Organizations are increasingly embedded with consultants and other non-employees who have the opportunity to engage in wrongdoing. However, research exploring the reporting intentions of employees regarding the discovery of wrongdoing by consultants is scant. It is important to examine reporting intentions in this setting given the enhanced presence of consultants in organizations and the fact that wrongdoing by consultants changes a key characteristic of the wrongdoing. Using an experimental approach, the current paper reports the results of a study examining employees' (...) reporting intentions subsequent to their discovery of wrongdoing by a consultant. The results of the study indicate that perceptions about the seriousness of a wrongdoing, personal costs and personal responsibility related to reporting a wrongdoing, and moral-equity judgments are significantly associated with reporting intentions for a normal reporting channel. Only perceptions of seriousness and personal costs are significantly associated for an anonymous reporting channel. Lastly, while personal costs for the anonymous reporting channel were lower than the normal reporting channel, reporting intentions were similar across the two channels. (shrink)

Business students from the three NAFTA countries were shown a possible Sexual Harassment scenario from Arthur Andersen's Business Ethics Program. They were asked to respond to a pre-questionnaire concerning the three characters' behaviors and possible actions and a post-questionnaire after writing a report from the points of view of the three characters in the scenario. The students were asked to consider whether the characters should report the possible harasser to their supervisor, and thus engage in whistle-blowing behavior, as well as (...) directly confront the harasser. Hypotheses are formulated for the three NAFTA countries based on Hofstede's cultural dimensions. There were significant differences, but in some cases not in the direction expected. Gender differences are also explored, but there were few significant differences. (shrink)

In response to the lack of empirical studies examining the internal disclosure behavior in the Chinese context, this study tested a whistleblowing -decision-making process among employees in the Chinese banking industry. For would-be whistleblowers, positive affect and organizational ethical culture were hypothesized to enhance the expected efficacy of their whistleblowing intention, by providing collective norms concerning legitimate, management-sanctioned behavior. Questionnaire surveys were collected from 364 employees in 10 banks in the Hangzhou City, China. By and large, the findings supported the (...) hypotheses. Issues of whistleblowing in the Chinese context and implications were discussed. (shrink)

This research consists of two studies with interrelated objectives. The purpose of the first study is to develop and validate scales measuring whistle-blowing subjective norms, attitudes, and intentions. The objective of the second study is to test a model of whistle-blowing intentions, motivated by the theory of reasoned action, across two contrasting cultures: the collectivist Thai and the individualistic American. To achieve cross-cultural comparisons, we first perform measurement and structural invariance tests. Tests of latent mean differences lend support for our (...) prediction that individuals in the collectivist Thai culture have higher means on subjective norms, attitudes, and intentions for whistle-blowing than members of the individualist American culture. Our models indicate that subjective norms for whistle-blowing, even though significantly different for American and Thai participants, have a direct effect on whistle-blowing attitudes as well as direct and indirect effects on reporting intentions for both subject groups. Compared to American subjects, the whistle-blowing intentions of Thai participants are more strongly influenced by subjective norms for whistle-blowing. (shrink)

Social contract theory has been criticized as a “theory in search of application.” We argue that incorporating the nano, or individual, level of analysis into social contract inquiry will yield more descriptive theory. We draw upon the psychological contract perspective to address two critiques of social contract theory: its rigid macro-orientation and inattention to the process of contract formation. We demonstrate how a psychological contract approach offers practical insight into the impact of social contracting on day-to-day human interaction. We then (...) articulate several potentially testable propositions that emerge from this nano-level perspective. (shrink)

This article reports the findings from a study that investigates the relationship between ethical climates and police whistle-blowing on five forms of misconduct in the State of Georgia. The results indicate that a friendship or team climate generally explains willingness to blow the whistle, but not the actual frequency of blowing the whistle. Instead, supervisory status, a control variable investigated in previous studies, is the most consistent predictor of both willingness to blow the whistle and frequency of blowing the whistle. (...) Contrary to popular belief, the results also generally indicate that police are more inclined than civilian employees to blow the whistle in Georgia - in other words, they are less inclined to maintain a code of silence. (shrink)

Recent financial fraud legislation such as the Dodd–Frank Act and the Sarbanes–Oxley Act (U.S. House of Representatives, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, [H.R. 4173], 2010 ; U.S. House of Representatives, The Sarbanes–Oxley Act of 2002, Public Law 107-204 [H.R. 3763], 2002 ) relies heavily on whistleblowers for enforcement, and offers protection and incentives for whistleblowers. However, little is known about many aspects of the whistleblowing decision, especially the effects of contextual and wrongdoing attributes on organizational (...) members’ willingness to report fraud. We extend the ethics literature by experimentally investigating how the nature of the wrongdoing and the awareness of those surrounding the whistleblower can influence whistleblowing. As predicted, we find that employees are less likely to report: (1) financial statement fraud than theft; (2) immaterial than material financial statement fraud; (3) when the wrongdoer is aware that the potential whistleblower has knowledge of the fraud; and (4) when others in addition to the wrongdoer are not aware of the fraud. Our findings extend whistleblowing research in several ways. For instance, prior research provides little evidence concerning the effects of fraud type, wrongdoer awareness, and others’ awareness on whistleblowing intentions. We also provide evidence that whistleblowing settings represent an exception to the well-accepted theory of diffusion of responsibility. Our participants are professionals who represent the likely pool of potential whistleblowers in organizations. (shrink)

Business students from the three NAFTA countries were shown a possible Sexual Harassment scenario from Arthur Andersen’s Business Ethics Program. They were asked to respond to a pre-questionnaire concerning the three characters’ behaviors and possible actions and a post-questionnaire after writing a report from the points of view of the three characters in the scenario. The students were asked to consider whether the characters should report the possible harasser to their supervisor, and thus engage in whistle-blowing behavior, as well as (...) directly confront the harasser. Hypotheses are formulated for the three NAFTA countries based on Hofstede’s cultural dimensions. There were significant differences, but in some cases not in the direction expected. Gender differences are also explored, but there were few significant differences. (shrink)

Discussions of whistleblowing whether in academic literature or in more popular media have tended to very one-sided assessments of the moral worth of the act. Indeed, much of the current literature concentrates on psychological or managerial aspects of whistleblowing while taking for granted this or that moral position or eschewing any normative commitment on the question. The purpose of this article is firstly to reemphasise the importance and complexity of the normative foundations of whistleblowing acts; and secondly, through a moral (...) philosophical analysis of the component decisions that make up any act of whistleblowing, to contribute to a more balanced and less polarised treatment of the topic. It is argued that the polarisation of views on the topic is in part due to a failure to decompose the act of whistleblowing into a number of inevitable component moral decisions leading up to the act. It is furthermore argued on the basis of the analysis that it is impossible to state a priori as a matter of general principle that whistleblowing is always morally right or morally wrong . The article will close with a reflection on the degree to which the weighing up of good and bad in the act of whistleblowing differs sharply among cultures; and with a conjecture as to a possible relation to a people's history which may serve as a pointer to interesting future empirical research on the topic. (shrink)

Incidences of organizational wrongdoing have become wide spread throughout the whole business world. The management of organizational wrongdoings is of growing concern in organizations globally, since these types of acts can be detrimental to financial well being. Wrongdoing occurs within organizational settings and organizational members commonly have knowledge of and thus the opportunity to report the wrongdoing. An employee’s decision to report individual or organizational misconduct, i.e. blow the whistle, is a complex phenomenon that is based upon organizational, situational and (...) personal factors. The purpose of this study is to examine the relationship between value orientations of individuals and choices for particular whistleblowing modes. Our results show that there are significant relationships between these variables. We contribute to the extant literature by choosing Turkey as context as most studies have been conducted in the US and Europe, and little has been reported about the actions taken by employees in non-Western cultures when they observe wrongdoing in their organizations. (shrink)

Whistle blowing programs have been central to numerous government, legislative, and regulatory reform efforts in recent years. To protect investors, corporate boards have instituted numerous measures to promote whistle blowing. Despite significant whistle blowing incentives, few individuals blow the whistle when presented with the opportunity. Instead, individuals often remain fallaciously silent and, in essence, become passive fraudsters themselves. Using the fraud triangle and models of moral behavior, we model and analyze fallacious silence and identify factors that may motivate an individual (...) to rationalize fallacious silence. We use a survey of graduate accounting students to test hypothesized factors that contribute to fallacious silence rationalizations in an academic setting. We find evidence that the ability to rationalize fallacious silence is related to community influences and personal traits such as awareness and moral competence. (shrink)

This study examined experimentally the effect of retaliation strength and accounting students’ level of moral reasoning, on their propensity to blow the whistle (PBW) when faced with a serious wrongdoing. Fifty-one senior accounting students enrolled in an auditing course offered by a large New Zealand university participated in the study. Participants responded to three hypothetical whistle-blowing scenarios and completed an instrument that measured moral reasoning (Welton et al., 1994, Accounting Education . International Journal (Toronto, Ont.) 3 (1), 35–50) on one (...) of two conditions – i.e., strong or weak retaliation for whistle-blowing. Consistent with the results of Arnold and Ponemon (1991, Auditing: A Journal of Practice and Theory 10 , 1–15) this study found that the strength of retaliation and participants’ moral reasoning level positively affected their PBW. Unlike results reported in Arnold and Ponemon (1991, Auditing; A Journal of Practice and Theory 10 , 1–15) a significant interaction effect of moral reasoning level and retaliation on participants’ PBW was not found. However, results showed that a participant’s gender has a significant effect on the relationship between his or her moral reasoning level and PBW. These results support the need to improve ethical awareness through accounting education and to increase protection for whistle-blowing (Miceli 2004, Journal of Management Inquiry 13 , 364–366). Furthermore, many participants found it difficult to take a stand when serious wrongdoing is discovered. Therefore, policymakers must exercise caution when placing heavy reliance on whistle-blowing, especially when whistle-blower protection processes are complex and not easily accessible, and processes to facilitate whistle-blowing may vary substantially between public and private sector organizations (Scholtens, 2003, Review of the operation of the Protected Disclosures Act 2000: Report to the Minister of State Services ). (shrink)

This article suggests that the introduction of employment protection rights for whistleblowers has implications for the way in which trust and loyalty should be viewed at the workplace. In particular, it is argued that the very existence of legislative provisions in the United Kingdom reinforces the notion that whistleblowing should not be regarded as either deviant or disloyal behaviour. Thus, the internal reporting of concerns can be seen as an act of trust and loyalty in drawing the employer's attention to (...) wrongdoing. Equally, external whistleblowing may result from a worker's belief that he or she also has a loyalty to the wider society. Given that the interests of employees do not necessarily coincide with those of their employer and that whistleblowers sometimes suffer reprisals, the author concludes that it is inappropriate to impose a contractual duty to report concerns. Instead, employers should endeavour to promote a culture of openness and create confidence in the mechanisms they provide for whistleblowing. (shrink)

The Sarbanes–Oxley Act of 2002 requires audit committees of public companies’ boards of directors to install an anonymous reporting channel to assist in deterring and detecting accounting fraud and control weaknesses. While it is generally accepted that the availability of such a reporting channel may reduce the reporting cost of the observer of a questionable act, there is concern that the addition of such a channel may decrease the overall effectiveness compared to a system employing only non-anonymous reporting options. The (...) rationale underlying this concern involves the would-be reporter’s likelihood of reporting, the seriousness with which the organization treats an anonymous report, and the organization’s ability to thoroughly follow-up the report. Thus, we explore the extent to which the availability of an anonymous reporting channel influences intended use of non-anonymous reporting channels. Further, in response to Sarbanes–Oxley and the environment of financial scandals that led to its passage, many firms are strengthening their internal audit departments, and providing them with greater independence from upper management’s direct control. Accordingly, our examination tests whether the intended use of the internal audit department as an internal reporting channel is greater when the internal audit department is of “high” versus “low” quality. Finally, the study investigates intended reporting behavior across three different cases (e.g., settings). Results show that the existence of an anonymous channel does reduce the likelihood of reporting to non-anonymous channels, that generally the internal audit department quality does not affect reporting to non-anonymous channels, and that case-setting affects the type of channel to be used. Implications from the study are discussed. (shrink)

Putting measures in place to prevent wrongdoing in organizations is important, but detecting and correcting wrongdoing are also vital. Employees who detect wrongdoing should, therefore, be encouraged to respond in a manner that supports corrective action. This article examines the influence of the ethical culture of organizations on employee responses to observed wrongdoing. Different dimensions of ethical culture are related to different types of intended responses. The findings show that several dimensions of ethical culture were negatively related to intended inaction (...) and external whistleblowing and positively related to intended confrontation, reporting to management, and calling an ethics hotline. (shrink)

The purpose of this paper is to examine whether anonymous reporting channels are effective in detecting fraud against companies. Fraud, which comprises predominantly asset misappropriation, represents a key operational risk and a major cost to organisations. The fraud triangle provides a framework for developing our understanding of how ARCs can increase detection of fraud. Using publicly listed company survey data collected by KPMG in Australia—where ARCs are not mandated—we find a positive association between ARCs and reported fraud. These results indicate (...) that ARCs are effective in detecting fraud. Additional analysis reveals that small firms derive the greatest benefit from adopting ARCs. We also find that independent boards do not directly influence the detection of fraud, but companies with independent boards detect more fraud because they implement ARCs. (shrink)

Since the introduction of the U.S. Sarbanes-Oxley Act in 2002 and several other national corporate governance codes, whistleblowing policies have been implemented in a growing number of companies. Existing research indicates that this type of governance codes has a limited direct effect on ethical or whistleblowing behaviour whereas whistleblowing policies at the corporate level seem to be more effective. Therefore, evidence on the impact of (inter)national corporate governance codes on the content of corporate whistleblowing policies is important to understand their (...) indirect impact on whistleblowing behaviour. This study analyzes the contents of whistleblowing policies, and parts of corporate codes of conduct and codes of ethics, describing such policies of 56 leading European companies. By classifying the contents in seven categories, an exploratory framework was created. General contents often identified were: applicability to all employees, a group-wide scope and an authoritative tone. The most common general violations to report were breaches of internal policies and external regulations or laws. The more specific violations most frequently mentioned were criminal offences and dangers to health and safety or the environment. Contacts to report to were the direct or indirect supervisors, a compliance officer or a confidential "hotline" facility. A confidentiality guarantee was common and anonymous reporting was often possible, though sometimes discouraged. Protection against retaliation is stated by ensuring that retaliation will not happen, prohibiting it or making it punishable. The requirement of good faith was frequently given. Finally, investigation of the report was often guaranteed. Surprisingly little information is given on the treatment of whistleblowers reporting an unfounded complaint in good faith, or reporting a violation they were involved in. The study's findings are most relevant to companies without a whistleblowing policy or those that intend to benchmark their policies, and to pan-European standard setters. (shrink)

The topic of moral repair in the aftermath of breaches of trust and harmdoing has grown in importance within the past few years. In this paper, we present the results of a qualitative study that offers insight into a series of key issues related to offender efforts to repair interpersonal harm in the workplace: What factors motivate offenders to make amends with those they have harmed? In what ways do offenders attempt to make amends? What outcomes emerge from attempts to (...) make amends? Drawing from the findings, we build an inductive model intended to guide future business ethics and management inquiry and research in this area. (shrink)

This paper develops a typology of moral problems in business. The cross-classification of two fundamental dimensions of ethical conduct: judgment and motivation, is employed to distinguish four types of moral problems: genuine dilemmas, compliance problems, moral laxity, and no-problem problems. Actual cases are brought to illustrate each type of problem, and corresponding coping strategies are presented. The paper highlights the need to design a dynamic strategy that will take into account the relationships among different types of ethical problems. In its (...) capacities as both an analytical tool for identifying and clarifying an ethical problem and a strategic tool for handling it, the typology has direct implications for developing ethical awareness, assigning accountability, and unfolding typical rationalizations in business activity. (shrink)

This study examined whether it was possible to classify Australian public sector employees as either whistleblowers or non-reporting observers using personal and situational variables. The personal variables were demography (gender, public sector tenure, organisational tenure and age), work attitudes (job satisfaction, trust in management, whistleblowing propensity) and employee behaviour (organisational citizenship behaviour). The situational variables were perceived personal victimisation, fear of reprisals and perceived wrongdoing seriousness. These variables were used as predictors in a series of binary logistic regressions. It was (...) possible to identify whistleblowers on the basis of individual initiative, whistleblowing propensity (individual and organisational), fear of reprisals, perceived wrongdoing seriousness and perceived personal victimisation. It was concluded that whistleblowers are not markedly dissimilar to non-reporting observers. Based on the two most influential variables (perceived personal victimisation and perceived wrongdoing seriousness), the average Australian public sector whistleblower is most likely to be an ordinary employee making a good faith attempt to stop what they perceived to be a serious wrongdoing that was initially identified through personal victimisation. (shrink)

This empirical study explores the characteristics and degree of implementation of so-called ethics hotlines in transnational companies (TNCs), which allow employees to present allegations of wrongdoing and ethical dilemmas, as well as to report concerns. Ethics hotlines have not received much attention in literature; therefore, this paper aims to fill that gap. Through the analysis of conduct/ethics codes and the compliance programs of the top 150 transnational companies ranked by the United Nations Conference on Trade and Development (UNCTAD) ( 2007 (...) ), we carry out a descriptive and taxonomic study of these companies’ ethics hotlines. We analyze: (1) the basic characteristics of the mechanism, (2) the degree of exigency and the provision of safeguards, (3) the matters reported and the systems for reporting, and (4) the relationships between hotlines and economic characteristics of the firm. Our study compares financial and nonfinancial TNCs as well as North American and European TNCs. Our results show that many firms (especially from North America) have established these procedures. We also find some disparities between European and North American ethics hotlines that suggest differences in the orientation of the procedures. (shrink)

This article argues that the study of biblical prophets offers a profound contribution to understanding the experience, role and attributes of whistleblowers. Little is known in the literature about the moral triggers that lead individuals to blow the whistle in organisations or why whistleblowers may show persistence against the harshness experienced as a result of their actions. This article argues that our understanding of the whistleblower’s work is highly informed by appreciating how moral values and norms are exercised by prophets (...) in seeking to become agents for change. This article identifies three core implications that have practical and theoretical relevance. The first concerns how the whistleblowing activity challenges the established order of an organisation as this is comprised of institutional structures, policies and procedures. Institutions display an unusual fragility against the seemingly powerless individual who helps reveal the wrongdoing. By disclosing ‘hidden’ knowledge concerning illegitimate intentions and actions, the seemingly powerless individual creates tension that has implications for the stability and order of the organisation. The second implication concerns the degree of social concern and the individual’s interpretation of morality. Whistleblowers, like prophets, display concern for moral values that have implications for the welfare of others, and which they seek to promote through their whistleblowing act. The third implication concerns the importance of agency. By taking a moral stance, the whistleblower assumes an important agentic role facilitating change through his/her intervention. Although such change is sudden and unpredictable it brings about new conditions for the organisation and its members. (shrink)

Many jurisdictions have put regulatory strategies in place to provide incentives and safeguards to whistleblowers to encourage whistleblowing on corporate wrongdoings. One such strategy is the provision of a financial incentive to the whistleblower if the complaint leads to a successful regulatory enforcement action against the offending organization. We conducted an experiment using professional accountants as participants to examine whether such an incentive encourages potential whistleblowers to report an observed financial reporting fraud to a relevant external authority. We also examine (...) the effect of perceived seriousness of the wrongdoing on accountants’ intention to whistleblow. We find that a financial incentive results in a higher intention to whistleblow to a relevant external authority. We also find that perceptions of the seriousness of the wrongdoing are significantly and positively associated with accountants’ intention to whistleblow to a relevant external authority. We find a significant interaction between the provision of a financial incentive and the perceived seriousness of the wrongdoing on the intention to report the wrongdoing externally. The intention to report the financial reporting fraud externally is higher when the level of perceived seriousness is higher, regardless of the availability of a financial incentive. However, when the perceived level of seriousness is lower, the presence of financial incentive results in a higher intention to report the financial reporting fraud externally. These findings indicate that the impact of a financial incentive on the intention to whistleblow is moderated by perceptions of the seriousness of the wrongdoing. (shrink)