4.6 Reliability of Results
4.11.2 Extraction of Underlying Factors Factor 1: Managerial Construct
4.11.2 Extraction of Underlying Factors
aim to ensure that the MACC is constantly acting with transparency, professionalism and independence. In response to this, five panel independent body including the Operations Review Panel (ORP), Consultation and Corruption Prevention Panel (CCPP), Anti-Corruption Advisory Board (ACAB), Special Committee on Corruption (SCC), and also the Complaints Committee (CC), have regularly and constantly monitor the functions of MACC (Malaysian Anti-Corruption Commission, 2020b).
Stansbury and Stansbury (2007) asserted that greater transparency could hinder the concealing of corruption, as fraudulent practices and collusion are highly dependent on the opaqueness of the construction process (Mizoguchi and Van Quyen, 2014). This reinforces Sohail and Cavill’s view that transparency mechanism is vital in monitoring the project performance at the same time to make construction stakeholders to be accountable for any decision made (Sohail and Cavill, 2008). Many past studies viewed disclosure of project information as one of the effective strategies to improve project transparency (Kenny, 2012; Ling, et al., 2014; López and Fontaine, 2019). To take it further, Sohail and Cavill (2008) suggested that revealing information such as public accounts, budgets, contractual arrangements and annual reports can effectively prevent misallocation of resources. However, due to the opaqueness of bidding information, construction sector is often regarded as an industry with limited revealed information (Zhang, et al., 2017), as it is revealed that nearly 90 % of tenderers fail to detail corresponding contests in tender documents (Le, Zhang and Li, 2014).
Besides, e-procurement is expected to bring higher transparency and accountability in tendering procedures (Eei, Husain and Mustaffa, 2012;
Neupane, Soar and Vaidya, 2014; Organisation for Economic Co-operation and Development, 2016; López and Fontaine, 2019). The application of e- procurement allows the public to access the information of public works’ open procurement online (Neupane, Soar and Vaidya, 2014), while avoiding direct contact between procurement parties and the tenderers at the same time detecting unethical conduct such as bid rigging throughout the procurement process (Organisation for Economic Co-operation and Development, 2016).
Furthermore, Transparency International, as a global coalition fight against
corruption, suggesting that Integrity Pacts can be useful to prevent corruption in public contracting (Transparency International, n.d.). In order to bolster the Malaysian Public Procurement Framework, a guideline for the implementation of Integrity Pact in public procurements was introduced in 2010 (United Nations Office on Drugs and Crime, 2018). In addition, Construction Industry Development Board (CIDB) also introduced integrity pact which acts as a useful tool to achieve clean bidding in construction project.
Leadership is one of the useful strategies under managerial construct.
Leader can bring influence on the overall organisational culture (Holliday, 2017), which is to say, leadership carries responsibility for a fair and transparent working environment (Tabish and Jha, 2012). A similar trend is observed by Khan, Khan and Soomro (2019), which discussed that leader who discharges duties with ethics not only acts as a role model to subordinates, but at the same time can change the atmosphere at working place towards a more ethical style of working ambience. Besides, adequate and prompt payment of professionals’ remuneration could effectively tackle unethical conduct. This validates the research conducted by Shah and Alotaibi (2018), which proved that benefits and salary increments could bring positive effects to discourage unethical practices. Ameh and Odusami (2010) recognised the importance of remuneration, by asserting that professionals can be susceptible to unethical conduct such as collusion if the client fails to provide adequate and prompt professional’s remuneration. Alutu (2007) added that delay payment of employers’ remuneration could trigger unethical actions as employers might be forced into corrupt conducts in order to fight for survival.
Factor 2: Regulatory Construct
Regulatory construct refers to statutory laws or institutional regulations which are created to forestall unethical conduct (Zhang, et al., 2017). It is accounted for 14.98 % of the total variance of the data, with ‘rules and regulations’
attaining the highest factor loading, following by ‘code of ethics’, ‘avoid conflict of interests’, and ‘standards’. The effectiveness of regulatory strategy has been recognised in a past study conducted by Owusu, et al. (2019), which
revealed that regulatory strategy ranked first among six strategies with the highest mean score of 11.00.
With a factor loading of 0.838, rules and regulations appears as one of the important strategies to inhibit unethical conduct. As underscored by Tabish and Jha (2012), effective rules and regulations is recognised as a useful weapon to combat corruption. Le, et al. (2014a) contended the significance of regulation system by pointing out that flawed regulation system is the main contributor to corruption between business and government. A study conducted in Afghanistan has uncovered that unethical professional practices such as corruption stem from flawed regulations (Niazi and Painting, 2017). In the same vein, a similar trend is also observed in other developing countries such as China (Zhang, et al.; 2017), India (Tabish and Jha, 2012), and Ghana (Ameyaw et al., 2017). The anti-corruption legal framework in Malaysia, which comprises the Malaysian Anti-Corruption Commission Act 2009 and related government regulations and circulars, is recognised by the Global Infrastructure Anti-Corruption Centre (GIACC) as an adequate country’s legal framework. However, it is pointed out that there is lack of enforcement of the legal framework due to insufficient resources in government agencies in monitoring, inspecting and auditing (Schoeberlein, 2020).
Owusu, et al. (2019) viewed code of ethics as the most critical strategy against unethical conduct. Code of ethics acts as a guidance for employers to ensure that they are carrying out their tasks according to with organisation’s values (Olatunji, et al., 2016). Ferrell, Fraedrich and Ferrell (2017) further stressed that to ensure effectiveness in combating unethical conduct, code of ethics need to be coupled with communication, so that employees understand what is expected from them and the punishments for breaking the code of ethics (Ferrell, Fraedrich and Ferrell, 2017). In this vein, Holliday (2017) urged that leader should be familiar with code of conducts and portray good role model to subordinates. In addition, standard is also considered as one of the important regulatory measures. International Organisation for Standardisation (ISO) has developed an international standard called ISO 37001, which is designed to impart anti-bribery culture within an organisation and promote ethical working culture (International Organization for
Standardization, 2016). In previous research, Owusu, et al. (2019) considered ISO 37001 as a flexible managerial instrument to combat corruption, as it is an international standard which can be adopted in all institutions regardless of the size and type. From this perspective, Chan and Owusu (2017) suggested that ISO 37001 could be applied in construction industry as a pragmatic measure to address bribery.
Furthermore, it is important to avoid conflict of interests in a construction project as the presence of conflict of interests could undermine client’s trust in the professionals. Professionals ought to declare all the possible conflict of interests prior to the commencement of the project (Adnan, et al., 2012). Shah and Alotaibi (2018) suggested that construction projects should be managed under one authority and minimise the personal conflict of interests between company and employees. Organisations should develop policy to ban conflict of interests which can lead to unethical professional practices (Transparency International, 2019). In Malaysia, there is existing legal measures and administrative framework to regulate conflicts of interest in the public sector, especially for the members of the Tender Board during the procurement process (United Nations Office on Drugs and Crime, 2018).
Factor 3: Probing Construct
Probing construct explained 14.84 % of the total variance of the data. Probing construct refers to investigative measures which aim to conduct effective investigation and monitor to prevent the engagement in corruption. It encapsulates 6 variables, including ‘efficient reporting system’, ‘quality assurance group’, ‘rigorous supervision’, ‘ombudsmen system’,
‘whistleblowing mechanism’, and ‘auditing system’, with factor loadings ranging from 0.53 to 0.78. The importance of probing construct has been recognised in previous studies, for instance, in a study conducted by Owusu, et al. (2020a), probing construct is identified as the top-ranked construct.
Whereas an earlier research conducted by Owusu, et al. (2019) argued that unethical conduct such as corruption is hard to investigate as the parties have no reason to reveal the corruption since all the involving parties are benefited from the corrupted conduct. Hence, due to the furtive nature of the conduct,
probing measures is specifically essential so that to uncover corruption activities existing in the industry.
Whistleblowing mechanism and efficient reporting system are regarded as useful probing strategies to mitigate unethical professional practices. Chen and Wang (2017) urged that in order to alleviate unethical practices in construction industry, government should take powerful actions to enhance protection and reward system for whistleblowers. In Malaysia, the MACC has fully utilised the Whistleblower Protection Act to protect the whistleblowers, in order to encourage individuals to report on corruption crimes (Nik Anis, 2021). For organisations, to encourage and promote the whistleblowing mechanism, there are a few measures that can be considered, such as developing anonymous reporting system to protect the whistleblowers (Oladinrin, Ho and Lin, 2016), or appointing trusted third party to set up whistle-blower regulations to protect the whistle-blowers (Graafland and Liedekerke, 2011). Transparency International (2017) suggested that friendly reporting mechanism is essential to encourage citizens to blow the whistle.
The importance of reporting system is also advocated in other studies. For instance, study conducted by Owusu, et al. (2020b) viewed efficient reporting system as a mechanism to prevent unethical conduct in construction industry.
DeFlaminis, et al. (2014) further recognised the use of hotlines as a robust tool to detect unethical practices such as fraud.
Quality assurance group and auditing system are among the notable variables under probing construct. Quality control is essential in a project which is responsible to ensure quality compliance (Hendrickson and Au, 1989).
It is suggested that every project team shall have a respective indigenous quality assurance group which concern with the ethical practices which will impact the quality of project (Mathenge, 2009; Adnan, et al., 2012). Moreover, auditing system is considered as a powerful weapon to combat unethical conduct such as collusion and fraud (Gunduz and Önder, 2013; Wu, et al., 2014; Bowen, Edwards and Cattell, 2015; Oke, Aigbavboa and Mangena, 2017; Brusca, Manes Rossi and Aversano, 2018). Two types of auditing system can be taken in a project, namely construction audits and operational audits. Construction audits can be performed throughout the project delivery
period and is used to uncover the possible areas that could breed unethical conduct such as fraud; in contrast, operational audit is effective in determining the assess the competency of internal control system and reveal unethical conduct in a construction project.
Studies from different countries including Hong Kong (Owusu, et al., 2020b), Saudi Arabia (Shah and Alotaibi, 2018), and Ghana (Owusu, et al., 2020a) aver that rigorous supervision is effective in preventing unethical conduct, which has also been recognised in the previous research conducted in Malaysia by Yap, et al. (2020c). Ameh and Odusami (2010) recommended organisations to engage third party to carry out supervisions in conjunction with government anti-corruption agency. In addition to rigorous supervision, ombudsmen system is also recognised as one of the effective probing measures. Ombudsmen system is referred to investigation work which aids in enhancement of service delivery and reduces issues such as corruption (Ngeow, 2018). Mathenge (2009) suggested that ombudsmen system shall be enforced in every department and division in construction projects to deal with complaints related to professional ethics.
Factor 4: Promotional Construct
Factor 4 is promotional construct, which accounted for 12.83 % of total variance of the data. Promotional construct relates to educational theme, aiming to disseminate the proactive measures to combat unethical practices (Owusu, et al., 2019). Owusu, et al. (2019) viewed promotional construct as linkage between other preventative strategies and relevant parties such as professionals, civil servants and general public. ‘Ethical training’,
‘communication’, and ‘education’ constitute this factor.
With a loading of 0.847, ethical training emerges as the most important strategy in the promotional construct. The importance of training has been stressed in studies conducted by Tabish and Jha (2012), Mukumbwa and Muya (2013), Nawaz, Ikram and Hashim (2013), and Owusu, et al. (2020b). In addition, a study in Malaysia urged that professional institutions to conduct ethical training with the aim to enhance ethical awareness and overall professional conduct among the construction professionals (Mohamad, et al.,
2015). In Malaysia, several training and certification programmes are organised and conducted by Construction Industry Development Board (CIDB), for instance, the Quality, Safety, Security Health & Environment Programme (QSHE) stimulates awareness on safety working culture in the construction site, which can effectively alleviate the inadequate health and safety provisions in the industry (CIDB Holdings, n.d.). Furthermore, Owusu, et al. (2020b) commented education as one of the effective measures in promoting anti-corruption practices. The importance of education is corroborated by other studies conducted by Mohamad, et al. (2015), Chen and Wang (2017) and Holliday (2017). In Malaysia, education has been incorporated as an integral part of the MACC’s three-pronged strategy as pursuant to Section 7(f) of the Malaysian Anti-Corruption Commission Act 2009 (Malaysian Anti-Corruption Commission, 2020a). Recognising the importance of education, MACC has generated cooperation plans with local higher learning institutions (IPTs) in the program Angkatan Mahasiswa Anti- Rasuah to promote anti-corruption attitude (Bernama, 2021; Nik Anis, 2021)
In addition to ethical training and education, communication is also one of the notable promotional measures. Ho and Oladinrin (2018) asserted that communication is an essential medium to impose code of ethics in an organisation to create positive influence on employees’ working styles (Ho and Oladinrin, 2018). In general, there are two types of communication channels, namely formal communication and informal communication. Formal communication is defined by Johnson, et al. (1994) as oral communication up and down the organisational chart, whereas informal communication is personal communication that disregards of organisational chart. Research findings revealed that informal communication channel, such as private discussion among co-workers, is more powerful than formal communication channel in disseminating information regarding ethics (Johnson, et al., 1994;
Ho, 2013).
Factor 5: Reactive Construct
Reactive construct relates to control mechanisms imposed on the wrongdoers committing corrupt practices (Owusu and Chan, 2018). Reactive construct
comes in fifth place with a total variance of 10.31 %. It has the least composing variables, comprising only two strategies, namely ‘punishments’
and ‘debarment and blacklist’. Despite being ranked last among the five constructs, it is worthwhile noting that it has the highest average mean score of 3.937, demonstrating that respondents recognise the effectiveness of probing construct in the combat against unethical professional practices. Reactive construct is considered essential as the absence of adequate reactive measures will make the industry vulnerable to unethical conduct (Owusu and Chan, 2018; Owusu, et al., 2020b). Owusu, et al. (2019) suggested that the effectiveness of reactive strategy varies in different countries, due to the disparities in the national legal structure. The difference is particularly evident when comparing between developed and developing countries. As contrasted with developed countries that have strict system to probe and punish offenders, most of the developing countries seem to be incompetent in delivering strict measures to offenders, which in turn encourage unethical conduct in the country (Owusu, Chan and Shan, 2019). In this regard, Malaysia is working on improvement on the enforcement of anti-corruption legislation by referring to the system in developed countries. As evident, Section 17A was introduced in the Malaysian Anti-Corruption Commission (Amendment) Act 2018, which was inspired by the anti-bribery legislation in the United Kingdom. Under the new section, strict corporate liability is to be imposed on commercial organisations for bribery offences committed by the associates in the organisations, which is up to a minimum fine of RM 1 million or 10 times the amount of the graft involved, whichever is higher (Ang and Sargunaraj, 2020).
As suggested by Tabish and Jha (2012), punishments such as termination of employment, cutback in salary, levy fine, reduction in grade, or even life imprisonment should be imposed on offenders who are in breach of code of conducts. It is supported by other studies which asserted that strict enforcement of discipline shall be imposed on wrongdoers, for instance, imposing sanctions can be effective in fighting unethical conduct (Le, et al., 2014b; Oke, Aigbavboa and Mangena, 2017). In another light, Tabish and Jha (2012) viewed punishment as a less effective preventative strategy as the punishment can only be imposed if the offender gets caught, which is difficult
as it is hard to prove unethical conduct. In consequence, construction parties might be motivated to conduct unethical activity despite seeing the punishments, as the party might opine that it is worth taking the risk due to the high rate of returns (Owusu and Chan, 2018). In addition, debarment and blacklist are also recognised as effective reactive measures to curb unethical conduct (Owusu, et al., 2020b). It can be implemented through suspension of license or banning of contractors who have corruption records from submitting tender (Mathenge, 2009; Owusu, et al., 2020b). For instance, the World Bank has incorporated fraud and corruption provisions in its procurement and consultant guidelines, and companies can be debarred as a result of involving in fraud or corruption. As a result of debarment, the companies are no longer eligible as a borrower (The World Bank, 2011).
4.12 Spearman’s Correlation Test
Spearman’s correlation test was employed to ascertain the concordance between influential factors and preventative strategies of unethical professional practices in the construction industry. The result of the test is presented in Table 4.15. Altogether, there are 103 correlations between the 10 influential factors with 22 preventative strategies. Most of the strategies have at least three significant correlations with factors, except for ‘code of ethics’
with only one correlation. With eight correlated influential factors,
‘leadership’ is recognised as the most effective strategy as it possesses the greatest number of significant correlations. Notably, both ‘whistleblowing mechanism’ and ‘quality assurance group’ have seven significant correlations.
Leadership, as the most effective strategy with eight significant correlations, has the strongest correlation with individual financial pressure at correlation coefficient value of 0.291. Individuals with financial pressure are more likely to engage in unethical professional practices. This statement is corroborated in the research of Owusu, Chan and Shan (2019), which revealed that professionals working with low wage level tend to fall into the temptation to conduct unethical practices to supplement their remuneration earnings.
Additionally, if the employers find out their superior or leader embezzles monetary resources which could have been allocated to potential increment of
their wages, they will tempt to engage in unethical practices (Tanzi 1998;
Boyd and Padilla 2009). Therefore, leader needs to act ethically and ensures the employees are getting reasonable wage that they deserve. From this point of view, Ferrell, Fraedrich and Ferrell (2017) stressed that ethical leaders shall act proactively to avoid potential misconduct in the organisation. Effective guidance and support shall be provided by leaders in order to encourage ethical working culture in the organisation. To cite an example, the chairman of NuStar has provided effective support to the employees in the forms of employee benefits and job security. In return, he gained trust from the employees as the employees are willing to follow the chairman’s ethical standards at their jobs (Ferrell, Fraedrich and Ferrell, 2017).
Whistleblowing mechanism is also revealed as one of the efficient strategies with seven significant correlations. Among all the seven significant correlations, it has the strongest relationship with the influential factor of lack of supervision at correlation coefficient value of 0.276. This is to say, whistleblowing mechanism could effectively mitigate the issue of lack of supervision and consequently curb unethical conduct. Supervisors with lack of ethical perceptions can intentionally supervise the project in slapdash manner due to the social ties with other parties in the project (Le, et al., 2014a). If there is no one speaks out this issue, it could bring adverse consequences to the project, including project delay, cost overrun, low quality of end projects, which will further lead to early deterioration of the building with shortened lifespan (Le, et al., 2014b; Owusu, Chan and Shan, 2019). In view of this, whistleblowing mechanism is essential to encourage project team members to reveal the issue of lack of supervision in the project. To encourage whistleblowing, organisations are recommended to develop anonymous reporting system to protect the whistleblowers, at the same time providing protection scheme such as job security for whistleblowers (Oladinrin, Ho and Lin, 2016).
Quality assurance group is another strategy with seven significant correlations. It is revealed to have the strongest relationship with lack of ethical standard and ethical code at correlation coefficient value of 0.289. Lack of ethical codes between business and governments is one of the major