An executive summary
for managers and
executives can be found
at the end of this article
Business decisions
involve ethical judgment
JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997, pp. 421-432 © MCB UNIVERSITY PRESS, 0736-3761
The influence of firm behavior on
purchase intention: do consumers
really care about business ethics?
Elizabeth H. Creyer and William T. Ross Jr
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 strongly
opposed 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 company’s competitive position but the host government will
also make a considerable profit, a profit which will be enjoyed by the ruling
élite, 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 press’s propensity for
Order of authorship of this article was determined alphabetically.
421
 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 Nestlé 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 firm’s 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 ethical
judgments 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 firm’s
behavior influence consumers’ purchases? A survey of consumers was
conducted to provide insight into these issues.

Ethical perspectives and research issues

Set of normal principles Ethics 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 an
individual 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

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

 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 can
simply 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 play an Expectations are beliefs regarding what is to be expected, or anticipated.
important role 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 today’s society?
Prospect theory 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

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

 (2) a likelihood function which maps the probability of the outcome
occurring.
Both functions are of interest, but the value function is most useful for the
present research. The most important properties of the value function are
that:
• decision makers evaluate outcomes as gains or losses from a reference
point, 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.

Perceived firm behavior Therefore, if consumers expect firms to behave ethically, then ethical
behavior is a reference point against which perceived firm behavior can be
judged – such a reference point offers very explicit predictions about the
valuation of ethical and unethical behaviors. Ethical behaviors should not be
valued highly by consumers if all they do is meet the reference point, or
expectation. However, exceptionally positive behaviors such as the decision
by a Lowell, MA manufacturer to continue to pay salary and benefits to his
production employees after a disastrous fire destroyed his plant, may be
viewed as a gain if it exceeds expectations. On the other hand, if ethical
behavior is the reference point against which corporate behavior is
evaluated, unethical behavior should be seen as a failure to attain the
reference point and thus viewed as a loss.
The theoretical argument described above is based on the assumption that
consumers expect firms to behave ethically and that this expectation serves
as a reference point for evaluative decisions. Klein and Oglethorpe (1986)
develop a categorization scheme for reference points based partially on
previous work by Della Bitta and Monroe (1973). They propose three
classes of reference points: aspiration based (what the consumer would like
to have happen), market based (what exists in the current market) and
experience 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 involving
situations, an aspiration-based reference point is most likely to be used. In
this case evaluating the ethicality of corporate behavior is expected to be:
• involving, because consumers believe that firm ethicality is an important
issue, and
• abstract because many different aspects of the firm’s motivations and
behaviors must be considered when making a judgment of the ethicality
of the behavior.
Consumers’ purchase Thus, consumers are expected to use an aspiration-based reference point
behavior when evaluating firm behavior.
Yet there is more to the issue. If ethical behavior is indeed viewed as
maintaining the status quo while unethical behavior is seen as a loss, then
how will this influence consumers’ purchase behaviors? That is, do
consumers believe that they will not reward ethical behavior but will punish
unethical behavior? The price that consumers are willing to pay for a firm’s
products is one way that consumers can signal their approval or disapproval
of a firm’s actions. Thus, consumers might be willing to pay less for a
product produced by a firm that has engaged in unethical behavior,
compared to the price of a similar product produced by a firm that has
engaged in ethical behavior. However, it is unclear whether consumers will

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

 place a higher value on a product produced by a firm that has engaged in
ethical behavior, relative to the value placed on products produced by a firm
that has neither engaged in ethical or unethical behaviors. That is, do
consumers 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 to
identify consumers’ expectations regarding the ethicality of corporate
behavior in today’s society, that is, their reference point. Second, we
examined how consumers believe their purchase behavior would be
influenced by ethical and unethical corporate actions. Finally, we explored
the relationship between expectations about the ethicality of corporate
behavior and consumers’ reports of how they would like to respond to
ethical and unethical acts.

Study
Sample
Questionnaire Data were collected by self-administered questionnaire completed by parents
of children enrolled in a northeastern, elementary public school. Each child
was given two surveys to take home. Parents were asked to complete the
survey and send it back to school with their child. The parent-teacher
organization received a donation of $2 for each completed survey. Four-
hundred-and-fifty questionnaires were sent home and 280 usable
questionnaires were returned providing a response rate of 62 percent[1].

Measures
A 27-item questionnaire, shown in Table I, was constructed to measure the
following four constructs:
(1) importance of the ethicality of a firm’s 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 today’s
society (expectation).
Responses to the items were measured on a seven point scale where 1 meant
“disagree completely” and 7 meant “agree completely”. An overall score for
each construct was obtained by averaging the response to the appropriate
items.
For each of the four constructs, the internal consistency of the scale was
assessed via factor analysis (see Table II). The results indicate that, for each
of 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 analysis
of the eigen values) to be meaningful. After establishing the relative
unidimensionality of the scales, internal consistency was examined using
coefficient 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 punish
unethical behavior measure meets only the 0.6 criterion. The effect of having
a measure with lower reliability is to attenuate the statistical significance of
tests of that measure, increasing the likelihood of not finding significant
effects. Thus, significant results for a scale with lower reliability are actually
the product of a more conservative test of the hypothesis.

JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997 425

 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 7
marketplace
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 7
I 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 reputation
21. 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

Table I. The 27-question questionnaire

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

 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 II. Summary of measures

Consumers’ expectations
Table III presents the items used in the descriptive statistics for each of the
four 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. The
null 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) , and
that 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 reward
ethical 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:

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 the p < 0.0001 level

Table III. Descriptive results

JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997 427

 • willingness to reward = B0 + B1 (importance) + B2 (expectation), and
• willingness to punish = B0 + B1 (importance) + B2 (expectation).
The regression equations with coefficients are shown below with the
standard errors of the coefficients in parentheses.
(1) willingness to reward = –0.445 +0.88 (importance) + 0.17 (expectation)
(0.54) (0.09) (0.09)
(2) willingness to punish = – 1.08 + 0.99 (importance) + 0.18 (expectation)
(0.59) (0.09) (0.09)
In both equations, importance is highly significant ( p < 0.0001) and the
expectation of ethical behavior is marginally significant ( p < 0.07, one-
tailed). Model comparison tests in which we compared this model to a
simple regression of willingness to reward and willingness to punish on
importance reveal that adding expectations to the model significantly
improves prediction of both a willingness to punish and a willingness to
reward[2]. Hence, consumers’ stated willingness to reward ethical behavior
and punish unethical behavior are influenced by the importance placed on
the ethicality of a firm’s behavior and, to a lesser extent, by their
expectations of how a firm should behave. Thus, the extent to which
consumers will reward or punish behavior is a function of both expectations
and the perceived importance of ethical behavior.

Discussion
Purchase decisions Our findings provide marketing practitioners with new insight into the
factors influencing consumers’ purchase decisions. In the survey, consumers
reported that:
• the ethicality of a firm’s behavior is an important consideration during
the purchase decision,
• ethical corporate behavior is expected,
• they will reward ethical behavior by a willingness to pay higher prices
for that firm’s product, and
• although they may buy from an unethical firm, they want to do so at
lower prices which, in effect, punishes the unethical act.
These are encouraging results from a societal perspective. It suggests that
firms should encourage ethical behavior, not only for its own sake, but also
because ethical behavior may benefit the firm while unethical behavior may
harm the firm. These findings provide new insight into the long-standing
debate regarding the usefulness of socially responsible behavior (Aupperle
et al., 1985).
Identifying the conditions under which the ethicality of firm behavior is
likely to have the greatest effects on purchase decisions is beyond the scope
of this research. However, if consumers perceive little difference between
competing products or brands, then this would seem to provide an
opportunity for marketing managers to differentiate their products on the
basis of the ethicality of their firm’s actions. As this research demonstrates,
consumers do form expectations about the ethicality of firm behavior.
Perhaps marketing managers should be encouraged to play a more active
role in shaping these expectations.
These findings also have interesting public policy implications. They
suggest that consumers are concerned about the ethicality of corporate

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

 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.
Future research 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 could
result 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 company’s
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 insight
into 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 not
improve 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.

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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.

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

 This summary has been
provided to allow
managers and executives
a rapid appreciation of
the content of this
article. Those with a
particular interest in the
topic covered may then
read the article in toto to
take advantage of the
more comprehensive
description of the
research undertaken and
its results to get the full
benefit of the material
present
JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 6 1997
Executive summary and implications for managers and
executives
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 that
businesses 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 Ross’s 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 élite 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
431
 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 change
general 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 McDonald’s 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 the
law.
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 précis 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)

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