Associations between Internal Controls and Organizational Citizenship Behavior (*)

By Holmes, Sarah A.; Langford, Margaret et al. | Journal of Managerial Issues, Spring 2002 | Go to article overview

Associations between Internal Controls and Organizational Citizenship Behavior (*)


Holmes, Sarah A., Langford, Margaret, Welch, O. James, Welch, Sandra T., Journal of Managerial Issues


In his landmark book, The Functions of the Executive (1938), Barnard stated that organizational moral behavior is obtained only through a cooperative effort among all employees. Top management, however, is obligated to carry the moral freight (Perrow, 1986) and must communicate a shared sense of moral purpose to employees (Barnard, 1938). This admonition that top management must motivate rather than rely upon employees to behave ethically may still apply today. The degree to which management supports adherence to certain standard operating procedures and internal control measures can communicate management's expectations of moral behavior by all employees, itself included.

In contrast, lax management attitudes, particularly toward internal controls, have frequently been linked to fraud and its detection (Vinten, 1992; Irvine and Lindsay, 1994; Hooks et al., 1994). A report issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO, 1992) stated that management concerns for effective internal control must "permeate" the organization. Controllers responding to a survey (Irvine and Lindsay, 1994) agreed ethically-oriented behavior in an organization is a broad-based management responsibility, and that as part of a management team, controllers had to model such behavior. Based upon a comprehensive review of the literature, Hooks et al. (1994) further suggested that codes of conduct have little impact if not enforced. That is, when top management displays "willful ignorance, [it] sends a powerful message that it will tolerate [wrongdoing]" (Thompson, 1993: 64). More recently, fraud researchers have cautioned auditors to be especially vigilant in assessing the "tone at the top" (Beasley et al., 1999: 13) and control weaknesses (Hillison et al., 2000). Lax attitudes by management may contribute to a lack of employee conscientiousness and therefore to an environment which allows or perhaps even encourages fraudulent activity, while it discourages the reporting of such activity. In contrast, positive or supportive ethical attitudes modeled by management may encourage employee conscientiousness, a contributing factor in organizational citizenship behavior such as reporting fraudulent activity.

The purpose of the current study is to determine (1) whether fraud schemes differ depending upon the attitude of management regarding controls, (2) whether detection of such schemes differs based upon attitude, and (3) whether outcomes differ based upon attitude. As a framework for this investigation, we utilized an expanded definition of organizational citizenship behavior that includes employee moral behavior, linking it to attitudes of top management. In this article, we discuss organizational citizenship behavior, explain research questions of interest, then discuss the results of the study and suggest areas of future research.

Organizational Citizenship Behavior

Organ (1988, 1990, 1994) originally concluded that organizational citizenship behavior (OCB) is extra-role behavior that is not formally recognized or rewarded by the organization. Dimensions of OGB include altruism (helping behaviors), courtesy (behaviors preventing problems with others at work), sportsmanship (behaviors indicating willingness to go along with few complaints), civic virtue (behaviors reflecting concern for firm), and conscientiousness (behaviors that go beyond simply obeying rules). Schnake et al. (1995) found that leadership behavior of managers might have more control over employee OGB than previously thought.

Van Dyne et al. (1994) redefined the OGB construct, broadening the set of specific behaviors and offering a more complex model with three factors: (1) loyalty: allegiance to an organization and its leaders, (2) obedience: acceptance of the need for rules and regulations to govern the organization, and (3) participation: full and responsible involvement in organizational governance while guided by "ideal standards of virtue" (1994: 767). …

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