Whistleblowing and the NZA case: Managing change and Human Resources

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Chapter 4. Theoretical part:

4.1. A model to assess the factors, influencing the whistleblowing intentions by Keil et al.:

It is important for a company to motivate its employees to use internal ways instead of making wrongdoings public, as stated in section 3.2. Therefore it should be aware and make use of the intervening mechanisms through which whistleblowing intentions are formed. These factors can be explained using the middle-range theory of whistleblowing by Keil et al. This model has been developed, tested and accordingly adjusted and as such is the dominant model explaining whistleblowing intentions.
The central explanatory variable of this model is the perceived "benefit-to-cost differential", henceforth BCD. (Keil et al., 2010) It is defined as the net difference between the perceived costs and expected benefits of whistleblowing from the perspective of a potential whistleblower. It is claimed that a witness of a wrongdoing would weigh the cost and benefits, associated with the whistleblowing and make a decision based on their difference. Therefore this decision making process will result in whistleblowing only in case the expected benefits outweigh the costs associated with whistleblowing. The key question is then which factors influence the BCD. For the selection of factors the social information processing framework of whistleblowing developed by Gundlach et al. is used. (Keil et al., 2010) This framework will be explained in the following.
Using the social information processing framework of Gundlach et al (2003) to identify factors influencing the decision-making process whether or not to blow the whistle:

By integrating power, justice and pro-social theories, Gundlach et al., (2003) tried to set up a social information processing framework. This framework tends to capture all the factors that are influencing the decision-making process of an individual whether or not to blow the whistle when identifying organizational wrongdoing. Gundlach et al., (2003) divide their model in interpersonal and intrapersonal factors. Interpersonal factors form the main part of the model and will be explained first. Intrapersonal factors could influence the interpersonal factors as will be explained later. The model itself is not shown in this section because the focus lies on the model of Keil et al., (2010) but for a better understanding of this part the model can be viewed in the summary in appendix A.
When an individual recognizes organizational wrongdoing, their emotions and their decisions whether they should blow the whistle are influenced by the cost and benefit analysis they make regarding the act of whistle-blowing. Besides of weighing the psychological and economic costs and benefits, potential whistleblowers also add attributions and responsibility judgments to their decision-making process. If a potential whistleblower attributes the wrongdoing to internal, stable and controllable causes, they will probably hold the wrongdoer(s) responsible and therefore they are more likely to decide to blow the whistle (Gundlach et al., 2003).
Social influence of the wrongdoer could also influence the decision-making process of a potential whistleblower. This social influence can be specified as the use of impression management tactics to manipulate the decision-making. These impression management tactics form the intrapersonal factors in the model. Both, defensive impression management and offensive impression management appear in the model. Defensive impression management means that the excuses and justifications made by the wrongdoer influence the (interpersonal) attributions by defining them as 'uncontrollable' and 'unstable'. As earlier stated, perceived controllable and stable causes should lead to whistleblowing and therefore this defensive impression tactic lowers this incentive. The second tactic is the offensive impression management. When a wrongdoer uses retaliation and threats, the potential-whistleblower will increase judgments of the responsibility of the wrongdoer and therefore encourages the actual whistleblowing. However, if this tactic leads to a high amount of fear against the wrongdoer the potential whistleblower could decide to not do it.
Besides of the intrapersonal and interpersonal factors there are two interfering factors added in the model: the power of both the wrongdoer and the potential whistle-blower and the credibility of the presentation of the impression management tactics. For example if the perceived power of the wrongdoer is high, blowing the whistle causes fear and therefore the potential whistleblower could decide not to blow the whistle. Also, when the presentation of an impression management tactic is perceived as non-credible it is more likely that the whistle is blown.
The seven factors influencing the BCD according to Keil et al.:

From the framework of Gundlach et al (2003), seven factors are claimed to be the key factors influencing the BCD and therefore the whistleblowing intentions. The focus on these seven factors is chosen based on the dominant theory and literature and is necessary in order to practicality (Keil et al., 2010).
The seven factors that companies need to consider when employing a whistleblowing program are shortly explained in the following.
Personal reporting responsibility is referred to as the degree of formally prescribed responsibility to report a whistleblower is associated with. It is claimed that a prescribed reporting responsibility enhances the likelihood of observing and reporting a wrongdoing. (Miceli and Near, 1984) Several studies develop models, according to which personal reporting responsibility has a direct influence on the whistleblowing intentions. (Smith et al., 2001; Keil et al., 2004). However here it is claimed that the BCD plays a mediating role in the relationship between personal reporting responsibility and the whistleblowing intentions.
The second factor that is believed to influence the whistleblowing intentions is trust in the supervisor. The extent to which the integrity of the immediate supervisor is trusted is observed to influence the upward communication likelihood of wrongdoings. Higher trust in the supervisor is associated with higher tendency to inform the latter in case a wrongdoing is observed. (Gaines, 1980) Higher support from and trust in supervisors is related to more whistleblowing. (Blackburn, 1988; Graham, 1986). Here higher trust is related to lower perceived costs of reporting the wrongdoing due to less perceived risk for reprisal from the supervisor. This increases the BCD and has therefore positive impact on the likelihood of whistleblowing.
The ability to hide the information about a wrongdoing is defined as the likelihood of no one else knowing unless the potential whistleblower reveals the information. This factor is based on the agency theory and it is found and empirically proved that information asymmetry lowers the whistleblowing intentions. (Harrell and Harrison, 1994; Tuttle et al., 1997). Again here BCD is claimed to mediate the relationship between the ability to hide information and the whistleblowing intentions.
It is believed that if whistleblowing does not require revealing one's personality, the costs associated with whistleblowing from the potential whistleblower perspective decrease. The forth factor believed to influence the whistleblowing intentions indirectly is therefore reporting anonymity. It is suggested that anonymity is preferred even in the presence of formal reporting channels. (Miceli and Near, 1992).
An expected benefit and also the main benefit (Miceli and Near, 1994) of whistleblowing from a potential whistleblower perspective is the willingness to correct the reported wrongdoing. Therefore management responsiveness referred to as the management responsiveness towards solving the wrongdoing plays a key role in determining the BCD and thereby influences the whistleblowing intentions. If the whistleblower perceived management responsiveness to be high, it is associated with higher likelihood that the appropriate measures will be employed and that the whistleblower will be protected from retaliation. This increases the likelihood of him/her reporting the wrongdoing accordingly. (Dozier and Miceli, 1985; Graham, 1986).
The organizational climate should also encourage internal whistleblowing. The sixth factor of the framework is the organizational climate conduciveness, defined as the degree to which organizational policies and climate encourages wrongdoings' reporting. More conducivenesses in terms of existence of forms, policies and deployed procedures for internal reporting of wrongdoing would increase the perception of whistleblowing support and decrease the costs associated with whistleblowing accordingly. (Micheli & Near, 1992) On the other hand the absence of the latter would lead to organizational silence (Morrison and Milliken, 2000).
Next to management responsiveness, senior management attachment influences the whistleblowing intentions through the BCD. If the management is directly involved in the wrongdoing the costs associated with whistleblowing increase due to fear of reprisal. (Conlee and Tesser, 1973; Johnson et al., 1974; Tesser and Rossen, 1975) Furthermore it can decrease the expected benefits as it will be associated with higher likelihood of ignorance of the information as well as low willingness to change. (Keil et al., 2010) In sum this would decrease the BCD and thereby lower the whistleblowing intentions.