@inproceedings{01J8M4EYZVMDY3DKQ4ZYZ1NY5H,
  abstract     = {{Abstract of Contribution 1367
ID: 1367 / PS 7.3: 4
Sport Governance, Sport Policy and Sport Law
Keywords: ethics culture, fraud, community sport clubs
Exploring the Relation between Ethics Cultures and Fraud Occurrence in Community Sport Organizations.

Gema Souvenir1, Tom De Clerck1, Cleo Schyvinck1, Wim Hardyns2, Annick Willem1

1Department of Movement and Sport Sciences, Ghent University, Belgium; 
2Department of Criminology, Criminal Law and Social Law, Ghent University, Belgium

1. Title

Exploring the Relation between Ethical Cultures and Fraud Occurrence in Community Sport Organizations.

2. Aims and research question

Organizational fraud, defined as “those practices that violate organizational rules and norms for personal or group gain” (Kihl et al., 2018), is detrimental to the functioning of non-profit community sport organizations (CSOs) (Archambeault et al., 2015). This research explores manifestations and perceived severance of organizational fraud in CSOs, as well as the role of ethical culture. Our research questions are:

• RQ1: What are the predominant types of fraud observed within CSOs, and how does ethical culture within these CSOs relates to the occurrence of fraud?

• RQ2: How do severity perceptions relate to the occurrence of illicit proceeds within CSOs?

3. Theoretical background and literature review

Sport management research has provided insights on organizational fraud antecedents in CSOs (Misener et al., 2023; Souvenir et al., 2023; Wicker et al., 2022). However, it is less apparent how widespread specific types of sport fraud are and to what extent stakeholders in CSOs perceive different types of organizational fraud as a severe threat to the CSO. Its hidden nature makes it difficult to accurately map its occurrence and consequences (Archambeault et al., 2015). This study differentiates two categories of fraud, including asset misappropriation and financial statement fraud. Regarding organizational fraud antecedents, ethical culture is considered an important element that can either inhibit or facilitate fraud. Ethical culture represents the collective perceptions held by people about the conditions within the CSOs that stimulate ethical conduct (Kaptein, 2020). The Corporate Ethical Virtues model (CEV-32), as conceptualized by Kaptein (2008), distinguishes three dimensions to ethical culture, constituted by so-called virtues. These dimensions are 1) self-regulating capacity (incl., clarity of rules and congruency of leaders), 2) self-correcting capacity (incl., transparency, the ability to sanction and the openness to discuss ethical issues), and 3) self-sufficient capacity (incl. mutual support and feasibility of goals).

4. Research design, methodology and data analysis

Two focus groups were conducted to develop a questionnaire on fraud in CSOs. The first focus group (n=6) consisted of academics (i.e., sport management, sport pedagogy, criminology). The second focus group (n=7) consisted of practitioners (i.e., sport practitioners, law enforcement). A total of 15 items were formulated to cover two main types of fraud; asset misappropriation and financial statement fraud (ACFE, 2022). The Corporate Ethical Virtues Model (CEV-32) (Kaptein, 2008) was used to measure ethical culture and its subdimensions. A series of CSOs in Belgium were asked to participate in a study on (un)ethical behavior. CSOs were contacted by email, phone, during trainings or events, and through federations’ newsletters to participate in a study on (un)ethical behavior. Active CSO members (e.g., athletes, coaches, and board members) were asked to assess the occurrence and the perception of severity of different types of fraud within their club, as well as to evaluate their club’s ethical culture.

5. Results, findings and discussion

The dataset consisted of 373 respondents from 99 CSOs and 27 sports. Misleading of sponsors, and theft (i.e., asset misappropriation), and payments in illicit funds and manipulation of invoices (i.e., financial statement fraud) were the most common types of fraud. Ethical culture – including its subdimensions (Kaptein, 2008) – showed significant negative relationships with all fraud items, ranging from -.169(p<.001) to -.528(p<.001) for asset misappropriation items and -.330(p<.001) to -.463(p<.001) for financial statement fraud items. When asked about the severity of asset misappropriation, only 2% said they did not consider it serious, while 43.5% did not consider financial statement fraud serious. Severity perceptions had a mediating role in the relationship between ethical culture and fraud types, suggesting that individual perceptions account for some of the relationships found.

6. Conclusion, contribution and implications

This research investigated the types of fraud CSOs are generally confronted with, and highlights how ethical culture and severity perceptions influence the reported occurrence of CSO fraud. Contrary to existing literature (ACFE, 2022), our findings suggest that that financial statement fraud may be more common than asset misappropriation. One explanation could be that the latter is generally done to benefit the club, while asset misappropriation implies taking resources away from the club. This study advocates for more research on stakeholders in CSOs’ perceptions of the acceptance of organizational fraud in CSOs, either because of personal beliefs of the severity of fraud or of perceived virtues in the ethical culture of the CSO.

7. References

ACFE. (2022). Occupational fraud 2022: a report to the nations. Association of Certified Fraud Examiners.

Archambeault, D. S., Webber, S., & Greenlee, J. (2015). Fraud and corruption in US nonprofit entities: A summary of press reports 2008-2011. Nonprofit and voluntary sector quarterly, 44(6), 1194-1224. https://doi.org/https://doi.org/10.1177/0899764014555987

Kaptein, M. (2008). Developing and testing a measure for the ethical culture of organizations: The corporate ethical virtues model. Journal of Organizational Behavior: The International Journal of Industrial, Occupational and Organizational Psychology and Behavior, 29(7), 923-947. https://doi.org/10.1002/job.520

Kaptein, M. (2020). Ethical climate and ethical culture. In D. Poff & A. Michalos (Eds.), Encyclopedia of business and professional ethics. Springer.

Kihl, L. A., Ndiaye, M., & Fink, J. (2018). Corruption’s impact on organizational outcomes. Social Responsibility Journal, 14(1), 40-60. https://doi.org/10.1108/SRJ-12-2016-0217

Misener, K. E., Kihl, L. A., Wicker, P., & Cuskelly, G. (2023). Sounding the alarm: Occurrences of fraud in nonprofit community sport organizations. Nonprofit Management and Leadership. https://doi.org/https://doi.org/10.1002/nml.21597

Souvenir, G., Schyvinck, C., Kihl, L. A., Hardyns, W., Vermeersch, A., & Willem, A. (2023). Fraud vulnerabilities in sport federations: The role of culture, leadership, and control. European Sport Management Quarterly, 1-24. https://doi.org/10.1080/16184742.2023.2189923

Wicker, P., Misener, K. E., Kihl, L. A., & Cuskelly, G. (2022). Vulnerability to fraud in community sport organizations: A multicountry study on the role of organizational capacity. Journal of Sport Management, 37(2), 88-101. https://doi.org/10.1123/jsm.2022-0022}},
  articleno    = {{1367}},
  author       = {{Souvenir, Gema and De Clerck, Tom and Schyvinck, Cleo and Hardyns, Wim and Willem, Annick}},
  booktitle    = {{EASM 2024 Conference : Sport Management and Social Inclusion, Abstracts}},
  language     = {{eng}},
  location     = {{Paris, France}},
  pages        = {{1}},
  title        = {{Exploring the relation between ethics cultures and fraud occurrence in community sport organizations}},
  url          = {{https://easm2024.org/}},
  year         = {{2024}},
}