ‘‘organized crime’’ focuses on activities, ‘‘Organized Crime’’ focuses on groups. Hagan (2006) suggests a revised ‘‘Organized Crime Continuum’’ that features two tiers: one for primary characteristics and one for secondary characteristics of groups that might be labeled ‘‘Organized Crime’’. The further these groups are scoring on these characteristics, the better an example they are of ‘‘Organized Crime groups. Primary characteristics include ideology, violence, services, and corruption. Secondary activities include hierarchy, secrecy, and membership. Hagan (2006) provides some possible examples of ‘‘Organized Crime’’ groups using this continuum. This might suggest the following levels of ‘‘Organized Crime’’ groups: level one (full-fledged groups such as the Cosa Nostra), level two (semi-Organized Crime groups that lack full development of some characteristics), and level three (street gangs and others that are lower level in exhibiting full development). 3. Criminal maturity levels Here we will present a model of potential stages of growth for criminal organizations. The model consists of four maturity levels, as illustrated in Fig. 1. Each level in the maturity model for criminal organizations can be described as follows:
Level 1—Activity: An activity-based criminal organization. The criminal organization organizes its criminal activities according to the business they are in. More or less Maturity Level of Criminal Organization
Level 4 VALUE Level 3
Value-Based Criminal Organizations
STRATEGY Level 2
Strategy-Based Criminal Organizations
KNOWLEDGE Level 1
Knowledge-Based Criminal Organizations
ACTIVITY Activity-Based Criminal Organizations
Time in Years
Fig. 1. Maturity levels for criminal organizations.
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random perceptions of opportunities govern the organization. Rules determine roles and activities; it is a rule-based organization. Breaking rules will have tough consequences. Activity-based theory conceives the organization as a bundle of activities. The role of the production function in transforming inputs into end products is important here, where management is concerned with flows of resources in activities. Activity-based management emphasizes the impact of the organization’s production function on creating value, while placing little attention on differences in stocks of resources.The typical value configuration of an activity-based organization is the value chain. In the value chain, value is created through efficient production of goods and services based on a variety of resources. The organization is perceived as a series or chain of activities (Stabell and Fjeldstad, 1998). Criminal organizations are involved in a variety of organized crimes, such as drug trafficking. For example, more than 14 million people worldwide, 0.3% of the global population aged 15 and above, are estimated to use cocaine (Chawla and Pietschmann, 2005). The main change in the organization of cocaine trafficking over the past decade was the end of cartelization. This followed the dismantling of the Medellin and the Cali cartels. The operations of the cartels were increasingly taken over by a large number of decentralized trafficking groups. Production of coca leaf, which used to take place mainly in Peru, shifted to Colombia, which is closer to the cocaine laboratories, following successful operations to break the air bridge linking Peru and Colombia. Level 2—Knowledge: A knowledge-based criminal organization. The criminal organization employs knowledge workers that accumulate organizational memory to learn from previous experience to improve efficiency and effectiveness in criminal performance. While activity-based theory conceives the organization as a bundle of activities, the resource-based theory conceives the organization as a bundle of resources. The main resource is found in the knowledge belonging to organizational members. The typical value configuration of a knowledge-based organization is the value shop. In the value shop, activities are scheduled and resources are applied in a fashion that is dimensioned and appropriate to solve a problem, while a value chain performs a fixed set of activities that enables it to produce a standard product or service in large numbers. The value shop is an organization that creates value by solving unique problems for customers and clients. Knowledge is the most important resource, and reputation is critical to organizational success (Stabell and Fjeldstad, 1998; Gottschalk, 2007). Money laundering is an important knowledge work for most criminal organizations. Money laundering has often been characterized as a three-stage process that requires (1) moving the funds from direct association with the crime, (2) disguising the trail to foil pursuit, and (3) making them available to the criminal once again with their occupational and geographic origins hidden from view. According to Joyce (2005), criminal money is frequently removed from the country in which the crime occurred to be cycled through the international payment system to obscure any audit trail. The third stage of money laundering is done in different ways. For example, a credit card might be issued by offshore banks, casino ‘‘winning’’ can be cashed out, capital gains on option and stock trading might occur, and real estate sale might cause profit. Level 3—Strategy: A strategy-based criminal organization. Management of the criminal organization is concerned with strategic directions that position the organization for the
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future. When the chief executive and top management team develops corporate strategy, they apply methods such as swot analysis (strengths, weaknesses, opportunities and threats), where avoiding law enforcement might be both an opportunity and a threat to be solved by corruption and other means. An interesting issue is how new chief executives are recruited to head a criminal organization as compared to legal organizations (Zhang and Rajagopalan, 2003). A qualitative transformation of Russian organized crime, particularly in organizational and behavioral patterns, was brought about by the changed economic and political situation in Russia since the 1990s. In particular, Abramova (2007) observes a pronounced shift from violent crime towards economic crime. Criminals try to establish and exercise control over legitimate businesses via corrupt politicians, local authorities, and/or law enforcement officials. A tendency towards the consolidation of criminal groups within given territories is also discernible, whilst there are signs of increased interregional integration among different criminal organizations. Transnational criminal organizations have received increased attention in recent years. Beare (2000) argues that understanding transnational crime requires a market-bymarket analysis. Such analysis will make us acknowledge that, aside from the profit motive, the separate markets are very different from one another. For example, issues involved in smuggling humans may be vastly different from the issues involved in drug smuggling. Yet, this is not typically how organized crime is dealt with by governments. Instead, there is a pressure to pass special laws or grant the police extra powers. Level 4—Value: A value-based criminal organization. A strong organizational culture emerges, which creates a strong common sense of shared values in the organization. Organizational culture is a set of shared norms, values and perceptions, which develop when the members of an organization interact with each other and the surroundings. It is holistic, historically determined, socially constructed and difficult to change (Hofstede et al., 1990). Organization culture might determine how the organization thinks, feels, and acts. Embedded in traditions and history, occupational culture, in terms of having a criminal occupation, contains accepted practices, rules, and principles of conduct. These are applied to a variety of situations. In addition, occupational cultures contain generalized rationales and beliefs (Bailey, 1995). In analyzing the culture of a particular group or organization, Schein (1990) finds it desirable to distinguish three fundamental levels at which culture manifests itself: (a) observable artifacts, (b) values, and (c) basic underlying assumptions. When one enters an organization one observes and feels its artifacts. This category includes everything from the physical layout, the dress code, the manner in which people address each other, to the more permanent archival manifestations such as company records, products, statements of philosophy, and annual reports. These are all observable artifacts in the organization. Values at the second level can be studied in terms of norms, ideologies, charters, and philosophies. Basic underlying assumptions at the third and final level are concerned with perceptions, thought processes, feelings, and behavior. While studies have shown that people within the same organization have very different values, often measured in terms of deviation from the mean (Glomseth and Gottschalk, 2007), we expect criminal organizations at level 4 in our maturity model to have very similar values. Their values will not only be typical for criminal organizations, but also have much smaller deviations between members than in criminal organizations at lower levels.
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In the next figure, some potential values of criminal organizations are exemplified. On a value scale from security to challenge, one might expect a mature organization to share the view that security is somewhat more important than challenge. Furthermore, one might expect a mature criminal organization to be almost as much planning oriented as action oriented. The focus will be long-term rather than short-term, and there will be less task-orientation and more relationship-orientation. Benchmark variables are needed to indicate characteristics of each stage. At level 1, management is characterized by rules and regulations, as indicated in Table 1. Knowledgebased criminal organization will typically have knowledge management, while strategybased organizations will be concerned with establishing and achieving goals and objectives. At the highest level of value-based criminal organizations, there is consistency in organizational values as developed over time by management (Fig. 2). Table 1 Benchmark variables for maturity level characteristics
Level 1: Activitybased criminal organizations
Level 2: Knowledge-based criminal organizations
Level 3: Strategybased criminal organizations
Level 4: Valuebased criminal organizations
Management
Rules and regulations
Structure
Networks of family members and temporary staff members Family ties and random ties for temporary members
Knowledge management Network of competent and specialized associates Members representing unique and valuable resources
Goals and objectives Hierarchical structure of power and influence
Organizational values Hierarchical structure of mission, vision and ambition Shared vision of a mutual goal aligning organizational and individual opinions Specialists with shared knowledge base Leadership shares values and global perspectives
Relationships
Individual goals and rewards
Division of labor
Multi-task members
Specialists
Managers and specialists
Communication
Organizers are the core communicating orders
Management
Dramatic management
Communicators ensure feedback from knowledge workers Knowledge management
Management communicates goals and individual targets Strategic management
Security
Action
Planning
Long-term focus
Task
Challenge
Short-term focus
Relationship
Fig. 2. Organizational values for criminal organizations.
Charismatic leadership
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4. Discussion This paper introduces the idea of maturity levels for criminal organization. Further research is required to establish the contents of each stage. Further research is also required to enable classification of real-world cases. Specifically, classification will need a methodological basis best known as content analysis. According to Riffe and Freitag (1997), seven features of content analysis distinguish poor studies from excellent studies. First, an explicit theoretical framework is needed. In this research, the theoretical framework of the stages of growth model is applied, which needs in itself further improvements. Second, hypotheses or research questions are needed. In this research, the research question ‘‘how’’ is concerned with the classification of cases into stages: How might criminal organizations be classified into maturity levels? Third, other research methods should also be applied. In addition to secondary data from known cases, a survey instrument among experts might be applied. Fourth, extramedia data should be incorporated, such as discussions of benchmark variables. Fifth, inter-coder reliability should be reported when classifying real-world cases. Sixth, reliability based on a random sample of coded content is not relevant for this research. Finally, presentations of only descriptive statistics should be avoided. An alternative to stages of growth mentioned by Hagan (2006) would be a continuum from strategic to tactical crimes such as arson, assault, blackmail, and bribery, to illegal businesses and activities such as cigarette smuggling, counterfeiting, frauds, and narcotics. The next phase involves legitimate businesses such as auto sales, bakeries, demolition, and trucking to finally big business and perhaps big government such as banking, entertainment, labor and securities. Updating this, Hagan (2006) adds activities often described as transnational organized crime. This research is concerned with determining the maturity level an organization is in. Maturity is regarded to be an indication for the efficiency and effectiveness with which an organization responds to environmental changes:
An organization with a low maturity will require time for such a response, which will decrease its ability to compete. An organization with high maturity will only require little time for such a response, increasing its competitiveness.
The stage hypothesis implicitly suggested by the maturity model for criminal organization might be empirically tested in future research. By classifying known cases of criminal organizations, such as those listed by the United Nations (2002), it may be possible to validate benchmark variables. For example, the Verhagen Group is involved in trafficking hashish into cities such as Amsterdam, Hague, and Rotterdam. Key characteristics of this loosely organized group are the extensive use of trans-border smuggling operations and the occasional use of violence and corruption. Apart from drug smuggling, the group engages in a diversity of other illegal activities, according to the United Nations (2002). The group imports hashish by sea from Morocco, Lebanon, and Pakistan and then distributes it to the Dutch, Danish, British, Belgian, and Swiss markets. Other activities of this criminal network include large-scale fraud/embezzlement, theft of large quantities of
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electronic goods, fraud involving precious materials, trafficking in expensive jewelry as well as fraudulent real estate transactions. The core group consists of five members, surrounded by approximately 45 associates. Within the core group, two individuals took a leading role. Associate members comprised couriers, persons taking care of storage and distribution, and captains and crewmembers of the ships who transport drugs. The core members of the group are exclusively Dutch, other members being German, British Asian, African, and American. All members are male. The leading persons in the group interact on the basis of friendship. The group has no strict code of conduct. However, a clear ban exists on incriminating other members. Internally the group does not use any violence at all. Even if members do not comply with the standards or the ban on incrimination, they are not physically punished but simply put out of work. The members possess a small number of firearms. One of the leaders had traded cars in Europe and the United States before he initiated the Verhagen Group. This provides him with extensive contacts to small-scale business activities in other countries. Despite this, the group has no strong overlap with legitimate economic activities. Most of the group members are employed in the car-dealing industry or receive unemployment benefits. The group is able to collect important information on the activities of law enforcement agencies, suggesting that some use is made of corruption practices. 5. Conclusion Stages of growth models enable the classification of criminal organizations into different maturity levels. In this paper, a four-stage model is proposed: activity-based, knowledgebased, strategy-based, and value-based criminal organizations. Further research is needed to support the existence of organizational stages and to identify classification characteristics in terms of benchmark variables. References Abramova, I., 2007. The funding of traditional organised crime in Russia. Economic Affairs, Institute of Economic Affairs, March 18–21. Bailey, W.G. (Ed.), 1995. The Encyclopedia of Police Science, second ed. Garland Publishing, New York, NY. Beare, M., 2000. Structures, strategies and tactics of transnational criminal organizations: critical issues for enforcement. Paper presented at the Transnational Crime Conference convened by the Australian Institute of Criminology in association with the Australian Federal Police and Australian Customs Service and held in Canberra, 9–10 March 2000. Chawla, S., Pietschmann, T., 2005. Drug trafficking as a transnational crime. In: Reichel, P. (Ed.), Handbook of Transnational Crime and Justice. Sage Publications, London, pp. 160–180. Earl, M.J., 2000. Evolving the E-business. Business Strategy Review 11 (2), 33–38. Finckenauer, James O., 2005. Problems of definition: what is organized crime? Trends in Organized Crime 8 (3), 63–83. Frankfort-Nachmias, C., Nachmias, D., 2002. Research Methods in the Social Sciences, fifth ed. Arnold, UK. Glomseth, R., Gottschalk, P., 2007. Occupational culture as determinant of criminal investigation performance: an empirical study of Norwegian police as value shop. International Journal of Management Practice 2 (4), 269–282. Gottschalk, P., 2007. Knowledge Management Systems in Law Enforcement: Technologies and Techniques. Idea Group Publishing, Hershey, PA. Gottschalk, P., Solli-Sæther, H., 2006. Maturity model for IT outsourcing relationships. Industrial Management & Data Systems 106 (2), 200–212.
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Gottschalk, P., Tolloczko, P.C., 2007. Maturity model for mapping crime in law enforcement. Electronic Government, An International Journal 4 (1), 59–67. Hagan, F.E., 2006. ‘‘Organized Crime’’ and ‘‘organized crime’’: indeterminate problems of definition. Trends in Organized Crime 9 (4), 127–137. Hofstede, G., Neuijen, B., Ohayv, D.D., Sanders, G., 1990. Measuring organizational cultures: a qualitative and quantitative study across twenty cases. Administrative Science Quarterly 35 (2), 286–316. Housel, T., Bell, A.H., 2001. Measuring and Managing Knowledge. McGraw-Hill Irwin, New York. Joyce, E., 2005. Expanding the international regime on money laundering in response to transnational organized crime, terrorism, and corruption. In: Reichel, P. (Ed.), Handbook of Transnational Crime and Justice. Sage Publications, London, pp. 79–97. Kazanjian, R.K., 1988. Relation of dominant problems to stages of growth in technology-based new ventures. Academy of Management Journal 31 (2), 257–279. Kazanjian, R.K., Drazin, R., 1989. An empirical test of a stage of growth progression model. Management Science 35 (12), 1489–1503. King, W.R., Teo, T.S.H., 1997. Integration between business planning and information systems planning: validating a stage hypothesis. Decision Sciences 28 (2), 279–307. Lampe, K., 2005. Organized crime in Europe. In: Reichel, P. (Ed.), Handbook of Transnational Crime and Justice. Sage Publications, London, pp. 403–417. Lampe, K., Johansen, P.O., 2003. Criminal Networks and Trust, Third Annual Meeting of the European Society of Criminology, Helsinki, August 29, Finland. Nolan, R.L., 1979. Managing the crises in data processing. Harvard Business Review March–April, 115–126. Rao, S.S., Metts, G., 2003. Electronic commerce development in small and medium sized enterprises: a stage model and its implications. Business Process Management 9 (1), 11–32. Riffe, D., Freitag, A., 1997. A content analysis of content analyses, twenty-five years of journalism quarterly. Journalism Mass Communication Quarterly 74 (2), 873–882. Schein, E.H., 1990. Organizational culture. American Psychologist 45 (2), 109–119. Stabell, C.B., Fjeldstad, Ø.D., 1998. Configuring value for competitive advantage: on chains, shops, and networks. Strategic Management Journal 19, 413–437. United Nations, 2002. Results of a Pilot Survey of Forty Selected Organized Criminal Groups in Sixteen Countries. Office of Drugs and Crime, United Nations. Zhang, Y., Rajagopalan, N., 2003. Explaining new CEO origin: firm versus industry antecedents. Academy of Management Journal 46 (3), 327–338.
International Journal of Law, Crime and Justice 36 (2008) 106–114
International Journal of Law, Crime and Justice www.elsevier.com/locate/ijlcj
Maturity levels for criminal organizations Petter Gottschalk Norwegian School of Management (BI), Nydalsveien, 0442 Oslo, Norway
Abstract Maturity models have been used widely in organizational research. These models describe the possible evolution of an organization over time. In this paper, a four-stage maturity model for criminal organizations is conceptually introduced. The maturity levels are activity-based, knowledgebased, strategy-based, and value-based criminal organizations, respectively. This model may prove helpful for law enforcement agencies as they try to understand how criminal organizations work to fight organized crime. r 2007 Elsevier Ltd. All rights reserved. Keywords: Organized crime; Criminal activity; Competence; Strategy; Organizational values; Characteristics of criminal organizations; Policing; Law enforcement
1. Introduction Stages of growth models have been used widely in both organizational research and management research. According to King and Teo (1997), these models describe a wide variety of phenomena—the organizational life cycle, product life cycle, biological growth, etc. These models assume that predictable patterns (conceptualized in terms of stages) exist in the growth of organizations, the sales levels of products, and the growth of living organisms. These stages are (1) sequential in nature, (2) occur as a hierarchical progression that is not easily reversed, and (3) evolve a broad range of organizational activities and structures. Benchmark variables are often used to indicate characteristics in each stage of growth. A one-dimensional continuum is established for each benchmark variable. The measurement of benchmark variables can be carried out using Guttman scales E-mail address: [email protected] 1756-0616/$ - see front matter r 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijlcj.2007.12.002
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(Frankfort-Nachmias and Nachmias, 2002). Guttman scaling is a cumulative scaling technique based on ordering theory that suggests a linear relationship between the elements of a domain and the items on a test. Both Finckenauer (2005) and Hagan (2006) have suggested that criminal organizations evolve over time. Building on their work as well as on research by Lampe (2005) and Lampe and Johansen (2003), this paper suggests a maturity model for criminal organizations, which might be applied to determine the organizational maturity level a criminal organization is in. New insights into criminal organizations by classifying them into maturity levels will help fight organized crime in law enforcement. 2. Organizational maturity models Various multistage models have been proposed for organizational evolution over time. For example, Nolan (1979) introduced a model with six maturity levels for information technology use in organizations, which was later expanded to nine levels. Earl (2000) suggested a maturity model for evolving the e-business consisting of the following six levels: external communication, internal communication, e-commerce, e-business, e-enterprise, and transformation, while Rao and Metts (2003) describe a stage model for electronic commerce development in small and medium-sized enterprises. In the area of knowledge management, Housel and Bell (2001) developed a five-level model. In the area of knowledge management systems, Gottschalk (2007) developed a four-stage model applied to knowledge management in law enforcement. Gottschalk and Tolloczko (2007) developed a maturity model for mapping crime in law enforcement, while Gottschalk and Solli-Sæther (2006) developed a maturity model for IT outsourcing relationships. Each of these models identifies certain characteristics that typify firms in different stages of growth. Among these multistage models, models with four stages seem to have been proposed and tested most frequently (King and Teo, 1997). The concept of stages of growth has been widely employed for many years. Already two decades ago, Kazanjian and Drazin (1989) found that a number of multistage models had been proposed, which assume that predictable patterns exist in the growth of organizations and that these patterns unfold as discrete time periods best thought of as stages or levels. These models have different distinguishing characteristics. Maturity levels can be driven by the search for new growth opportunities or as a response to internal crises. Some models suggest that organizations progress through stages while others argue that there may be multiple paths through the stages. Kazanjian (1988) applied dominant problems to stages of growth. Dominant problems imply that there is a pattern of primary concerns that firms face for each theorized stage. In criminal organizations, for example, dominant problems can shift from lack of skills to lack of resources to lack of strategy associated with different stages of growth. Kazanjian and Drazin (1989) argue that either implicitly or explicitly, stages of growth models share a common underlying logic. Organizations undergo transformations in their design characteristics, which enable them to face the new tasks or problems that growth elicits. The problems, tasks or environments may differ from model to model, but almost all suggest that stages emerge in a well-defined sequence, so that the solution of one set of problems or tasks leads to the emergence of a new set of problems and tasks that the organization must address.
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Finckenauer (2005) suggests a distinction between certain crimes that may be extremely complex and highly organized in their commission, but which are not committed by criminal organizations, and true organized crime. Hagan (2006) suggests that ‘‘Organized Crime’’ be used to refer to crime organizations, while ‘‘organized crime’’ will refer to activities, crimes that often require a degree of organization on the part of those committing them. According to him, not all ‘‘organized crime’’ is committed by ‘‘Organized Crime’’ groups. Also, the committing of ‘‘organized crime’’ does not make a group an ‘‘Organized Crime’’ group, he says. While ‘‘organized crime’’ refers to crimes that are organized, ‘‘Organized Crime’’ refers to Organized Crime groups. While ‘‘organized crime’’ focuses on activities, ‘‘Organized Crime’’ focuses on groups. Hagan (2006) suggests a revised ‘‘Organized Crime Continuum’’ that features two tiers: one for primary characteristics and one for secondary characteristics of groups that might be labeled ‘‘Organized Crime’’. The further these groups are scoring on these characteristics, the better an example they are of ‘‘Organized Crime groups. Primary characteristics include ideology, violence, services, and corruption. Secondary activities include hierarchy, secrecy, and membership. Hagan (2006) provides some possible examples of ‘‘Organized Crime’’ groups using this continuum. This might suggest the following levels of ‘‘Organized Crime’’ groups: level one (full-fledged groups such as the Cosa Nostra), level two (semi-Organized Crime groups that lack full development of some characteristics), and level three (street gangs and others that are lower level in exhibiting full development). 3. Criminal maturity levels Here we will present a model of potential stages of growth for criminal organizations. The model consists of four maturity levels, as illustrated in Fig. 1. Each level in the maturity model for criminal organizations can be described as follows:
Level 1—Activity: An activity-based criminal organization. The criminal organization organizes its criminal activities according to the business they are in. More or less Maturity Level of Criminal Organization
Level 4 VALUE Level 3
Value-Based Criminal Organizations
STRATEGY Level 2
Strategy-Based Criminal Organizations
KNOWLEDGE Level 1
Knowledge-Based Criminal Organizations
ACTIVITY Activity-Based Criminal Organizations
Time in Years
Fig. 1. Maturity levels for criminal organizations.
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random perceptions of opportunities govern the organization. Rules determine roles and activities; it is a rule-based organization. Breaking rules will have tough consequences. Activity-based theory conceives the organization as a bundle of activities. The role of the production function in transforming inputs into end products is important here, where management is concerned with flows of resources in activities. Activity-based management emphasizes the impact of the organization’s production function on creating value, while placing little attention on differences in stocks of resources.The typical value configuration of an activity-based organization is the value chain. In the value chain, value is created through efficient production of goods and services based on a variety of resources. The organization is perceived as a series or chain of activities (Stabell and Fjeldstad, 1998). Criminal organizations are involved in a variety of organized crimes, such as drug trafficking. For example, more than 14 million people worldwide, 0.3% of the global population aged 15 and above, are estimated to use cocaine (Chawla and Pietschmann, 2005). The main change in the organization of cocaine trafficking over the past decade was the end of cartelization. This followed the dismantling of the Medellin and the Cali cartels. The operations of the cartels were increasingly taken over by a large number of decentralized trafficking groups. Production of coca leaf, which used to take place mainly in Peru, shifted to Colombia, which is closer to the cocaine laboratories, following successful operations to break the air bridge linking Peru and Colombia. Level 2—Knowledge: A knowledge-based criminal organization. The criminal organization employs knowledge workers that accumulate organizational memory to learn from previous experience to improve efficiency and effectiveness in criminal performance. While activity-based theory conceives the organization as a bundle of activities, the resource-based theory conceives the organization as a bundle of resources. The main resource is found in the knowledge belonging to organizational members. The typical value configuration of a knowledge-based organization is the value shop. In the value shop, activities are scheduled and resources are applied in a fashion that is dimensioned and appropriate to solve a problem, while a value chain performs a fixed set of activities that enables it to produce a standard product or service in large numbers. The value shop is an organization that creates value by solving unique problems for customers and clients. Knowledge is the most important resource, and reputation is critical to organizational success (Stabell and Fjeldstad, 1998; Gottschalk, 2007). Money laundering is an important knowledge work for most criminal organizations. Money laundering has often been characterized as a three-stage process that requires (1) moving the funds from direct association with the crime, (2) disguising the trail to foil pursuit, and (3) making them available to the criminal once again with their occupational and geographic origins hidden from view. According to Joyce (2005), criminal money is frequently removed from the country in which the crime occurred to be cycled through the international payment system to obscure any audit trail. The third stage of money laundering is done in different ways. For example, a credit card might be issued by offshore banks, casino ‘‘winning’’ can be cashed out, capital gains on option and stock trading might occur, and real estate sale might cause profit. Level 3—Strategy: A strategy-based criminal organization. Management of the criminal organization is concerned with strategic directions that position the organization for the
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future. When the chief executive and top management team develops corporate strategy, they apply methods such as swot analysis (strengths, weaknesses, opportunities and threats), where avoiding law enforcement might be both an opportunity and a threat to be solved by corruption and other means. An interesting issue is how new chief executives are recruited to head a criminal organization as compared to legal organizations (Zhang and Rajagopalan, 2003). A qualitative transformation of Russian organized crime, particularly in organizational and behavioral patterns, was brought about by the changed economic and political situation in Russia since the 1990s. In particular, Abramova (2007) observes a pronounced shift from violent crime towards economic crime. Criminals try to establish and exercise control over legitimate businesses via corrupt politicians, local authorities, and/or law enforcement officials. A tendency towards the consolidation of criminal groups within given territories is also discernible, whilst there are signs of increased interregional integration among different criminal organizations. Transnational criminal organizations have received increased attention in recent years. Beare (2000) argues that understanding transnational crime requires a market-bymarket analysis. Such analysis will make us acknowledge that, aside from the profit motive, the separate markets are very different from one another. For example, issues involved in smuggling humans may be vastly different from the issues involved in drug smuggling. Yet, this is not typically how organized crime is dealt with by governments. Instead, there is a pressure to pass special laws or grant the police extra powers. Level 4—Value: A value-based criminal organization. A strong organizational culture emerges, which creates a strong common sense of shared values in the organization. Organizational culture is a set of shared norms, values and perceptions, which develop when the members of an organization interact with each other and the surroundings. It is holistic, historically determined, socially constructed and difficult to change (Hofstede et al., 1990). Organization culture might determine how the organization thinks, feels, and acts. Embedded in traditions and history, occupational culture, in terms of having a criminal occupation, contains accepted practices, rules, and principles of conduct. These are applied to a variety of situations. In addition, occupational cultures contain generalized rationales and beliefs (Bailey, 1995). In analyzing the culture of a particular group or organization, Schein (1990) finds it desirable to distinguish three fundamental levels at which culture manifests itself: (a) observable artifacts, (b) values, and (c) basic underlying assumptions. When one enters an organization one observes and feels its artifacts. This category includes everything from the physical layout, the dress code, the manner in which people address each other, to the more permanent archival manifestations such as company records, products, statements of philosophy, and annual reports. These are all observable artifacts in the organization. Values at the second level can be studied in terms of norms, ideologies, charters, and philosophies. Basic underlying assumptions at the third and final level are concerned with perceptions, thought processes, feelings, and behavior. While studies have shown that people within the same organization have very different values, often measured in terms of deviation from the mean (Glomseth and Gottschalk, 2007), we expect criminal organizations at level 4 in our maturity model to have very similar values. Their values will not only be typical for criminal organizations, but also have much smaller deviations between members than in criminal organizations at lower levels.
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In the next figure, some potential values of criminal organizations are exemplified. On a value scale from security to challenge, one might expect a mature organization to share the view that security is somewhat more important than challenge. Furthermore, one might expect a mature criminal organization to be almost as much planning oriented as action oriented. The focus will be long-term rather than short-term, and there will be less task-orientation and more relationship-orientation. Benchmark variables are needed to indicate characteristics of each stage. At level 1, management is characterized by rules and regulations, as indicated in Table 1. Knowledgebased criminal organization will typically have knowledge management, while strategybased organizations will be concerned with establishing and achieving goals and objectives. At the highest level of value-based criminal organizations, there is consistency in organizational values as developed over time by management (Fig. 2). Table 1 Benchmark variables for maturity level characteristics
Level 1: Activitybased criminal organizations
Level 2: Knowledge-based criminal organizations
Level 3: Strategybased criminal organizations
Level 4: Valuebased criminal organizations
Management
Rules and regulations
Structure
Networks of family members and temporary staff members Family ties and random ties for temporary members
Knowledge management Network of competent and specialized associates Members representing unique and valuable resources
Goals and objectives Hierarchical structure of power and influence
Organizational values Hierarchical structure of mission, vision and ambition Shared vision of a mutual goal aligning organizational and individual opinions Specialists with shared knowledge base Leadership shares values and global perspectives
Relationships
Individual goals and rewards
Division of labor
Multi-task members
Specialists
Managers and specialists
Communication
Organizers are the core communicating orders
Management
Dramatic management
Communicators ensure feedback from knowledge workers Knowledge management
Management communicates goals and individual targets Strategic management
Security
Action
Planning
Long-term focus
Task
Challenge
Short-term focus
Relationship
Fig. 2. Organizational values for criminal organizations.
Charismatic leadership
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4. Discussion This paper introduces the idea of maturity levels for criminal organization. Further research is required to establish the contents of each stage. Further research is also required to enable classification of real-world cases. Specifically, classification will need a methodological basis best known as content analysis. According to Riffe and Freitag (1997), seven features of content analysis distinguish poor studies from excellent studies. First, an explicit theoretical framework is needed. In this research, the theoretical framework of the stages of growth model is applied, which needs in itself further improvements. Second, hypotheses or research questions are needed. In this research, the research question ‘‘how’’ is concerned with the classification of cases into stages: How might criminal organizations be classified into maturity levels? Third, other research methods should also be applied. In addition to secondary data from known cases, a survey instrument among experts might be applied. Fourth, extramedia data should be incorporated, such as discussions of benchmark variables. Fifth, inter-coder reliability should be reported when classifying real-world cases. Sixth, reliability based on a random sample of coded content is not relevant for this research. Finally, presentations of only descriptive statistics should be avoided. An alternative to stages of growth mentioned by Hagan (2006) would be a continuum from strategic to tactical crimes such as arson, assault, blackmail, and bribery, to illegal businesses and activities such as cigarette smuggling, counterfeiting, frauds, and narcotics. The next phase involves legitimate businesses such as auto sales, bakeries, demolition, and trucking to finally big business and perhaps big government such as banking, entertainment, labor and securities. Updating this, Hagan (2006) adds activities often described as transnational organized crime. This research is concerned with determining the maturity level an organization is in. Maturity is regarded to be an indication for the efficiency and effectiveness with which an organization responds to environmental changes:
An organization with a low maturity will require time for such a response, which will decrease its ability to compete. An organization with high maturity will only require little time for such a response, increasing its competitiveness.
The stage hypothesis implicitly suggested by the maturity model for criminal organization might be empirically tested in future research. By classifying known cases of criminal organizations, such as those listed by the United Nations (2002), it may be possible to validate benchmark variables. For example, the Verhagen Group is involved in trafficking hashish into cities such as Amsterdam, Hague, and Rotterdam. Key characteristics of this loosely organized group are the extensive use of trans-border smuggling operations and the occasional use of violence and corruption. Apart from drug smuggling, the group engages in a diversity of other illegal activities, according to the United Nations (2002). The group imports hashish by sea from Morocco, Lebanon, and Pakistan and then distributes it to the Dutch, Danish, British, Belgian, and Swiss markets. Other activities of this criminal network include large-scale fraud/embezzlement, theft of large quantities of
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electronic goods, fraud involving precious materials, trafficking in expensive jewelry as well as fraudulent real estate transactions. The core group consists of five members, surrounded by approximately 45 associates. Within the core group, two individuals took a leading role. Associate members comprised couriers, persons taking care of storage and distribution, and captains and crewmembers of the ships who transport drugs. The core members of the group are exclusively Dutch, other members being German, British Asian, African, and American. All members are male. The leading persons in the group interact on the basis of friendship. The group has no strict code of conduct. However, a clear ban exists on incriminating other members. Internally the group does not use any violence at all. Even if members do not comply with the standards or the ban on incrimination, they are not physically punished but simply put out of work. The members possess a small number of firearms. One of the leaders had traded cars in Europe and the United States before he initiated the Verhagen Group. This provides him with extensive contacts to small-scale business activities in other countries. Despite this, the group has no strong overlap with legitimate economic activities. Most of the group members are employed in the car-dealing industry or receive unemployment benefits. The group is able to collect important information on the activities of law enforcement agencies, suggesting that some use is made of corruption practices. 5. Conclusion Stages of growth models enable the classification of criminal organizations into different maturity levels. In this paper, a four-stage model is proposed: activity-based, knowledgebased, strategy-based, and value-based criminal organizations. Further research is needed to support the existence of organizational stages and to identify classification characteristics in terms of benchmark variables. References Abramova, I., 2007. The funding of traditional organised crime in Russia. Economic Affairs, Institute of Economic Affairs, March 18–21. Bailey, W.G. (Ed.), 1995. The Encyclopedia of Police Science, second ed. Garland Publishing, New York, NY. Beare, M., 2000. Structures, strategies and tactics of transnational criminal organizations: critical issues for enforcement. Paper presented at the Transnational Crime Conference convened by the Australian Institute of Criminology in association with the Australian Federal Police and Australian Customs Service and held in Canberra, 9–10 March 2000. Chawla, S., Pietschmann, T., 2005. Drug trafficking as a transnational crime. In: Reichel, P. (Ed.), Handbook of Transnational Crime and Justice. Sage Publications, London, pp. 160–180. Earl, M.J., 2000. Evolving the E-business. Business Strategy Review 11 (2), 33–38. Finckenauer, James O., 2005. Problems of definition: what is organized crime? Trends in Organized Crime 8 (3), 63–83. Frankfort-Nachmias, C., Nachmias, D., 2002. Research Methods in the Social Sciences, fifth ed. Arnold, UK. Glomseth, R., Gottschalk, P., 2007. Occupational culture as determinant of criminal investigation performance: an empirical study of Norwegian police as value shop. International Journal of Management Practice 2 (4), 269–282. Gottschalk, P., 2007. Knowledge Management Systems in Law Enforcement: Technologies and Techniques. Idea Group Publishing, Hershey, PA. Gottschalk, P., Solli-Sæther, H., 2006. Maturity model for IT outsourcing relationships. Industrial Management & Data Systems 106 (2), 200–212.
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