Protect or Pay: Promoting Internal Whistleblowing

• In Event: Fraud and Accounting Behavior

Abstract

Employee whistleblowing is responsible for detecting the largest percentage of occupational frauds, making it a critical concern of managers. Anti-retaliation measures and monetary incentives are two ways managers can encourage employees to report suspicions or observations of illegal misconduct to internal channels. Results of a 2x3 experimental survey of 283 working US adults show that anti-retaliation policies significantly positively relate to internal whistleblowing, and that employee trust in the organization mediates this relationship. Relatively low monetary awards, framed as compensation or as a reward, do not increase whistleblowing intentions, while relatively high payments, when offered after low payments, do significantly increase reporting likelihood. Results suggest that managers should focus on developing and enforcing anti-retaliation policies and tread lightly when considering the use of monetary incentives to incentivize whistleblowing.

Authors

• Cynthia P Guthrie, Bucknell University

• Eileen Z Taylor, North Carolina State University