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Relationships among value congruence, perceived victimization, and retaliation against whistle-blowers

Journal of Management - December 22, 1994

"Whistle-blowing" in response to perceived organizational wrongdoing poses important dilemmas for organizations and their members. Whistle-blowing occurs when current or past organization members "disclose illegal, immoral or illegitimate acts or omissions to parties who can take action to correct the wrongdoing" (Near & Miceli, 1985, p. 4). Thus, whistle-blowers can identify and sometimes propose solutions to organization problems, but they may also threaten the authority structure of the organization (Weinstein, 1979) or the functioning of work groups (Jensen, 1987). Perhaps because of this perceived threat, whistle-blowers sometimes fear or experience retaliation. Consequently, individuals contemplating whistle-blowing are interested in knowing how retaliation can be avoided.

Previous scholarly research on retaliation against whistle-blowers has been criticized because samples were limited to reports of sex discrimination (e.g., Parmerlee, Near & Jensen, 1982) or wrongdoing in the US federal sector (e.g., Near & Miceli, 1986). Further, these data sets were archival and omitted many potentially important variables. The present study examines the predictors of retaliation, using data generated by a survey completed by more than 1000 Directors of Internal Auditing (DIAs), who were employed in the private sector, in federal, state and local government, or in not for profit organizations across North America. Thus, the purpose of the present study was to examine the following general question: under what circumstances do whistle-blowers experience, or escape, perceived retaliation? A power perspective is taken in examining this question because--as it will be argued later--organizations are less free to retaliate against, or attempt to control, whistle-blowers on whom they are relatively more dependent (Miceli & Near, 1992).

Directors of internal auditing (DIAs) are of particular interest because it has been suggested that empowering them might have prevented the recent financial crises in various industries (Internal Auditor, 1987, p. 6). Further, many of the prescriptions for improving the lot of the whistle-blower urge the creation of roles for organization members that prescribe whistle-blowing, under the assumption that this change would reduce the incidence of retaliation against whistle-blowers (Ewing, 1983). However, the limited existing empirical evidence suggests that whistle-blowers who are formally required to monitor and report wrongdoing are no less likely than other whistle-blowers to experience retaliation (Near & Miceli, 1986). Thus, there are important policy reasons as well as theoretical reasons for studying these whistle-blowers.

Reliance on a sample of internal auditors, however, raises some questions of internal validity. Internal auditors are employed to ensure the adequacy and effectiveness of their organizations' systems of internal control; they deter, detect, investigate, and report fraud and other wrongdoing in organizations (Professional Standards and Responsibilities Committee, 1985). For example, when internal auditors obtain evidence that financial statements disseminated to the public are misleading or that theft is occurring, they must decide whether to report the incident and if so, to whom. Given that internal auditors are supposedly required by their jobs to report wrongdoing, can they be considered whistle-blowers? We believe so, for three reasons.

First, whistle-blowing is formally role-prescribed in many organizations, for many individuals--not just internal auditors. For example, more than half of the codes of ethics in private sector organizations require all employees to report possible illegal or unethical conduct (Mathews, 1988). Second, there are many potential conflicts in role prescriptions conveyed by influential parties. Top managers may give "lip service" to encouraging reporting, but informal norms and reward systems may actually discourage it. Third, whistle-blowing on all illegal, immoral, or illegitimate acts or omissions is rarely, if ever, truly role-prescribed. In the case of internal auditors, the Institute of Internal Auditors--the primary professional organization that sets standards for auditing practice--encourages reporting through specified channels (for example, to the audit committee of the company's board of directors) of certain activities (such as "significant fraud"). But reporting other activities that an auditor may consider wrongful (such as safety violations) is not addressed specifically, and reporting to parties external to the organization, such as the media, is discouraged (Professional Standards and Responsibilities Committee, 1985). Thus, internal auditors can be considered whistle-blowers when they report wrongdoing.

Apart from the conceptual issue, however, is an empirical question that warrants examination. If opinions differ as to the appropriate definition of whistle-blowing, research must be conducted on various types of whistle-blowers in order to determine differences and similarities among them. For example, there has been some disagreement in the literature as to whether whistle-blowers who use internal channels to report wrongdoing are in fact whistle-blowers (Farrell & Petersen, 1982). Yet recent empirical studies indicate few differences in whistle-blowers who use internal channels versus those who use external channels, among federal employees (Miceli & Near, 1992). Similarly, unless we compare across studies the responses of whistle-blowers with differing role expectations, we cannot determine whether these role expectations impact their propensity to blow the whistle or the organization's propensity to retaliate against them. We might expect, without evidence, that employees who are expected to blow the whistle would be more likely to blow the whistle and less likely to experience retaliation--but this is clearly an empirical question that can be answered only through research. Assuming that this is true, the research reported here may be a conservative estimate of what happens to employees who blow the whistle: If internal auditors, whose jobs include, in part, the reporting of wrongdoing, are subject to retaliation, what must be the plight of other employees whose job description includes no such responsibility? In short, results from this study may or may not generalize to include the "typical" whistle-blower, if indeed such an individual exists. Instead, it seems appropriate to attempt to develop taxonomies of types of whistle-blowers, of which internal auditors may be one type that is more or less similar to other types. Further research would then be needed on other types of whistle-blowers, to compare similarities and differences to determine their causes.

The Predictors of Retaliation: A Power Perspective

Previous research has shown that theories of power may be useful in examining the occurrence of retaliation (Near & Miceli, 1986). Three streams of research provide a power perspective that is useful in examining retaliation against whistle-blowers. Each stream suggests predictors of retaliation; before developing specific hypotheses, we provide an overview of the streams.

Resource Dependence Theory

Following Emerson (1962), Pfeffer and Salancik (1978) proposed that, when one party controls important resources on which another party depends, the first party (e.g., a member) maintains power and the second (e.g., the organization) is dependent on the first. Organizations also depend more heavily on members who are more central in the network or critical to the survival of the organization (Brass, 1984). Thus, they depend more heavily on whistle-blowers who control critical resources than on those who do not (Perry, 1992).

When whistle-blowers lack support or potential support from other organization members or outsiders, they may possess less power than do whistle-blowers who have this support (Perry, 1992). Under these circumstances, the organization would resist attempts to stop the wrongdoing, perhaps by retaliating (Near & Miceli, 1986).

Power Bases

As noted by Greenberger, Miceli and Cohen (1987), another perspective on power relationships can be drawn from the literature on personal bases of power or influence (e.g., French & Raven, 1959). Members wield power through providing valued and not easily substitutable characteristics such as personal charisma, position status, unique skills, credibility, or previous performance--characteristics that give rise to varied bases of power (French & Raven, 1959). This suggests that the greater the stocks of these characteristics, the more powerful the whistle-blower may be, and the more reluctant the organization and its managers may be to take the risks involved in retaliating against a powerful whistle-blower.

Minority Influence

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