Discourse Ethics in Controlling Fraud: A Comparative Case Study

This study explores the role of discourse ethics in fraud control by examining how communicative rationality shapes moral reasoning within two large insurance companies in India, operating in similar institutional environments. Drawing on Habermas’s communicative action theory, the analysis categorizes discourse into pragmatic, ethical, and moral realms, focusing on each organization’s approach to fraud management. While Company A employs a cost-centered approach, often overlooking ethical infractions and resulting in reputational challenges, Company B emphasizes transparency, ethical incentives, and stakeholder engagement, leading to a robust fraud control framework. Through 20 interviews with senior and middle management, data collected via comparative case analysis reveals how discourse ethics shapes divergent fraud control practices under comparable coercive, mimetic, and normative pressures. Findings demonstrate that open stakeholder dialogue, anchored in ethical transparency, significantly bolsters fraud prevention and organizational legitimacy. Company A’s emphasis on procedural compliance contrasts with Company B’s proactive ethics, underscoring the limitations of cost-driven approaches in fraud management. The study highlights discourse ethics as an effective tool in fostering ethical legitimacy, with implications for practitioners seeking to enhance fraud control through communication-centered governance frameworks.