Understanding Whistleblowing in Islamic Financial Institutions: Challenges and Opportunities

What is it about?

This study explores the factors that motivate and inhibit employees in Indonesian Islamic financial institutions from becoming whistleblowers (those who report violations). Through interviews, the study found that organizational commitment, religiosity, regulations, organizational support, and social identity encourage employees to report violations. However, commitment to co-workers, personal costs, and a sense of inappropriateness act as deterrents to whistleblowing. The role of leaders in creating an ethical climate that supports whistleblowing is crucial, although some leaders still tend to cover up violations. Effective whistleblowing systems are needed to maintain organizational integrity and public trust, especially in the financial sector. By addressing psychological and social barriers, and implementing protective measures, organizations can enhance the effectiveness of their whistleblowing systems.

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Why is it important?

Whistleblowing plays a crucial role in maintaining ethical standards and accountability within organizations. In the context of Islamic financial institutions, understanding the factors that encourage or inhibit reporting unethical behavior is vital for fostering a culture of transparency and trust. This research sheds light on the unique challenges faced by employees in Islamic financial institutions and emphasizes the need for effective whistleblowing systems to protect both whistleblowers and organizational integrity.

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