The Influence of Capability, Pressure and Rationalisation on Employees’ Intention to Commit Fraud in the Malaysian Workplace: the Mediating Role of Opportunity

Por, Kelly (2024) The Influence of Capability, Pressure and Rationalisation on Employees’ Intention to Commit Fraud in the Malaysian Workplace: the Mediating Role of Opportunity. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

In recent years, fraud has burgeoned into a pervasive issue in Malaysia, with a consistent increase in reported cases posing significant challenges for organisations globally, resulting in escalating financial and non-financial losses. This study investigates the influence of employee capability, pressure and rationalisation on employees fraud intention in Malaysian organisations, with opportunity acting as a pivotal mediator. Departing from traditional models like the Fraud Triangle Theory, this research incorporates the Fraud Diamond Theory, with a focal point on capability as a critical determinant. With that, a quantitative research and cross-sectional analysis were conducted by collecting primary data through electronic questionnaires involving 250 working adults in Malaysian organisations to address the research questions and research objectives. Thereafter, data collected were analysed using Statistical Package for Social Sciences (SPSS) and Partial Least Squares Path Modelling with Smart-PLS. The findings unveil the significant impact of employee capability and pressure on fraud opportunities. Furthermore, the study validates the mediating role of opportunity in the interplay between capability, pressure, rationalisation and employees' fraudulent intentions. Ultimately, all of the seven research questions were substantiated based on statistical analysis and literature review, enriching the Fraud Diamond Theory and furnishing actionable insights for organisations to fortify their anti-fraud measures. This research underscores the pivotal role of personal attributes and organisational roles in facilitating fraudulent behaviour, amplifying comprehension of fraud deterrence through elucidating the mediating role of opportunity, which has been understudied within the Malaysian context. It underscores the criticality of organisational elements such as internal controls and corporate culture in shaping individuals' perceptions of fraud opportunities, pressures, and rationalisations. From a practical perspective, this research offers nuanced insights by developing targeted training programs to raise awareness of fraud risks and ethical considerations among employees. Additionally, monitoring individuals with long tenure high fraud capabilities enables the implementation of stringent internal controls and surveillance measures in vulnerable areas, thereby thwarting opportunities for unethical behaviour.