The impact of organizational culture on occupational crime in pharmaceutical manufacturing companies in Nairobi County

Abstract

The Association of Certified Fraud Examiners reports 2016 indicated that over 633.40 billion Kenya shillings are lost yearly due to occupational crimes. Similarly, the Global Business Ethics study indicated that senior and middle-level management commits 23% and 32% of the corruption cases. Whereas Price Waterhouse Coopers report indicated that about 36% of the firms faced economic crimes, with emerging and developed markets affected more in 2016, most companies are yet to adopt fraud detecting and deterrent strategies to mitigate such occupational crimes. This study aimed to establish the effect of organizational culture on occupational crime in pharmaceutical manufacturing companies in Nairobi County. The study's specific objectives comprise organizational ethics, financial, board oversight, and corporate size on occupational crime in pharmaceutical manufacturing companies in Kenya. This study was grounded on the Fraud Triangle Theory. The study adopted a descriptive research design. The study targeted all the 26 licensed Manufacturing firms for Pharmaceutical in Nairobi County registered under the Kenya Association of Pharmaceutical Industry in 2020. The study used both quantitative and qualitative data. Quantitative data were collected using self-administered questionnaires using the drop and pick method. While qualitative data were collected utilizing interview guide sheets. A pilot test study was carried out before the actual research. The study employed descriptive statistics to analyze the quantitative data using SPSS version 22. Qualitative data from the Key Informants were analyzed thematically using content analysis. Analysis results were presented using figures and tables. All statistical analyses were carried out at 95% significance level. Correlation results showed that organizational culture positively and significantly influences occupational fraud. Regression findings also indicated that financial controls, board oversight, organizational ethics, and corporate size positively and significantly influence occupational crimes in pharmaceutical companies in Nairobi County. The study established that poor financial controls and board oversight are associated with higher occupational malpractices in the company. Additionally, the study established that the presence and adherence to an organizational code of ethics are associated with decreased incidences of occupational fraud. The study established that poor financial controls and board oversight are associated with higher occupational crimes in the company. Additionally, the study established that the presence and adherence to an organizational code of ethics are associated with decreased incidences of occupational fraud. Further, the study established that corporate size is associated with the frequency of occurrence and seriousness of occupational fraud. The study also established that the level of employee monitoring determines occupational fraud incidences and corporate size. The study recommends the management of pharmaceutical companies establish effective financial control measures and realistic regulatory measures such as fraud risk evaluation and oversight to combat occupational crimes in the pharmaceutical companies.