The Importance of Social Mechanisms in the Commission of or Resistance to Group Fraud: A Field Study

54 Pages Posted: 8 Jul 2021 Last revised: 20 Jul 2021

See all articles by Pujawati Mariestha (Estha) Gondowijoyo

Pujawati Mariestha (Estha) Gondowijoyo

Queen's University - Smith School of Business

Christie Hayne

University of Illinois at Urbana-Champaign

Pamela R. Murphy

Queen's University - Smith School of Business; Queen's University

Date Written: July 12, 2021

Abstract

We analyze 19 stories from individuals who committed group fraud and 19 from those who resisted pressure to commit group fraud. Our goal is to better understand the control mechanisms that helped push people toward or against group fraud. Our theoretical lens highlights the implications of the social nature of “group” fraud and classifies the mechanisms we examine into social and administrative mechanisms. Social mechanisms are based on the influence of others (e.g., culture, mentorship) while administrative mechanisms are based on rules and policies (e.g., reward systems). We find that social mechanisms are significantly more influential than administrative mechanisms in pushing individuals toward the commission of and resistance to group fraud. Leveraging Qualitative Comparative Analysis, we also identify combinations of control mechanisms that commonly lead to the commission of and resistance to group fraud. Our field study enriches group fraud literature and identifies control mechanisms in which practitioners should invest.

Keywords: fraud, group fraud, control systems, social mechanisms, administrative mechanisms

JEL Classification: M41

Suggested Citation

Gondowijoyo, Pujawati Mariestha (Estha) and Hayne, Christie and Murphy, Pamela R., The Importance of Social Mechanisms in the Commission of or Resistance to Group Fraud: A Field Study (July 12, 2021). Available at SSRN: https://ssrn.com/abstract=3876749

Pujawati Mariestha (Estha) Gondowijoyo

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
Kingston, Ontario K7L3N6
Canada

Christie Hayne (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
540-300-4577 (Phone)

Pamela R. Murphy

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada
6135333260 (Phone)

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