Protect or Pay? Promoting Internal Whistleblowing

Abstract:     

Employee whistleblowing is responsible for detecting the largest percentage of occupational frauds, making it a critical concern for managers. Anti-retaliation measures and monetary incentives are two ways managers can encourage employees to report suspicions or observations of 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 and obligation to report partially 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.

Number of Pages in PDF File: 39

Keywords: Whistleblowing, incentives, retaliation, fraud

JEL Classification: G30, M41, M50