Motivating Whistleblowers

Abstract

Law-breaking activities within an organization bene…ting the …rm at the expense of the general public are widespread but di¢cult to uncover, making whistleblowing by employees desirable. We employ a novel laboratory experiment to investigate if and how monetary incentives and expectations of social approval or disapproval, and their interactions, a¤ect the decision to blow the whistle. Experimental results show that: i) …nancial rewards signi…cantly increase the likelihood of whistleblowing and do not substantially crowd out non-monetary motivations activated by expectations of social judgment; and ii) the possibility of social judgment decreases (increases) whistleblowing when the public is unaware (aware) of the negative externalities generated by fraud, suggesting that whistleblowers are at least partly motivated by a desire for social approval. Our …ndings suggest that whistleblowers on corporate fraud should be …nancially rewarded and should be shielded from public/media scrutiny when the social cost of the illegal activity is not visible or salient to the public. We also …nd evidence of an interesting relationship between political orientation and social judgment: while left-leaning subjects react to the possibility of receiving social approval or disapproval as expected, right-leaning people are una¤ected by it.

Analyzing the effect of financial reward, personal cost and reporting channel on whistleblowing intentions utilizing an experimental study

“…Based on the explanation from the Prosocial Behavior Theory, providing financial rewards to whistleblowers is expected to encourage whistleblowing intentions. Previous researches on the effect of financial reward on whistleblowing intentions indicated that financial reward influenced whistleblowing intentions; or in other words, given financial rewards would encourage whistleblowing intentions (Andon et al, 2016;Schmolke & Utikal,2016;Butler et al, 2017;and Xu & Ziegenfuss, 2008). Based on this explanation, the hypothesis is: H1: Whistleblowing will be greater, if given a financial reward compared to not given a financial reward.…”

Whistleblower rewards, false reports, and corporate fraud

“…Schmolke and Utikal ( 2016) study the frequency of whistleblowing generated by rewards, fines for not blowing the whistle, as well as whether, and how, the enforcing authority is affected by the whistleblower's report. Butler et al (2017) study the interaction between monetary rewards, the visibility of the crime reported, and public image concerns of the whistleblowers. Most relevant for us, both studies find that, controlling for other factors, monetary rewards are very effective in increasing the probability of whistleblowing.…”