Assessing conflict of interest in organizations

Abstract

The innumerable cases of opportunistic behavior by directors, managers, and employees, primarily the various forms of corruption, have shown that neglecting conflicts of interest (CoI) situations can have important negative effects on the organizations involved, undermining, in some cases, their survival and development, as well as creating harmful consequences for stakeholders and the wider community. In proposing remedies to deal with CoI scholars underline the importance of assessing it. However, this aspect has been not investigated adequately. Using the literature on CoI and, in particular, the framework proposed by Thompson (2009) for the medical sector, the objective of the paper is to outline the elements required to assess the extent of the risk of CoI in organizations. Our framework considers the following two elements: a) the probability that the secondary interest may interfere, even if only apparently, with the primary interest of the organization; b) the seriousness of the damage and/or moral unacceptability of the mere appearance of improper behavior. The assessment also allows understanding not only what the causes are, that can increase the probability of interference of the secondary interests, but also the factors that feed these interests, suggesting the most suitable remedies. The analysis has several implications for researchers, practitioners, and regulators.