The effects of unethical conduct

of pharmaceutical companies on
consumer behavior
Empirical evidence from Germany
Jorg Lindenmeier
WHL Graduate School of Business and Economics, Lahr, Germany, and
Dieter K. Tscheulin and Florian Drevs
Department of Business Administration, University of Freiburg, Freiberg,
Germany
Abstract
Purpose This study aims to investigate how unethical corporate behavior of pharmaceutical
companies affects consumer behavior of German consumers, especially boycotts of over-the-counter
drugs.
Design/methodology/approach Borrowing from psychological theory as well as consumer
behavior theory, the study develops a conceptual model that considers affective and cognitive
determinants of boycotting behavior. Within the scope of the German pharmaceutical sector, the
researchers conducted a survey to validate the research hypotheses using moderated regression
analysis.
Findings Individuals inclination to join boycotts and engage in boycott communication results
from anger about animal testing, perceived immorality of pharmaceutical companies corporate
behavior and negative corporate image of pharmaceutical companies. An empirical analysis reveals
signicant moderation effects.
Research limitations/implications This research focuses on the pharmaceutical sector and the
boycott of over-the-counter drugs.
Practical implications The study results may help pharmaceutical companies develop
communication responses to accusations of unethical corporate behavior.
Originality/value The paper offers new insights on the effects of unethical corporate behavior on
consumers, which may be useful to the crisis-prone pharmaceutical sector.
Keywords Animal experimentation, Boycotting behaviour, Unethical corporate behaviour,
Corporate image, Pharmaceuticals industry, Germany, Consumer behaviour
Paper type Research paper
Introduction
The pharmaceutical sector is a multi-billion market. For instance, the revenues in the
US pharmaceutical market amounted to $310.75 billion in 2010 (BPI: German
Pharmaceutical Industry Association, 2011). In the public mind, pharmaceutical
products have often been seen as a culprit of rising healthcare cost. In 2009,
pharmaceutical products factually accounted for 17.30 per cent of total expenditures
within Germanys statutory health insurance scheme (BPI: German Pharmaceutical
Industry Association, 2011). However, pharmaceutical companies can also be
considered as a main force behind innovation in healthcare markets.
The current issue and full text archive of this journal is available at
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International Journal of
Pharmaceutical and Heathcare
Marketing
Vol. 6 No. 2, 2012
pp. 108-123
qEmerald Group Publishing Limited
1750-6123
DOI 10.1108/17506121211243040
Just as the majority of others businesses pharmaceutical companies generally strive
for excellent product or service quality and reasonable prices as the prerequisites for
nancial success. Recently, the moral dimension of corporate behavior has gained
importance, a trend reected in the emergence of such management concepts as
corporate social responsibility and corporate citizenship (e.g. Ku sku and
Zarkada-Fraser, 2004). Moreover, as consumer sovereignty grows (Smith, 1987),
instances of unethical corporate conduct result in harsher consumer reactions, with
consumer boycotts representing the most severe consumer resistance (Herrmann,
1993). The effects of consumer boycotts can be so far reaching that they affect a rms
bottom line. For instance, during the Brent Spar boycott almost 75 per cent of the
German population boycotted Shell (Greenpeace, 2003). Powerful opposition from
consumers induced Shell to reverse its decision to dump the Brent Spar oil platform in
deep Atlantic waters ( Jordan, 1998). Reactions to the BP oil spill also engaged
thousands of consumers (e.g. Facebook group Boycott BP has more than 800,000
followers) and the consumer boycott caused company CEO Tony Hayward to resign
(MacMillan, 2010). In another example, 52 per cent of German consumers continue to
boycott Schlecker because of the drugstore chains labor exploitation (Grassroots
Germany, 2009). Several econometric studies have also shown that consumer boycotts
may have a negative effect on boycotted rms stock price (e.g. Davidson et al., 1995).
Against this background, the current study investigates how instances of unethical
corporate conduct impact boycott motivation. Unethical corporate conduct is part of
the moral domain and has signicant societal consequences. Environmental pollution
(as in the BP oil-spill), the exploitation of labor (as in Nikes abuse of child labor[1]), and
human rights abuses by authoritarian regimes (as in the Pepsico/Burma
controversy[2]) are examples of unethical corporate conduct. More recently, certain
drug safety issues (as in Mercks Vioxx recall[3]) as well as marketing and advertising
tactics in promoting prescription drugs have been considered as unethical business
practices of pharmaceutical companies. Hence, consumer boycotts can likewise be
expected to impact the bottom line of pharmaceutical companies.
Against this background, the current study focuses on the pharmaceutical
industrys animal experimentation practices. Even though animal experimentation is
an established practice in R&D and is legally mandated, the practice frequently
attracts protests from animal rights activists, who consider the practice unethical. But
as long as pharmaceutical companies follow legal regulations and protocols (standards
of good clinical practice) it is questionable whether animal experimentation constitutes
an unethical business practice. On the other hand, animal experimentation is
controversial and makes some people uncomfortable. Thus, the question whether
animal experimentation constitutes unethical corporate conduct is not easy to answer.
We can initially rely on normative ethical theories from the domain of moral
philosophy, including deontology and teleology. However, in a consumer research
context, it is up to each citizen to judge whether pharmaceutical companies animal
experimentation practices are morally right or wrong. Hence, the current study focuses
on consumer perceptions of pharmaceutical companies alleged unethical conduct.
Many consumers regularly use over-the-counter drugs. The worldwide revenues for
over-the-counter drugs of the pharmaceutical industry amounted to $72.1 billion in
2009 (Pharmaceutical Technology Europe, 2010). In 2010, pharmaceutical companies
sold over-the-counter drugs worth more than e6.1 billion in Germany. Compared to
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2009, sales and revenue have moderately decreased. In sum, the over-the-counter
market represents about 20 per cent of the total market for pharmaceuticals in
Germany (BPI: German Pharmaceutical Industry Association, 2011). About 80 per cent
of the over-the-counter drugs revenue is generated in pharmacies (BPI, 2011). About 90
per cent of the German population is insured under a statutory health insurance (Putz
and Hagist, 2006). There is no reimbursement of expenses for the majority of
over-the-counter drugs in Germanys statutory health insurance since 2004. The rest of
the German population signed private insurance contracts (Schreyogg and Grabka,
2010). These private health insurance plans reimburse a bigger part of the expenses for
over-the-counter drugs. All in all, most of the German citiziens must thus pay the full
costs for over-the-counter drugs.
Due to the importance of over-the-counter drugs for pharmaceutical companies,
animal rights activists may impose signicant economic pressure on pharmaceutical
companies by calling for boycotts of over-the-counter drugs. Since these drugs are
often used to treat mild illnesses such as colds and headaches, it is relatively easy for
consumers to refrain from buying them and the individual costs of boycotting (Klein
et al., 2004) are quite low. In contrast, it is more difcult to boycott prescription drugs
because they may be necessary to treat serious illnesses. Hence, boycott activists
typically call on consumers to forgo over-the-counter drugs (for further information on
over-the-counter drugs see DeLorne et al., 2010)[4]. In keeping with this reasoning, the
current study is limited to boycotts of over-the-counter drugs.
The academic literature on consumer boycotts has grown signicantly in recent
years (e.g. Hunter et al., 2008; Yuksel and Mryteza, 2009; and Farah and Newman, 2010)
as the moral dimension of corporate behavior has attracted more researchers. But
boycotts of pharmaceutical companies have not received sufcient attention, which is
surprising because the pharmaceutical sector is considered one of the most crisis-prone
industries (Priporas and Vangelinos, 2008), as current boycott campaigns demonstrate.
For example, Novartis International AG has been criticized because the rm applied
for patent protection in India for a drug called Glivec to treat chronic myeloid leukemia.
Boycott activists claim that this would preclude leukemia patients in India from the
access to generic drugs[5]. Wyeth Pharmaceuticals[6] has come under activist attack
because it produces estrogen drugs from the urine of pregnant mares in a way the
protectors regard as cruel.
Prior empirical research reveals that, in particular, instrumental considerations (Sen
et al., 2001), the cost-benet ratio of boycotting (Klein et al., 2004), consumer animosity
and ethnocentrism (Ettenson and Klein, 2005), solicitude and trust (Hoffmann and
Muller, 2008), and attitudinal constructs (Farah and Newman, 2010) represent major
antecedents of boycott motivation. According to an exploratory study by Kozinets and
Handelman (1998), anger constitutes a trigger for boycott participation. According to
Belch and Belchs (1987) research, corporate image may be important for boycott
motivation as well. A literature review reveals no conclusive empirical research
analyzing how anger and corporate image impact boycotting behavior. There is little
research, too, on the effects of perceived ethicality of criticized corporate conduct on
boycott motivation. This is surprising since previous research shows that perceived
unethical corporate behavior may inuence consumer attitude (Folkes and Kamins,
1999) or willingness to pay (Creyer and Ross, 1996).
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This study lls the research gap by addressing three questions: First, does anger
provide a basis for boycott motivation? Second, does perceived immorality of unethical
corporate conduct as well as corporate image affect boycott inclination? Third, do these
constructs interact? In sum, this is the rst paper delineating and validating a
conceptual model which comprises anger, corporate image, and ethical evaluation as
antecedents of boycotting behavior. In addition, this is the rst empirical study on
consumer boycotts of pharmaceutical companies.
In the next section, we develop a model of boycotting behavior. Subsequently, we
present the results of an empirical study which validates our model, and discuss these
ndings. In the concluding section, we provide a summary and discussion of the studys
managerial implications and avenues for further research as well as limitations.
Conceptual considerations
Boycotts are a means for consumers to express their displeasure over misconduct by
businesses, governments or other organizations. Consumer boycotts represent efforts
by activist groups to hobble companies that act in an unethical manner by persuading
consumers to not buy products from the offenders (Friedman, 1985). Sen et al. (2001) as
well as John and Klein (2003) look at consumer boycotts from the perspective of the
social dilemma theory, a sub-area of rational choice theory. According to Weber et al.
(2004, p. 281) social dilemmas represent phenomena of collective behavior where (a) at
any given decision point, individuals receive higher payoffs for making selsh choices
than they do for making cooperative choices regardless of the choices made by those
with who they interact and (b) everyone involved receives lower payoffs if everyone
makes selsh choices than if everyone makes cooperative choices. This is because the
results of a successful boycott resemble public goods[7] and individuals thus have an
incentive to free-ride (i.e. continue to buy products from the boycotted company) on the
efforts of others (people refraining from the consumption of boycotted products).
Individual rationality consequently results in collective irrationality (Kollock, 1998)
and social cooperation, in the form of boycott success, is endangered.
Based on psychological and consumer behavior theory, this study examines anger
caused by unethical corporate conduct, perceived immorality of unethical corporate
conduct and boycotted companies corporate image. Figure 1 describes the proposed
Figure 1.
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relationships. Consumer anger, a negative emotional reaction to unethical corporate
behavior, can be classied as a type of moral emotion. Moral emotions are complex
constructs linked to concerns for well-being (Meyer and Baker, 2010), including ones
own well-being and that of other persons or society as a whole. Moral emotions such as
consumer anger tend to elicit pro-social action (Haidt, 2003) and therefore should
attenuate free-riding incentives. Considering social dilemma theory, research regards
boycotting as a pro-social behavior (e.g. Klein et al., 2004), and boycotting thus
qualies as a consequence of consumer anger. Anger may trigger communication
among consumers, and boycott supporters often try to convince others to join the
boycott. Thus, boycott communication that resembles negative word-of-mouth and
complaining behavior may help to accelerate joint action and may be critical for
success. Boycott communication allows consumers to vent their anger (Nyer, 2000) and
functions as a strategy for consumers to take revenge on businesses (Wetzer et al.,
2007). Hence, we offer hypothesis H1:
H1. The willingness to boycott is greater when there is a high level of anger
caused by unethical corporate conduct. As consumers level of anger increases
due to unethical corporate behavior, they become more willing to.
The perceived immorality of corporate conduct results from a cognitive evaluation
process during which consumers compare their perceptions of alleged unethical
corporate behavior (e.g. animal experientation) with their ethical values and norms
(e.g. Spicer et al., 2004 on the relevance of ethical norms for behavior). Lessons learned
from early childhood about right and wrong establish the basis of these ethical norms
and values (Reidenbach and Robin, 1990). Moreover, and in line with Reidenbach and
Robins (1990) denition, perceived immorality of corporate behavior is the consumers
perception of justice and fairness of rm behavior. Helsons (1964) adaption level
theory and the disconrmation paradigm (e.g. Anderson and Sullivan, 1993) suggest
that the more consumer perception of corporate behavior deviates from their ethical
norms the stronger the perception of immorality. Perceptions of immorality may
motivate people to participate in consumer boycotts. This assumptions theoretical
foundation can be found in Darley and Pittmans (2003) research on the psychology of
retributive justice. They argue that the primary response to inict harm intentionally
on others is an urge to punish. Perceptions of immorality may motivate people to
engage in punitive action (Pagano and Huo, 2007), including boycotting. It then
follows, as hypothesis H2 states, that:
H2. Boycott intention is greater when the perceived immorality of unethical
corporate conduct is high.
The corporate image concept reects perceptions of companies, corporate groups or
even whole industries. Corporate image reects multiple attributes (e.g. social
responsibility image) in the minds of different stakeholders (Pope et al., 2004).
According to Demetriou et al. (2010, p. 269), a positive corporate image is the
foundation for corporate success, which can be an incentive for the sale of products,
recruitment of the best employees and attraction of investors, and can act as a
competitive advantage. But if the company fails to maintain a positive corporate
image, it may not achieve its business objectives (Furman, 2010). In line with Furman
(2010), we suggest that when consumers buy products from companies with poor
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images (e.g. due to unethical behavior), they may experience cognitive dissonance
(Festinger, 1957), dened as a psychologically uncomfortable state or imbalance that
is produced when various cognitions about a thing are not consistent (Bawa and
Kansal, 2008, p. 31). If purchasers feel guilty about buying a product, they may
experience cognitive dissonance. The stronger the feeling of cognitive dissonance the
higher the motivation to engage in dissonance-reducing behavior, according to
Festinger (1957). The current study considers the corporate image of the
pharmaceutical industry as a whole. Boycott participation, which represents a
purchase sacrice ( John and Klein, 2003), is a strategy to reduce cognitive dissonance.
Hence, hypothesis H3:
H3. Boycott intention is greater when corporate image of the boycotted industry is
more negative.
We assume that anger caused by unethical corporate conduct results in a boost of
contrast effects (Sherif et al., 1961). According to the disconrmation model of
consumer satisfaction, consumers analyze their consumption experiences in terms of
internalized reference standards (Anderson and Sullivan, 1993). Contrast effects may
result when consumption experiences (quality perceptions) differ strongly from
internalized reference standards and may cause higher or lower satisfaction responses
(Babin et al., 1994). In line with Ottati and Isbels (1996) research, we assume that
affective and cognitive constructs may interact, leading to an intensication of contrast
effects. More precisely, we hypothesize that stronger anger reactions by consumers
boost the inuence of perceived immorality on boycott intentions since people who
experience stronger anger exaggerate how much corporate conduct deviates from
ethical norms. Thus, hypothesis H4:
H4. Anger moderates the causal relationship between perceived immorality and
boycott intention: The positive and direct effect of perceived immorality on
boycotting intention is greater (lower) when the level of anger is greater (or
less).
According to Klein and Dawar (2004), a positive corporate image may serve as an
insurance policy against the adverse effects of business crises. They suggest that a
positive corporate image may have a halo effect that spills over onto consumer
behavior, including the decision-making process and attenuated boycott motivation.
We thus hypothesize that a positive corporate image may alleviate the detrimental
effects of anger and perceived immorality on boycott intention. Therefore, hypotheses
H5a and H5b are:
H5a. Corporate image moderates the causal relationship between anger and
boycott intention: The positive and direct effect of anger on boycotting
intention is greater (lower) when the corporate image is negative (positive).
H5b. Corporate image moderates the causal relationship between perceived
immorality and boycott intention: The positive and direct effect of perceived
immorality on boycotting intention is greater (lower) when the corporate
image is negative (positive).
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According to Sen et al. (2001), several types of counterarguments or costs of boycotting
may dilute individual boycott motivation. For instance, free-riding incentives or the
small-agent problem, linked to social dilemma theory, represent indirect costs of
boycotting. The inconveniences associated with constrained consumption are direct
costs of boycotting (Klein et al., 2004). When the preference for boycotted products or
brands is high or the number of suitable substitutes is low, these inconveniences are
more pronounced (Sen et al., 2001). Within a health-related context, perceived
vulnerability to disease (Ho, 1998) may be counted among the direct costs of boycott
participation. The more vulnerable to diseases people perceive themselves the higher
will be their preference for certain pharmaceuticals. Therefore, hypothesis H6 is:
H6. Counterarguments have a negative and direct effect on boycotting intention.
Method
This studys factual research object involves boycott campaigns of animal rights
activists who aim to stop pharmaceutical companies animal testing practices. The
authors chose this issue because 56.5 percent of EU citizens deem animal experiments
unacceptable, even when their purpose is to develop new medicines and treatments for
diseases (European Commission, 2006). Thus, we can assume that many people regard
pharmaceutical companies animal testing practices as instances of unethical corporate
conduct.
The survey that provides the data for this study took place in Spring 2010. Student
research assistants distributed questionnaires in person to the sample, which the
authors dene as the German population between 18 and 65 years of age. Using quota
sampling, the student assistants conducted interviews with people who t the quota
criteria for gender and age. The interviews were conducted in person, which yielded a
representative sample of German-speaking 214 interviewees whose characteristics
appear in Table I. Respondents average age is 42.3 years, the average age of the
German population. A total of 18 respondents are vegetarians (Vegetarier.net, n.d.) and
90 respondents frequently use homeopathic drugs (Allensbach Institute for Public
Opinion Research, 2009), percentages that correlate closely with those in the overall
German population. Thus, the sampling procedure apparently resulted in a sample of
good quality.
At the outset of the interview the participants read preliminary information on
pharmaceutical industrys animal experimentation practices and campaigns against
them, including statements that refraining from buying over-the-counter drugs such as
Gender
Age Men Women Total
(years) n (%) n (%) n (%)
18-29 20 20 40 18.7
30-39 23 26 49 22.9
40-49 28 28 56 26.2
50-59 23 26 49 22.9
60-65 10 10 20 9.3
Total 104 48.6 110 51.4 214 100.0
Table I.
Sample characteristics
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nasal sprays or painkiller, is a means to support activists mission. According to a
market research report (Institut fur Demoskophie Allensbach, 2011), 48.1 (34.2 per cent)
of the German population did use over-the-counter painkillers (cold medicines) in 2010.
The revenue with over-the-counter cold medicines (painkillers) summed up to e1.1
(e0.4) in 2010. To be clearer, the product categories considered in the current study
represent the best-selling over-the-counter products in Germany.
Thereafter, the interviewees responded to questions related to the constructs
depicted in Figure 1. The perceived immorality measure uses the four items of the
moral equity dimension of Reidenbach and Robins (1990) multidimensional ethics
scale (Animal testing is unfair., Animal testing is unjust., Animal testing is
morally wrong., and Animal testing is not acceptable to my friends and family.).
Anger is measured along a three-item scale (I feel angry!, I feel irritated!, and I feel
hostile!). To measure the pharmaceutical industrys image we used Riordan et al.s
(1997) scale (Generally I think the pharmaceutical industry has a good reputation in
the community., [. . .] has a good reputation in the industry., ]. . .] is actively
involved in the community. ,[. . .] a good overall image., [. . .] is known as a good
place to work., and [. . .] has a good reputation among its customers.). To assess the
effect of arguments against boycott participation, expected need of medication is a
single item measure (How likely is it that you will need over-the-counter medicine
(e.g. nasal spray or painkiller) within the course of the next weeks?). According to the
statistics in Table II, these scales show reasonable reliability and validity. To address
the question of boycott intention and boycott communication the questionnaire
includes three item measures (I am talking about the boycott of the pharmaceutical
industry with my friends and acquaintances./I am boycotting over-the-counter drugs.;
I am tempted to boycott over-the-counter drugs/tell others about the boycott, but I
dont know if I will.; and I am not boycotting over-the-counter drugs. I am not talking
about the boycott of the pharmaceutical industry with my friends and acquaintances.)
based on a scale developed by Klein et al. (2004). Finally, the respondents answered
questions on their socio-demographic characteristics.
Study results
This study uses moderated regression analysis to test the relationships proposed.
Table III shows the results of two moderated regression models. As Aiken and West
Mean SD
Cronbachs
alpha (1) (2) (3) (4) (5)
Anger about animal testing 2.84 1.08 0.81 0.73
b
Animal testings perceived immorality 4.62 1.12 0.95 0.30 0.85
Pharmaceutical industrys corporate
image
3.75 1.77 0.89 0.05 0.03 0.54
Counter-arguments
a
2.41 1.12 0.01 0.03 0.00
Boycott intention 3.40 1.12 0.90 0.26 0.49 0.14 0.01 0.89
Boycott communication 3.75 1.14 0.89 0.30 0.48 0.05 0.05 0.84
Notes:
a
Cronbachs alpha and average variance extracted cannot be calculated for single-item
measures.
b
Numbers in italics represent average variance extracted
Table II.
Descriptive statistics,
average variance
extracted, Cronbachs
alpha, and squared
interconstruct
correlations
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suggest (1991), we mean-center the four independent variables. To assess the proposed
moderating effects, we create interaction terms by multiplying the mean-centered
variables. Since all dependents are mean-centered variables or the results of
mean-centered variables multiplication, the value of the regression constant
corresponds to the dependent variables average value. Table III shows that the
variance ination factors reect low multicollinearity. In addition, adjusted R-squared
of 0.36 and 0.53 indicates moderate-to-good overall model t.
H1 posits a positive and direct effect of anger about animal testing practices on
individuals intention to boycott the pharmaceutical industry. Examining angers
regression coefcients, the authors nd support for this hypothesis. Hence, anger
appears to be an affective basis of boycott intention. The regression results indicate
that perceived immorality of animal testing has a signicant effect on intention to join
a boycott against the pharmaceutical industry as well as to engage in boycott
communication, in line with hypothesis H2, which suggests that boycotting represents
a means to restore fairness and equity. Interestingly and (not) consistent with H3,
pharmaceutical industrys corporate image has (no) signicant effect on the intention
to join a boycott of over-the-counter drugs (engage in boycott communication). Since
cognitive dissonance results from individuals purchase decisions these ndings are
Intention to join
the boycott against
the pharmaceutical
industry
Intention to engage
in boycott
communication
Unstandardized
coefcients
Unstandardized
coefcients VIF
Constant 3.69
* * *
3.24
* * *
Anger about animal testing ! Behavioral
intent (H1)
0.24
* *
0.32
* * *
1.45
Animal testings perceived immorality !
Behavioral intent (H2)
0.58
* * *
0.57
* * *
1.56
Pharmaceutical industrys corporate image (2)
! Behavioral intent (H3)
0.23
* *
0.07
ns
1.07
Animal testings perceived immorality
Anger about animal testing ! Behavioral
intent (H4)
0.04
ns
0.13
* * *
1.15
Pharmaceutical industrys corporate image (2)
Anger about animal testing ! Behavioral
intent (H5a)
20.13
ns
20.12
ns
1.32
Pharmaceutical industrys image (2)
Animal testings perceived immorality !
Behavioral intent (H5b)
20.06
ns
0.11
* *
1.32
Counterargument (Expected need for
medication) ! Behavioral intent (H6)
0.02
ns
0.08
ns
1.05
Adj. R-squared
0.36
Adj. R-squared
0.53
F
(6,206)
20.71
* * *
F
(6,206)
40.19
* * *
Notes:
*
p , 0.10,
* *
p , 0.05,
* * *
p , 0.01. Analysis considers corporate image reversely coded. All
independents are mean-centered variables or the product of mean-centered variables
Table III.
Test of hypothesized
relationships (moderated
regression analysis)
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unsurprising. Put simply, individuals may (not) easily establish a clear link between
their prior purchasing decisions and boycotting (communication). Therefore,
boycotting (boycott communication) is (not) a strategy to reduce cognitive
dissonance. Table III shows that the immorality anger interaction effect is
merely signicant with regard to boycott communication intention. Simple-slope
analysis shows that the regression coefcient of animal testings perceived immorality
is 0.84 ( p , 0.01), 1.16 ( p , 0.01), and 1.47 ( p , 0.01) for low, average, and high levels
of anger about animal testing practices. Thus, this signicant interaction effect is in
line with hypothesis H4, which suggests that anger causes contrast effects. In
agreement with hypothesis H5b, the image immorality interaction has a signicant
effect on the willingness to engage in boycott communication. Simple-slope analysis
indicates that the regression coefcient of animal testings perceived immorality is 1.08
( p , 0.01), 1.29 ( p , 0.01), and 1.50 ( p , 0.01) for low, average, and high levels of
pharmaceutical industrys negative corporate image. The more positive
pharmaceutical industrys corporate image the less strong is the effect of anger on
boycott communication intention, supporting hypothesis H5b that corporate image
apparently acts as an insurance policy against the adverse effects of boycotts.
Hypothesis H5a posits an interaction effect of corporate image and anger. Empirical
analysis contradicts this hypothesis. Apparently, pharmaceutical companies corporate
image has no effects that extend from the cognitive sphere to the domain of emotions.
Finally, and in contrast to hypothesis H6, the need for medication has no signicant
effect on the two facets of boycott intention, perhaps because the survey measured
interviewees expectations. The counter arguments may have a more pronounced effect
when there is a factual need for medication.
Limitations, managerial implications and avenues for future research
This study analyses how pharmaceutical companies unethical behavior causes
negative reactions by German consumers. Empirical analysis assesses the effects of
anger caused by unethical corporate behavior, of perceived immorality of unethical
corporate behavior and corporate image on German consumers intention to boycott
over-the-counter drugs. The results of moderated regression analyses indicate that all
three independent variables affect individual inclination to boycott pharmaceutical
companies and to engage in boycott communication. With regard to consumer
willingness to engage in boycott communication, empirical analysis reveals signicant
moderation effects.
Any interpretation of this studys results should be tempered by its limitations.
First, this study is conned to the boycott of over-the-counter drugs. An incautious
application of the current studys results into a general pharmaceutical industry
context is problematic. This is due to the complexity of pharmaceutical consumption
(e.g. physicians as gatekeepers to market of Rx-drugs) as well as to the manifoldness of
end users in the pharmaceutical industry (e.g. patients, pharmacists, or private health
insurance rms). Second, this study focuses on behavioral intent, which does not
necessarily correlate with actual behavior. Third, the empirical results may be
distorted by the inuence of concerns related to social desirability, which may have
prompted respondents to over-report their inclination to boycott the pharmaceutical
industry.
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The current research suggests managerial implications for pharmaceutical
companies. Pharmaceutical companies in general cannot control immediate affective
responses to unethical corporate conduct, such as anger caused by animal
experimentation. Rather, attempts to manipulate consumer emotions may even
boomerang. Thus, pharmaceutical companies should refrain from communication
tactics aimed at disarming anger. Nevertheless, the study results provide managers of
pharmaceutical rms with two promising courses of action to dampen the detrimental
effects of consumer boycotting behavior. First, pharmaceutical companies should
continue to strive for a positive corporate image. Image campaigns that involve
multiple pharmaceutical rms can reduce the negative effects of boycott campaigns[8].
Moreover, one can assume that single pharmaceutical companies should independently
strive for a positive corporate social responsibility image as well. Research shows that
communication tactics such as cause-related marketing (e.g. Demetriou et al., 2010) and
sponsoring select events (e.g. Gwinner and Eaton, 1999) are effective means of
image-building. Second, pharmaceutical companies that wish to lessen boycott
intentions must address consumer perceptions of their immorality. But changes in
animal testing practices in response to animal rights activists are not feasible in most
cases because of government regulations such as those of the US Food and Drug
Administration. Therefore, pharmaceutical rms should attempt to inuence
consumer perceptions through communication. Bradford and Garrett (1995) point
out that companies have different types of communicative responses to accusations of
alleged unethical conduct at their disposal (Bradford and Garrett, 1995). While a no
comment response draws negative reactions (Hunter et al., 2008), concessions
(Bradford and Garrett, 1995) may be more effective. However, managers of
pharmaceutical rms should keep in mind that concessions may have a negative
effect on a rms image as a strong boycott opponent. Excuses may be more
appropriate (Hill et al., 2000). But when an activist groups accusations are substantive,
excuses may result in an unfavorable boomerang effect (Bradford and Garrett, 1995).
Pharmaceutical companies may also monitor consumer anger with early warning
systems, which should focus on social milieus that recruit activists, such as blogs and
social networks.
The current studys ndings open avenues for further research. First, future
research could analyze whether this studys ndings are valid in other instances of
unethical corporate conduct as well for prescription drugs. Second, researchers could
focus on the effects of moral transgression committed by health service providers
(e.g. medical malpractice). Third, researchers could modify and enhance the proposed
model. For example, constructs such as patient compliance could be included when
boycotts of Rx-only drugs are investigated. Fourth, and based on Bradford and
Garretts (1995), Hill et al.s (2000) and Hunter et al.s (2008) research on crisis
communication, future research could analyze in more detail how pharmaceutical
companies and health service providers should respond to accusations of unethical
corporate conduct. Fifth, considering the proposed model, researchers could compare
how pharmaceutical sector overall image versus individual company image affect
consumer boycotting decisions. Sixth, since the current study did not consider any time
effects, panel analyses should be conducted. By doing this, corporate image and its
dynamic effects on consumer behavior could be tracked and analyzed over the course
of a boycott campaign. Seventh, affective responses other than consumer anger could
IJPHM
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118
be considered. For instance, animal experimentation might arouse disgust (e.g. Shimp
and Stuart, 2004). Finally, future research could investigate whether calls for boycotts
inuence pharmaceutical rms nancial performance.
Notes
1. See, e.g. Locke et al. (2007).
2. See, e.g. Coombs (1998).
3. Vioxx, the painkiller developed and marketed by Merck, had serious side effects such as
cardiac infarctions and apoplectic strokes (see, e.g. www.timesonline.co.uk/tol/comment/
article5590806.ece (accessed 19 April 2011)). Legal suits charged that the pharmaceutical
company was aware of the side effects and tried to conceal unfavorable results of clinical
trials.
4. For example, environmental activist groups try to push consumer to refrain from the
consumption of over-the-counter drugs such as Alka Seltzer and Canesten to put pressure on
Bayer AG (see, e.g. http://bristol.indymedia.org/article/14150; accessed 12 April 2011).
5. See http://novartisboycott.org (accessed 6 October 2010).
6. http://equinevoices.org/wyeth.php (accessed 6 October 2010) and www.islandnet.com/
,luree/premarin.html (accessed 11 April 2011).
7. Consumer boycott research typically distinguishes between instrumental and expressive
boycott campaigns. Instrumental boycotts can be considered successful when the boycotted
company stops the criticized corporate behavior. In contrast, expressive boycotts are deemed
successful when public opinion is affected (Friedman, 1991).
8. For instance, the Association of German research-based pharmaceutical companies recently
launched a campaign to improve the industrys public image. See, e.g. www.vfa.de/de/
presse/pressemitteilungen/pm-036-2005-vfa-informationskampagne-erhaelt-den-
politikaward.html (accessed 12 April 2011).
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About the authors
Jorg Lindenmeier is an Assistant Professor at the WHL Graduate School of Business and
Economics. He has published in a number of peer-reviewed journals, including Journal of
Business Research, Health Services Management Research, Voluntas: International Journal of
Voluntary and Nonprot Organizations, and Nonprot Management & Leadership. Jorg
Lindenmeier is the corresponding author and can be contacted at: joerg.lindenmeier@whl-lahr.de
Dieter K. Tscheulin is a Professor of Healthcare Management and Marketing as well as Dean
of the Faculty of Economics and Behavioral Sciences at the University of Freiburg, Germany. He
has experience as a management consultant, specializing in pricing strategies and product and
service innovation processes. He has written and edited several books and published in
peer-reviewed journals, including Health Services Management Research, European Journal of
Health Economics, Journal for Public and Nonprot Services and Journal of Advertising Research.
Florian Drevs is a Postdoctoral Research Fellow in the Department of Marketing and Health
Care Management at the University of Freiburg, Germany. He has experience as a management
consultant in the healthcare industry. He has published in peer-reviewed journals, including
European Journal of Health Economics and Journal for Public and Nonprot Services.
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