AUFF Grant: Too good to be bad? Fraud and corruption in purpose-driven organizations.

Fraud and corruption severely threaten democracy, prosperity, and economic development.
Accounting research addresses fraud and corruption mainly in traditional, profit-driven
organizations such as Enron, WorldCom, Wirecard, and Volkswagen. Here, the emergence of
fraud is explained by incentive structures, such as executive pay schemes, short-term profit-
seeking, and corresponding individual rationalizations. Recently, however, major scandals have
shocked investors and the public, occurring in a different type of organization: purpose-driven
organizations, such as Theranos. These types of organizations aim to benefit disadvantaged
segments of populations, target neglected societal issues, and satisfy unmet needs in local
communities. Here, fraud is often overlooked by stakeholders and researchers alike due to
normative assumptions that they are ‘too good to be bad.’ Yet, fraud in purpose-driven
organizations is particularly relevant for society, as it takes resources away from where they are
most needed, i.e., from vulnerable groups and communities. Drawing and critically reflecting
on fraud theories and applying a multi-method research design, this research project aims to
develop and test theory on fraud in purpose-driven organizations.
AUFF Research Grant.