Abstract

The social cognitive theory provides an overview of the nature and function of organizations in terms of their cognitive, self-reflective, and self-regulatory roles. In this way, all members can contribute to improving moral awareness and ensuring a moral environment, particularly in terms of fraud prevention and reduction. This study combines the social cognitive theory with the social identity theory and religious values to reduce fraud. The social cognitive theory has some weaknesses that lead to natural, physical, and material ramifications. This study examines the role of an ethical culture framework in fraud reduction. Indeed, fraud can be reduced by framing an ethical culture as an organizational one. Moreover, organizational culture can be a result of the existing moral awareness and the spiritual framework of the work environment. The data used herein were obtained from 220 cooperatives in Central Java, Indonesia, as well as a questionnaire, all of which were analyzed using structural equation modeling. The results show that the ethical culture framework has a positive and significant effect on reducing fraud, in that an anti-fraud culture was proven to exist due to the influences of moral awareness and workplace spirituality, thereby reducing fraud.