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JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997, pp. 421-432 M CB U NIVERSITY PRESS, 0736-3761 421

Empirical research on ethics and social responsibility in marketing has been

extensive (e.g. Laczniak and Inderrieden, 1987; Sherwin, 1983; Thompson,

1995; Tybout and Zaltman, 1974). These issues are not only important to

academicians; many corporations are also concerned about business ethics

and corporate social responsibility. In fact, many firms have initiated a

number of actions that encourage employees to include ethics as a formal

part of their decision making processes. For example, most companies have

a written code of ethics. Ethics officers are also becoming more and more

commonplace; some firms such as Nynex have placed ethics officers within

each division of the company. Corporate training programs that teach

employees how to deal more effectively with ethical issues have also

become more common. Mechanisms which make it easier for employees to

report ethical violations and concerns, such as hotlines, are also in place in

many corporations.

Actions such as these have been taken by many firms, in part, because of the

increasing recognition that many, if not most, business decisions involve

some ethical judgment. Consider the following dilemmas.

A consumer products company plans to target a low cost infant formula

directly to consumers rather than toward physicians and hospitals is stronglyopposed by the American Academy of Pediatrics. The importance of

meeting the proper nutritional needs of infants cannot be understated.

Therefore the American Academy of Pediatrics advises parents to consult

their pediatrician before using any infant formula. Will the company go

ahead with their plan to target parents, rather than physicians, in order to

gain a competitive advantage or will they follow the recommendation of

American Academy of Pediatrics?

Or consider another circumstance.

An athletic shoe company is considering whether to manufacture shoes in a

country with a very poor record on human rights. The new facility will

improve the companys competitive position but the host government willalso make a considerable profit, a profit which will be enjoyed by the ruling

lite, not by the people of the country who will be employed at meager

wages. Will the firm support a corrupt government in order to make higher

profits?

Firms hope that a consideration of ethical issues during the decision-making

process will be helpful in preventing, or at least decreasing, the frequency of

unethical behavior. Having a corporate ethics policy also seems to facilitate

the process of recovery after an ethical scandal although firms may wish

otherwise, unethical acts do occur and do not often go unnoticed. The lack of

respect many people feel towards business today, the presss propensity for

The influence of firm behavior onpurchase intention: do consumersreally care about business ethics?

Elizabeth H. Creyer and William T. Ross Jr

An executive summary

for m anagers andexecut ives can be found

at the end of this article

Business decisionsinvolve ethical judgment

Order of authorship of this article was determined alphabetically.


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422 JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997

investigative reporting, and the willingness of many insiders to blow the

whistle on unethical corporate behavior increase the likelihood that such

behaviors will eventually be discovered. For example, consider the recent

case in which Sears admitted to overcharging customers who had their cars

repaired. Other firms such as Nestl and Beechnut have also been involved

in ethical scandals.

The increasing concern for corporate ethics within the business community

raises several interesting questions. Although the promotion of ethical

corporate behavior has become increasingly important to many firms, is it

really so important to consumers? That is, will this new concern for

corporate ethics really help in the marketplace? Thus, many managers may

find themselves pondering the following questions. Do consumers

impressions of the ethicality of a firms behavior influence their purchase

decisions? Have consumers noticed that firms have become increasingly

concerned about corporate ethics? As Thompson (1995) noted, knowledge

about marketing ethics has increased substantially over the last several years,

in large part because of the many empirical studies that have been

conducted. However, the majority of this research has analyzed the ethicaljudgments of marketing professionals consumers consideration of ethical

issues has been neglected.

The purpose of this research is to examine the issue of unethical corporate

behavior from the perspectives of consumers. Several questions are

addressed. First, what are consumers expectations regarding the ethicality

of corporate behavior? Second, is whether a firm acts ethically or unethically

an important consumer concern? Third, will information regarding a firms

behavior influence consumers purchases? A survey of consumers was

conducted to provide insight into these issues.

Ethical perspectives and research issuesEthics is generally referred to as the set of moral principles or values that

guide behavior (Sherwin, 1983). However, what constitutes ethical and

unethical behavior can differ depending on the set of moral principles used

as the basis for judgment. At least three approaches to defining the ethicality

of behavior have been proposed (Cavanaugh et al., 1981). According to

utilitarian-based approaches, behavior is judged by its effects on the overall

welfare of everyone involved. With rights-based approaches, on the other

hand, behavior is judged with regard to how it affects the entitlements of

individuals. Finally, with justice-based approaches, behavior is judged in

terms of whether it imposes a fair distribution of benefits and burdens. It is

important to note that there is considerable subjectivity associated with the

application of each of these approaches. An action judged ethical by anindividual utilizing one approach may be considered unethical by the same

individual utilizing another approach or by a different individual using the

same approach.

However, difficulty defining what constitutes unethical behavior has not

hindered research into ethical issues within the field of marketing. Extensive

research has focused on ethical problems faced by marketing managers,

marketing researchers, advertising personnel, salespeople, and purchasers

(Ferrel and Gresham, 1985; Ferrel and Skinner, 1988; Ferrel and Weaver,

1978; Hunt et al., 1984; Murphy and Laczniak, 1981). In addition, several

seminal books on the topic of marketing ethics have also been published (see

Smith and Quelch, 1993). There are several reasons why business decision

makers need to consider ethical issues during their strategic planning

Set of normal principles


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JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997 423

process. On the one hand, many people in business choose to behave within

the generally accepted standards of ethical behavior because they want to,

that is, the desire to behave ethically is a personal choice. For example, an

individual may be guided by strong religious beliefs, altruistic motives, or

simply a desire to protect their reputation. On the other hand, although there

are exceptions (e.g. Bhide and Stevenson, 1990), unethical behavior cansimply be bad business. A firm needs the trust of relevant stakeholders.

Once that trust is violated, a number of unpleasant outcomes, such as

increased government regulations, confrontational suppliers, and

disillusioned customers, are possible. For example, consumers have initiated

boycotts to protest what they perceive to be unethical, or irresponsible,

corporate behavior.

Thus, although it is important to understand the factors influencing how

business decision makers respond to an ethical dilemma, it is equally

important to understand how consumers interpret, and react to the outcome

of that corporate decision. Whereas much of the prior research has focused

on business professionals description of their behavior, the present research

examines the expectations that consumers have about the ethicality of

corporate behavior.

Expectations are beliefs regarding what is to be expected, or anticipated.

They have been shown to play an important role in many types of decisions.

In particular, consumers form a number of different expectations; whether or

not those expectations are met is crucial in determining their level of

satisfaction or dissatisfaction. For example, consumers might expect a

certain level of quality for a specific brand or expect the price of a given

grade of product to be within a certain range. If the perceived level of quality

does not meet or exceed expectations, or if the price of the product is not

within the expected price range, dissatisfaction will result.

Beliefs may be formed in three essentially different ways (Van Raaij, 1991).

First, beliefs may be formed through direct experience. Second, beliefs may

be formed on the basis of information provided by outside sources such as

the mass media and word-of-mouth. Finally, beliefs may be inferential, that

is, formed when the individual goes beyond the information provided by

their experience or by the information source. Thus, consumers have both

the capability and countless opportunities to form expectations about the

ethicality of corporate behavior. In fact, consumers are exposed to a great

deal of information, some of which is controllable by firms and some of

which is not. While some information aims to create a positive impression of

a company, other sources of information can provide examples of corporate

wrongdoing. How have consumers integrated this divergent information?What are consumers expectations regarding the ethicality of corporate

behavior in todays society?

After these consumer expectations are identified, prospect theory

(Kahneman and Tversky, 1979), a descriptive model of the risky choice

process, can be used to predict how consumers will respond to both ethical

and unethical firm behavior. In fact, prospect theory and the prospect theory

value function have been used successfully to predict behavior in a number

of marketing situations (c.f. Puto, 1987; Creyer and Ross, 1996 and Ross,

1991). Drawn from the expected value family of models, it characterizes

options on two nonlinear dimensions:

(1) a function which maps the value of the outcome, and

Expectations play animportant role

Prospect t heory


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(2) a likelihood function which maps the probability of the outcomeoccurring.

Both functions are of interest, but the value function is most useful for thepresent research. The most important properties of the value function arethat:

decision makers evaluate outcomes as gains or losses from a referencepoint, often the status quo,

the value function indicates diminishing marginal returns with distance(in either direction) from the reference point, and

the function is steeper in the loss domain than in the gain domain.

Therefore, if consumers expect firms to behave ethically, then ethicalbehavior is a reference point against which perceived firm behavior can bejudged such a reference point offers very explicit predictions about the

valuation of ethical and unethical behaviors. Ethical behaviors should not bevalued highly by consumers if all they do is meet the reference point, orexpectation. However, exceptionally positive behaviors such as the decisionby a Lowell, MA manufacturer to continue to pay salary and benefits to hisproduction employees after a disastrous fire destroyed his plant, may beviewed as a gain if it exceeds expectations. On the other hand, if ethicalbehavior is the reference point against which corporate behavior isevaluated, unethical behavior should be seen as a failure to attain thereference point and thus viewed as a loss.

The theoretical argument described above is based on the assumption thatconsumers expect firms to behave ethically and that this expectation servesas a reference point for evaluative decisions. Klein and Oglethorpe (1986)develop a categorization scheme for reference points based partially onprevious work by Della Bitta and Monroe (1973). They propose three

classes of reference points: aspiration based (what the consumer would liketo have happen), market based (what exists in the current market) andexperience based (what has happened to the consumer in the past).According to this framework, involvement and depth of processing vary

according to which class has been selected. For more abstract or involvingsituations, an aspiration-based reference point is most likely to be used. Inthis case evaluating the ethicality of corporate behavior is expected to be:

involving, because consumers believe that firm ethicality is an importantissue, and

abstract because many different aspects of the firms motivations andbehaviors must be considered when making a judgment of the ethicalityof the behavior.

Thus, consumers are expected to use an aspiration-based reference pointwhen evaluating firm behavior.

Yet there is more to the issue. If ethical behavior is indeed viewed asmaintaining the status quo while unethical behavior is seen as a loss, thenhow will this influence consumers purchase behaviors? That is, doconsumers believe that they will not reward ethical behavior but will punishunethical behavior? The price that consumers are willing to pay for a firmsproducts is one way that consumers can signal their approval or disapprovalof a firms actions. Thus, consumers might be willing to pay less for aproduct produced by a firm that has engaged in unethical behavior,

compared to the price of a similar product produced by a firm that hasengaged in ethical behavior. However, it is unclear whether consumers will

Perceived f irm behavior

Consumers purchasebehavior


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place a higher value on a product produced by a firm that has engaged inethical behavior, relative to the value placed on products produced by a firm

that has neither engaged in ethical or unethical behaviors. That is, doconsumers believe that they will reward ethical behavior by a willingness to

pay more for that firms products?

Thus, the objectives of this survey were threefold. The first objective was toidentify consumers expectations regarding the ethicality of corporatebehavior in todays society, that is, their reference point. Second, weexamined how consumers believe their purchase behavior would beinfluenced by ethical and unethical corporate actions. Finally, we exploredthe relationship between expectations about the ethicality of corporatebehavior and consumers reports of how they would like to respond toethical and unethical acts.

Study

Sample

Data were collected by self-administered questionnaire completed by parents

of children enrolled in a northeastern, elementary public school. Each childwas given two surveys to take home. Parents were asked to complete thesurvey and send it back to school with their child. The parent-teacherorganization received a donation of $2 for each completed survey. Four-hundred-and-fifty questionnaires were sent home and 280 usablequestionnaires were returned providing a response rate of 62 percent[1].

Measures

A 27-item questionnaire, shown in Table I, was constructed to measure thefollowing four constructs:

(1) importance of the ethicality of a firms behavior (importance);

(2) willingness to reward an ethical firm via purchasing behavior;

(3) willingness to punish an unethical firm via purchasing behavior; and

(4) expectations regarding the ethicality of corporate behavior in todayssociety (expectation).

Responses to the items were measured on a seven point scale where 1 meantdisagree completely and 7 meant agree completely. An overall score foreach construct was obtained by averaging the response to the appropriateitems.

For each of the four constructs, the internal consistency of the scale wasassessed via factor analysis (see Table II). The results indicate that, for eachof the four scales, all of the items loaded with the expected sign on a single

factor.

Further factors were too small (according to scree plot analysis and analysisof the eigen values) to be meaningful. After establishing the relativeunidimensionality of the scales, internal consistency was examined usingcoefficient alpha. Resulting reliabilities ranges from 0.61 to 0.91. Nunnally(1967) indicated that for exploratory work, reliabilities of 0.6 were adequate.In his second edition (Nunnally, 1978), however, he increased that to 0.7.Three scales meet the 0.7 criterion; however, the willingness to punishunethical behavior measure meets only the 0.6 criterion. The effect of havinga measure with lower reliability is to attenuate the statistical significance oftests of that measure, increasing the likelihood of not finding significanteffects. Thus, significant results for a scale with lower reliability are actuallythe product of a more conservative test of the hypothesis.

Questionnaire


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Table I. The 27-question questionnaire

Strongly Strongly

agree disagree

1. I would go several miles out of my way to buy from a 1 2 3 4 5 6 7

store that I knew to be extremely ethical

2. I would pay considerably more money for a product 1 2 3 4 5 6 7

from a firm that I knew to be extremely ethical

3. Firms who are extra ethical should do well in the 1 2 3 4 5 6 7

marketplace

4. Firms who are ethical should be allowed to earn greater 1 2 3 4 5 6 7

profits than firms normally do

5. Given a choice between two firms, one ethical and the 1 2 3 4 5 6 7

other not especially so, I would always choose to buy

from the ethical firm

6. I would go several miles out of my way not to buy from 1 2 3 4 5 6 7

a store that I knew to be extremely unethical

7. I would pay considerably less money for a product from 1 2 3 4 5 6 7

a firm that I knew to be extremely unethical

8. Firms which are unethical should do poorly in the 1 2 3 4 5 6 7marketplace

9. Firms which are unethical should not be allowed to earn 1 2 3 4 5 6 7

greater profits than firms normally do

10. Given a choice between two firms, one unethical and 1 2 3 4 5 6 7

the other not especially so, I would never choose to

buy from the unethical firm

11. It really bothers me to find out that a firm that I buy 1 2 3 4 5 6 7

from has acted unethically

12. I really care whether the stores I patronize have a 1 2 3 4 5 6 7

reputation for ethical behavior

13. Whether a firm is ethical is not important to me in 1 2 3 4 5 6 7

making my decision what to buy

14. I really care whether the companies whose products 1 2 3 4 5 6 7I buy have a reputation for unethical behavior

15. It is important to me that the firms I deal with do not 1 2 3 4 5 6 7

have a reputation for unethical behavior

16. It really pleases me to find out that a firm I buy from 1 2 3 4 5 6 7

has acted ethically

17. I really care whether the stores I patronize have a 1 2 3 4 5 6 7

reputation for unethical behavior

18. Whether a firm is unethical is not important to me 1 2 3 4 5 6 7

making my decision what to buy

19. I really care whether the companies whose products 1 2 3 4 5 6 7

I buy have a reputation for unethical behavior

20. It is more important to me that the firms I deal with 1 2 3 4 5 6 7

have an ethical reputation21. Firms really should be ethical in all of their dealings 1 2 3 4 5 6 7

in the marketplace

22. I expect the firms that I deal with to act ethically at

all times. 1 2 3 4 5 6 7

23. All firms will be unethical sometimes; it is normal 1 2 3 4 5 6 7

24. It is no big deal if firms are sometimes unethical 1 2 3 4 5 6 7

25. Firms have a responsibility not to ever act unethically 1 2 3 4 5 6 7

26. All firms will not uphold the highest ethical standards 1 2 3 4 5 6 7

sometimes; nobody is perfect

27. Firms have a responsibility to always act with the 1 2 3 4 5 6 7

highest of ethical standards


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Consumers expectations

Table III presents the items used in the descriptive statistics for each of thefour constructs. A T-test was used to determine whether the mean for each

construct is greater than four, the midpoint on the seven point measures. Thenull hypothesis is that the mean is less than or equal to four; the alternative

hypothesis that the mean is greater than four. For all four constructs, the

means are significantly greater than the midpoint of the measure. Consumers

state that they expect firms to conduct business ethically (M = 4.97) , andthat whether or not this is the case is an important concern (M = 5.26).

Consumers also report a willingness to reward ethical behavior (M = 5.04)

and punish unethical behavior (M = 5.03).

Relationships among the constructs

In this section we focus on the degree to which the willingness to rewardethical behavior and the willingness to punish unethical behavior are

predicted by expectations of firm behavior. This relationship was examined

using two regression analyses in which willingness to reward and

willingness to punish were regressed on importance and on expectations.

This enabled us to determine whether expectations had an influence on

willingness to punish unethical behavior and/or on willingness to reward

ethical behavior. The perceived importance of ethical behavior was expected

to have a significant effect on both dependent measures. However, it is the

effects of consumers expectations that are the primary focus of this

research. Thus, we test the effects of expectations given the inclusion

importance. The form of the equations are as follows:


Table II. Summary of measures

Number of Coefficient

Measure Sample item items alpha

Willingness to I would pay considerably more money 5 0.71

reward for a product from a firm that I knew

to be extremely ethical

Willingness to I would pay considerably less money 5 0.61

punish for a product from a firm that I knew

to be extremely unethical

Importance of I really care whether the stores I patronize 10 0.91

ethical behavior have a reputation for ethical behavior

Expectation I expect the firms that I deal with to act 7 0.80

about ethical ethically at all times

behavior

Table III. Descriptive results

Standard Number of

Measure Mean deviation subjects T-statistic

Willingness to reward 5.04 1.11 279 15.79a

Willingness to punish 5.03 1.23 279 13.92

Importance of ethical behavior 5.26 0.68 279 30.73

Expectations about ethical behavior 4.97 0.64 274 24.87

Notes: aT-statistical tests whether the mean of the scale is significantly different from the

midpoint of the scale; all are statistically significant at thep < 0.0001 level


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behavior and believe that they will take actions to promote it. That is, by

rewarding ethical behavior through a willingness to pay higher prices for

products, consumers can have a significant regulating effect on corporate

behavior. Similarly, through a desire to pay lower prices for products

manufactured by disreputable firms, consumers can discourage unethical

corporate behavior. However, in order for this system to work effectively,

consumers must be kept informed of questionable business practices. Thus,

information regarding improper or unethical corporate actions must be easily

accessible by the general public. On the other hand, instances of positive

corporate behavior should also be readily available to consumers. Ethical

corporate behavior not only benefits society, it also can significantly benefit

the specific firm if consumers are aware of it.

Our findings raise additional questions which provide opportunities for

future research. Specifically, consumers report that ethical behavior is

important to them. They also report that although they will purchase from an

unethical firm, they would do so at a lower price to punish the behavior. Yet,

we did not directly specify the ethical and unethical behaviors. Ethicality

may be a multi-dimensional concept different ethical corporate acts couldresult in different consumer responses. Similarly, different unethical

corporate acts might lead to different types of responses. For example,

although consumer deception and price fixing at the wholesale level are both

unethical behaviors, consumers may have a stronger reaction in the latter

case. Refusing to discriminate on the basis of age when hiring employees

and making a full disclosure of the risks associated with the use of a cold

medicine are both examples of ethical behavior yet they might have different

impacts on the consumer decision process. In the latter case, the companys

action is of greater personal relevance to the consumer than in the former

case. Thus, the opportunity exists for future research to identify the

dimensions along which the ethicality of corporate behavior are evaluated.

Consumers do report that they care about business ethics, but greater insightinto precisely how much they care and under what circumstances is needed.

Notes

1. In order to protect the privacy of the children at the school, specific demographic

information such as income level was not collected. However, the students and, hence,

the parents come from a wide range of educational and income levels and thus, we

believe, provide a representative sample of consumers. It should be noted that there is

some possibility that one person from a family filled in both questionnaires sent to that

family. We specifically requested that two different adults respond to decrease the

likelihood of this occurring.

2. We also examined other models to ensure that we were using the appropriate models. For

example, inclusion of the interaction between expectation and importance did notimprove model fit, and the coefficient for the interaction was not significant (p > 0.10) in

that model and the coefficient for expectation was not significantly diminished. Thus,

importance does not moderate the effects of expectation they are independent effects.

References

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relationship between corporate social responsibility and profitability,Academy of

Management Journal, Vol. 21, September, pp. 479-86.

Bhide, A. and Stevenson, H.H. (1990), Why be honest if honesty doesnt pay,Harvard

Business Review, Vol. 68, September-October, pp. 121-9.

Cavanaugh, G.F., Moberg, D.J. and Velasquez, M. (1981), The ethics of organizational

politics,Academy of Management Review, Vol. 6 No. 3, pp. 363-74.

Creyer, E. and Ross, W.T. Jr (1996), The impact of corporate behavior on perceived productvalue,Marketing Letters, Vol. 7 No. 2, pp. 173-85.


Future research


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price perceptions, in Ward, S. and Wright, P. (Eds),Advances in Consumer Research,

Vol. 1, Association for Consumer Research, Urbana, IL, pp. 359-69.

Ferrell, O.C. and Gresham, L.G. (1985), A contingency framework for understanding ethical

decision making in marketing,Journal of Marketing, Vol. 49, Summer, pp. 87-96.

Ferrell, O.C. and Skinner, S.J. (1988), Ethical behavior and bureaucratic structure in

marketing research organizations,Journal of Marketing Research, Vol. 25, February,pp.103-9.

Ferrell, O.C. and Weaver, K.M. (1978), Ethical beliefs of marketing managers,Journal of

Marketing, Vol. 42, July, pp. 69-73.

Hunt, S.D., Chonko, L.B. and Wilcox, J.B. (1984), Ethical problems of marketing research,

Journal of Marketing Research, Vol. 21, August, pp. 309-24.

Kahneman, D. and Tversky, A. (1979), Prospect theory: an analysis of decision under risk,

Econometrica, Vol. 47, March, pp. 263-91.

Klein, N.M. and Olgethorpe, J.E. (1986), Cognitive reference points in consumer decision

making, in Wallendorf, M. and Anderson, P. (Eds),Advances in Consumer Research,

Vol. 14, Association for Consumer Research, Provo, UT, pp. 183-7.

Laczniak, G.R. and Inderrieden, E.J. (1987), The influence of stated organizational concern

upon ethical decision making,Journal of Business Ethics, Vol. 6, May, pp. 297-307.

Murphy, P.E. and Laczniak, G.R. (1981), Marketing ethics: a review with implications, inEnis, B.M. and Roering, K.J. (Eds),Review of Marketing, AMA, Chicago, IL,

pp. 251-66.

Nunnally (1967), Psychometric Theory, McGraw Hill, New York, NY.

Nunnally (1978), Psychometric Theory, 2nd ed., McGraw Hill, New York, NY.

Puto, C.P. (1987), The framing of buying decisions,Journal of Consumer Research, Vol. 14

No. 3, pp. 301-15.

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Elizabeth H. Creyer is Associate Professor of Marketing and Transportation at the

University of Arkansas, Fayetteville, Arkansas, USA. William T. Ross, Jr is Assistant

Professor of Marketing at Temple University, Philadelphia, Pennsylvania, USA.

s


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Executive summary and implications for managers andexecutives

Consumers set the ethical bounds of business not moral philosophers

There are times when it seems business is tainted by the actions of a few

unscrupulous and ethical people. These unethical actions when discovered dominate news about business. The contrary (and common) situation

seldom attracts the same attention. When a business is caught out giving

incorrect information to consumers or colluding in price fixing or

manipulation the assumption of many is that this would be normal business

practice without regulatory control.

In many ways the reverse is true. Most businesses operate with a degree of

respect for the consumer that those consumers would find surprising. And,

as the interests of consumers extend to wider areas of business operation,

firms seek to demonstrate ethical dealings with suppliers, employees and

their local environment. So when we find that ethical behavior presents

positive business benefits then there is a still greater likelihood thatbusinesses will act ethically.

Creyer and Ross show us that consumers do take perceptions of ethical or

unethical activities by business into account when buying. Consumers expect

businesses to behave ethically and are prepared to punish those businesses

when they see them falling below the standards expected. Moreover, some

consumers will seek out firms they see as ethical.

These findings set a strong imperative on firms to act responsibly. But, at the

same time, we lack a clear basis on which ethical or unethical behavior

should be judged. Creyer and Rosss two examples show how this problem

arises. The desire of the American Academy of Pediatrics for parents to

consult a pediatrition before using any infant formula might be seen as an

admirable protection of consumer health through the intervention of an

expert in the choice. However, we could also argue that the Academy acts

not to protect consumers, but to secure its own monopoly over infant formula

distribution and hence its members profits. Both positions are ethically

defensible but what matters is how consumers see the issue do they support

the medical practitioners or the firm seeking lower consumer prices by

cutting out the middleman?

We face a similar dichotomy with the less developed country. A

manufacturing plant in that country means jobs and investment for ordinary

people, but also means members of the local lite making monopolistic

profits. Are low third world wages a reflection of exploitation or stages of

economic development? Again both positions can be defended in ethical

terms. What matters is how consumers feel about the two possibilities. The

risk for the business keeping manufacture in a high cost economy is that the

price differential may exceed the extra premium Creyer and Ross identify

consumers will pay in rewarding ethical behavior.

So we know that firms must act ethically. Yet we do not know precisely what

that means in many cases. A firm must balance the interests of its employees,

shareholders, suppliers and customers while retaining unreproachable

ethics. Remember that even firms seen as practicing exemplary ethics (e.g.

Body Shop) have not escaped criticism on the basis of misbehavior verging

on unethical practice. Such criticism may be unfounded but it does show that


This summary has been

provided to allowmanagers and executives

a rapid appreciation of

the content of this

article. Those w ith aparticular interest in t he

topic covered may then

read t he articl ein toto totake advantage of the

more comprehensive

descripti on of theresearch undertaken and

its results t o get the full

benefit of the m aterial

present


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consumer organizations, ethical trusts and the media are willing to

challenge the pronouncements of firms about ethics.

Since the customer provides businesses with profit and the means to continue

trading, it is their ethical judgment that matters. And business should not try

to use its position to change consumers ethical position. Such an attempt

will probably fail since few, if any, businesses have the strength to changegeneral consumer attitudes. In ethics as with many other aspects of

business it is better to go with the flow of consumer opinion rather than

swim against that flow.

Regardless of the presence or otherwise of criticism there are three essential

things that firms must subscribe to:

(1) Transparency. People are rightly suspicious of organizations that

operate in a secretive manner. Ethical positions should be clear to the

buyer allowing that buyer to judge their acceptability.

(2) Honesty.Dishonesty is one of the most criticized aspects of business

ethics. Incorrect or incomplete labeling, deliberate obfuscation and

confusing pricing all irritate consumers. And the requirement of honest

dealings extends beyond corporate policies to the behavior of staff and

other representatives.

(3) Humility. Firms must avoid seeking to use power or money to secure

unethical positions against consumer wishes. When McDonalds sued a

couple of English anarchists for criticizing them they acted to protect

their name. But, in doing so, they exposed themselves to huge costs and

presented their opponents with an international platform to propagate

their criticisms. What did the anarchists do when the case was over?

They went straight out and distributed the same leaflets that brought

about the case in the first place. It is far better to use persuasion and

information to protect an ethical position than the heavy hand of thelaw.

Business needs ethics since they control the actions of cowboys and allow

consumers a mechanism for deciding who to buy from. Governments, rather

than responding to the blandishments of pressure groups with draconian

regulations, should set about ensuring that firms act honestly, transparently

and are sensitive to public opinion. The punishment of unethical behavior

can come from the consumers themselves rather than inflexible and

expensive courts.

Firms need to realize that they depend on consumers and to take note of the

trend toward ethics forming a core part of consumer decision making. The

willingness of consumers to reward or punish businesses on the basis

of ethics shows how important defining a clear ethical position is to all

firms.

(A prcis of the article The influence of firm behavior on purchase

intention: do consumers really care about business ethics? Supplied by

Marketing Consultants for MCB University Press)


Documents

The Influence 2