Conflicts of interest

A conflict of interest is a situation where an individual’s or organization’s decision-making is influenced by personal interests rather than professional duty or integrity. In a work environment, this can manifest itself when individuals prioritise relationships with family members or friends over objective criteria. In sport organizations, it is common to find situations where one person fulfils several roles, as a board member and in other positions. Such situations increase the likelihood of conflicts of interest (Sherry et.al., 2007, p. 268). The Good Governance Guidelines for Sports Organisations clearly state and recommend that conflicts of interest should be avoided. They state that organisations have a duty to establish a governance system that ensures an impartial and professional decision-making process. Conflicts of interest can affect public confidence in the organizations concerned and ripple through the sector (Hadfield 2004, Sherry et.al., 2007, p. 273).

A conflict of interest arises when personal interests interfere with someone’s ability to fulfil their duties against the interests of others (Sherry, Shilbury 2009, p. 47). One of the main criteria for a conflict of interest is the ‘interest’ itself. Boatright (1992, p. 191) stated that “a conflict of interest can be described as a situation in which a person’s personal interests interfere with the promotion of the interests of others when he has a direct duty to act in the interests of those others”. For example, the financial ties of a person in a managerial position, or membership of other organizations directly linked to management, clearly give rise to a conflict of interest which that person has a duty to avoid.

Conflicts of interest as ethical breaches are widespread in sports governance. Conflicts between direct work responsibilities or private business interests are common. For example, on the board of a horse racing organization in California, most members were actively involved in both the breeding of horses and the betting of races (Sherry et.al., 2007, pp. 272-273). If the involvement of board members in the management of the organization is motivated by their personal interest, this already gives rise to a conflict of interest at the motivational level. Such self-interested motivation may be more problematic for the organization than professional competence (Sherry, Shilbury 2009, pp. 57-58). National Sports Governance Observer (NSGO), in its governance audits of Cypriot sports federations, found that board members carry out many operational activities that create conflict of interest situations between management and administration. NSGO recommended the introduction of a code of ethics to identify and eliminate conflicts of interest, thereby improving governance standards (Anagnostopoulos, Van Eekeren, Solenes 2020, p. 59).

Favouritism is closely linked to conflicts of interest. More specifically, it involves biased behaviour, where certain individuals are favoured on the basis of personal relationships rather than merit or fairness. Favouritism is the practice of giving preferential treatment to persons who are close associates or friends. This practice often reduces organizational productivity, can create a toxic work environment, creates an unjust culture, undermines trust and respect for management, creates divisions and lowers overall organizational morale (Abubakar et.al., 2017, p. 131). A favourite is a person who is promoted up the career ladder due to the trust and influence of his or her boss, giving the impression of being chosen (Safina, 2015, p. 631). Favouritism harms competition by creating an unhealthy organizational culture where intrigue and mobbing prevail. A sense of impunity on the part of the favourite can lead to psychological terror. Organizations where favouritism is practised tend to distance themselves from new ideas and are not competitive.

Favouritism cannot be completely eradicated because it is a natural human trait, namely caring for one’s neighbours. However, given that favouritism is in fact a hotbed of corruption (Safina 2015, pp. 632-634.), it is the direct responsibility of the leading officials of an organization to avoid the spread of conflicts of interest in the management of the organization (Sherry, Shilbury 2009, pp. 47-56.). One of the most prominent examples of the spread of favouritism is the Russian Federation, where the rise of favouritism and corruption was highlighted in Dinara Safina’s study as a key reason for Russia’s overall economic underdevelopment (Safina 2015, p. 634).

Favouritism is closely linked to narcissism, which is characterised by a strong sense of self-worth, egocentrism and a need for self-improvement. Narcissistic behaviour is based on a belief in one’s own superiority (Zhang et.al. 2024, p. 1). Narcissism is antisocial behaviour that harms or does not consider the well-being of others. Organizations where favouritism is prevalent create an environment in which individuals are justified in their anti-social behaviour by believing that they are not subject to generally accepted ethical standards. The greater the prevalence of favouritism practices in an organization, the higher the level of cynicism and the more toxic the work environment (Abubakar et.al., 2017, p. 136).

Favouritism is closely related to nepotism, a term used to describe situations where vacancies are given to relatives regardless of their professional qualifications (Safina, 2015, p. 631). Nepotism reflects kin altruism (Hamilton 1964) and can occur even without transactional reciprocity, which in turn is a precondition of favouritism. It is a form of altruism that parents exercise to ensure the well-being of their offspring and is based on the family as a social group. In contrast, favouritism is linked to personal relationships and socialisation, such as close friendships. These differences imply that nepotism in organizations may only be beneficial for particular affinity groups (Burhan et.al., 2020, pp. 35-36). Moreover, the culture of organizations employing kin, similar to monarchies, tends to persist in the long term as positions are passed down from generation to generation (Perez-Alvarez, Strulik 2021, p. 214).

Nepotism is perceived as procedurally unfair (Lambert et.al., 2007), is associated with mismanagement, inefficiency and undermining moral principles of fairness (Weng, et.al., 2023, p. 8). Research has highlighted the link between nepotism and lower firm performance (Perez-Alvarez, Strulik 2021, p. 216). Research shows that employees perceive nepotism to be more procedurally unfair than favouritism (Burhan et.al., 2020, pp. 43-45). Procedural fairness in an organization is important in creating a sense of ownership among stakeholders. This feeling increases employees’ self-confidence, improves relationships, and promotes self-esteem and confidence (Hohman, & Rivera, 2008, Burhan et.al., 2020, p. 37.).