Designing a Model to Counteract Moral Hazard in Government Organizations: An Interpretive Structural Modeling Approach (Case Study: Tehran University of Medical Sciences)

Extended Abstract
 
Introduction and Objectives: Moral hazard (kaj-maneshī) in public organizations is opportunistic behavior where an informed individual covertly exploits others. Due to complex structures, weak supervision, and lack of transparency, this issue is more common in the public sector, leading to reduced efficiency, increased costs, and weakened public trust. Islamic teachings condemn corruption and emphasize managers’ responsibility to maintain justice and integrity. Lack of effective controls, positive incentives, and proper reward systems contribute to moral hazard. Considering the importance of organizational health, designing a comprehensive model to counteract moral hazard—tailored to public organizations—is essential to improve performance and public trust.
Research Methodology: Moral hazard in government organizations is one of the most important obstacles to improving efficiency and effective human resource management. This phenomenon, which is rooted in opportunistic behavior, occurs when an individual or group prioritizes their personal interests over collective interests by taking advantage of unequal information and taking covert actions, and as a result, it reduces efficiency, increases management costs, and weakens public trust. The complexity of administrative structures, weak supervision, lack of transparency, and ineffective reward and punishment systems are the main factors behind the spread of moral hazard in government institutions. From a theoretical perspective, moral hazard is a key concept in the field of organizational economics and public management, and its consequences include reduced productivity, weakened employee commitment, and damage to organizational health. Recent research emphasizes the need to design comprehensive and indigenous models to deal with this phenomenon in the government sector; models that can provide a basis for reducing opportunistic behavior by utilizing multidimensional approaches including strengthening institutional controls, increasing transparency, and promoting organizational culture. Given the specific characteristics of government organizations, such as extensive bureaucracy, non-profit objectives, and the requirement for public accountability, common models in the private sector are not effective in this area. In this regard, designing a comprehensive model to identify factors affecting moral hazard and providing practical solutions to counteract it is a vital necessity to improve performance, increase transparency, and maintain public trust in government organizations.
The interview protocol is presented in Table 3.
Table 3. Interview Protocol




Row


Questions




1


How does moral hazard emerge in public organizations, and what factors contribute to its occurrence?




2


What are the consequences of moral hazard for the performance, integrity, and efficiency of public organizations?




3


What strategies and interventions can be implemented to effectively counteract moral hazard in public organizations?




4


How can a comprehensive model for counteracting moral hazard in public organizations be designed based on the relationships among the identified factors?




 
 
Results A qualitative study using expert interviews and content analysis with ATLAS.ti identified key factors influencing organizational moral hazard. Open, axial, and selective coding revealed critical components such as weak supervision, lack of accountability, unhealthy culture, and poor reward systems. The quantitative phase analyzed variables through the Structural Self-Interaction Matrix (SSIM) and Interpretive Structural Modeling (ISM), classifying them into four hierarchical levels. MICMAC analysis further categorized variables into four groups based on influence and dependence: independent, dependent, linkage, and autonomous. Finally, a structured comprehensive model of organizational moral hazard was developed.
Table 1. Hierarchical Levels of Factors Influencing Moral Hazard




Level


Dimension


Sub-dimensions




Level One


Antecedents


Corruption and Mismanagement ← Decreased Social Trust ← Decreased Organizational Commitment ← Decreased Service Quality




Level Two


Consequences


Job Burnout ← Weak Organizational Communications ← Cynicism and Distrust




Level Three


Organizational Factors


Inadequate Training ← Leadership and Supervision ← Reward and Punishment System




Level Four


Outcomes


Reduced Organizational Culture ← Lack of Accountability ← Reduced Efficiency Evaluation




 
Figure 1. Final Research Model
Discussion and Conclusion: This study used Interpretive Structural Modeling (ISM) to design a model of organizational moral hazard in government organizations. Organizational moral hazard was identified as a multidimensional phenomenon, including contexts (weak supervision, unhealthy culture), enhancers (poor communication, culture of secrecy), practical dimensions, and negative outcomes (reduced service quality, corruption). Structural, cultural, and psychological factors contribute to its formation. The research emphasized the role of compensation and the unique characteristics of government organizations, aligning with previous studies while differing in some aspects. The structural and interpretive approach of this study is innovative.
Practical Implications for Empowering Human Resources:
Organizations should establish continuous and independent internal monitoring systems using modern technologies to detect violations. Confidential reporting systems and professional ethics training help strengthen organizational culture. Long-term policies to institutionalize honesty and accountability are essential. Additionally, improving employee well-being and fostering transparent communication between managers and staff increase engagement and effective participation.
Suggestions for Future Research:
It is recommended that future research expand the geographical scope and include various types of governmental and semi-governmental organizations across different countries to enhance the generalizability of the findings. Utilizing mixed quantitative and qualitative methods, such as advanced statistical analysis combined with in-depth interviews, can provide a more comprehensive understanding of the factors influencing organizational moral hazard and the mechanisms to address it.
Acknowledgements: The authors express their sincere gratitude to the participants for their cooperation, the anonymous reviewers for their intellectual support, and the scientific and editorial team of the Journal of Religious Studies, Spirituality, and Management.
Conflict of Interest: This research declares no conflict of interest and was conducted in full compliance with ethical and scientific principles, without any affiliation to institutions or personal interests.