Forms of internal opportunism and its impact on the company's activities

Yuzhakova Ninel Aleksandrovna ORCID: 0009-0005-0711-8962 Postgraduate student; Faculty of Public Administration; Lomonosov Moscow State University 140016, Russia, Moscow region, Lyubertsy, md. Zenino Residential complex Airplane, 46 Helicopter street uzhakova.n@mail.ru

1. Introduction

Opportunism can manifest itself in various forms, depending on the conditions and reasons that influenced its formation. So, it is important to know how the object of analysis correlates with the environment, with the norms of legislation, the form and time of its manifestation ^[1].

According to the norms of legislation, opportunism can be legal and illegal. The fact that opportunism can be legitimate was suggested by O. Williamson in 1991 ^[2]. Its essence lies in the fact that one party, in case of violation of the contract, has the legal right to file a lawsuit for damages, while knowing that the counterparty will suffer enormous damage if the decision is not in his favor. Legitimate opportunism, on the one hand, does not carry anything negative, since everything happens within the framework of the law of a particular state. But if we consider the situation from the perspective of the scale of damage that can be inflicted on the counterparty after the claim and the damage caused by the breach of contract, it may turn out that these are completely incommensurable amounts, and the issue could be resolved by peaceful methods ^[3].

The relevance of the study lies in the fact that in the modern world, cases of various forms of opportunistic behavior in companies are increasingly occurring, which it is not customary to talk about in order not to undermine the reputation of the company. Annual studies of consulting companies show a continuous increase in the manifestation of opportunism in the workplace, which leads to financial losses, harms the company's image, and exacerbates the moral situation in the team. In order for companies to effectively use preventive measures to counteract the opportunistic behavior of staff, it is necessary to understand the forms in which such behavior can manifest itself.

The purpose of the study: to analyze the forms of manifestation of opportunistic behavior of personnel in the company and determine its impact on the company's activities.

Research objectives:

1. to form a classification of forms of opportunistic behavior;
2. to determine the impact of various types of opportunistic behavior on activities within the company;
3. to investigate the forms of opportunistic behavior in relation to the object of analysis;
4. to formulate recommendations on preventing and minimizing the consequences of opportunistic personnel behavior.

The subject of the research is the forms of suppression of the opportunistic behavior of staff in the company.

The object of the study is the influence of forms of opportunistic behavior on the company's activities.

Hypothesis: the manifestation of opportunistic behavior in various forms negatively affects the company's activities.

Methodology: generalization of the theoretical and practical base of forms of internal opportunistic behavior affecting the company's activities, processing and generalization of analytical materials from professional associations, analysis of cases (practices) of the manifestation of opportunistic behavior of personnel in organizations.

Source materials: works of domestic and foreign scientists and practitioners, analytical materials of professional associations, practices of opportunistic behavior of personnel in organizations.

2. Classification of forms of opportunistic behavior of personnel in the company

Everything that is outside the legal field, as well as violates the current legislation of the country, regulations and local regulations, refers to illegal opportunism.

According to the form of manifestation, opportunism is divided into active and passive ^[4]. Active implies a purposeful manifestation of the opportunistic behavior of the parties in order to renegotiate the contract, create an artificial environment for profit ^[5]. Passive, in turn, manifests itself in the form of avoidance of the basic obligations of fulfilling the contract ^[6].

According to the time of manifestation, there are ex ante (opportunistic behavior before the conclusion of the contract) and ex post (opportunistic behavior after the conclusion of the contract) opportunistic behavior ^[7].

According to the correlation of the object with the internal or external environment, opportunism can be endogenous (intra-company) and exogenous ^[8]. Internal opportunism usually appears as a result of the activities of employees, and external opportunism occurs in interaction with counterparties, that is, from external forces.

In order to determine the impact of intra-company opportunism on the company's activities, it is necessary to make a more detailed classification of the remaining forms of its manifestation.

Table 1. Classification of forms of opportunistic behavior.

Source: compiled by the author

In relation to the contractual process, there are two forms of opportunistic behavior: ex ante (pre-contractual) opportunism and post ante (post-contractual) opportunism. The difference lies in the time of its manifestation. In the first case, opportunism manifests itself before the conclusion of the contract. The purpose of pre-contractual opportunism is to conceal information about the workplace from the employer and to misinform or conceal the true reasons for the purpose of staying at the workplace from the employee. The goal of post-contractual opportunism is to maximize benefits (tangible and intangible). both for the employer and the company as a whole, and for the individual employee ^[9]. Every form of opportunistic behavior has a negative impact on the company's operations. Therefore, it is important for counterparties to develop the right ways to combat opportunistic behavior within the firm, depending on the forms of opportunism.

The most detailed post-contract and pre-contract opportunism is considered in the article by E.V. Popov and E.V. Ershov ^[10]. Based on the data provided by the authors, table 2 was compiled.

Table 2. Manifestation of certain forms of opportunistic behavior in the workplace

A source: compiled by the author on the basis of Popov E.V., Ershov E.V. Opportunism in industrial enterprises // Manager. 2015. №2 (54).

For example, the deliberate concealment of the negative aspects of work by the employer, unpaid overtime, assignment of duties beyond the scope of the employment contract, and wage manipulation. At a minimum, they can lead to the loss of valuable employees and a decrease in the company's reputation. If the rights of an employee are violated within the framework of labor legislation, then he has every right to challenge the actions of the employer in court. If an employee shows such forms of opportunism as shirking and negligence, the quality of work deteriorates, therefore, consumers of the goods or services that the company produces will switch to competitors, and the company will suffer damage. Fraud on the part of the employee can lead to serious consequences. Most often it occurs with some documents and has a delayed effect. Theft on a small scale can lead to a deterioration in relations within the workforce, as employees will begin to suspect each other of this crime, which will affect productivity. Theft on a particularly large scale in itself causes great damage to the company, as its resources suffer.

According to the ACFE 2024 global report, the average damage from one identified case of corporate fraud amounted to 1.5 million US dollars, an increase of 24% compared to the previous year. At the same time, companies lose 5% of their annual income on average due to such offenses. More than 43% of all cases were detected through anonymous messages, which makes this channel the most effective way to detect opportunistic behavior ^[11].

According to a report by the U.S. Federal Bureau of Investigation, global cybercrime losses exceeded $16 billion in 2024, up 33% from the previous year. The main reasons for the growth were investment scams and phishing attacks, as a result of which employees were deceived and funds were transferred to the accounts of intruders ^[12].

The PwC Global Economic Crime Survey 2024 report notes that 46% of organizations worldwide have experienced economic crimes in the past two years. Cybercrime (31%), abuse of office (28%), and corruption (25%) are among the most common forms of fraud ^[13].

The EY Global Integrity Report 2024 indicates that 49% of respondents believe that compliance with corporate ethics standards has improved over the past two years, but corporate violations continue to grow, indicating a growing gap between stated values and actual behavior ^[14].

According to the degree of intensity of its manifestation, intra-company opportunism can be crude, strategic and natural. Gross opportunism implies a deliberate violation of the terms of a contract in order to achieve one's interests. In other words, the counterparty initially knows that his actions will harm the company, but at the same time he will receive his benefits ^[15]. The interests of the counterparties in this case do not coincide, and everyone acts based on obtaining their possible benefits. Strategic opportunism is the use of information asymmetry in order to conceal data from one side from the other. In any case, this form of opportunism also proceeds from personal gain, but within the framework of information distribution ^[16]. At the same time, it is very difficult to compare the damage caused by gross opportunism and strategic, since withholding information can lead to large losses for the company.

Opportunism can be hidden and open. Hidden opportunism is quite difficult to identify due to insufficient resources and information, so such actions by employees can cause more damage to the company. The ability to identify open opportunism is higher, so the speed of response and application of measures to eliminate consequences is also higher.

According to O. Williamson, opportunism refers to deliberate attempts to mislead, distort, disagree, or confuse someone within the firm. Opportunistic behavior can be classified as objective or perceived. Objective opportunism deviates from certain behavioral rules in an intra-company contract. The perceived opportunism deviates from the rules not taken into account by the contract, but established directly by the firm ^[17].

Returning to the issue of intra-company opportunism, it should be noted that, considering pre-contract and post-contract opportunism, some authors define them from two sides: both exogenous (aimed at external contractors) and endogenous (intra-company). The results of the analysis of the two forms of data are presented in Table 3.

Table 3. Forms of opportunistic behavior in relation to the object of analysis

A source: compiled by the author on the basis of Grigoriev N. S. Forms of manifestations of opportunistic behavior // Russian Journal of Education and Psychology. – 2015. – №. 3 (47).

It can be assumed that before concluding a contract, it is inappropriate to consider intra-company opportunism, since the employee is not yet part of the company, and the company does not influence the employee. However, the transaction costs that will be spent on information retrieval, protection from third parties, and mechanisms to prevent the appearance of opportunism in the company will have a positive impact in combating the manifestations of intra-company opportunism, as well as minimize the consequences in the future ^[18].

Thus, each counterparty tries to reduce the risk of information asymmetry by clarifying additional information about its counterparty. An employer checks a potential employee through professional tests, interviews, and security services. Additional information can be provided by the previous employer. But even when checking all the information, it may turn out that this employee is prone to shirking or, for example, his values do not align with the values and organizational culture of the company ^[19]. If he shows himself in an interview as a responsible employee who is interested in working for a particular company, this does not guarantee that he will develop opportunistic behavior. At the same time, the potential employee himself has fewer resources to find out about the employer, since companies often tend to hide negative information about themselves, and order positive feedback from former employees on work sites and review sites. If a potential employee does not know anyone in the company, then he is unlikely to be able to fully learn the corporate culture and relationships in the team, and at the interview, if he turns out to be a highly qualified specialist, they will tell him only about the advantages of working in the company, and they will not voice inconvenient points. This may also affect the further manifestation of opportunism on the part of both the employer and the employee, since the counterparties were not initially honest with each other.

3. Manifestations of opportunistic behavior of staff and their impact on the company's activities

Examples of opportunistic behavior are well demonstrated by a number of well-known corporate scandals. For example, in the companyIn 2001, Enron's top management systematically concealed losses through fictitious subsidiaries. This led to bankruptcy with assets of $63.4 billion and caused damage to investors in the amount of more than $40 billion. In the case of WorldCom in 2002, the misrepresentation of financial statements resulted in losses of $11 billion and became the largest bankruptcy in the history of the United States at that time. In Russian practice, there is a well-known example of Tolyattiazot, where management used transfer pricing and affiliated companies to withdraw assets, causing multibillion-dollar damage to shareholders.

Intra-company opportunism can manifest itself after an employee has been dismissed from the company, and negatively affect its future activities. So, Frances Haugen, a former employee of Facebook (an organization banned in the Russian Federation), in October 2021, before her dismissal, took away internal documents and handed them over to the Wall Street Journal, an American daily business newspaper, and the US Congress. After receiving the data, the US Congress initiated an investigation into how the company operates, and the Wall Street Journal wrote several articles about privileged Facebook users who can circumvent the law and publish prohibited materials while remaining unpunished ^[20], and the negative impact of the Instagram network (banned in Russia Russian Federation organization) on adolescent girls, increasing their anxiety and depression levels ^[21]. The company incurred reputational risks after this incident. Due to the current situation, the company introduced new working rules for employees to reduce information leaks, which the employees themselves immediately passed on to the media, and they were publicly available ^[22]. This situation suggests that no matter how hard the company tries to minimize the risks associated with opportunistic behavior, as well as introduce measures to prevent and counteract it, there will always be people who will commit illegal acts for their own interests. But, on the other hand, the fact that internal employees disclose information may indicate the dissatisfaction of the team as a whole. In this way, they show the overall tension. And this action should be considered by management not as a call for tougher measures to counter opportunistic behavior, but as a signal of problems in communication with employees. In any case, this action had a negative impact on Facebook: in October, its shares fell by 4.66% ^[23].

Another example of the negative impact of intra-company opportunism is the situation with Yandex. In February 2021, the company's security service revealed an internal data leak of about 5,000 users ^[24]. A check was carried out on this fact, and it turned out that one of the company's employees had provided the information to the public. In order to minimize the risks of information leakage, the company decided to review the work processes of employees who have access to confidential information. It is noteworthy that Yandex shares increased by 1.1% in February 2021 ^[25]. But at the same time, trust in the service has fallen. So, in 2022, the Yandex.Food service was also leaked customer information, only this time a class action lawsuit was filed against the company ^[26], from which the company incurred reputational risks.

In 2024, the Association of Certified Fraud Investigation Specialists published its report entitled "Corporate Fraud 2024: A Report for the People", the largest study of industrial fraud to date ^[27]. Since the release of the first report in 1996, ACFE has analyzed more than 20,000 professional fraud cases reported by certified fraud screening specialists.

This report is based on the results of the ACFE Global Survey 2023, an online survey open to 53,118 certified fraud investigation professionals that was conducted from July 2023 to September 2023.

As part of the ACFE online survey, respondents were asked to describe the largest case of professional fraud they had encountered and investigated since January 2022. They were then asked questions about the details of the fraud case, including information about the perpetrator, the damage done to the organization and the forms of fraud used, as well as fraud trends in general.

A total of 7890 responses were received, 2110 of which could be used for the purposes of the ACFE decision report.

The submitted cases had to meet the following four criteria:

1) the case should relate to professional fraud (i.e. fraud committed by a person in relation to the organization in which he works);

2) the investigation was conducted in the period from January 2020, that is, until the moment of participation in the survey;

3) the investigation is completed at the time of participation in the survey;

4) the respondent should have been reasonably confident that the perpetrators of the illegal acts had been identified.

Each study examined the mechanisms used by employees to deceive their employers. Even with the transition to digital payments, remote work environments, and technology-based organizations, the patterns and methods used by employees to display opportunistic behavior have remained unchanged.

Among the main and frequently committed forms of opportunistic behavior in the company that can be traced are:

• Misappropriation of assets, in which an employee steals company assets or abuses employer resources. This form is the most common, with 86% of fraud cases falling into this category. However, these schemes tend to result in the lowest average losses of $100,000.
• Financial reporting fraud schemes, in which the perpetrator intentionally causes a material misstatement or omission in an organization's financial statements, are the least common (9%), but cause the most damage to the company (593,000 USD) category.
• Corruption, which includes offenses such as bribery, conflict of interest, and extortion, is in the middle in both frequency and loss. These schemes occur in 50% of cases and result in an average loss of $150,000.

Based on the above analysis, it can be said that intra-company opportunism and fraudulent actions on the part of staff endanger the company's activities, which confirms the hypothesis of the study. At the moment, there are statistics around the world where cybercrimes occupy the first place, which can cause great damage. This is due to the emergence of new ways to circumvent the security system, the emergence of cryptocurrencies and "gray zones" in the legislation of the countries in which this fraud is committed ^[28]. Then there is the misappropriation of assets, bribery and corruption. Pre-contract and post-contract opportunism are characterized by different forms of intra-company opportunism, but both before and after the conclusion of the contract, the company must bear certain costs in order to control and successfully regulate the manifestations of opportunism in the company. At the same time, there is no guarantee that these methods of combating opportunism will be effective for a particular company.

4. Recommendations for preventing and minimizing the consequences of opportunistic personnel behavior

1. Before concluding a contract (employment contract), the HR department needs to carry out a number of activities. First of all, before being invited to an interview, HR managers should analyze the applicant's resume and find additional information about the employee's reputation (reviews from colleagues, characteristics from a previous job). This will allow, at the first stage, to weed out those who have already been noticed in the manifestation of fraudulent behavior in the workplace. At this stage, the costs of searching for information will arise, while the costs of resolving the consequences of possible opportunistic behavior that may harm the company will decrease ^[29].

This recommendation is aimed at preventing ex-ante opportunism (falsification of hiring data), which can be implemented through checking recommendations, social networks, and connections with former employers.

2. In order to diagnose latent tendencies to display opportunistic behavior of staff, the company must develop an effective recruitment questionnaire containing questions that can be answered by a portrait of a potential employee and apply psychological tests to determine the character and temperament of the future employee.

One of the effective tools for the preventive analysis of potential risks associated with opportunistic behavior of employees is the case interview method. This method involves modeling situations close to the real conditions of professional activity, followed by an analysis of the reactions and behavioral strategies of the applicant. For example, a situation is proposed for an applicant: "Imagine that you hold the position of a specialist in the procurement department. One of the bidders is your personal acquaintance, who offered you assistance in promoting his company, despite the fact that his price offer objectively loses to competitors. Management trusts you and does not require strict documentation of each stage of supplier selection. Your actions?"

The analytical purpose of the case is to identify behavioral patterns indicating a candidate's possible propensity to conceal information, manipulate in the interests of third parties, and be willing to act outside the framework of ethical norms in conditions of weak control.

Evaluation criteria may include awareness of a conflict of interest, willingness to act in the interests of the organization rather than for personal or affiliated purposes, commitment to transparency of decisions (intention to notify management), and a level of moral and ethical maturity expressed in maintaining professional distance.

Potential indicators of opportunistic behavior:

– rationalization of violations (for example: "it won't hurt the company");

– concealment of the fact of personal communication with the supplier;

– evading responsibility by delegating decisions without informing management.

Thus, the use of case interviews as an assessment method makes it possible to diagnose behavioral attitudes in advance that potentially contribute to the development of opportunistic practices in the future. The use of such a tool in combination with psychological testing and biographical data analysis helps to reduce transaction costs associated with the risks of intra-company opportunism.

3. To prevent post-contractual opportunism, when a person is part of a company, it is necessary to familiarize a new employee with internal values and rules. Management should also establish internal communication within the workforce, and employees should be able to receive feedback not only from their colleagues, but also from their superiors in order to feel that managers are monitoring the performance of their work duties and are always ready to help their subordinates ^[30]. In order to implement this recommendation, it is necessary to allocate a mentor for a new employee, as well as conduct trainings that introduce the internal culture.

4. In order to avoid alienation of labor, it is necessary to create an effective motivation system that will include monetary and non-monetary incentives. It is most effective to gradually implement a KPI system, having previously prepared the team for organizational changes if this system did not exist before ^[31].

5. In order to avoid opportunistic behavior from the management, it is necessary to form its own personnel reserve in order to nurture its own managers who will occupy high positions in the company. Perhaps because of this, the company will become more closed to external candidates, but the advantages of a talent pool are undeniable when choosing a candidate for high positions: reputation, experience, and adherence to the company's values.

6. Building an effective motivation system aimed at fairly rewarding employees in proportion to their contribution to the organization is another measure aimed at countering the opportunistic behavior of staff in the company ^[32].

7. When forming an information base within a company, it is necessary to clearly allocate access to certain resources in such a way that employees cannot use the information to their advantage. To do this, the security service needs to create a system in which, in order to gain access to certain information, the approval of the line manager and the person directly responsible for the information is required ^[33].

8. The HR department should systematically conduct surveys in the company regarding comfort and concerns. This will make it possible to identify people who may exhibit opportunistic behavior when the situation worsens. Therefore, the company should have internal psychological assistance that would help reduce stress levels among employees.

5. Conclusions

The opportunistic behavior of the staff should be considered as a systemic threat to the stability and sustainable development of the company. Regardless of the legality of the external form, actions aimed at extracting benefits to the detriment of the interests of the organization undermine trust within the team, violate corporate norms and have a devastating impact on economic security.

Taking into account the growing trend of opportunistic behavior, the need to develop and implement preventive mechanisms, risk assessment systems and ethical filters at the hiring stage, as well as the formation of a culture of openness and feedback within the company is becoming more important. Rather than dealing with the consequences, systemic management of the root causes of opportunistic behavior should be a priority for organizations seeking long-term effectiveness and the preservation of human resources.

The results of the study confirmed the existence of a stable relationship between the forms of opportunistic personnel behavior and risks to the economic, personnel, information and reputational security of the organization. The classification features of opportunism have been clarified, including the division by time of manifestation (ex ante and ex post), the nature of information asymmetry, the degree of openness and intensity of behavior, which allows us to consider the phenomenon more systematically.

An analysis of empirical examples from Enron, WorldCom, Facebook, and Yandex, combined with quantitative data from the ACFE global report, demonstrated the scale of the consequences of opportunistic actions, including financial losses, undermining corporate culture, reduced loyalty, and loss of trust from stakeholders. These facts have justified the need for an integrated approach to the prevention of destructive employee behavior.

Based on the analysis of literary sources, a classification of forms of manifestation of opportunistic behavior was formed, and an analysis of pre-contract and post-contract opportunism was initiated, since the costs incurred by the company vary depending on the time of manifestation of opportunistic behavior (before or after the conclusion of the contract).

Statistical data from the Association of Certified Fraud Investigation Specialists report were summarized. According to the results of the analysis, one of the main forms of opportunistic behavior in companies were: misappropriation of assets, manipulation of financial statements in which an employee intentionally causes a significant distortion or omission in the financial statements of the organization and corruption.

As a rule, statistical data that is publicly available on the Internet is limited only to information that can be quantified. Therefore, the damage caused by shirking, failure to fulfill one's work obligations, and the commission of petty fraud, which is difficult to control and monitor, most often does not fall under research, and there is no data on how much damage such actions cause.

The recommendations developed in the framework of the study are based on the introduction of preventive tools aimed at identifying and reducing risks at the recruitment stage. Among them, case interviews, assessment sessions, psychological testing, building a system of fair remuneration, developing feedback and delineating information access are highlighted. Each measure is aimed at eliminating specific prerequisites for the formation of opportunistic behavioral strategies.

Staff behavior can cause irreparable harm to an organization and thereby weaken its economic security. If opportunistic behavior occurs, the risk of financial losses increases, undermining the company's reputation, reducing the level of organizational culture and motivation, staff turnover increases, and as a result, there is a shortage of qualified personnel. Opportunism affects the elements of personnel, financial, intellectual and information security in the economic security system. Financial damage is currently one of the main consequences of opportunism, which negatively affects the financial security of the company. Deterioration of the moral situation in the team, staff outflow, decreased motivation, and violation of the integrity of the corporate culture affect personnel security. The leakage of confidential information, as well as information that is proprietary to the company, affects intellectual and information security.

Thus, the opportunistic behavior of the staff should be interpreted as a stable destructive factor that systematically affects the key elements of the organization's security. Effective management of such risks requires not only the institutionalization of relevant regulations and procedures, but also the integration of behavioral analysis into HR and corporate policy practices. The formation of an organizational culture environment focused on compliance with ethical standards, ensuring transparency of internal company interactions and the development of internal control mechanisms is a prerequisite for the sustainable functioning and strategic development of the company. The implementation of these approaches will minimize the consequences of behavioral deviations and ensure long-term protection of the organization's resources from internal threats.