Impact of whistle blowing on organizational culture

INTRODUCTION
One of the chief interest of many firm is to construct an ethical corporate environment by
which wrongdoings and wrongdoers from an organization can be regulated, reduced and can
even be eliminated. By taking actions against the wrongdoers encouraging whistle blowing
which helps in seeking and taking attention of the authority and management towards the
wrongdoings. (Kaptein, 2008)
What is whistle blowing?
For some of the people it is known as an act of expressing an interest relating to misdoings
cheating or other unlawful and unethical activities outside the firm, for some reasons they
don’t feel it able to upraise the matter inside firm. For most of employees whistle blowing is an
employee reporting method whether inside and outside the corporation. David crook.
The word whistle blowing very negative association and impacts with it, it is said that anyone
who blows whistle is seen as a sneak, a grass, a rat and all manner of other names. Culturally
children are taught by their parents not to rat on their siblings, in school not to rat on their
mates, and in workforce not to rat on their companions. Because of this culture, whistle
blowing in business is often betrayed as morally un discussible, on the grounds that it violates the
duty of loyalty and confidentiality to the business and fellow workers.As a result, many
employers still view whistleblowers with suspicion, not as the loyal bearers of critical
information which they often are. Rather than actively encouraging employees to sound the
alarm, many companies create a culture and procedures which actually deter employees from
blowing the whistle. This is often because companies fear
uncontrolled whistleblowing. Encouraging controlled whistleblowing is, however,
good business practice. (Banerjee&Roy, 2014).
Importance of whistle blowing
It is proved that most of the firm’s turnover has reduced from 2% to 5% as a result of
wrongdoings that upwards of 25% of population. From top to bottom, become part of
wrongdoings given the opportunities. 80% of frauds are committed by staff, often by confident
and long service employees of organization, the effect of successful fraud is that honest people
are not ought to suspect. A firm believes that internal regulation will not allow fraud to take
place but the fraudster has the initiative, he has time and motivation to be attentive towards detail
and can hide their tracks among numbers of transactions. Its very unbalanced war, the fraudster
has to be lucky once or more, the company has to defend the organization safely all the time.
Corporate fraud is both serious and permeative issue and effects all organizations causing huge
loss. . What is more, 75 per cent of those frauds which are uncovered are found by chance
(through anonymous tip-offs, whistleblowing, accident or change of management) contrary to
most effective management and audition processes. It confirms that most wrongdoings are
uncovered, An international survey found that 84% of wrongdoings conducted in US were done
by employees. The survey resulted that most firms have weak control for detecting employee
fraud. Most units of business are at risk ,as , procurement and purchasing advertising, sales,
marketing and distribution production and manufacturing spares, warranties, field service and
maintenance disbursements and expenses receivables credit and lending computers, sensitive
commercial information and data.
Research objective:
This research is centered on the effect of whistle blowing on organizational ethical culture.
However, other specific objectives are:

 To develop an importance of whistle blowing in organization.

 To determine that whistle blowing can influence the employee actions and
management decision.

Whistle blowing and transparency

Organizational internal transparency is improved by internal reporting (Miceli et al., 2008),
employee thinks that its effective and will prove just and clean and clear site, especially when
management is totally unknown about it. But if employee thinks that management already known
about the misdoings they will have no reason to inform management and to blow whistle.
Transparency and visibility can make employees responsible for their activities if they are aware
and keep idea about results of their activities.
Transparency is positively related with whistleblowing.
Clarity and whistle blowing
Clarity is the foremost ethical virtue of any corporate. What the organization is expecting should
be clear and comprehensible, the greater the level of clarity the more employees realize the
firm’s expectations and his own responsibilities.
Clarity and organizational culture is directly related with whistle blowing.

Methods
This study followed the descriptive field analytical approach which deals with the quantitative
data, which answers the questions about variables for elaborating, forecasting and preventing
phenomena. This approach is specified from a representative sample to a whole population.
The approach is considered quantitative because it is going to represent in a numerical form.
Here, we are considering deductive approach. We are taking some sample and implementing the
result on the populations.

Measures
The constructs on this have to take a look at had been developed via the use of period scales
observed from preceding studies. And use five likers scale strongly agree to strongly disagree.
All gadgets had been sincerely worded. Logo keep in mind measures have been tailor-crafted
from the preceding research.

Population and sample

The data were collected through a questionnaire-based survey of employees working in various
public and private sector organizations in Pakistan. We specifically targeted the internal auditors
 as they are integral to organizations and have a broader role. According to Read and Rama
(2003): “Whistle-blowing can play an important role in the internal control environment of an
organization, and internal auditors are its natural outlets”. Their responsibilities include: ongoing
monitoring and evaluating risk management; over-seeing the internal processes and governance
issues; providing consultation on how to improve systems and
processes.

Research model

Individual motives

transparency Whistle blowing Culture

clarity

Literature review:
Whistleblowers need to be supported and encouraged to act asmonitors of corporate behaviors
and discourage wrongdoers to the extent of eliminating them. However, prior research indicates
that only a fewmight blowthewhistle. Primarily due to some kind of fear of
retribution,topmanagement disapproval, or someother affective disposition, available study
suggests that only a handful of employees blows the whistle against wrongdoings (Miceli et al.,
2008). The organizational ethical context is usually perceived by employees as a combination of
ethical climate and ethical culture (Treviño & Weaver, 2003). Ethical climate consists of aspects
that determine what constitutes ethical conduct (Victor & Cullen, 1988). Ethical culture on the
other hand,comprises aspects that stimulate ethical conduct (Treviño&Weaver, 2003).
[35TD$DIF]Treviño, [36TD$DIF]Butterfield, [37TD$DIF]andMcCabe (1998) pioneered in
developing and testing a construct of the ethical culture of organizations. Corporate Ethical
VirtuesModel developed by Kaptein (1998, 1999), includes seven virtues to be implanted and
embedded in organizational culture representing ethical quality(Kaptein, 2008). The CEVMis
grounded on Solomon’s (1992, 1999, 2000, 2004) virtue-based theory of business ethics. This
theory posits that organizations must possess certain virtues, in order to outshine morally. After
Collier (1995), Kaptein (1998, 2008)further suggests that the virtuousness in the organization
culture motivates employees to act ethically and prevent to behave unethically.
Pakistan, a developing country is fraught with corruption and has consistently been reported as
such. According to a report of 2015 by Transparency International Pakistan with a score of 30
has been ranked at 117th position out of 168 countries (TI, 2015). Another report that assessed
the National integrity system of Pakistan highlighted various weaknesses; lack of a
whistleblowing mechanism being one of the major drawbacks (TI, 2014). Whistle blowing is not
yet a popular trend in organizations in Pakistan,and research on whistleblowing is all the more
limited. The laws and regulations are still in a developing phase. With special reference to
Pakistan the principle for protection of whistleblowers requires that individuals who release
information on wrongdoing – whistleblowers – must be protected. However, there is no
protection in Federal Right to Information Law for the whistleblowers. It does not provide
protection against any legal, administrative or employment-related sanction for disclosing
information. In the absence of a clause for protection of whistleblowers, officials who even sense
wrong doings or maladministration, would be afraid of losing their jobs or being suspended, if
they disclosed information (Ali et al., 2015; TI, 2014). Though policy making and taking
measures to stop wrongdoings is vital, but spotting and amending wrongdoers are also
imperative. Management should encourage, support and ensure psychological wellbeing and
safety of employees who blow whistle against misconduct and wrongdoings taking place in the
organization. Therefore, influence of the ethical culture in organizations on employees’ responses
need to be analyzed regarding wrongdoing. In depth analysis of corporate ethical culture
dimensions related to varied responses by the employees are required (Kaptein, 2011).

Whistle blowing and transparency

Organizational internal transparency is improved by internal reporting (Miceli et al., 2008),
employee thinks that its effective and will prove just and clean and clear site, especially when
management is totally unknown about it. But if employee thinks that management already known
about the misdoings they will have no reason to inform management and to blow whistle.
Transparency and visibility can make employees responsible for their activities if they are aware
and keep idea about results of their activities.
Transparency is positively related with whistleblowing.
Clarity and whistle blowing
Clarity is the foremost ethical virtue of any corporate. What the organization is expecting should
be clear and comprehensible, the greater the level of clarity the more employees realize the
firm’s expectations and his own responsibilities.
Clarity and organizational culture is directly related with whistle blowing.
Model Hypothesis:

H1: significance impact of individual motives on whistle blowing

H2: significance impact of transparency on whistle blowing

H3: significance impact between clarity and whistle blowing

H4: there is positive relationship between whistle blowing and organizational culture.
Regression

Variables Entered/Removeda

Model Variables Variables Method

Entered Removed

Clarity, . Enter
Transparency,
1
Individual_motiv
esb

a. Dependent Variable: Whistle_blowing

b. All requested variables entered.

Model Summary

Model R R Square Adjusted R Std. Error of the

Square Estimate

1 .326a .106 .079 .64167

a. Predictors: (Constant), Clarity, Transparency, Individual_motives

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

Regression 4.783 3 1.594 3.872 .012b

1 Residual 40.351 98 .412

Total 45.134 101

a. Dependent Variable: Whistle_blowing

b. Predictors: (Constant), Clarity, Transparency, Individual_motives

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig.

Coefficients

B Std. Error Beta

 (Constant) 1.376 .301 4.566 .000

Transparency .147 .099 .145 1.486 .141

1
Individual_motives .127 .096 .135 1.331 .186

Clarity .178 .093 .191 1.907 .059

a. Dependent Variable: Whistle_blowing

Regression analysis shows that the results are significant or not according to analysis table result of
transparency is not significant as .141>0.05 so the hypothesis rejected that there is a positive
relationship between transparency and whistle blowing. Individual motive is not significant by results as
.86>0.05 so as per computed results it lies in critical region and out of significant region so the
hypothesis rejected that there is positive relationship between individual motives and whistle blowing.
Clarity is also greater than level of significance 0.059>0.05 so the hypothesis rejected there is negative
relationship between clarity and whistle blowing.

Correlations

Correlations

Organization_cul Transparency Individual_motiv Clarity Whistle_blowing

ture es

Pearson Correlation 1 .335** .224* .254** .218*

Organization_culture Sig. (2-tailed) .001 .024 .010 .028

N 102 102 102 102 102
Pearson Correlation .335** 1 .203* .132 .198*
Transparency Sig. (2-tailed) .001 .040 .185 .046
N 102 102 102 102 102
Pearson Correlation .224* .203* 1 .289** .220*
Individual_motives Sig. (2-tailed) .024 .040 .003 .027
N 102 102 102 102 102
Pearson Correlation .254** .132 .289** 1 .249*
Clarity Sig. (2-tailed) .010 .185 .003 .012
N 102 102 102 102 102
Pearson Correlation .218* .198* .220* .249* 1
Whistle_blowing Sig. (2-tailed) .028 .046 .027 .012

N 102 102 102 102 102

*. Correlation is significant at the 0.05 level (2-tailed).
Correlation is used to measure the relationship between two or more variables.

Here the correlation applied is two tailed, if the results lie under level of significance it shows that the variables are having a
significant impact on each other or not.

The table shows that there is a significant relationship among variables.

Significance between organizational culture and independent variable: Clarity= .001<.05 so te result is significant,
transparency =0.24<.05 ,individual motives=.110<0.05 so all the independent variables have a significant effect on each
other.

Conclusion:

The research is done to check the impact of whistle blowing on organizational culture. Different
variables are measured to check the impact. Some are dependent and some are independent variables

Data is collected by questionnaires after collection of data spss is applied on it. To enter and analyze
data, for data analysis correlation and regression analysis is applied to check the relationship between
dependent and independent variables.

Here the correlation applied is two tailed, if the results lie under level of significance it shows their

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