Academic journal article Journal of International Business Research

Whistle-Blowers and Technology: A Cross-Cultural Framework for Effective Corporate Malfeasance Reporting Systems

Academic journal article Journal of International Business Research

Whistle-Blowers and Technology: A Cross-Cultural Framework for Effective Corporate Malfeasance Reporting Systems

Article excerpt

INTRODUCTION

Information technology is never a neutral addition to an organization (Cutcliffe, 2006). The choices top management makes about what, when and how to implement new technologies, whether as extensive as an enterprise system (Pozzebon and Titah, 2006) or as individual as decision support tools (Kersten et al., 2002), will have consequences on how organizational members function, either for better or for worse. The functioning of organizational members, in turn, affects how well the organization succeeds in accomplishing its mission. One type of information technology of concern to all levels of management as well as society in general (Zelby, 1989) is that which provides for employee reporting of corporate malfeasance within transnational corporations.

Highly publicized incidents of corporate wrongdoing have resulted in legislation in several countries and brought the issue of employees reporting internal corporate problems to the forefront of management's concerns. For example, in the U.S., the Sarbanes-Oxley Act of 2002 (SOX) mandated a focus on the internal controls used in an organization's financial reporting system, demanding much of the attention of accountants and information systems (IS) professionals (Holmes, 2007). Much of this attention has been focused on complying with Sections 302, 404, and 409 of SOX (Daigle and Lampe, 2005) which relate specifically to the financial reports of the organization. However, also important but receiving far less attention, are the requirements in Section 301 to provide mechanisms for the anonymous reporting of corporate misconduct. Section 301 requires that publicly-traded corporations in the United States establish procedures for the confidential and anonymous reporting by employees of questionable corporate activities (corporate malfeasance), and Section 1107 provides for criminal penalties in the event of corporate retaliation against said employee. Similarly, the U.K. Combined Code on Corporate Governance of July 2003 requires audit committees to ensure that employees have means by which they can report corporate malfeasance. [See Schmidt (2005) for a complete listing of common law countries that have used legislation to address whistle blowing activities.] Even in the absence of national legislation, organizations that develop and maintain effective internal corporate malfeasance reporting systems (CMRS) have the added benefit of containing or reducing rising insurance premiums (Jernberg, 2003) as well as possibly preventing (Schmidt, 2005), containing and/or correcting potentially damaging situations. Furthermore, unlike other corporate information systems (for which exists extensive research) that primarily support specific organizational levels such as decision support systems and executive information systems, CMRS, in order to be effective, must be acceptable to and utilized by each organizational member regardless of level within the hierarchy. Therefore, international and domestic organizations, public and private, can benefit from the development and implementation of IT-based CMRS that are culturally compatible with its employees.

This conceptual paper seeks to inform both researchers and practitioners regarding the cultural aspects of using information technology to enhance CMRS and to support responsible whistle-blowing activities. It builds upon and adds to the body of research that examines how employees in different cultures accept information technologies and respond to various information sharing tasks (Chow et al., 1999) by providing a theoretically grounded approach to developing effective cross-cultural CMRS.

The paper begins with a review of research findings regarding the role of whistle-blowers in organizations, and then discusses the cultural issues facing transnational organizations. Based on this research, it next provides a suggested framework for matching information technology choices for reporting corporate malfeasance to those cultural dimensions, and concludes with suggestions for future research. …

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