Running head: CONFLICT OF INTEREST 1

Conflict of Interest

Name

Institutional Affiliation

Date
CONFLICT OF INTEREST 2

Definition

A conflict of interest occurs when a party is involved in two relationships in competition

for the individual's loyalty. As such, the aims or concerns of the different parties involved are

incompatible.

Summary

Conflict of interest influences an individual's decision making when presented with

different viable options. In that case, a party involved in a conflict of interest makes a biased

decision that is likely to benefit him or her either directly or indirectly (Fineberg, 2017). More

often than not, this decision does not opt for the best option that benefits the organization which

the individual acts on behalf of, but rather is biased based on personal benefit. Therefore, a

situation where an individual or an organization has a vested interest, whether of status,

reputation, or monetary value, leads to a conflict of interest. In such a scenario, the decision-

making is bound to be biased. Thus, the individual involved prioritizes personal gain over duties

and at the expense of the organization's interests. Usually, conflict of interest has legal

ramifications as it has been criminalized in the public sector, and involved parties may face

prosecution in a court of law.

Discussion

Conflict of interest may come in different dimensions, including nepotism, self-dealing,

and excess compensation. In nepotism, an individual is likely to grant favors to close friends or

relatives in employment matters. The favored persons might not be the best fit for the

opportunity, hence disadvantaging other qualified people, which may impact the organization in

diverse ways (Tytko-Smokovych et al., 2020). A conflict of interest regarding self-dealing

CONFLICT OF INTEREST 3

happens when a company fiduciary takes actions that benefit the individual rather than the

organization's interest. For instance, it involves the violation of insider trading, using the

organization's finances as a loan without following due process, and using company property like

machinery for personal gains. Conflict of interest that is based on self-compensation is common

in non-profit organizations. For instance, it may involve allocating some officials excessive

compensation that is more than commensurate with their duties. Conflict of interest, on many

occasions, is seen as a prerequisite of corruption (Spence, 2020).

Besides, there are many other forms of conflict of interest in work environments. For

instance, managers having romantic relationships with their employees may lead to biased

decision-making in terms of promotion and compensation. Also, in cases where an employee sets

up a side business that has the dimension of competing with the employer may lead to a conflict

of interest. Conflict of interest may also arise in the supply chain environment. For instance, a

friendly employee to a supplier may help the supplier win the contract without following the due

process according to the organization’s policy. Policies encourage disclosure of conflicts of

interest as a remedy in managing such conflicts (Sah, & Feiler, 2020). Conflict of interest may,

therefore, be as a result of conflicting personal or professional interests. Conflict of interest may

also be either financial or nonfinancial (Rodwin, 2018). Conflict of interest can occur in

virtually all sectors, including in healthcare, education, et cetera.

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References

Fineberg, H. V. (2017). Conflict of interest: why does it matter?. Jama, 317(17), 1717-1718.

Rodwin, M. A. (2018). Attempts to redefine conflicts of interest. Accountability in

research, 25(2), 67-78.

Sah, S., & Feiler, D. (2020). Conflict of interest disclosure with high-quality advice: The

disclosure penalty and the altruistic signal. Psychology, Public Policy, and Law, 26(1),

88.

Spence, E. H. (2020). The sixth estate: tech media corruption in the age of information. Journal

of Information, Communication and Ethics in Society.

Tytko, A., Smokovych, M., Dorokhina, Y., Chernezhenko, O., & Stremenovskyi, S. (2020).

Nepotism, favoritism and cronyism as a source of conflict of interest: corruption or

not?. Amazonia Investiga, 9(29), 163-169.