A dark side of dotcoms has come to light, and it has nothing to do with plunging stock prices or scrapped IPOs.
Internet company executives are four times more likely to have questionable or criminal pasts than their low-tech counterparts, according to a study by Kroll Associates, a global business investigations and intelligence firm based in New York.
Nearly 40 percent of senior managers at Internet companies had less than squeaky-clean backgrounds. Checks revealed criminal convictions or connections to organizations such as gambling rings or organized crime.
By comparison, 10 percent of non-Internet company executives were found to have questionable backgrounds, Kroll said.
Of the 70 background checks Kroll conducted on Internet company top executives, directors and consultants, 27 had been charged with or connected to white-collar crimes. Allegations included Securities and Exchange Commission violations, insurance fraud, undisclosed bankruptcy and ties to the Russian mafia.
Robert Hogan, a professor of psychology at the University of Tulsa, believes the study pinpoints a difference between straight-laced corporate America and the more risk-seeking executives of Internet start-ups. Hogan described typical dotcom chiefs as "people who are real aggressive, who are willing to take chances, who are willing to roll the dice, break rules."
Hogan also noted that many dotcom leaders started as scrappy entrepreneurs — a stark contrast to many of the polished, business-school graduates and button-down ladder climbers likely to control the helm of giant corporations. Hogan’s research shows that entrepreneurs are considerably more audacious and adventuresome than people who toil for large companies.
"There is a huge difference between an entrepreneur and someone who climbs the corporate hierarchy at Bank of America or General Motors," Hogan said. "In a corporation, it has to do with conscientiousness and rule following. And the name of the game in entrepreneurship is to break the rules."
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