Environmental Governance and Whistleblower Rewards: Balancing Prosocial Motivations with Monetary Incentives

This article examines the idea of introducing a comprehensive reward program for whistleblowing on violations of environmental laws. The common criticism that rewards for external reporting considerably discourage employees from internal reporting is unjustified. This argument overlooks both legal practices of whistleblowing and prior research on social preferences. We argue that prosocial motivations are a crucial determinant of both internal and external reporting. Prosocial individuals are predominant in society. They respond to monetary incentives for external reporting while maintaining their commitment to internal reporting driven by prosocial motives. By combining a vignette-based survey and a measurement of social value orientation, we find that the effect size of prosociality on the likelihood of whistleblowing is comparable to, or greater than, the effect sizes of established predictors like demographic and contextual variables. We also find that the discouragement effect is less pronounced for prosocial individuals than for proself individuals. Based on these findings, we discuss how to design legal frameworks that balance the discouragement effect and the incentive effect of whistleblower rewards.