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Home > Books > Organizational Conflict

Resistance to Change and Conflict of Interest: A Case Study

Submitted: 20 July 2017 Reviewed: 10 October 2017 Published: 20 December 2017

DOI: 10.5772/intechopen.71578

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Change for organizations is a necessity. Today’s businesses are aware of the need to keep up with the environmental changes and change demands. If the change process is not handled properly in the business, it will bring major problems with it. Every change will absolutely and definitely face resistance. Similarly, conflicts are considered to be inherent in organizations. The important thing is to prevent conflicts from taking over organizational interests. If conflicts arise in situations where personal interests constitute a source, it is an issue that needs to be discussed seriously. This study is intended to reveal elements that create a potentially resilient potential, in particular protecting personal interests. A case study method was utilized in the study. This method is preferred because it is appropriate to examine in detail the history, current situation and environmental functioning of a particular person or group and to obtain appropriate information in order to provide statistical methods. In particular, the case study, which reveals a reflection of the conflict of interest that is valued as a consequence of the functions of exchange resistance and as a consequence thereof, reflects the relationship between resistance and conflict of interest.

  • resistance to change
  • conflict of interest
  • organizational interests

Author Information

Cem karabal *.

  • Beykent University, Istanbul, Turkey

*Address all correspondence to: [email protected]

1. Introduction

An important part of organizational life is change. Without change, no business can survive in today’s competitive environment. Modern managers are faced with permanent progressive technological change. The most important tasks are to initiate organizational change and to ensure that a new position is achieved by keeping it under control among existing business structures. If they do not discuss the new methods, equipment and management policies, they can face with very serious moral and manufacturing problems [ 1 ].

The globalization of the markets in the 1980s and 1990s witnessed an unprecedented period of change, thanks to increased external competition and rapid technological movements. Strategic initiatives, mergers, acquisitions and operational initiatives have gained momentum in this process; applications such as just-in-time production, total quality management, process innovation and MRP have contributed to the change process. New requests coming to organizations in the control of these processes, the efforts to bring the performances of the organizations to the upper levels and new designs have provided the development of change management [ 2 ].

Organizational change efforts are often met with strength by people. Although managers are aware of this resistance, they do not make too much effort to understand why and how they will be handled. One of the most important problems encountered in making changes in organizations is to manage resistance to change and handle it correctly. Resistance to change emerges in different and unexpected ways [ 3 ]. Resistance to change is like a pain. It does not say exactly where the error is, but it allows you to understand that it is a problem [ 4 ]. However, the resistance to change must be perceived as reasonable. This is natural, and a change that is essentially not encountered with resistance should not be considered as natural [ 5 ].

Similarly, conflicts are considered to be inherent in organizations. The important thing is to prevent conflicts from taking over organizational interests. If conflicts arise in situations where personal interests constitute a source, it is an issue that needs to be discussed seriously.

This study includes a relationship between resistance to change and conflict of interest. The main goal of the research is to see how these two parameters will interact in the change process. I believe that conflict of interest is a very important issue but we could not see it in the literature as a scale or in relation with other factors. From this point, the aim of this study is to draw attention to the issue.

2. Resistance to change

Why do people show resistance to change? According to Caruth et al. [ 1 ], the reason for resisting the changes made to employees’ work conditions is due to a variety of reasons, such as their individual personality. While some respond positively, others may get angry. Starting from this, resistance to change submitted by the administration, the resistance shown by the nature of mankind (generally people do not like change) and resistance about fears and threats (fear of unknown, reduced job security, suffering economic loss, reduced job status, change in work-group relationships) have divided the reasons in two main groups [ 1 ].

Change is considered an annoying phenomenon because of the necessity of departing from known with the deterioration of the status quo and anticipation to give up; resistance to change can be assimilated to friction in physics. As it is necessary to apply more force without friction to move an object, it is necessary to apply force to change with regard to people [ 6 ]. Managers and employees detect the change in different ways. While senior executives see change as an opportunity to overcome problems and improve their careers in a positive sense, middle-level managers do not welcome well the change very much. Change is destructive and unexpected for them, and this can disrupt the balances [ 7 ]. Resistance resulting against change can be assessable as a destructive force working in the interests of competing firms [ 8 ]. Kotter and Schlesinger stated that managers should be aware of four common situations in which people are motivated to show resistance to change. These are [ 9 ]: narrow interest, misunderstanding and lack of trust, different evaluations and low tolerance for change.

Caruth et al. [ 1 ] suggested that people with varying degrees of resistance would show it in three different ways. These are carried out directly as attacks, secret attacks and passive behaviors [ 1 ]. Resistance to change can be realized individually or organizationally. The signs of individual resistance are usually complaints, mistakes, anger, indifference, withdrawal, absenteeism to work due to health reasons and stubbornness. As for that, organizational resistance is work accidents, increase in compensation claims of employees, increasing absenteeism, sabotage, increase in expenditures due to health and decreasing productivity, and these are only some common signs [ 10 ].

Koçel lists the events that cause people to show resistance to change in reasons regarding to the business, due to personal reasons and for social reasons [ 6 ].

2.1. Function of resistance to change

While resistance to change is performed individually or in groups, it can also appear in open or hidden forms. What is important here is the fact that there are individuals at the beginning of resistance. Even the emerging resistance in groups is realized as formal or informal structures strengthened by the gathering of individuals.

When the causes of change resistance, which are revealed by various researchers and partly seen as a repetition of each other, are considered together, the factors that constitute resistance to change are mainly expressed under six headings. They are personality traits of individuals, which are emerging as uncertainties about whether they will bring change or take it, insecurity against oneself or those who perform change, an interest appraisal resulting from the changes that will take place between the current situation and the future situation, commitment to past experiences and group-effect result.

2.1.1. Personality

Individual differences, known as personality, are defined as how individuals think and behave in different situations [ 11 ]. Personality traits usually tend to be based on the emergence of personal hostilities, being disturbed on being guided, seeing as being excluded and on the edge of being thrown away with change, characteristic stupor, anger, personal conflicts, ignorance, lack of interest and the emergence of personal hostilities against those who make the change.

2.1.2. Uncertainty

One of the most important elements in the individual dynamics of changing resistance is uncertainty. People are afraid of unknowns and uncertainties [ 12 ]. The fact that those who perform the change are not sufficiently clear, that the change is not fully explained and the uncertainties that occur with them can be listed as fear from the unknown, loss of control and concerns about the future and business.

2.1.3. Insecurity

In situations where the safety of individuals is threatened, sabotages occur [ 5 ]. Trust-minded thoughts such as insecurity, not being self-confident, being afraid of failure and misunderstanding against those who manage change or those who are part of it come under the heading of insecurity.

2.1.4. Loyalty to the past

Many studies pointed out that the mistakes in the institutional change process stem from the fact that past knowledge has not been abandoned [ 13 ]. Markets are places where experience is gained, but lessons are changed frequently. We must learn from the past all the time, but we do not need to worship it [ 14 ]. It is required that they should not be tied tight to the past for organizations to survive. Before the organizations try out new ideas, they need to discover that their old ones are inadequate and get rid of them [ 15 ]. To give up knowledge of the past requires that you come from above the change barriers and that you re-evaluate the cognitive organizational competencies, circumferences, threats, opportunities, strategies and old ways of achieving success [ 16 ]. A culture of resistance to change developed with frustrations from the past during the change process, low tolerance for change, the difficulty of giving up on habits, the difficulty of learning new things, the disruption of well-known comforts, close-mindedness, old experiences, past performances and past mistakes can be counted as the causes of resistance to change, which can be ranked under the framework of commitment to the past.

2.1.5. Group effect

The concept of group dynamics refers to the changes and reactions that occur on any part of the group, the influence and reaction that the group members and the group make on the structure [ 17 ]. The group effect comes from the interactions between individuals and is shaped by the light of factors above mentioned. However, the relationship between group members influences strengthening these factors or changing their shape [ 18 ].

Groups are units formed in informal and formal structures within the organization. Disagreements between the aims of change and group norms and similar groups within the organization should take a negative attitude toward change, the possibility of deterioration of existing relations, the majority of group members support resistance, the probability of the group losing its disintegration or status, in short, the idea that change can change social interactions, can be regarded as the resistance dynamics that the groups to which the individuals belonging are exposed.

2.1.6. Valuation of interest

Every change means losing for someone [ 5 ]. In the new situation that the valuation of interest individuals will emerge with change, they are seen to pursue their personal interests and evaluate their possible consequences. Generally, it can be listed as the causes of interest-based resistance of individuals who think like the expectation of unemployment, the possible increases in the current work load, the loss of status and the possibility that the material situation will change in the negative direction, which comes with technological change.

3. Valuation of interest and conflict of interest

Concept of interest is defined as the indirectly obtained profit, gain, benefits or the benefits that only one person provides for himself. The fact that it is a matter of interest requires that something related to the subject be requested; the fact that we have called it interest has the power to abolish even the strongest associations. The presence of such power results leads to the presence of a conflict.

Conflicts are one of the elements that can reduce or increase the efficiency, effectiveness, change and development levels of organizations and on the basis of which lies individual differences [ 19 ].

In a rapidly developing and changing world, because we call the invariance of change, non-homogenous social groups are being formed and it is inevitable that these groups are differentiated from each other. This situation creates a natural ground for conflicts [ 20 ].

Even if individuals or groups assume an agreement on the purpose of organization, the differences in unit-based intentions lead these conflicts to interests or priorities.

Individuals or groups on certain topics may have different interests. Any decision to be taken or a decision taken by a group may affect the interests of the other party. Along with such differences, the effort to expand the strengths of the organization’s employees or groups can also be a major source of conflict [ 6 ].

The inevitability of the conflict is due to the three tendencies of the human being [ 21 ]:

People’s attitudes, beliefs, levels of knowledge and life experiences are different between them.

These differences cause people to become self-centered and have difficulty in understanding the perspectives of other people.

People usually tend to protect and bring their own personal interests into the forefront.

With regard to the concept of conflict, it can be said that the negativity state proposed in classical approaches is inherent in organizational structures together with modern thought. Even with proper management, conflicts are expected to have a very positive effect on disruptive outcomes [ 22 ]. While constructive conflicts encourage change and innovation, the conflicts that are being destructive bring out the interests of the parties, the negative situations that are brought about by the purposes of the organization [ 23 ]. In organizations where there are no conflicts, it is observed that the members of the organization are closed to change and innovation because of indifference and monotony [ 24 ].

Concerning the concept of conflict, it can be said that the negativity state which is proposed in the classical approaches is inherent in organizational structures together with modern thought. The encounter with resistance of a change process is considered as a sign of the beginning of change. Just as it cannot normally be mentioned from a change without resistance, it would not be right to talk about an organization that does not have a clash. However, the fact that the clerk has personal interests and elements that can prevent the company’s objectives would have a negative impact on the change process and no contribution to corporate interests. Here, the moral and ethical dimension of work is prominent.

According to an international survey conducted in 300 large companies in 1987, it emerged that at the beginning, of the moral problems encountered in enterprises, employees think it is a conflict of interest [ 25 ].

Businesses have important principles to follow about their own behavior. One of them constitutes the basis of this principle that those who find themselves able to give themselves the image of a conflict of interest in relation to themselves or close family members, to declare it and to exclude themselves if there is really a conflict. A similar situation is declared by authors during academic studies.

Another element of conflict can be expressed as approaches against innovation and change. J. March and H. Simon, who analytically examined the causes of conflict in organizations, expressed one of the causes of the sources of conflict in organizations as conflicts arising from differences in perception. The source of this conflict is the source of information and opinions required by the innovations. In consequence of these, disagreements and conflicts arise because organizations are constantly open to innovations and exchanges, and the information, however, experience and flexibility required for performing changes are not perceived by some former administrators [ 17 ].

One of the stages of the conflict process is intentions. Intentions are among people’s perceptions, emotions and open behaviors. Decisions of intent are decisions to behave in a certain way. In order to be able to respond to the behavior of the person, his intent must be determined. Many conflicts are growing by increasing the severity of the parties because one of them has attributed bad faith to the behavior of the other. There is often a difference between intentions and behaviors, so behavior does not accurately reflect the intent of the individual. Different structures of behavior depending on intentions are listed as competitive, collaborative, avoidant, harmonious and compromising. The way of behavior, which takes the form of competitive intentions, is expressed as the effort of one person to satisfy his interests without considering others [ 26 ]. The new qualities predicted by changing circumstances and the necessity of people playing different roles can cause conflicts. In particular, change-specific situations such as restructuring studies and transfer of undertaking are capable of generating significant conflicts.

It is a strategy that targets the personal interests that have no cooperation and have a destructive effect based on a win-lose approach and is maintained in a competitive environment. The application of the strategy of domination in conflict may cause aggressive behavior and sabotage by increasing tension between the parties. Instead of questioning the cause of the conflict, one side to applying domination to the other side to turn the situation into its own is the opponent’s loss approach. People make an interest appraisal in the process of change. If the change that will take place is against their own interests, they can adopt a course of action, a resistance decision, to create protection against it. They enter a conflict with a competitive intent and struggle for their own interests. The conflict that comes with the resistance decision will allow the conflict of interest to be staged in a visible way.

When we look at the literature, we could not find a study related to conflict of interest and resistance to change together. Resistance to change had used a lot of researches but literature hasn’t got a scale of the conflict of interest. Therefore, the case study method is used in this study.

The research has also been carried out in Istanbul, a company operating in the construction sector. Observes had taken record by assistant of the general manager and it includes a 1-year period. The case study method was utilized in the study. This method is preferred because it is appropriate to examine in detail the history, current situation and environmental functioning of a particular person or group and to obtain appropriate information in order to provide statistical methods. The event was dealt with by an observation technique and the most important feature of this technique is that the individuals who are observing are in their natural environment. Many behaviors can be identified and assessed in their actual state as long as the individual is in a natural environment; in other studies, it is known that the individuals studied do not behave as they are but rather behave or reply in a frame that they want to be, that the community wants to be or as they can be accepted by their surroundings. This issue stands out as one of the common problems of non-observational study techniques. Observations were made in a participatory manner and all the information was recorded in a systematic manner during the process by taking part in the event throughout the process. The actual names of the person subject to the case study and of the company are indicated by symbols on the specific requests of the persons.

The main questions to be answered in the sample case prior to study are mentioned below:

Q1: Do self-interests prevent the interests of the organization?

Q2: Do self-interests return to conflict between individuals or groups?

Q3: When individuals who make valuation of interests show resistance to change, does resistance to change be open or implicit?

Q4: Is it possible to break the resistance of people who have the potential of resistance through communication?

5. Case study

5.1. general information about the case study.

XYZ Engineering Inc. is one of the well-known, recognized and trusted companies operating in the construction sector in Istanbul/Turkey. It has 30 years of history. In this process, hundreds of successful projects have been carried out and have created added value by employing hundreds of people. On the basis of the sector/industry, the market demand is continuous, and an opinion and the work of the company show a positive trend. In parallel to these, the human resource has also increased.

Constructively, it is a family-owned business. Company partners are family members but soon, with the public offering, there will be a conversion to a structure that is now traded in the stock market. Company employees now constitute the professionals who are out of the family predominantly. The annual turnover of the company is 80 million dollars and it has 160 staff.

Operating functions are vertical organizational structures that are integrated with each other. It is involved in the case study; it includes the general manager of the company, the operation director, the purchasing manager (PM) and the finance manager (FM).

The abbreviations and explanations used in the case study are as follows:

XYZ Engineering Inc. Case Study Company

FM: Finance/Accounting Manager

OM: Operations Director

PM: Purchasing Manager

GM: General Manager

5.2. History of case study

The company, which has been handling the stages of institutionalization more professionally since 2004, in order to be able to execute processes that are more integrated and manage all flows with a single software, decided to switch to a new ERP software in 2016.

In the present case, no integrated software was being used. While the finance department used its own software, the procurement department also carried out its activities with an autonomous computer program. As for that, the operation department has run processes from the proprietary software, with forms that are required by business-building methods and procedures.

Thanks to the software, project costs, procurement status, stocks, accounting records, communication between field staff, reporting and many more possibilities would be put into practice on a single platform, with all the business involved, including the relationships.

GM has pursued the study and demonstration of the related software himself and he/she was convinced that he/she would get all the flows he wanted, thanks to this software. Purchasing contracts for the software are over and an opening kick-off is applied. He/she did not want to think about the possibility of software failure; however, in parts where the employees cannot be involved in the process, the investment made would be a significant loss, and GM would not be able to give it to himself.

There had never been a similar study previously done in the company. GM knew that the process demanded change management and that change had given him the task of leadership Thus, he/she believed that it would make it easier to identify resistance and remove the obstacles.

GM gathered all the responsible persons before the software developers arrived to the company and held an informative meeting on the subject. By persuading meeting attendees to require a new writing transition and aimed to create a guidance coalition to support everyone to take over the project and get the best result for the company as soon as possible.

The shortcomings of the current situation during the meeting, the new situation, the convenience, the negative side of the software used. Everyone asked the participants to support the process and the purpose of the meeting was complete. It was then time to invite the ERP company to start the process.

The software was installed and the training process started. Integrations were created and new processes were established with separate participation of the departments. Everything went well in sight. All the employees had taken the directives and it appeared that they were doing their job. Nobody showed any sign of dissatisfaction. After 3 months passed, some reports from software developers were pointing to negative situations. Information from the finance department was experiencing delays.

The requested information was not given in time, the entries that needed to be done were not completed in time and the chronic records were constantly entered in the created records. Even simple information was prepared and delivered to the software for weeks. GM assembled a meeting to tackle the situation and asked FM to make a statement on the topic. The description is classic. Unit workers had begun to voice that the old software is more useful in informal meetings, and they defended the new writing. Even though he was aware of the FM situation that could not manage the process properly. The workers acted slowly, the work went on systematically and the FM did not wish to increase resistance by intervention.

GM, in consultation with FM, has reached the following result: He/she did not want to engage in combat with the FM team. GM gave some directives to him. He/she wanted to find out why his subordinates showed resistance. Under this resistance, he wanted to determine whether there was a situation that could directly affect his personal interests, such as fear of failure, not to give up on habits and to spend more labor in the adaptation process, and he wanted him to report the situation.

Similar problems began to emerge in the purchasing department. Since he/she used different software in this department before, he/she started to set new and old benchmarks, and this led to constant conflict with the software group. They were doing it easily in the old software but they could not do it in the software, and the discourse was intense and made an important intervention compulsory. In short, the purchasing department resisted.

GM also held a similar meeting with PM. Acting as if the issues are the same, PM was being stimulated like FM, and various directives were transferred to him. But there was a difference. GM noticed that the PM had taken the lead of this resistance and had channeled his own team in this direction. By making the implication that PM will directly increase their workload, that he/she spent time working on the negative side of the new software and was doing it clearly. Even under normal conditions, some activities carried out by FM would walk through the PM in the new process and this was not really in the interest of the PM. Moreover, this shift in the business division and the workload shifting from the FM to the PM have caused serious conflicts between the two units, and these two units, which had to work in co-ordination, had almost begun to enter the process on their own.

With regard to the operation side, there was another resistance profile. OM and its team did not use the standard software in the normal situation. They were running a process in the form of manual forms. Many times, they terminated the processes without filling these forms and then filling them backwards and leaving them open in the system. The new software did not give chance this comfort. All transactions had to be recorded via software when they were instant and when needed. OM and the team were not very keen on this issue as integration of new software restricted their activities in full liberty and it would require time to run this software. In addition, the necessity of opening purchase requisitions through the software emerged but the fact that they did not do it in a healthy way also created an atmosphere of conflict between the PM and OM. They also made choices and began to resist. But the resistance on the OM side is cryptic. It had not expressed clearly the utility of the software that is being made, as if it is being defended from the background and the software sabotaged.

5.3. Analysis of case study

GM has analyzed the whole situation and was aware of his attitude. There were organizational problems that could be clearly diagnosed medially. The most important of these is resistance to change. The others were negative conflicts among the groups. The worst of all told all units how important this software is for the organization. However, unit managers and/or subordinates put their personal interests in front of their interests.

GM has worked on identifying resistance sources and what they need to do to combat them. The drawing that emerges in the coming point and schematizes the conflict situation is shown in Figure 1 .

case study on conflict of interest in organization

Figure 1.

Conflict situation of XYZ Engineering Inc.

FM and PM are in conflict because of the shift in workload. OM and PM are in conflict due to the same reason. This situation is a conflict of interest originating from intentions and it is following a competitive course among the managers. There is no strong conflict among OM and FM. In addition to these, they are criticizing the new software by highlighting the past software in order not to disturb FM and PM habits. OM wants to maintain the comfort of the old software. Also, in FM employees, by not learning the new software, there is also a sense of insecurity to themselves that arises from failure.

By acting as an example, the answers of the study questions are as follows.

A1: People usually tend to protect and bring their own personal interests into the forefront [ 21 ]. Self-interests get ahead of the interests of the organization. The interest appraisal has been conducted by PM, FM and OM and they have not considered the GM’s share of the software’s interest in the organization’s interest.

A2: Self-interests have become conflicts between individuals or groups. The result of the evaluation of interest between FM and PM and OM and PM has come to an end.

A3: Recardo characterized overt and covert forms of resistance to change [ 27 ]. If the individuals making the valuation of interest show resistance to change, resistance to change can manifest itself in open or implicit forms. In the case of the example, when PM acts in open resistance, OM shows implicit resistance because the PM is actually reacting to a workload not on the decline. This situation can be made explicit because it is seen as an injustice to her/him. However, OM will have to work harder by losing his/her comfortable position. He/she does not want to react by expressing it in terms of the moral dimension of work.

A4: Smollan emphasized the importance of communication [ 28 ]. Persons have potential resistance through communication that can be broken but since the sample event is at the beginning of the change process, it will not be very accurate to comment on this issue. Continuity of communication can solve this situation. The other source of insecurity and distrust of the past can be removed from this point.

6. Conclusion

Change for organizations is a necessity. Today’s businesses are aware of the need to keep up with the environmental changes and change demands. If the change process is not handled properly in the business, it will bring major problems with it. Every change will absolutely and definitely face resistance: sometimes at the beginning, sometimes in the middle and sometimes in the last period, but the resistance must be handled and managed properly throughout the entire process. Determination of the functions that constitute the resistance of change the approach to the issue of the problem to be done in this direction, will facilitate the solution of the issue. People show resistance for different reasons in case of change. This study is intended to reveal elements that create a potentially resilient potential, in particular protecting personal interests. During the course of the case study, different situations were encountered, and based on conflict of interest, they found their place in this study.

As it is seen and confirmed in the case study, people carry their own personal interests unfortunately in front of their organizational interests. This situation can be thought of as a reflection of professional life as well as lack of organizational commitment or organizational citizenship feelings. Businesses may take some measures to prevent employees from engaging in conflicts of interest. First of all, institutional citizenship may have a potential to overcome this situation. In addition, by establishing a more self-sacrificing culture within the organization, motivation for the people’s support for organizational interests rather than their own interests can be provided. People can be encouraged to make their own internal evaluations in this respect by questioning the moral and ethical aspects of the situation; in this respect, individuals can reach more objective perspectives when evaluating their interests.

When we look at the individuals in the business, it seems that such conflicts and false positioning are more common where the ability to make objective assessments is not very strong. Along with false positioning, more ego and ultimately more interest demands are being encountered. Such mentality sets out a competitive intention in order to protect their interests naturally and is creating resistance to this process of change.

In particular, the case study, which reveals a reflection of the conflict of interest that is valued as a consequence of the functions of exchange resistance and as a consequence thereof, reflects the relationship between resistance and conflict of interest. In the further study point, by performing field studies in which both variables can be measured and analyzed, sample findings can be supported and/or new findings can be developed. Researchers should look over and observe other events in different companies and sectors (textile, food or chemistry, etc.). Thus, the amount of case studies will increase. Moreover, the scale of “conflict of interest” and its use for qualitative studies should develop.

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  • v.31(4); 2020 Nov

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Conflicts of Interest and An Approach to Managing Them

Nilda e. fink.

1 PROES Program, Biochemical Foundation of Argentina

2 On behalf of the IFCC Task Force on Ethics (TF-E)

Conflicts of interest (COI) exist in every step of life, including in medicine and science. Professionals who work in different areas of Health systems, such as physicians in care patient, in pharmaceutical and biomedical devices industries, in management positions, in teaching or in research, all must apply rigid ethical principles.

It is possible with these actions that COI were detected in several circumstances such as in the prescribing therapy, in production or employment of technology in services of Health system, in article publications, and in decision-making for those who have decided to occupy positions of responsibility in scientific and healthcare institutions, in industry or professional associations, among others. These actions must be consistent with the essential principles of Bioethics.

At present, COI disclosure has been irreversibly installed in Medicine. A detailed description of the classification of conflicts of interest and its ethical and legal implications in the practice of health sciences such as those that appear in the practice of clinical and laboratory medicine, pharmaceutical industry and also, research and publications are included. Final considerations on the management of COI are also included.

Conflicts of interest (COI) exist in every step of life and in every corner of society, including medicine and science ( 1 , 2 ). Professionals who work in different areas of Health systems, such as physicians in patient care, in pharmaceutical and biomedical devices industries, in management positions, in teaching or in research, must apply rigid principles even if their main objective is not to produce new knowledge as researchers are interested in. It is possible with these actions that COI were detected in several circumstances such as in the act of prescribing a therapy ( 3 ), in production or employment of technology in services of Health system, in article publications, and in decision-making for those who have decided to occupy positions of responsibility in scientific and healthcare institutions, in industry or professional associations ( 4- 6 ) among others. These actions must be consistent with the essential principles of Bioethics in the field of Health that are implicit in documents and fundamental principles such as those arising from the Helsinki declaration, the Belmont report and others ( 7-10 ). This is extended to modern and serious societies where justice and social ethics require absolute transparency in decision-making involving third parties ( 11 ).

When the term COI is analyzed in a search database such as Pubmed ( 12 ), it appears registered – as part of the title – between 1962 and 2018 there are 1,288 registered articles, with a sustained increase. It was noted though that it obtained more relevance in the field of medicine from the 80s. This shows that COI consideration has been irreversibly installed. In this article several aspects pertaining to conflict of interest, in terms of its definition, classification, applications, management and other challenges are described.


Sometimes the term is used unclearly or used as a prejudice that leads to anticipated moral condemnation. It is necessary to have a more flexible look since the presence of a conflict of interest is a situation that appears frequently and sometimes it is not possible to avoid that other people were involved. Therefore, biased conclusions can be drawn to qualify a behavior as reprehensible when in facts it is not. So it is essential to review and adjust its meaning. According to the Thompson definition ( 13 ), COI “is a set of conditions in which professional judgment concerning a primary interest tends to be unduly influenced by a secondary interest.” It can also be defined as a situation where a judgment or action that should be determined by a primary value established for professional or ethical reasons (protection of research subjects, production of safe knowledge, adequate assistance to the patient), may be influenced or appear skewed to obtain a secondary benefit.

For example, a person in a high professional position is in a COI when the decision he/she has to take may affect his/her personal interests, of an economic or professional nature, as his/her decision could attract benefit or harm to those interests. For a better understanding of the nature of personal interests, Table 1 enumerates an ordered description of different types of factors involved besides own interests (relatives, affective and professional relations).

Classification of personal interests

The term conflict of interest is a moral concept that means a challenge to the behavior of those who have an obligation or a duty that collides with a personal interest Such interest can therefore distort a judgment in an irrational or unacceptable way, thus creating a mantle of suspicion if justice has been damaged ( 11 , 13 ). In other words, it is the person’s actions in the context of a particular situation that may be a cause for concern ( 14 ).

Accordingly, the ethical dilemma that the presentation of a COI entails has more to do on how to proceed and resolve the conflict since the appearance of a COI does not imply by itself reprehensible conduct or taking a reprehensible position by the professional involved. The challenge is the management and resolution of the dilemma ( Figure 1 ).

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Scheme for decision making to solve dilemmas


At this point it is convenient to start by asking ourselves what we are talking about in professional terms or in a colloquial environment when we say COI since it is possible to give it a meaning that is not appropriate. A particular situation may arise when there is a dispute over “conflicting interests” between two or more persons or entities, for example in a fight between two or more manufacturers when a contract is in dispute. In this case, the genesis of the conflict may appear if the institutional evaluator who must give his opinion on proposals quality has held a position in one of the companies that aspires to obtain the contract.

There would be a real conflict of interest due to the hypothetical possibility that this evaluator could make a biased opinion that unjustifiably benefits one of the companies. Different situations can occur such as receiving important gifts as an exchange for those benefits or receiving a hidden payment, for example to favor one of the companies, thus criminal figures of bribery is produced. Another possibility of conflict for a professional who works as chief staff in an industry or in a public administration department who could have a “conflict of duties”. As an example this could appear when an employee requests to be absent in his/her labor by a non-contemplated statutory cause, although important from personal point of view, which may be understandable within the framework of a labor relationship. That person, exercising his/her work with professionalism, must decide between the obligation to respond to their superiors who trust on his/her actions to allow, only for valid reasons, the withdrawal of a person. On the other hand, to consider that the reason for the request is not appropriate although understandable from other points of view ( 14 ).

Another condition that is in fact a conflict of interest appears when a health professional gives preferential treatment to a family member on a waiting list. A different situation that can generate conceptual confusion occurs when a physician is under the effect of an emotional involvement with a patient and does not handle the situation with sufficient professional distance, which can lead to failures associated with a loss of objectivity. These arguments have led to the existence of codes of ethics that specifically prohibit medical professionals, especially in the field of psychiatry, to engage in personal relationships with patients. Table 2 summarizes these concepts and in Table 3 detailed types of secondary interests are described.

Decision-making conflicts in Medicine

Categories of secondary interests


Since 1978 when the Belmont report ( 10 ) was produced, basic fundamental principles of justice, autonomy and beneficence/non-maleficence support, among other aspects, the decision-making on patients’ own body. This position completely relegated the paternalistic model of physician-patients relationships. Nevertheless, some very unprotected and needy sectors request assistance, fully trusting on suitability and integrity of physicians without perceiving that they may be in a disadvantageous situation in which COIs could occurs. Harmful decisions can be made, biased towards defenseless people, so these COIs must be treated more rigorously than in other settings in medical fields.

In relation to COI in medical research, it is well known that there are research studies where results have been reported in a biased way as a consequence of COI, these effects may prove harmful and may be reversed only after a considerably long time. In relation to teaching and in recommendations elaboration, deviations can occur due to COI that installs concepts that late rare transferred for years to clinical practice and that persist over time. Likewise, there are doubts in society about the integrity of health professionals who lose credibility in front of public opinion. This loss of credibility is due to the mantle of doubt that is installed before the eyes of patients who may consider that gifts, invitations or other types of benefits can affect their health and finally, their lives. It is difficult to prevent all negative effects of COI as Chren et al mentioned ( 15 ) “preserving justice, the trusteeship relationship with our patients, and our own altruism are regulative ideals — that is, standards not always achievable by all of us, but useful templates ‘against which all efforts can be measured.”

From a legal point of view, the responsibility for the administration done by anybody who acts for or on behalf of another person has limits on his/her autonomy and freedom as there is a more powerful party entrusted to protect interests of a less powerful party. This could be similar to physician/patient relationship so any possibility of COI should be avoided to preserve the interests of the protected part. In order to regulate health care professionals, specific codes for various professionals have been approved. These codes for example prohibit members of a health care professional for practicing the profession if they are in a COI or in a professional misconduct ( 16 ).

Many professions have their own COI legal documents. These documents were composed quite some years ago, but for medicine it was not until about 40 years ago that legal bodies were incorporated. Many medical organizations and journals were concerned about interactions between the industry and the medical profession and have introduced requirements for authors to disclose any financial interest they have in a study ( 16 ) Moreover, different types of articles written by authors with a financial interest were rejected. For example a very complete and excellent disclosure form was approved by American Association of Clinical Chemistry (AACC) ( 17 ).

In the 1990s, many Colleges and Associations of Physicians from several countries outlined in position papers how to deal with relations between physicians and the industry, and it was acknowledged that not only real bias but also perceived bias should be avoided ( 18 ). Moreover, gifts or subsidies from industry “ought not to be accepted if acceptance might influence or appear to others to influence the objectivity of clinical judgment”. Also detailed recommendations on gifts and subsidies can be found in an opinion of the Council on Ethical and Judicial Affairs, which the American Medical Association (AMA) incorporated into its Code of Medical Ethics ( 18 , 19 ). Sections on continuing education, research, clinical evaluation and surveillance studies were included, nonetheless, it was remarked that the main focus on patient care must be included. The guidelines do not forbidden research and education sponsoring by industry but only under regulated nature of manufacturers’ and physicians’ alliances. In relation to this, conference and courses organizers must have under control the content of events and no reference for endorsement of a sponsor’s product should be done. As regards to industry gifts, some associations guidelines are stricter. Furthermore, health professionals are discouraged from investing in companies where commercial success could be affected by practices of the professional. Criticism has frequently emerged and proposal for improvement have been sought ( 16 ).

In 2012, the International Federation of Clinical Chemistry (IFCC) approved a statement for all members integrating its structure at different levels that they are required to read this policy and sign the disclosure statement ( 20 ). As part of the statement definition, conditions for participant’s exclusion, examples of potential COI and disclosure statement were included. At the same time also a statement for Ethics publication was also approved. Also Council of International Medical Societies (CIOMS) in its Ethical Guidelines for clinical research in COI guideline 25 dedicated to researchers, research institutions and research ethics committee mention, as an important topic for disclosure, requirements for education and highlight recommendations on disclosure to research ethics committees and to participants ( 21 ).

The World Medical Association produced a statement on conflict of interest ( 22 ) with recommendations for research, needs in education and also items for health organization and Institution conflicts were included. Two other aspects of interest for laboratory medicine are included. One is related to self-referrals and fee-splitting as a point to keep in consideration and expresses that “all referrals and prescriptions (whether for specific goods or services) should be based on an objective assessment of the quality of the service or of the physician to whom the patient has been referred. Referral by physicians to health care facilities (such as laboratories) where they do not engage in professional activities but in which they have a financial interest is called self-referral. This practice has the potential to significantly influence clinical decision-making and is not generally considered acceptable unless there is a need in that particular community for the facility and other ownership is not a possibility (for example, in small rural communities)”. Also mentions that “kickbacks (or fee-splitting) occur when a physician receives financial benefit for referring a patient to a specific practitioner or for a specific service for which a fee is charged. This practice is not acceptable”. Second important point considers for “patient convenience, occurs if many physician offices are located in close geographic proximity to other medical services such as laboratories. The physician should not receive any financial compensation or other consideration either for referring a patient to these services, or for being located in close geographical proximity to them” ( 22 ).

Some authors have researched the extent to which physicians interact with industry. Considering this goal there are many different types of articles published from 70s up to now referred to COI, industry and medical specialties and organizations in which frequency, relevance and implications of gifts from companies to researchers and others members in academic life, such as scientists, and found that these studies indicate that interactions are common and in various forms. Unfortunately studies have shown these interactions influence physicians and medical researchers for example on prescribing patterns ( 23 ), and the outcome of research studies to support a product. These findings did not show something unexpected and are in parallel with the budget spent for products promotion. Even taking into account these finding, many physicians consider that they are not likely to be influenced by their interactions with industry.

In relation to publication ethics, focus on duplicate publication, inappropriate authorship, fabrication of data, plagiarism, and conflict of interest (COI) is paramount. The issue of COI is an important problem for medical journals. Relevant documents related to COI definition and disclosure include the COI Disclosure Form are those done by the International Committee of Medical Journal Editors (ICMJE) ( 24 ) and flowcharts by the Committee on Publication Ethics (COPE) dealing with the omission of essential COI notes in research publications ( 25 ), which provide advice for publishers and editors.


As was mentioned earlier there are conflicts of interest in every aspect of human activity, including medicine and science. The moral problem arising when the influence of a secondary interest that can threaten the ethics of a professional decision is accepted as natural. A conflict of interest could be an inducement or temptation that must be distinguished from its acceptance. However, there are situations that are consciously ignored. Awareness, acknowledgement of COI and evaluation of the influence of secondary interests are important in these situations. As such, focus must be directed to recognize and manage COI appropriately. The ethical management of COIs by institutions must be carried out through explicit regulations with corporative supervision through their governing bodies or by special committees. The types of conflict and the potential for real or perceived damage can be approached by different strategies and they are: disclosure, hierarchical steps of review and authorization, and prohibition ( Figure 2 ) ( 16 ).

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Strategy for an approach to management of conflicts of interest

The main action to solve a conflict of interest is its disclosure. Transparency by public declaration is considered as the golden rule. It is morally very healthy to highlight the secondary interests that could affect the rigor of professional judgment because it implies to show potential bias intentionally desired to be prevented by offering their exposure openly. To judge whether one is in a conflict of interest, it can be revealing to ask a recommended question in relation to how comfortable patients and others people are about his/her interest in the matter under discussion and in function of answers.

Review and authorization

By means of laws and regulations, formal review systems were introduced to control conflict of interest additional to disclosure as is the case of medical research. Research ethics boards have a duty to determine, among other items, whether conflicts of interests are affecting clinical trials and the health care of patients participating in trials. Members of review boards should themselves not be in a conflict of interest. Universities have systems of authorization and reception of financial interests from researchers to the university administration and that could verify if the required conditions are achieved ( 16 ).


But disclosure and review and authorization are not always enough and adequate. Some conflicts of interest may so deeply affect trust that they have to be forbidden ( 16 ). The policies of some entities disapprove of researchers being remunerated over and above reasonable compensation for extra work and in a condition of decrease of other income ( 16 ). The remuneration for merely including research subjects in a clinical trial, should not to be accepted. In that case, the temptation to include subjects without proper informed consent and without respecting selection criteria is huge. The policy further discourages physicians from accepting a fee from industry in exchange for meetings with representatives or for attending promotional activities. The organizers of educational program events are also requested not to be in a potential COI by virtue of any relationship with companies that fund such events. Additionally, to ensure quality of clinical practice guidelines, organizations need to formulate policies related to COI ( 26 ).

In conclusion, it is important to arise awareness for COI acknowledgment to evaluate the influence of secondary interests. In this article we include a detailed description of conflicts of interest classification and its ethical and legal implications in the practice of health sciences such as those that appear in the practice of clinical and laboratory medicine, pharmaceutical industry and also, research and publications. Final considerations on the management of COI are also included.

3 Famous Board Management Conflict of Interest Cases

In the history of modern business, there are many successful and not-so-successful examples of company development. Including quite a few examples of conflicts of interest, which had a significant impact on the further development of the company and its employees. It has already been said much about how dangerous the conflicts of interests are for the work of the company. We would like to bring to your attention several famous conflicts of interest cases that will show in practice how disastrous the consequences of conflicts of interest of various levels and types are.

What can the most famous examples of conflicts of interest tell us?

All known stories of conflicts of interest tend to point to one thing – an inadequate system for resolving conflicts within a company, as well as inconsistency in the practices used with legal norms. Examples include the following cases:

  • BlueCrest Capital Management . Last year, the company was forced to pay more than $50 million in compensation for failing to resolve a conflict of interest in a timely manner. In this case, the conflict arose because of an ill-conceived executive portfolio allocation policy that resulted in losses to outside investors. Although the conflict dates back to 2015, the litigation has not yet ended.
  • CCO . This relatively recent case arose because two executives at a prominent California consulting firm concealed their conflicts of interest while in a management role. The misconduct itself was discovered by the Securities Commission, which initiated litigation on the matter. As a result of the misconduct of the company’s directors, not only its shareholders but also its corporate image suffered.
  • RHB Securities Hong Kong . Also, one of the most striking recent examples, was when the conflict of interests within the company went beyond the company’s boundaries and reached the point of litigation. In this case, an audit of the company’s operations found that its corporate statute did not contain the necessary conflict of interest regulations. As a result, the company was fined more than $6 million by the Securities and Futures Commission.

The abovementioned examples show that even the presence of legal norms, which prescribe to avoid and solve conflicts of interests inside the company promptly, are not always observed by the companies. The interests of a large number of people suffer as a result of such actions.

What are the dangers of directors’ conflict of interest?

The resolution of conflicts of interest requires a particularly careful approach since the consequences of such situations can be unpredictable. In addition to financial losses, corporate conflicts of interest may have other consequences:

  • Loss of a company’s positive image, since both customers and business partners, will not be able to trust a counterparty that ignores legal regulations;
  • Loss of market value of the company – it is quite common to see the company’s shares decline due to conflict of interest proceedings, resulting in losses and loss of value to the entire market;
  • Subsequent reorganization – not all companies are able to maintain the stability of their operations while a conflict of interest is being resolved, which may result in reorganization changes that do not always benefit employees and shareholders.

It is worth remembering that a conflict of interest is easier to prevent than to resolve and deal with the consequences. It is also worth bearing in mind that the internal settlement mechanism should clearly comply with current legal norms.


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Case Study: When Two Leaders on the Senior Team Hate Each Other

  • Boris Groysberg
  • Katherine Connolly Baden

case study on conflict of interest in organization

How should a CEO address friction between his CFO and the sales chief?

In this fictional case, the CEO of a sports apparel manufacturer is faced with an ongoing conflict between two of his top executives. Specifically, the head of sales and the CFO are at each other’s throats and the tension is having a ripple effect on their teams and the rest of the organization. The CEO, who tends to avoid conflict himself, is struggling with how to respond. His options include changing the company compensation scheme to encourage better collaboration, firing the two leaders, getting them each a coach, and doing more team building activities.

The feedback in the 360-degree reviews was supposed to be anonymous. But it was crystal clear who’d made the negative comments in the assessment of one executive.

  • BG Boris Groysberg is a professor of business administration in the Organizational Behavior unit at Harvard Business School and a faculty affiliate at the school’s Race, Gender & Equity Initiative. He is the coauthor, with Colleen Ammerman, of Glass Half-Broken: Shattering the Barriers That Still Hold Women Back at Work (Harvard Business Review Press, 2021). bgroysberg
  • KB Katherine Connolly Baden is a research associate at Harvard Business School.

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Local officials may sit on several bodies with conflicting priorities and constituencies.

A public agency CEO has a side consulting business that may create a conflict of interest.

Ethics case study focused on conflicts of interest and ethnicity in city government and development.

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John Pelissero, director, government ethics, quoted by This is Reno.

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Organizational Conflict of Interest


An Organizational Conflict of Interest (OCOI) may result when factors create an actual or potential conflict of interest on an instant contract, or when the nature of the work to be performed on the instant contract creates an actual or potential conflict of interest on a future acquisition. In the latter case, some restrictions on future activities of the contractor may be required.

Type of OCOIs OCOIs generally involve one of three situations:

  • Unequal access to information: CMU may have an unfair competitive advantage resulting from access to information not generally available to others seeking the same federal funding.
  • Impaired objectivity: At the government’s direction, CMU may be asked to assess performance or evaluate products of someone within CMU or CMU’s direct competitor seeking federal funding.
  • Biased ground rules: A CMU community member may have provided scientific, engineering or technical assistance or written the work requirements for a funding opportunity where someone else at CMU is an applicant.

If one of these situations exists, it means that CMU is potentially unable to render impartial assistance or advice to the Government, CMU’s objectivity in performing the research might be impaired, or CMU may have an unfair competitive advantage. CMU both provides assistance to the U.S. Government and does work on behalf of the U.S. Government, thus OCOIs are sometimes unavoidable.

  • A faculty member in the School of Computer Science provides DARPA with technical direction for the development of a Broad Agency Announcement (BAA). If anyone from CMU submits a proposal pursuant to that DARPA BAA an OCOI may exist because the SCS faculty member could share privileged information about DARPA with the proposer that would give him or her an advantage. There may be exceptions; for example, participating in collective discussion at a workshop related to developing the BAA may not create as much potential for OCOI as advising DARPA as an individual. This potential OCOI may need to be disclosed to DARPA.
  • CMU develops a detailed model plan for the scientific and technical training of staff at the Air Force Research Laboratory. The Laboratory adopts the curriculum and incorporates it into a request for proposal (RFP) to conduct the training. If anyone from CMU responds to the RFP, an OCOI exists and may need to be disclosed or managed.
  • A CMU researcher who does not work with the CMU’s Software Engineering Institute (SEI) collaborates with the SEI on a project for Homeland Security and has access to confidential government information. Another researcher at CMU submits a proposal for funding to Homeland Security related to the same scientific area. Homeland Security may consider this to be an OCOI, and it may need to be disclosed or managed.
  • A CMU researcher serves as a reviewer for NSF. This individual must follow NSF’s conflict of interest guidelines and recuse him/herself from certain proposals. However this activity generally does not create an OC)I for the researcher or his/her CMU colleagues.

CMU has five policies related to Conflicts of Interest in Research:

  • Organizational Conflict of Interest in Research [PDF]
  • Conflict of Interest and Commitment
  • Compliance with Financial Conflict of Interest Requirements
  • Consulting by Faculty 
  • Code of Business Ethics and Conduct

Members of the research community should review these policies and associated guidance so they understand their responsibilities as they pertain to federal requirements and university policy.   These policies set forth CMU's commitment to follow the law and promote the ethical conduct of research. 

Complexity and conflicts of interest statements: a case-study of emails exchanged between Coca-Cola and the principal investigators of the International Study of Childhood Obesity, Lifestyle and the Environment (ISCOLE)

  • Open access
  • Published: 27 November 2017
  • Volume 39 , pages 49–56, ( 2018 )

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  • David Stuckler 1 ,
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Statements on conflicts of interest provide important information for readers of scientific papers. There is now compelling evidence from several fields that papers reporting funding from organizations that have an interest in the results often generate different findings from those that do not report such funding. We describe the findings of an analysis of correspondence between representatives of a major soft drinks company and scientists researching childhood obesity. Although the studies report no influence by the funder, the correspondence describes detailed exchanges on the study design, presentation of results and acknowledgement of funding. This raises important questions about the meaning of standard statements on conflicts of interest.

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In an ideal world, scientific research would be entirely free from bias, with factors such as the source of funding of the authors playing no role in the design of a study, how it is analysed and how the findings are presented. Unfortunately, this is not always the case, and a growing body of work, especially meta-analyses, have shown that the source of funding may be an important determinant of the results, while other research, such as analyses of documents obtained from the tobacco industry, has revealed clear evidence of influence by the funders of research.

This has led scientific journals to require authors to complete statements listing any competing or conflicting interests. A conflict of interest is considered to exist where “professional judgment concerning a primary interest (such as patients’ welfare or the validity of research) may be influenced by a secondary interest (such as financial gain or personal rivalry)” [ 1 ]. Thus, conflict-of-interest statements, which should list funding sources, have come to play a fundamental role in managing potential conflicts in scientific research. Their utility, however, depends on the extent to which they accurately report not just who funded research but what role they played. It is common for studies that acknowledge funding to report that “the funder had no influence on the study”. But what does this actually mean?

Answering this question is not straightforward, for several reasons. First, exchanges between researchers and funders are often hidden from view, making it impossible to ascertain whether there really was no influence and, if there was, what form it took. Conflict-of-interest statements are self-reported and concerns about perceived bias may encourage researchers to downplay the funder’s role. Second, the nature of influence is not always observable. Theories of power differentiate three aspects [ 2 , 3 ]. One is sometimes referred to as “hard power”, where one party instructs another or exerts coercion. This would occur if the funder insisted on changes to study design, for example. Another is “soft power”, where no formal demands are made but one party seeks to please the other. Thus, a researcher may anticipate what the funder would want to see, without being told explicitly, perhaps because of a belief that this would encourage future funding. The third is manipulation, where both parties come to share a set of beliefs about an issue, such as what answers to a problem are or are not acceptable. This is a more radical dimension, more difficult to observe, and involves shaping a party’s cognitions and/or dispositions.

Previous studies have shown that the source of funding, as disclosed in papers, is associated with the findings of research. For example, clinical trials in psychiatry found that those where at least one author reported a financial conflict of interest were 4.9-fold more likely to report positive results than those that did not [ 4 ]. Another meta-analysis of systematic reviews conducted in the field of sugar-sweetened beverages found that those with food industry funding were five times more likely to report no positive association between weight gain and obesity than those not reporting funding [ 5 ]. Another analysis found that industry-funded reviews were more likely to suggest evidence of a causal relation between sugar-sweetened beverages and that the weight gain was weak [ 6 ], and another that industry funding of reviews of research on artificial sweeteners was associated with study findings [ 7 ]. Yet another found that the only studies finding an adverse effect of smoking bans on revenues in the hospitality industry were funded by the tobacco industry [ 8 ]. However, the reasons underlying these correlations with industry sponsorship are unclear.

Here we take advantage of a case-study where we look beneath the surface of disclosure of conflict-of-interest statements to better understand the relationship between an industry sponsor and public health academics. In this case, we focus on researchers in the United States (US), using emails obtained through the Freedom of Information requests (FOI) in the state of Louisiana. In some countries, individuals have a legal right to ask public bodies, which may include public universities, to reveal documentary material that they hold on particular issues. While there are usually many exceptions, such as national security, or personal information, or where finding and retrieving the material would involve excessive cost, a public body receiving such a Freedom of Information request is usually required to disclose the documents, or explain why it is not doing so, within a defined number of days. The title of the pertinent law in the state of Louisiana is the Louisiana Public Records Act (La. R.S. 44:1 et seq.).

Our analysis focuses on a contested area, childhood obesity, where the food industry has a clear interest in the results of scientific research. The food industry has strongly opposed public health interventions such as taxes on sugar-sweetened beverages and emphasizes the importance of physical activity as a solution to obesity, diverting attention from the role of unhealthy diet [ 9 ]. Prominent public health actors, such as the new United States CDC director, have seen Coca-Cola as an ally in the fight against obesity [ 10 ].

Specifically, we investigate the Coca-Cola-funded International Study of Childhood Obesity, Lifestyle and the Environment (ISCOLE), among the largest multi-country studies of factors driving childhood obesity. The ISCOLE began in 2012, when Coca-Cola awarded a $1 million contract to the Pennington Biomedical Research Center to coordinate the project. In total, Coca-Cola invested $6,426,000 in the ISCOLE [ 11 ]. Its primary aim was to determine relationships between lifestyle and childhood obesity across countries; it included 6000 ten-year-old children from 12 countries in five major geographical regions of the world [ 12 ]. At the time of writing, it has produced at least 40 peer-reviewed publications (Supplementary table 1).

Of these 40, 13 were in a supplement to the International Journal of Obesity, which while noting support from Coca Cola, make no mention of whether it was involved in aspects of the study design etc.. Two other papers included a similar statement. Of the remainder, 24 report that “The funder had no role in the design and conduct of the study, the collection, management, analysis and interpretation of the data, or preparation, review and approval of the manuscript” or some close variant making the same point (Box 1 ). One paper could not be retrieved.

Here we assess this statement through an ‘ethnography of emails’ regarding the design, conclusions and publications, as revealed in correspondence between the Principal Investigators of the ISCOLE, Timothy Church and Peter T. Katzmarzyk, of Pennington Biomedical Research Center, in Baton Rouge, and Rhona Applebaum, Vice President and Chief Scientific & Regulatory Officer, in Atlanta, until June 2013 and later Chief Science and Health Officer, of Coca-Cola at the time, and Beate Lloyd, Senior Director, Nutrition Center of Expertise, Scientific and Regulatory Affairs, in Atlanta. The U.S. Right to Know (USRTK,, a consumer and public health group, obtained the emails and documents. This organization conducts wide-ranging investigations into the food and agrichemical industries, examining the health risks of their products, and their public relations, political and lobbying campaigns. Since its founding in 2015, the USRTK (GR) has made a series of public requests to assess potential links between Coca-Cola and public health leaders and academics. For this study, the USRTK sent a state Freedom of Information request, as permitted by the Louisiana Public Records Act, on 19 September 2016 to Louisiana State University, in Baton Rouge seeking emails and other documents exchanged between Professors Church and Katzmarzyk with Coca-Cola or the American Beverage Association. The USRTK received responses from Louisiana State University in batches between 23 September and 14 October 2016.

This analysis shows the complexity of the nature of influence itself, and raises the question of whether existing statements fully capture any influence exerted via “soft power”. If they fail to capture this complexity, does this failure invalidate statements such as that used by the ISCOLE in its papers?

Coca-Cola’s influence on study design

The emails suggest that the researchers did consult and include Coca-Cola representatives in making strategic decisions about study design. In the early stages of planning the study, for example, the parties debated which and how many countries are to be included. Applebaum emailed Katzmarzyk on 26 March 2012 saying: “Ok—so with Russia and Finland we are at 13? Or no Finland and at 12. Seriously–our CEO hates the #13” (Appendix 1 in supplementary material; please see ). She continued, “Serious about this 13 business. We have no FL [floor?] 13 at Coke”. Applebaum asked Katzmarzyk: “What other country should we look at?”, to which he responded, “We should talk about Russia as well—do you have contacts there already?” (Appendix 1 in supplementary material). Applebaum offered a suggestion to Church (in which he copied Katzmarzyk) about adding two more countries, but replies suggest that the researchers were willing to accept her proposals. The reference to the number 13 should be interpreted in light of the widespread view, in many western countries, that this number is unlucky. Katzmarzyk wrote to Applebaum and Church: “We can work out a more detailed budget if this is something you would want to pursue” (Appendix 2 in supplementary material).

This seeming deference by the researchers to Coca-Cola is apparent in subsequent exchanges. Katzmarzyk briefed Applebaum on the potential exclusion of Mexico, noting that it was failing to achieve its study milestones, and presented options for other countries. He solicited Applebaum’s views on how to proceed, saying to her: “Please let us know your thoughts” (Appendix 3 in supplementary material).

Other comments reinforce this apparent willingness by the researchers to please their funders. For example, Timothy Church of Pennington Biomedical Research Center wrote to Beate Lloyd (Senior Director of Nutrition) on 11 July 2013: “we are grateful for the funding and we value our relationship with the TCCC [The Coca-Cola Company]. It is very important to me to have a plan that TCCC is happy with moving forward” (Appendix 4 in supplementary material).

In the published protocol for the ISCOLE, no rationale was given for selecting these particular countries other than to have a wide geographical distribution [ 12 ].

Coke’s influence on study progress and publication

The ISCOLE PIs at Pennington kept Coca-Cola informed of their progress and sought to arrange meetings linked to project milestones at Coca-Cola’s offices. They seemed particularly keen to ensure maximum publicity for their findings, itself entirely natural, but in close collaboration with their funder Coca-Cola. Thus, Church and Katzmarzyk wrote to Applebaum in July 2012 updating them on the ISCOLE’s progress: “Tim and I were talking—we would like to come over to Atlanta for a day to meet with you all—to discuss the media strategy and develop key talking points on our partnership” (Appendix 4 in supplementary material).

Frequent contact between PIs and Coca-Cola create an impression that Coca-Cola played a role in shaping research presentations. For example, Katzmarzyk wrote to Applebaum and Church on 19 July 19 2012 about an upcoming presentation, “Okay, I have drafted an abstract and an agenda for the symposium. Comments and edits welcome. PK” (Appendix 5 in supplementary material).

Despite these interactions, there seemed to be a clear desire among the Pennington PIs to avoid potential public perception that Coca-Cola had influenced the study. For example, Katzymark noted to Applebaum and Church on 7 May 2014 after his presentation, “See below I just got the evaluation form (sic) my TOS [The Obesity Society] presentation last fall: 99% of the 97 people who responded said the presentation was free of commercial bias!!!”.

But 5% said that I didn’t present faculty disclosures—which is BS [bullshit—a derogatory term meaning “rubbish”]- I just checked my slide deck and I presented this at both the beginning and end. Some people may have been asleep” (Appendix 6 in supplementary material).

The PIs also seem to have felt the need to have Coca-Cola approve their media strategy. For example, Katzmarzyk asked Applebaum and Church whether it would be acceptable to share the ISCOLE slides with a USA Today reporter: “Okay for me to share my slides with Nanci Hellmich?” A short discussion ensued, then Applebaum apparently gave her blessings: “It will be great!” (Appendix 7 in supplementary material).

It is clear that Applebaum did review publications and, at times, stated opinions. In one instance, Applebaum replied to other Coca-Cola representatives, “Hi I’m not comfortable saying this is a study about obesity prevention. Would need to get approval from the researchers” (Appendix 5 in supplementary material).

Coca-Cola’s influence on study acknowledgement

Coca-Cola maintained contractual control over the study’s conflict-of-interest statements. Quoting the study agreement, “PBRC agrees that if Sponsor so requests, and only if Sponsor requests, substantive releases and/or written reports contemplated by this Article 6 may include language to the effect that ‘The Study was funded by Coca-Cola.’” (Appendix 8 in supplementary material).

Applebaum exercised this influence, by specifying the desired conflict-of-interest statement. Katzmarzyk wrote to Applebaum, on 18 January 2013, “Yes, in the acknowledgements section—where this is typically done, we have the language inserted that you wanted (I think) from our meeting with your group in Atlanta: ‘ISCOLE is funded by the Coca-Cola Company. The funder had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.’” (Appendix 9 in supplementary material) Applebaum wrote to the ISCOLE researchers on 4 August 2015 “I’m proud to say was supported by The Coca-Cola Company–and that’s it–support only” (Appendix 10 in supplementary material).

Overall, Coca-Cola seemed to be pleased with the ISCOLE. When the journal Obesity published a paper, entitled “Relationship between lifestyle behaviours and obesity in children aged 9–11: Results from a 12-country study” in August 2015. The article concluded that “behavioural risk factors are important correlates of obesity in children, including low MVPA (moderate to vigorous physical activity), short sleep duration and high TV viewing”. Rhona Applebaum wrote, “A very happy day!!…Love the tagline, ‘Global study is first of its kind to survey children across different cultures.’”(Appendix 10 in supplementary material).


Overall, apart from influencing the total number of study sites, we found no evidence of Coca-Cola exerting ‘hard power’ over the Pennington PIs, where the funder directly changes core methodological principles or points in the research. However, the email exchanges appear to convey evidence of Coca-Cola’s exercise of ‘soft power’, whereby the researchers consistently sought to ensure the funders were satisfied and sought their guidance on choices of study design, framing and public presentation of study findings. It is not possible, using documentary analysis, to identify the third face of power, manipulation, although this should be addressed in future research. That would, most likely, require empirical research by psychologists.

As with all papers based on Freedom of Information requests, our approach had several limitations. First, our analysis examines one major grant between Coca-Cola and the PIs. It is not possible to generalize from this analysis to all conflicts of interest or even other disclosures on Coca-Cola-funded research. Previous investigations into recent Coca-Cola-funded research, however, produce similar findings, including apparent efforts to influence research, suggesting that it may be part of a broader strategy [ 13 ]. Second, much of the analysis here draws on what was supplied by Louisiana State University and this may be an incomplete sample of all relevant material. In response to our FOI request on 6 October 2016, an administrator at the University responded thus: “Our information technology system migrated to a new email platform in May 2015. From the point of the migration forward, any emails that were transferred, written, received or deleted are available and readily accessible in current email stores. The file transfer included contains emails that are available and readily. Any emails either archived or deleted prior to the system migration are not readily accessible and would only be attainable through a recovery process… Delivery of any resulting data (of which there may be none) entails a process that could take several weeks to complete, is dependent upon a successful backup tape restore, and such a process would be “unreasonably burdensome or expensive”. To access this material would be expensive and time-consuming for Louisiana State University and could require costly and prolonged legal action by us to exact compliance. That also means that the analysis reported here, while it advances knowledge beyond previous studies of conflicts of interest by looking ‘beneath the surface’ at the process of research and collaboration, is nonetheless incomplete. More generally, further efforts are needed to strengthen and ensure the integrity of FOI laws as a mechanism for transparency.

The use of the FOI laws is also a double-edged sword. The strategy has proven useful in exposing wrongdoing in the tobacco, agrichemical, and pharmaceutical industries. However, corporations may also use FOI requests to influence and stymie the activities at public institutions. Researchers and funders who fear that every detail of their correspondence could be made public might be pushed to be more secretive in their exchanges, making it more difficult in the future to bring any wrongdoing into the light.

Given what we have shown, we are left with one important question. Is the ISCOLE’s statement, “The study sponsor has no role in study design, data collection, analysis, conclusions or publications”, accurate?

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Funding: DS is funded by a European Research Council Grant: 313590-HRES. DS is also funded by the Wellcome Trust. GR is funded by the non-profit organization, The U.S. Right to Know, whose major donors are the Organic Consumers Association ($479,500), Dr. Bronner’s Family Foundation ($133,000), the CrossFit Foundation ($50,000), Panta Rhea Foundation ($20,000) and the Westreich Foundation ($17,500).

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Stuckler, D., Ruskin, G. & McKee, M. Complexity and conflicts of interest statements: a case-study of emails exchanged between Coca-Cola and the principal investigators of the International Study of Childhood Obesity, Lifestyle and the Environment (ISCOLE). J Public Health Pol 39 , 49–56 (2018).

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Conflict of Interest Explained: Types and Examples

case study on conflict of interest in organization

What Is a Conflict of Interest?

A conflict of interest occurs when an entity or individual becomes unreliable because of a clash between personal (or self-serving) interests and professional duties or responsibilities. Such a conflict occurs when a company or person has a vested interest —such as money, status, knowledge, relationships, or reputation—which puts into question whether their actions, judgment, or decision-making can be unbiased.

Some examples of a conflict of interest could be:

  • Representing a family member in court
  • Starting a business that competes with your full-time employer
  • Advising a client to invest in a company owned by your spouse
  • Hiring an unqualified relative or friend

When such a situation arises, the party with the conflict of interest is usually asked to remove themselves, and it is often legally required of them.

Key Takeaways

  • A conflict of interest occurs when a person's or entity's vested interests raise a question of whether their actions, judgment, and/or decision-making can be unbiased.
  • In business, a conflict of interest arises when a person chooses personal gain over duties to their employer, or to an organization in which they are a stakeholder, or exploits their position for personal gain in some way.
  • Conflicts of interest often have legal ramifications.

Investopedia / Yurle Villegas

Understanding Conflict of Interest

A conflict of interest in business normally refers to a situation in which an individual's personal interests conflict with the professional interests owed to their employer or the company in which they are invested. A conflict of interest arises when a person chooses personal gain over the duties to an organization in which they are a stakeholder or exploits their position for personal gain in some way.

All corporate board members have fiduciary duties and a duty of loyalty to the corporations they oversee. If one of the directors chooses to take action that benefits them at the detriment of the firm, they are harming the company with a conflict of interest.

One example might be the board member of a property insurance company who votes on the induction of lower premiums for companies with fleet vehicles—when they, in fact, own a truck company. Even if the institution of lower premiums isn't a bad business move for the insurer, it could still be considered a conflict of interest because the board member has a special interest in the outcome.

In legal circles, representation by a lawyer or party with a vested interest in the outcome of the trial would be considered a conflict of interest, and the representation would not be allowed. Additionally, judges who have a relationship with one of the parties involved in a case or lawsuit will recuse themselves from presiding over the case.

Special Considerations

A conflict of interest may lead to legal ramifications as well as job loss. However, if there is a perceived conflict of interest and the person has not yet acted maliciously, it's possible to remove that person from the situation or decision in which a possible conflict of interest can arise. Using the prior example of a board member who owns a truck company, they could simply remove themselves from all decisions that could positively or negatively affect their personal business.

Common Types of Conflicts of Interest

Self-dealing is the most common type of conflict of interest in the business world. It occurs when a management-level professional accepts a transaction from another organization that benefits the manager and harms the company or the company's clients.

Gift issuance is also a very common conflict of interest. It happens when a corporate manager or officer accepts a gift from a client or a similar type of person. Companies normally circumvent this issue by prohibiting gifts from customers to individual employees.

Troublesome situations may also arise when, in the course of professional duties, an individual collects confidential information. Any information of this type used for personal gain by an employee is a huge conflict of interest, at least in the United States. The financial industry constantly grapples with this type of conflict of interest in the form of insider trading .

Finally, the hiring of, or showing favorable workplace treatment to, a relative or spouse—known as nepotism—can result in a potential conflict of interest.

A financial advisor who knowingly advises clients to purchase financial products which are not in their best interests (too expensive, too risky, or not in line with stated goals), but which earn the advisor a bigger commission, would be guilty of conflict of interest.

Real-World Example of Conflict of Interest

In the financial industry, an agency problem refers to a type of conflict of interest where agents don't fully represent the best interests of their principals. The Enron scandal is an extreme example of an agency problem that led to the collapse of what was at the time one of the largest companies in the United States.

In 2001, Enron Corporation declared bankruptcy after it was revealed that the top leaders in the company had used mark-to-market accounting and special purpose vehicles (SPVs) to hide financial losses. This made the company appear more profitable than it really was.

While Enron's executives had a legal responsibility to protect the interests of its shareholders, some executives instead engaged in illegal activities to camouflage the company's massive losses and debts. Share prices dropped from over $90 a share to under $1 a share. Several executives were indicted for their actions and eventually sent to prison.

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Joint Committee of Taxation. " Report of Investigation of Enron Corporation and Related Entities Regarding Federal Tax and Compensation Issues, and Policy Recommendations: Volume 1 Report ," Page 77.

U.S. Securities and Exchange Commission. " Spotlight on: Enron ."

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Appendix A: Case Studies

List of case studies, case study 1: handling roommate conflicts, case study 2: salary negotiation at college corp, case study 3: oecollaboration, case study 4: the ohio connection, case study 5: uber pays the price, case study 6: diverse teams hold court.

Chapter Reference: Section 2.2 Approaches to Conflict

Whether you have a roommate by choice, by necessity, or through the random selection process of your school’s housing office, it’s important to be able to get along with the person who shares your living space. While having a roommate offers many benefits such as making a new friend, having someone to experience a new situation like college life with, and having someone to split the cost on your own with, there are also challenges. Some common roommate conflicts involve neatness, noise, having guests, sharing possessions, value conflicts, money conflicts, and personality conflicts (Ball State University, 2001). Read the following scenarios and answer the following questions for each one:

  • Which conflict management style, from the five discussed, would you use in this situation?
  • What are the potential strengths of using this style?
  • What are the potential weaknesses of using this style?

Scenario 1: Neatness. Your college dorm has bunk beds, and your roommate takes a lot of time making their bed (the bottom bunk) each morning. They have told you that they don’t want anyone sitting on or sleeping in the bed when they are not in the room. While your roommate is away for the weekend, your friend comes to visit and sits on the bottom bunk bed. You tell your friend what your roommate said, and you try to fix the bed back before your roommate returns to the dorm. When they return, your roommate notices that the bed has been disturbed and confronts you about it.

Scenario 2: Noise and having guests. Your roommate has a job waiting tables and gets home around midnight on Thursday nights. They often brings a couple friends from work home with them. They watch television, listen to music, or play video games and talk and laugh. You have an 8 a.m. class on Friday mornings and are usually asleep when they returns. Last Friday, you talked to your roommate and asked them to keep it down in the future. Tonight, their noise has woken you up and you can’t get back to sleep.

Scenario 3: Sharing possessions. When you go out to eat, you often bring back leftovers to have for lunch the next day during your short break between classes. You didn’t have time to eat breakfast, and you’re really excited about having your leftover pizza for lunch until you get home and see your roommate sitting on the couch eating the last slice.

Scenario 4: Money conflicts. Your roommate got mono and missed two weeks of work last month. Since they have a steady job and you have some savings, you cover their portion of the rent and agree that they will pay your portion next month. The next month comes around and your roommate informs you that they only have enough to pay their half of the rent.

Scenario 5: Value and personality conflicts. You like to go out to clubs and parties and have friends over, but your roommate is much more of an introvert. You’ve tried to get them to come out with you or join the party at your place, but they’d rather study. One day your roommate tells you that they want to break the lease so they can move out early to live with one of their friends. You both signed the lease, so you have to agree or they can’t do it. If you break the lease, you automatically lose your portion of the security deposit

Works Adapted

“ Conflict and Interpersonal Communication ” in Communication in the Real World  by University of Minnesota is licensed under a  Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

Ball State University. (2001). Roommate conflicts. accessed June 16, 2001, from

Chapter Reference:  Section 2.4 Negotiation

Janine just graduated college, she’s ready to head out on her own and get that first job, and she’s through her first interviews. She receives an offer of a $28,000 salary, including benefits from COLLEGE CORP, from an entry-level marketing position that seems like a perfect fit. She is thrown off by the salary they are offering and knows that it is lower than what she was hoping for. Instead of panicking, she takes the advice of her mentor and does a little research to know what the market range for the salary is for her area. She feels better after doing this, knowing that she was correct and the offer is low compared to the market rate. After understanding more about the offer and the rates, she goes back to the HR representative and asks for her preferred rate of $32,500, knowing the minimum that she would accept is $30,000. Instead of going in for her lowest amount, she started higher to be open to negotiations with the company. She also sent a note regarding her expertise that warranted why she asked for that salary. To her happy surprise, the company counter offered at $31,000—and she accepted.

  • What key points of Janice’s negotiation led to her success?
  • What could have Janice done better to get a better outcome for her salary?

“ Conflict and Negotiations ” in Organizational Behaviour by OpenStax is licensed under a Creative Commons Attribution 4.0 International License .

“Good & Bad Salary Negotiations,” , April 19, 2018, .

Herner, M. (n.d). 5 things HR wishes you knew about salary negotiation., accessed October 21, 2018, .

Chapter Reference:  Section 3.2 Creating, Maintaining, and Changing Culture

At OECollaboration, a technology company that develops virtual collaboration software for new companies, Mike Jones is a new manager. One of the biggest challenges he has faced is that the team that he is managing is well established and because he is an outsider, the team members haven’t yet developed trust in him.

Two weeks into his new employment, Mike held a meeting and discussed all of the changes to the remote work agreements as well as implementing new meeting requirements for each employee to have a biweekly meeting scheduled with him to discuss their projects. The team was outraged, they were not excited, and the following days he wasn’t greeted in a friendly way; in addition, his team seemed less engaged when asked to participate in team functions.

Tracy James is also a new manager at OECollaboration who started at the same time as Mike, in a similar situation where she is a new manager of an existing team. Tracy was able to hold a meeting the first day on the job to listen to her team and get to know them. During this meeting she also told the team about herself and her past experiences. Additionally, she held one-on-one meetings to listen to each of her team members to discuss what they were working on and their career goals. After observation and discussion with upper management, she aligned her own team goals closely with the skills and experiences of her new team. She met with the whole team to make changes to a few policies, explaining why they were being changed, and set the strategy for the team moving forward.

Because she got her team involved and learned about them before implementing her new strategy, this was well received. Her team still had questions and concerns, but they felt like they could trust her and that they were included in the changes that were being made.

  • What challenges can a new manager encounter when starting to manage an existing team?
  • What strategies can a new manager implement to ensure that their new team is engaged with them and open to change and growth?

Adapted Works

“ Organizational Power and Politics ” in Organizational Behaviour by OpenStax is licensed under a Creative Commons Attribution 4.0 International License .

Giang, V. (2013, July 31). The 7 types of power that shape the workplace. Business Insider.

Morin, A. (2018, June 25). How to prevent a workplace bully from taking your power. Inc.

Weinstein,  B. (n.d.). 10 tips for dealing with a bully boss,” CIO , accessed October 13, 2018,

Chapter Reference:  Section 4.1 Power

Janey worked as an executive assistant to a product manager at her company: Ohio Connection. Overall, she loved her job; she was happy to work with a company that provided great benefits, and she and found enjoyment in her day-to-day work. She had the same product manager boss for years, but last year, her manager left Ohio Connection and retired. Recently her new manager has been treating her unfairly and showcasing bullying behavior.

Yesterday, Janey came into work, and her boss decided to use their power as her manager and her “superior” to demand that she stay late to cover for him, correct reports that he had made mistakes on, and would not pay her overtime. She was going to be late to pick up her son from soccer practice if she stayed late; she told him this, and he was not happy.

Over subsequent days, her boss consistently would make comments about her performance, even though she had always had good remarks on reviews, and created a very negative work environment. The next time she was asked to stay late, she complied for fear of losing her job or having other negative impacts on her job. Janey’s situation was not ideal, but she didn’t feel she had a choice.

  • What type of power did Janey’s boss employ to get her to do the things that he wanted her to do?
  • What negative consequences are apparent in this situation and other situations where power is not balanced in the workplace?
  • What steps should Janey take do to counteract the power struggle that is occurring with her new manager?

Chapter Reference:   Section 5.1 Interpersonal Relationships at Work

Uber revolutionized the taxi industry and the way people commute. With the simple mission “to bring transportation—for everyone, everywhere,” today Uber has reached a valuation of around $70 billion and claimed a market share high of almost 90% in 2015. However, in June 2017 Uber experienced a series of bad press regarding an alleged culture of sexual harassment, which is what most experts believe caused their market share to fall to 75%.

In February of 2017 a former software engineer, Susan Fowler, wrote a lengthy post on her website regarding her experience of being harassed by a manager who was not disciplined by human resources for his behavior. In her post, Fowler wrote that Uber’s HR department and members of upper management told her that because it was the man’s first offense, they would only give him a warning. During her meeting with HR about the incident, Fowler was also advised that she should transfer to another department within the organization. According to Fowler, she was ultimately left no choice but to transfer to another department, despite having specific expertise in the department in which she had originally been working.

As her time at the company went on, she began meeting other women who worked for the company who relayed their own stories of harassment. To her surprise, many of the women reported being harassed by the same person who had harassed her. As she noted in her blog, “It became obvious that both HR and management had been lying about this being his ‘first offense.’” Fowler also reported a number of other instances that she identified as sexist and inappropriate within the organization and claims that she was disciplined severely for continuing to speak out. Fowler eventually left Uber after about two years of working for the company, noting that during her time at Uber the percentage of women working there had dropped to 6% of the workforce, down from 25% when she first started.

Following the fallout from Fowler’s lengthy description of the workplace on her website, Uber’s chief executive Travis Kalanick publicly condemned the behavior described by Fowler, calling it “abhorrent and against everything Uber stands for and believes in.” But later in March, Uber board member Arianna Huffington claimed that she believed “sexual harassment was not a systemic problem at the company.” Amid pressure from bad media attention and the company’s falling market share, Uber made some changes after an independent investigation resulted in 215 complaints. As a result, 20 employees were fired for reasons ranging from sexual harassment to bullying to retaliation to discrimination, and Kalanick announced that he would hire a chief operating officer to help manage the company. In an effort to provide the leadership team with more diversity, two senior female executives were hired to fill the positions of chief brand officer and senior vice president for leadership and strategy.

Critical Thinking Questions

  • Based on Cox’s business case for diversity, what are some positive outcomes that may result in changes to Uber’s leadership team?
  • If the case had occurred in Canada, what forms of legislation would have protected Fowler?
  • What strategies should have been put in place to help prevent sexual harassment incidents like this from happening in the first place?

“ Diversity in Organizations ” in Organizational Behaviour by OpenStax is licensed under a Creative Commons Attribution 4.0 International License .

Della Cava, M. (2017, June 13). Uber has lost market share to Lyft during crisis. USA Today.

Fowler, T. (2017, February 19). Reflecting on one very, very strange year at Uber.

Lien,  T. (2017, June 6). Uber fires 20 workers after harassment investigation. Los Angeles Times.

Uber (2017, February). Company info.

Chapter Reference:  Section 5.3 Collaboration, Decision-Making and Problem Solving in Groups

Diverse teams have been proven to be better at problem-solving and decision-making for a number of reasons. First, they bring many different perspectives to the table. Second, they rely more on facts and use those facts to substantiate their positions. What is even more interesting is that, according to the Scientific American article “How Diversity Makes Us Smarter,” simply “being around people who are different from us makes more creative, diligent, and harder-working.”

One case in point is the example of jury decision-making, where fact-finding and logical decision-making are of utmost importance. A 2006 study of jury decision-making, led by social psychologist Samuel Sommers of Tufts University, showed that racially diverse groups exchanged a wider range of information during deliberation of a case than all-White groups did. The researcher also conducted mock jury trials with a group of real jurors to show the impact of diversity on jury decision-making.

Interestingly enough, it was the mere presence of diversity on the jury that made jurors consider the facts more, and they had fewer errors recalling the relevant information. The groups even became more willing to discuss the role of race case, when they hadn’t before with an all-White jury. This wasn’t the case because the diverse jury members brought new information to the group—it happened because, according to the author, the mere presence of diversity made people more open-minded and diligent. Given what we discussed on the benefits of diversity, it makes sense. People are more likely to be prepared, to be diligent, and to think logically about something if they know that they will be pushed or tested on it. And who else would push you or test you on something, if not someone who is different from you in perspective, experience, or thinking. “Diversity jolts us into cognitive action in ways that homogeneity simply does not.”

So, the next time you are called for jury duty, or to serve on a board committee, or to make an important decision as part of a team, remember that one way to generate a great discussion and come up with a strong solution is to pull together a diverse team.

  • If you don’t have a diverse group of people on your team, how can you ensure that you will have robust discussions and decision-making? What techniques can you use to generate conversations from different perspectives?
  • Evaluate your own team at work. Is it a diverse team? How would you rate the quality of decisions generated from that group?

Sources: Adapted from Katherine W. Phillips, “How Diversity Makes Us Smarter,” Scientific American, October 2014, p. 7–8.

“ Critical Thinking Case ” in  Organizational Behaviour by OpenStax is licenced under a Creative Commons Attribution 4.0 International License .

Conflict Management Copyright © 2022 by Laura Westmaas, BA, MSc is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Discover how to build a winning team and boost your business negotiation results in this free special report, Team Building Strategies for Your Organization, from Harvard Law School.

Top Ten Posts About Conflict Resolution

Effective negotiating skills and negotiation tactics for use in conflict resolution.

By PON Staff — on January 30th, 2024 / Conflict Resolution

case study on conflict of interest in organization

Conflict resolution is the process of resolving a dispute or a conflict by meeting at least some of each side’s needs and addressing their interests. Conflict resolution sometimes requires both a power-based and an interest-based approach, such as the simultaneous pursuit of litigation (the use of legal power) and negotiation (attempts to reconcile each party’s interests). There are a number of powerful strategies for conflict resolution , as you’ll see in our list below of ten popular posts about conflict resolution:

1. How to Resolve Cultural Conflict: Overcoming Cultural Barriers at the Negotiation Table

Understanding cultural norms, while avoiding stereotyping, is a key negotiation skill needed by all international negotiators. Negotiation research reveals that dealmaking across cultures tends to result in worse negotiated agreements than those where negotiators share a common cultural background. Here are some negotiating skills and negotiation techniques you can use to help you avoid cognitive biases at the bargaining table and maximize your value creation opportunities with international counterparts. Read more.

2. 10 Great Examples of Negotiation in Business

Here are some of the most newsworthy business and commercial disputes of 2013 – This was a year that saw many hardball tactics backfire, costly legal battles were waged, and many negotiated agreements were ripped to shreds. Apple versus Samsung. Robin Thicke versus Marvin Gaye. The end of the NHL lockout. 2013 was a year that was filled with negotiation case studies and here are the Program on Negotiation’s top 10 examples that illustrate the importance of negotiation in business. Read more.

The New Conflict Management

Claim your FREE copy: The New Conflict Management

In our FREE special report from the Program on Negotiation at Harvard Law School - The New Conflict Management: Effective Conflict Resolution Strategies to Avoid Litigation – renowned negotiation experts uncover unconventional approaches to conflict management that can turn adversaries into partners.

3. MESO: Make Multiple Equivalent Simultaneous Offers to Create Value in Dealmaking Table

Learn how multiple equivalent simultaneous offers (MESOs) in negotiation offer business negotiators and conflict management professionals multiple avenues for value creation and dispute resolution at the bargaining table. Not only are MESOs effective negotiation strategies, but they can also help resolve seemingly intractable disputes by helping one side or the other reach the zone of possible agreement (ZOPA). Read more.

4. Conflict Resolution in the Family

One of the most common forms of conflict many of us will face is the inevitable dispute with a family member or loved one. What negotiation techniques are best applied to disputes within the family? Drawing on Bruce Feiler’s Lessons in Domestic Diplomacy, this article offers negotiation skills tips for people seeking to resolve conflict inside the home. Read more.

5. Negotiation with Your Children: How to Resolve Family Conflicts

While the negotiation strategies you employ to resolve conflicts with your spouse, brother, or uncle may work wonders in those situations, are they also applicable to resolving conflicts with children? In this article drawn from negotiation research, Scott Brown’s book How to Negotiate with Kids…Even When You Think You Shouldn’t offers practical negotiation advice for parents dealing with difficult situations with children. Read more.

6. Integrative Negotiations: Dispute Resolution Through Joint Fact-Finding

Cooperation in joint fact-finding expeditions can help disputants reach agreement by forcing them to look outside one another’s own limited expertise or experience and rely on that of a neutral third party. Lawrence Susskind’s The Consensus Building Handbook describes joint fact-finding as a multi-step collaborative process designed to help disputants reach a negotiated agreement. Read more.

7. Negotiating the Good Friday Agreement

U.S. Senator George Mitchell’s role in the Good Friday Agreement was pivotal in helping each side reach a negotiated agreement in one of the world’s longest running conflicts. In his interview with Program on Negotiation Managing Director Susan Hackley, George Mitchell describes the negotiating skills and negotiation techniques he employed, namely the “Mitchell Principles,” commitments to open communication, non-violence, and democracy, to bring each side to a negotiated agreement. Read more.

8. Negotiation Games

This article examines the risks disputants take in escalating their conflict to the legal system, – namely, that pure chance, rather than the merits of the case, could decide the outcome of the conflict. Engaging negotiation game resources are also available. Read more.

9. How to Maintain Your Power While Engaging in Conflict Resolution

Here are four negotiation tips for maintaining power and status in negotiation scenarios. While power and prestige may be important factors for the individual negotiator, they may not be important to the negotiation at hand; conversely, high levels of differing status among negotiators may make viable negotiated agreements difficult and value creating agreements impossible. Read more.

10. The Role of Urban Planners in Negotiations: Case Study of Israeli-Palestinian Negotiations

In an event held at the Harvard Law School campus, urban planner Karen Lee Bar-Sinai discussed the role of urban development in peace negotiations between Israelis and Palestinians. Bar-Sinai noted in her discussion that political boundaries and cultural boundaries between peoples often manifest themselves in the form of physical boundaries. Read more.

What did you take away from these examples of conflict resolution? Share your opinions in the comments.

Related Conflict Resolution Article:  Negotiating a Non-Compete Agreement with Employers

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Some virtual care companies putting patient data at risk, new study finds

Canadian researchers have patient privacy concerns as industry grows post-covid.

case study on conflict of interest in organization

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This story is part of CBC Health's Second Opinion, a weekly analysis of health and medical science news emailed to subscribers on Saturday mornings. If you haven't subscribed yet, you can do that by  clicking here .

If you visit a doctor virtually through a commercial app, the information you submit in the app could be used to promote a particular drug or service, says the leader of a new Canadian study involving industry insiders.

The industry insiders "were concerned that care might not be designed to be the best care for patients, but rather might be designed to increase uptake of the drug or vaccine to meet the pharmaceutical company objectives," said Dr. Sheryl Spithoff, a physician and scientist at Women's College Hospital in Toronto.

Virtual care took off as a convenient way to access health care during the COVID-19 pandemic, allowing patients to consult with a doctor by videoconference, phone call or text.

It's estimated that more than one in five adults in Canada —  or 6.5 million people — don't have a family physician or nurse practitioner they can see regularly, and virtual care is helping to fill the void.

But the study's researchers and others who work in the medical field have raised concerns that some virtual care companies aren't adequately protecting patients' private health information from being used by drug companies and shared with third parties that want to market products and services.

A female doctor with long, brown hair standing in a medical office.

Spithoff co-authored the study in this week's BMJ Open , based on interviews with 18 individuals employed or affiliated with the Canadian virtual care industry between October 2021 and January 2022. The researchers also analyzed 31 privacy documents from the websites of more than a dozen companies.

The for-profit virtual care industry valued patient data and "appears to view data as a revenue stream," the researchers found.

One employee with a virtual care platform told the researchers that the platform, "at the behest of the pharmaceutical company, would conduct 'A/B testing' by putting out a new version of software to a percentage of patients to see if the new version improved uptake of the drug."

case study on conflict of interest in organization

Many virtual care apps pushing products, selling personal data, research finds

Concerns about how data might be shared.

Matthew Herder, director of the Health Law Institute at Dalhousie University in Halifax, said he hopes the study draws the public's attention to what's behind some of these platforms.

"All of this is happening because of a business model that sees value in collecting that data and using it in a variety of ways that have little to do with patient care and more to do in building up the assets of that company," Herder said.

Bearded man standing in front of a chalkboard.

Other industry insiders were concerned about how data, such as browsing information, might be shared with third parties such as Google and Meta, the owner of Facebook, for marketing purposes, Spithoff said.

The study's authors said companies placed data in three categories:

  • Registration data, such as name, email address and date of birth.
  • User data, such as how, when and where you use the website, on what device and your internet protocol or IP address.
  • De-identified personal health information, such as removing the name and date of birth and modifying the postal code.

Some companies considered the first two categories as assets that could be monetized, employees told the researchers.

  • Many Canadians welcomed virtual health care. Where does it fit in the system now?
  • Virtual urgent care didn't divert Ontario patients from ER visits during pandemic, study suggests

Not all of the companies treated the third category the same way. Some used personal health information only for the primary purpose of a patient's virtual exchange with a physician, while others used it for commercial reasons, sharing analytics or de-identified information with third parties.

The study's authors said while each individual data point may not provide much information, advertisers and data analytic companies amalgamate data from browsing history and social media accounts to provide insights into an individual's mental health status, for example.

One study participant described how a partnership for targeted ads might work: "If an individual is coming through our service looking for mental health resources, how can we lean them into some of our partnerships with corporate counselling services?"

case study on conflict of interest in organization

Nurses’ union says virtual care is a move toward privatization of health care

Conflict-of-interest questions.

Lorian Hardcastle, an associate professor of law and medicine at the University of Calgary, studied  uptake of virtual care in 2020. She highlighted issues of continuity of care, privacy legislation and consent policies.

Since then, she said, uptake in virtual care accelerated during the COVID-19 pandemic.

"I think that the commercialization of the health-care system raises concerns around conflicts of interest between what is best for patients on the one hand and then on the other hand, what has the best return for shareholders," said Hardcastle, who was not involved in the BMJ Open study.

A woman with long brown hair wearing a blouse and jacket.

Hardcastle said it is helpful to have industry insiders acknowledge problems that health professionals and academics have expressed about commercialization.

The Office of the Privacy Commissioner of Canada, which funded the study, said in an email that privately funded health professionals are generally considered to be conducting commercial activities.

Hospitals, long-term care facilities and home care services that are publicly funded are not considered to be engaged in commercial activities and are covered by provincial privacy legislation, the office said. Health information falls into many categories and may be subject to different privacy laws across various jurisdictions.

Hardcastle also suggested that self-regulatory bodies, such as provincial colleges of physicians and surgeons, may need to revisit policies around relationships between health providers and industry.

Virtual care industry responds

CBC News heard from some Canadian virtual care companies that said they take the privacy of individuals seriously.

"Patient data is only used with patients' explicit consent and only when it's required for health-care interactions between a patient and a doctor," a spokesperson for virtual care platform Maple said. "We do not exploit patient data for marketing or commercial gain."

  • Is virtual care a cure for Canada's battered health-care system?

In a statement, Rocket Doctor said it is important to note that the company "does not do any of the things listed by the researchers as common in the telehealth industry."

Telus said that all of the data collected from its virtual care service is treated as personal health information.

"Telus Health doesn't receive any funds from pharmaceutical companies for our virtual care service and we do not sell any patient data collected," said Pamela Snively, the company's chief data and trust officer.

Source of information hard to pin down

Hardcastle said it may be difficult for some people to distinguish between receiving reliable and accurate information from a health-care provider on an app and getting services marketed to them that the health provider may or may not find useful.

"Your family doctor isn't trying to collect superfluous information in order to market services to you," she said.

Some provinces and territories pay for the virtual services. In other cases, patients pay themselves or are covered by employer or private insurance.

  • Patients tapping into alternative care options, but N.S. emergency departments still face challenges

Nova Scotia's government, for example, has a contract with Maple to provide residents without a primary care provider with unlimited virtual visits. Those who do have a regular provider can have two visits per year paid for by the province.

Tara Sampalli, senior scientific director at Nova Scotia Health Innovation Hub, said the province's contract with Maple means residents' data can't be used in other ways, such as by third-party providers.

The province doesn't have that level of control over other providers of virtual care, said Sampalli, who holds a PhD in health informatics.

Calls for an opt-out choice

Herder, of Dalhousie University, said users should be able to easily opt out of having their data used for commercial purposes. He also said that if the data doesn't represent the full diversity of Canada, algorithms shaping clinical decision-making could be racially biased.

Spithoff said while patient awareness is important, patients aren't in a position to fix this problem.

  • 140,000 Nova Scotians are waiting for a family doctor. Can virtual care help?

"We need better legislation, regulation, and we need better funding for primary care," she said. "Or people can get virtual care integrated into their offline care."

Spithoff and her co-authors said self-regulation by the industry is unlikely to lead to change. 

The researchers acknowledged they were limited to publicly available documents and that they did not interview those affiliated with the third-party advertisers.

case study on conflict of interest in organization

Canadian Medical Association calls for health-care system overhaul


  • An earlier version of this story suggested that all health professionals conduct commercial activities under federal legislation. In fact, some publicly funded health services are not commercial and are covered by various other legislation. Feb 12, 2024 6:11 PM ET


case study on conflict of interest in organization

Amina Zafar covers medical sciences and health topics, including infectious diseases, for CBC News. She holds an undergraduate degree in environmental science and a master's in journalism.

With files from CBC's Christine Birak

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Reproductive rights in America

Research at the heart of a federal case against the abortion pill has been retracted.

Selena Simmons-Duffin

Selena Simmons-Duffin

case study on conflict of interest in organization

The Supreme Court will hear the case against the abortion pill mifepristone on March 26. It's part of a two-drug regimen with misoprostol for abortions in the first 10 weeks of pregnancy. Anna Moneymaker/Getty Images hide caption

The Supreme Court will hear the case against the abortion pill mifepristone on March 26. It's part of a two-drug regimen with misoprostol for abortions in the first 10 weeks of pregnancy.

A scientific paper that raised concerns about the safety of the abortion pill mifepristone was retracted by its publisher this week. The study was cited three times by a federal judge who ruled against mifepristone last spring. That case, which could limit access to mifepristone throughout the country, will soon be heard in the Supreme Court.

The now retracted study used Medicaid claims data to track E.R. visits by patients in the month after having an abortion. The study found a much higher rate of complications than similar studies that have examined abortion safety.

Sage, the publisher of the journal, retracted the study on Monday along with two other papers, explaining in a statement that "expert reviewers found that the studies demonstrate a lack of scientific rigor that invalidates or renders unreliable the authors' conclusions."

It also noted that most of the authors on the paper worked for the Charlotte Lozier Institute, the research arm of anti-abortion lobbying group Susan B. Anthony Pro-Life America, and that one of the original peer reviewers had also worked for the Lozier Institute.

The Sage journal, Health Services Research and Managerial Epidemiology , published all three research articles, which are still available online along with the retraction notice. In an email to NPR, a spokesperson for Sage wrote that the process leading to the retractions "was thorough, fair, and careful."

The lead author on the paper, James Studnicki, fiercely defends his work. "Sage is targeting us because we have been successful for a long period of time," he says on a video posted online this week . He asserts that the retraction has "nothing to do with real science and has everything to do with a political assassination of science."

He says that because the study's findings have been cited in legal cases like the one challenging the abortion pill, "we have become visible – people are quoting us. And for that reason, we are dangerous, and for that reason, they want to cancel our work," Studnicki says in the video.

In an email to NPR, a spokesperson for the Charlotte Lozier Institute said that they "will be taking appropriate legal action."

Role in abortion pill legal case

Anti-abortion rights groups, including a group of doctors, sued the federal Food and Drug Administration in 2022 over the approval of mifepristone, which is part of a two-drug regimen used in most medication abortions. The pill has been on the market for over 20 years, and is used in more than half abortions nationally. The FDA stands by its research that finds adverse events from mifepristone are extremely rare.

Judge Matthew Kacsmaryk, the district court judge who initially ruled on the case, pointed to the now-retracted study to support the idea that the anti-abortion rights physicians suing the FDA had the right to do so. "The associations' members have standing because they allege adverse events from chemical abortion drugs can overwhelm the medical system and place 'enormous pressure and stress' on doctors during emergencies and complications," he wrote in his decision, citing Studnicki. He ruled that mifepristone should be pulled from the market nationwide, although his decision never took effect.

case study on conflict of interest in organization

Matthew Kacsmaryk at his confirmation hearing for the federal bench in 2017. AP hide caption

Matthew Kacsmaryk at his confirmation hearing for the federal bench in 2017.

Kacsmaryk is a Trump appointee who was a vocal abortion opponent before becoming a federal judge.

"I don't think he would view the retraction as delegitimizing the research," says Mary Ziegler , a law professor and expert on the legal history of abortion at U.C. Davis. "There's been so much polarization about what the reality of abortion is on the right that I'm not sure how much a retraction would affect his reasoning."

Ziegler also doubts the retractions will alter much in the Supreme Court case, given its conservative majority. "We've already seen, when it comes to abortion, that the court has a propensity to look at the views of experts that support the results it wants," she says. The decision that overturned Roe v. Wade is an example, she says. "The majority [opinion] relied pretty much exclusively on scholars with some ties to pro-life activism and didn't really cite anybody else even or really even acknowledge that there was a majority scholarly position or even that there was meaningful disagreement on the subject."

In the mifepristone case, "there's a lot of supposition and speculation" in the argument about who has standing to sue, she explains. "There's a probability that people will take mifepristone and then there's a probability that they'll get complications and then there's a probability that they'll get treatment in the E.R. and then there's a probability that they'll encounter physicians with certain objections to mifepristone. So the question is, if this [retraction] knocks out one leg of the stool, does that somehow affect how the court is going to view standing? I imagine not."

It's impossible to know who will win the Supreme Court case, but Ziegler thinks that this retraction probably won't sway the outcome either way. "If the court is skeptical of standing because of all these aforementioned weaknesses, this is just more fuel to that fire," she says. "It's not as if this were an airtight case for standing and this was a potentially game-changing development."

Oral arguments for the case, Alliance for Hippocratic Medicine v. FDA , are scheduled for March 26 at the Supreme Court. A decision is expected by summer. Mifepristone remains available while the legal process continues.

  • Abortion policy
  • abortion pill
  • judge matthew kacsmaryk
  • mifepristone
  • retractions
  • Abortion rights
  • Supreme Court

The Associated Press

Studies cited in case over abortion pill are retracted due to flaws and conflicts of interest

A medical journal has retracted two studies claiming to show the harms of the abortion pill mifepristone, citing conflicts of interest by the authors and flaws in their research.

Two of the three studies retracted by medical publisher Sage Perspectives were cited in a pivotal Texas court ruling that has threatened access to the pill. The U.S. Supreme Court will take up the case next month, with a decision expected later this year. The court's ruling could impact nationwide access to mifepristone, including whether it continues to be available by mail.

Medication abortion accounts for more than half of all abortions in the U.S., and typically involves two drugs: mifepristone and misoprostol .

Here's what to know about the retractions:


Both studies cited in the court ruling were published in the journal Health Services Research and Managerial Epidemiology. They were supported by the Charlotte Lozier Institute, part of an advocacy group that seeks to end access to abortion.

A 2021 paper looked at 423,000 abortions and more than 121,000 emergency room visits following medication abortions and abortions done through a medical procedure from 1999 to 2015. Researchers concluded medication abortions are “consistently and progressively associated with more postabortion ER visit morbidity” than the other type.

A 2022 paper concluded that failure to identify a prior abortion during an ER visit — either by a doctor or because a patient concealed it — is “a significant risk factor for a subsequent hospital admission.”


U.S. District Judge Matthew Kacsmaryk cited the studies in a controversial legal ruling that will go before the U.S. Supreme Court next month.

Essentially, Kacsmaryk sided with a conservative Christian medical group, arguing that mifepristone’s original approval by U.S. regulators was flawed because it overlooked serious safety issues with the pill.

He cited one of the retracted studies in claiming that mifepristone causes “many intense side effects.” The ruling also cited the second retracted paper in explaining why anti-abortion physicians had the legal standing to bring their lawsuit — instead of showing they were directly harmed by a product, the judge said medical abortions cause “enormous pressure and stress" to physicians.

Many legal experts and medical professionals were deeply skeptical of the arguments and statistics cited in Kacsmaryk's decision, and a federal appeals court overturned parts of the ruling last summer.

The Food and Drug Administration's original 2000 approval of mifepristone is not in question, but the Supreme Court could roll back recent changes that made the drug easier to obtain, including via mail order.


In a retraction notice, Sage Perspectives said a reader contacted the journal with concerns about the presentation of some of the data, possible “defects” in the selection of the data and whether authors’ affiliations with anti-abortion advocacy organizations present conflicts of interest that should have been disclosed.

Sage said in a statement that it asked two experts to conduct an independent post-publication peer review, which found the conclusions “were invalidated in whole or in part" for several reasons, including problems with the study design and methodology and errors in the analysis of the data.

The studies’ lead author, James Studnicki, said in an emailed statement that the publisher's actions are a “baseless attack on our scientific research and studies." Studnicki is a vice president at the Charlotte Lozier Institute.

Retractions of research papers have been on the rise, with more than 10,000 last year, according to Ivan Oransky, who teaches medical journalism at New York University and co-founded the Retraction Watch blog. About 1 in 500 papers is retracted, he said, compared with 1 in 5,000 two decades ago.


Ushma Upadhyay, a professor of public health at the University of California, San Francisco, said medication abortions are extremely safe, with less than a third of 1% being followed by a serious adverse event. She pointed out that mifepristone has been used for more than two decades. The FDA says it has been used by about 6 million people for abortions.

She said one of the major flaws of the retracted research is that the authors conflate ER visits with serious adverse events and don’t confirm whether patients received treatment.

The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.

FILE - A patient prepares to take the first of two combination pills, mifepristone, for a medication abortion during a visit to a clinic in Kansas City, Kan., on, Oct. 12, 2022. On Wednesday, Feb. 7, 2024, the medical journal Sage Perspectives retracted studies claiming to show the harms of mifepristone, citing conflicts of interest by the authors and flaws in the research. (AP Photo/Charlie Riedel, File)

Watch CBS News

Judge in Trump's New York fraud case orders him to pay $354 million in penalties, plus millions more in interest

By Graham Kates, Melissa Quinn

Edited By Stefan Becket, Paula Cohen

Updated on: February 16, 2024 / 8:37 PM EST / CBS News

Former President Donald Trump and the Trump Organization must pay $354 million in fines — a total that jumps to $453.5 million when pre-judgment interest is factored in — a judge ruled Friday in their New York  civil fraud case . The long-awaited ruling also bars them from seeking loans from financial institutions in New York for a period of three years, and includes a three-year ban on Trump serving as an officer or director of any New York corporation.

Judge Arthur Engoron handed down his judgment in a 92-page decision on Friday. The ruling is one of the largest corporate sanctions in New York history. Trump has vowed to appeal. 

The judge's ruling also blocks Allen Weisselberg , the former chief financial officer of the Trump Organization, and Jeffrey McConney, former corporate controller, from serving as an officer or director of any New York corporation or other legal entity in the state for three years, and permanently bans them from serving in the "financial control function" of any New York corporation.

"The evidence is overwhelming that Allen Weisselberg and Jeffrey McConney cannot be entrusted with controlling the finances of any business," Engoron's order states.

In addition to imposing limits on Trump's business activities, the order bans his two oldest sons, Eric Trump and Donald Trump, Jr., from serving as an officer or director of any New York corporation or legal entity for two years.

The two, who serve as executive vice presidents at the Trump Organization, must also pay more than $4 million apiece, including interest. Weisselberg is ordered to pay a $1 million penalty. 

Speaking outside Mar-a-Lago after the ruling, Trump called the judge "crooked" and insisted the case was a "witch hunt."

"We will get back to work. It's a ridiculous award — a fine of $355 million for doing a perfect job," Trump said.

"Complete lack of contrition"

Engoron issued a scathing rebuke of Trump, his two adult sons, Weisselberg and McConney in his decision, writing that they refused to admit error even after four years of investigation and litigation.

"Their complete lack of contrition and remorse borders on pathological," he wrote. "They are accused only of inflating asset values to make more money. The documents prove this over and over again."

The judge determined that Trump, top officials at the Trump Organization, and his companies submitted "blatantly false financial data" to accountants in order to borrow more money at more favorable interest rates.

"When confronted at trial with the statements, defendants' fact and expert witnesses simply denied reality, and defendants failed to accept responsibility or to impose internal controls to prevent future recurrences," Engoron wrote.

He said the frauds in the case "leap off the page and shock the conscience."

New York Attorney General Letitia James cheered the decision as a victory for the state, the country and those who believe in an even playing field.

"There simply cannot be different rules for different people," she said in a statement. "Now, Donald Trump is finally facing accountability for his lying, cheating, and staggering fraud. Because no matter how big, rich, or powerful you think you are, no one is above the law."

Alina Habba, one of Trump's attorneys who also serves as his spokeswoman, denounced the decision and confirmed the former president will appeal Engoron's judgment.

"This verdict is a manifest injustice — plain and simple. It is the culmination of a multi-year, politically fueled witch hunt that was designed to 'take down Donald Trump,' before Letitia James ever stepped foot into the Attorney General's office," she said in a statement. "Countless hours of testimony proved that there was no wrongdoing, no crime, and no victim."

She continued: "Let me make one thing perfectly clear: this is not just about Donald Trump — if this decision stands, it will serve as a signal to every single American that New York is no longer open for business."

A spokesperson for the Trump Organization also defended the company's financial dealings, calling the ruling a "gross miscarriage of justice."

"If the Attorney General is permitted to retroactively insert herself into private commercial transactions between sophisticated parties, no business transaction entered into in the State of New York will be beyond the attorney general's purview," the spokesperson said. "Every member of the New York business community, no matter the industry, should be gravely concerned with this gross overreach and brazen attempt by the attorney general to exert limitless power where no private or public harm has been established."

James brought the civil suit in 2022, asking the judge to bar Trump from doing business in the state and seeking a penalty of $250 million, a figure her office increased to $370 million by the end of the trial. 

Trump and his legal team long expected a defeat, with the former president decrying the case as "rigged" and a "sham" and his lawyers laying the groundwork for an appeal before the judgment was even issued. 

Even before Friday's ruling, the judge had largely affirmed James' allegations that Trump and others at his company inflated valuations of his properties by hundreds of millions of dollars over the course of a decade, and misrepresented his wealth by billions. The scheme , the state said, was meant to trick banks and insurers into offering more favorable deal terms.

Engoron ruled in September that Trump and the other defendants were liable for fraud , based on the evidence presented through pretrial filings.

The trial, which began in October  and wrapped up in January , focused on other aspects of the lawsuit related to alleged falsification of business records, issuing false financial statements, insurance fraud and conspiracy.

The financial penalty James sought, known as disgorgement, is meant to claw back the amount Trump and his company benefited from the scheme. (Under New York law, disgorgement cases are decided by a judge, not a jury .) 

Ivanka Trump, the former president's daughter and once an executive at the Trump Organization, was originally named as a defendant in the suit, but an appellate court later dismissed allegations against her, citing the state's statute of limitations.

What were the Trumps accused of?

The lawsuit laid out seven causes of actions — the claims of illegal conduct that James' office said entitled the state to claw back ill-gotten profits and warranted severe sanctions against the defendants:

  • Persistent and Repeated Fraud
  • Falsifying Business Records
  • Conspiracy to Falsify Business Records
  • Issuing False Financial Statements
  • Conspiracy to Falsify False Financial Statements
  • Insurance Fraud
  • Conspiracy to Commit Insurance Fraud

The claims revolve around financial statements given by Trump and his company to banks and insurers.  The statements were prepared by accounting firms using spreadsheets of underlying data that included vast inflations of Trump property valuations.

The defendants lost on the first claim, persistent and repeated fraud, before the trial even started.

While Trump can appeal, the judgment will take a toll on his finances in the process.

"Trump may have a shot at reducing the damages on appeal, but to appeal he has to post an appeal bond of $350 million in this case and $83 million in E. Jean Carroll's case . That will be costly," John Coffee, a Columbia University law professor and an expert on corporate governance and white collar crime, told CBS News .

The Sept. 26 fraud ruling

Engoron agreed in September with James' office that it was beyond dispute, based on evidence presented through pretrial filings, that Trump and his company provided banks with financial statements that misrepresented his wealth by billions.

"The documents here clearly contain fraudulent valuations that defendants used in business," Engoron wrote in the Sept. 26 ruling.

Engoron found as fact in that ruling that Trump and the company overstated the valuations of many properties by hundreds of millions of dollars. He cited the Palm Beach Assessor valuation of Trump's Mar-a-Lago club at between $18 million and $28 million for each year between 2011 and 2021 — the values for which he paid local property taxes. During those years, Trump valued the property at between $328 million and $714 million on his annual statements of financial conditions.

Trump seized on the Mar-a-Lago valuation, complaining about it frequently during public appearances, in social media posts, and in his own defense at trial.

Trump's testimony at the trial

Donald Trump and three of his children testified during the trial, which began on Oct. 2 and ran for more than three months. 

Ivanka Trump and her brothers said they couldn't recall many of the interactions at the center of the case, including deliberations related to efforts to secure financing and insurance for Trump property developments. Eric and Donald Trump Jr. both sought to pin blame on the company's accountants, claiming they had little involvement in the preparation of financial statements that misrepresented the values of company properties.

But Engoron determined that there was "sufficient evidence" that Eric and Donald Trump Jr. "intentionally falsified business records." He found that Eric Trump "intentionally" gave McConney "knowingly false and inflated valuations" for the Seven Springs estate, a Trump-owned property in Westchester County, New York.

The former president took the stand on Nov. 6 , stopping to address the media on his way into court. "It's a very sad situation for our country," he said.

Under oath, he gave long-winded answers, seeming to test the judge's patience. At one point Engoron addressed Trump's lawyers, saying, "We got another speech," and urging them to "control him if you can."

As questioning continued, Trump defended the valuations of various Trump Organization properties said the company's statements of financial condition included a disclaimer that absolved him of responsibility for inaccuracies.

Engoron's order criticized Trump for failing to answer many questions, which the judge said damaged his credibility.

"Overall, Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial. His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility."

Lawyers for the Trumps argued that the financial statements were accurate and well done, and also that valuations are subjective. They said that documents James' lawyers called evidence of fraud were actually evidence of Trump's "genius." Any misrepresentations or breaks with accepted accounting practices were his accountants fault, they said.

The former president himself also blamed his accountants, but maintained that his financial statements actually undervalued his properties and net worth.

"I'm worth more than the numbers in the statement," Trump said.

–CBS News' Jake Rosen and Aimee Picchi contributed reporting.

  • The Trump Organization
  • Donald Trump
  • Letitia James

Graham Kates is an investigative reporter covering criminal justice, privacy issues and information security for CBS News Digital. Contact Graham at [email protected] or [email protected]

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