The effect of social exchange relationships on peer reporting fraudulent financial misconduct: a case study of an UK-non-profit organization

Lamba, EJ

Abstract

Non-profit organizations are an important component of the UK market and a large part of culture. In March 2017, there were 167,063 registered charities in England and Wales with a combined turnover of £74.7 billion and a charitable spend of more than £71 billion. Significant controversies surrounding charities, such as the Oxfam fiasco, have shaken the industry as recent as 2018, showing that principled companies with the intention to support society can also take ethics for granted. The extant literature reveals that people's capacity to identify and interpret moral questions differs but resolving ethical problems necessitates a greater comprehension of the forces that impair ethical judgment. The previous researchers have looked into various analytical mechanisms to investigate the ethical decision-making method and considered, for example, using a range of analytical viewpoints to decide the extent to which workers' conceptions of ethical principles, ethical culture, and corporate social responsibility moderate the interaction between their ethical concerns and ethical decisions. Currently, there is no universally accepted concept of fraudulent activity and clearly, the controversies that shook the non-profit field have generated a need to explore how employees participate and rationalize fraudulent misconduct as they are directly related to the success of companies.

Employee misconduct has received the greatest attention, mostly because the abuses are so egregious, and the costs are so enormous. These stories seemingly have a commonality in that the accused workers, who seemingly strive to selflessly help the world’s less fortunate, are hiding a much darker reality below the surface. This study investigates the individual and organisational factors which influence peer reporting intentions with a focus on accounting-related employee fraud. The individual and organizational factors that are associated with peer reporting behaviour within a charitable organization in England and Wales are examined. This study adopts mixed research methods including interviews and questionnaire surveys. The study develops an integrated model of ethical decision-making which borrows from Rest’s (1986) widely adopted Four Component Model and compliment this further by investigating how social forces play a part in the decision-making process. Furthermore, It examines individuals (gender, age, education, rank) and organizational level (social exchange relationships, strength of organization retaliation) within a UK context. Results indicate that gender, age, education, and tenure do not have a significant influence on reporting intention, however, rank plays a significant role in reporting intention. Furthermore, social exchange relationships (interpersonal affect and reciprocal relationships) do not play a significant role in determining reporting intention within the charitable sector. The study also finds that diffusion of blame and displacement of responsibility is the most common rationalizations that employees use to disassociate themselves from engaging in unethical behaviour which in this case, is non-reporting of accounting-related misconduct. The proposed model is a theoretical contribution to literature and the findings of the study add to literature and propose some practical contributions.

Citation

Lamba, E. The effect of social exchange relationships on peer reporting fraudulent financial misconduct: a case study of an UK-non-profit organization. (Thesis). University of Salford

• Thesis Type: Thesis
• Deposit Date: Jul 8, 2022
• Publicly Available Date: Jul 8, 2022
• Award Date: Jan 6, 2022