BUSINESS STUDENTS' PERCEPTIONS OF ETHICS IN MARKETING GAEDEKE, R.M. - KELLEY, C.A. Journal of Education for Business; May/Jun92, Vol.

67 (5), P .294

ABSTRACT. This study reports the results of a survey that investigated student perceptions of ethics in marketing today, the role of codes of ethics, and how to incorporate business ethics into the curriculum. A method of raising ethical considerations in the introductory marketing course is then presented. This approach involves a process of selecting examples of marketing activities in which ethical dilemmas are present; discussing major theories of ethical decisionmaking; and structuring the students' analytical approach to discover, evaluate, and argue the ethical dilemmas. Business ethics is a growing concern to politicians, educators, consumers, and business. The increased emphasis on business ethics is evidenced through publicized events including derelictions on Wall Street, in the savings and loan industry, and in the defense industry. According to a 1989 poll conducted by the Gallup organization, most Americans give low to merely average marks to the level of honesty and ethical standards in business ("Poll Says Business Ethics Lacking," 1989). In the face of mounting public concern about the role of ethics in business, business academicians are urged to include discussions of ethics in their classes (Magner, 1989). Marketing activities in particular are related to the issue of business ethics because marketing's boundary-crossing tasks expand the number of individuals and groups that are involved in and affected by marketing decisions. The introductory marketing course is a natural place to provide this exposure. Our purpose in this study was to examine the perceptions of business students toward ethics in marketing and how marketing educators may address ethics in the introductory marketing course.

Literature Review
Investigations of marketing ethics have generally followed two streams of research. The first stream has examined students' individual ethics assessments of business activities in general. In Nichols and Zimmerer's (1985) study, undergraduate students examined 10 situations and assessed their personal evaluation of the ethical acceptability of the situation, how society would similarly assess the situation, and how business persons would respond. They found that strength of religious belief affects individual opinions of what is acceptable, but not what society as a whole or the business world views as acceptable. Their study did not find evidence by gender or academic major of differences in ethical perceptions. Hegarty and Sims (1979) examined how environmental conditions affect ethical/unethical behavior. They found that ethical decisionmaking among subjects increased given the presence of an organizational policy concerning ethical behavior.

Hawkins and Cocanougher (1972) found that students majoring in business have more tolerant attitudes toward questionable business operations than nonbusiness majors do. In a follow-up study at a university setting in a different part of the country, Shuptrine (1979) lent additional support to this finding. The second stream of research has focused on measuring student perceptions of ethics based on a specific marketing activity. DeConinck and Good (1989) studied specific behavioral perceptual differences of ethics between sales practitioners and future salespersons, that is, students enrolled in sales classes. They found that practitioners professed a greater concern for ethical behavior and less attention to sales than did the students. Grant and Broom (1988) investigated the response of students to an ethical dilemma faced by a salesperson. They reported that business ethics attitudes were related to family income, father's occupation, and type of university. Students from "low-income" families thought "strictly" ethical or unethical, whereas those from "high-income" families tended to view ethics in terms of immediate monetary return. Those from "middle-income" families tended to compromise. Students whose fathers were employed in a blue-collar job had higher ethical standards than students whose fathers were employed in either managerial or professional jobs. Students graduating from a "small" state university appeared to be more inclined toward "strictly" ethical attitudes; those from "large" state universities and private religious universities appeared to have the full spectrum of ethical attitudes. Although these streams of research have increased the business educator's understanding of students' perceptions of ethics, additional studies are needed to expand the depth and breadth of knowledge in this area. Specifically, a cross-sectional study is needed to investigate student perceptions of the ethics of marketing activities in general and the role of codes of ethics in decisionmaking. These issues were the focus of the current study.

Methodology
Students have often been used in survey research involving ethical behavior. Although the external validity of these studies may be questionable (Hunt & Vitell, 1986), the results do provide an important observation of the ethical beliefs of tomorrow's business managers as well as a reflection of the education received by students. A self-administered questionnaire was completed by students enrolled in upper division marketing classes at four universities. The first part of the questionnaire consisted of statements concerning students' perceptions of the ethics of marketing in general and codes of ethics. Five-point Likert-type scales, ranging from 1 = strongly agree to 5 = strongly disagree, were used to measure these statements. Students' opinions of how business ethics should be incorporated into the curriculum were measured with categorical questions. Part two of the questionnaire focused on the demographics of age, gender, and major area of concentration.

The sample consisted of 327 students attending universities in four regions of the country: the West, Southwest, Southeast, and East. MANOVAs were run to test for regional differences on the items that were included on the questionnaire. Given that no significant differences existed among students from the different regions of the country, the data were pooled for further analysis. The age groupings of the respondents were: under 20 (0.6%), 20-23 (74.9%), 24-28 (18.7%), and 29 and older (5.8%). Over half of the respondents were female (53.2%), and 74.9% were marketing majors.

Results
Ethics in Marketing Today : In Table 1, we show the responses to statements about the ethics of marketing in general. The strongest agreement among students is that business leaders should be held accountable for their behavior in an ethical sense (M = 1.54). Yet they do not perceive that ethical issues are the single most important issue confronting American business today (M = 2.82) or that ethical issues should be decided by the legal system (M = 3.26). Students agree that ethical considerations should be an integral part of marketing's strategic planning process (M = 1.69) and that most marketing decisions involve some degree of ethical judgment (M = 1.97). The respondents also agree that it is possible for marketers to behave ethically in a competitive world (M = 1.76). Students tend to agree that corporate values of profit and efficiency should be tempered by values of ethics (M = 2.22). Though students somewhat agree that the conduct of marketers is as ethical as that of people engaged in other areas of business (M = 2.19), their perception is not as strong that the ethics of marketing currently are superior to those of the past (M = 2.51). Yet, students tend to agree that the public at large believes marketers have a lower ethical standard than marketers actually have (M = 2.39). Students tend to disagree that the receipt or solicitation of gifts, entertainment, or anything else of value should be prohibited(M= 3.16). Students somewhat agree that sales people face more ethical dilemmas than any other marketing personnel (M = 2.46). Yet they tend to disagree that researchers face more ethical dilemmas than other marketing personnel (M = 3.08). Their responses are mixed as to whether most marketing researchers are professionals and conduct themselves in a professional manner (M = 2.41) and whether the application of military principles to marketing is ethical (M = 2.96). We used a series of MANOVAs to test for differences in selected demographic characteristics as they relate to the perceptions of ethics in marketing today. Overall, there are significant MANOVAs for age groups of the respondents, F(45,918) = 1.83, p </= .001, and for gender, F(15,311) = 1.83, p </= .030. The MANOVA is not significant for student's area of concentration, F(90,1727) = .98, p </= .520.

Younger respondents agree more strongly that marketing ethics today are superior to those of the past, F(3,323) = 3.48, p </= .016, whereas older respondents agree more strongly that business leaders should be held accountable for their behavior in an ethical sense, F(3,323) = 2.85, p </= .038. The youngest and the oldest age groups disagree that researchers face more ethical dilemmas than any other marketing personnel, whereas the 24-to-28year-old age group agree with this statement, F(3,323) = 3.52, p </= .015. Last, the oldest age group agree that receiving or soliciting gifts, entertainment, or anything else of value should be prohibited, F(3,323) = 4.38, p </= .005 and that ethical issues are the single most important issue confronting American business today F(3,323) = 2.84, p </= .038; the younger age groups tend to disagree with these statements. Females, compared with males, agree more strongly that the public at large believes that marketers have a lower ethical standard than marketers actually have, F(1,325) = 4.71, p </= that business leaders should be held accountable for their behavior in an ethical sense, F(1,325) = 5.14, p </= .024, that ethical considerations should be an integral part of marketing's strategic planning process, F(1,325) = 5.51, p </= .020, that corporate values of profit and efficiency should be tempered by values of ethics, F(1,325) = 3.94, p </= .048, and that ethical issues are the single most important issue confronting American business today, F(1,1,325) = 5.38, p </= .021. The Role of Codes of Ethics : Many companies have adopted codes of standards of ethical behavior. Codes of ethics have been suggested as a means to attain high ethical standards in business ("AMA Adopts New Code," 1987); Byrne, 1988; Hyman, Skipper, & Tansey, 1990). Although formal, written codes of ethics are present in many companies, they are somewhat controversial. For example, some ethics specialists believe codes are merely "window-dressing"--they look good but are not expected to interfere with the realities of the business world (Bennett, 1988). As shown in Table 2, students tend to disagree that ethical conduct can be reduced to a code of ethics (M = 3.10), that codes of ethics look good but help little (M = 2.93), and that written codes of ethics can resolve the difficult ethical situations the marketer may face (M = 2.88). Instead, they believe that corporations need a culture and peer pressure that spell out what is ethical behavior and what is not (M = 1.95). They are undecided about whether or not employees should be fined for violating a company's code of ethics even when these are not violations of the law (M = 2.55). After reading the American Marketing Association's code of ethics, students tend to agree that this code provides definitive guidelines (M = 2.29). They are uncertain, however, whether or not the code can be enforced (M = 2.83). The MANOVA results are significant for age, F(21,910) = 1.62, p </= .039 but are not significant for gender, F(7,319) = 2.00, p </= .054 or area of business concentration F(42,1476) = 0.63, p </= .966. The only univariate age-group significant difference is that the oldest age group agree that the American

Marketing Association's code of ethics cannot be enforced, F(3,323) = 3.71, p </= .012, whereas the younger respondents agree less with this statement.

Incorporating Business Ethics Into the Curriculum

Incorporating business ethics into the curriculum has not yet come of age. Although business students are not convinced that ethical behavior is something a school can teach, many are not satisfied with the attention it now receives and want their institutions to address business ethics in a more structured way (Magner, 1989). The current study found that an overwhelming majority (94.2%) of students believe that business ethics should be incorporated into the business curriculum. Furthermore, 56.6% favor either a required course in business ethics or a required course in each major; whereas 6.4% would like to see business ethics incorportated into every business course. The remaining 37.0% prefer having elective courses in business ethics incorporated into the curriculum. Students who have taken a course in ethics and students who have not completed an ethics course differed in their views as to the integration of ethics into business courses. Students with previous course exposure to ethics believe that business ethics should be a required course.

Incorporating Ethics Into the Introductory Marketing Course

Students have relatively strong opinions about ethics in marketing today (see Tables 1 and 2). They believe that business leaders should be held accountable for their behavior and that ethical considerations should be an integral part of the planning process. They also believe that it is possible to behave ethically in a competitive world and that most business (marketing) decisions involve some degree of ethical judgment. Furthermore, they believe that the organizational climate in which managers operate largely influences the ethical dimensions of business decisionmaking. Given students' opinions about ethical behavior in business, it is not surprising that they favor the raising of ethical considerations in the classroom. To accomplish this task, educators should use the following three-step process. First, present three major theories of ethical decisionmaking. Second, select for class discussion current and past examples of marketing activities in which ethical dilemmas are present. Third, follow a seven-step outline to discover, evaluate, and discuss the ethical dilemmas. Theories of Ethical Decisionmaking Before discussing the ethics of specific marketing activities, the educator needs to cover the theories of ethics that can be applied to marketing decisions. The utilitarian theory, Kant's categorical imperative, and the theory of justice are three commonly used theories of ethical decisionmaking. The utilitarian theory stresses decisionmaking based on the greatest good for the greatest number of

people. Kant's categorical imperative directs decisions to be made based on acting in a way that the action may become universal law. Finally, the justice principle follows the rule of distributive justice by requiring the decisionmaker to be guided by equity, fairness, and impartiality. Finding Examples of Marketing Ethics Business publications such as The Wall Street Journal, Business Week, and Fortune contain timely examples of marketing decisions that may be discussed from an ethical point of view. Several examples are listed in Table 3, according to marketing activity. Discussing the Ethics of Marketing Activities : The examples presented in Table 3 can be discussed using a process developed by Cavanagh, Moberg, and Velasquez (1981). This process is presented in Figure 1. The example of RJ Reynolds's planned test market of Uptown will illustrate how to implement the process. The rate of growth of Black male smokers is increasing even though the health hazards of smoking have been known for some time. Based on this information, RJ Reynolds decided to test market Uptown by targeting Black male smokers. However, the increased rate of smoking has resulted in a 50% higher incidence of lung cancer among Black males than among White males. RJ Reynolds canceled the test market after considerable public pressure was applied. Yet the example is useful to illustrate the process in Figure 1. The discussion begins by having the students consider whether the decision to market Uptown optimized the interests of the internal and external parties of the organization. From an internal perspective, the decision was a logical one. New products should be marketed in growing markets where they have the greatest chance to succeed. In addition, cigarettes are a legal product. The external point of view is not as clear. The individual smoker would gain satisfaction, but from a societal point of view it would not be satisfactory to contribute to the growth in the incidence of lung cancer among smokers. At this point, students may conclude that there are no overriding factors that would justify the suboptimization of external party goals and reject the decision to introduce Uptown. However, other students may argue that the internal party interests supersede suboptimization and move to the question of the rights of the affected parties. In this case, students may argue that RJ Reynolds is not forcing people to smoke. Thus, the decision respects the rights of all parties. Other students may point out that the purpose of the marketing campaign may be to increase primary demand, that is, increase the number of Black male smokers, as well as selective demand, that is, increase the market share for Uptown among existing Black male smokers. Therefore, the conclusion may be that the rights of society are abrogated.

At the last stage, students discuss whether the health effects of smoking are so costly to society that the decision violates the theory of justice. Yet other students may conclude that the free-market system would justify the decision because cigarettes are a legal product. There is no right or wrong conclusion to an ethical dilemma, so a consensus does not have to be achieved. However, the process is a good one for business educators who believe it is their obligation to raise the ethical awareness of students before they enter the business world. Other marketing examples can be discussed in a similar way when various marketing topics are covered in the introductory marketing course.
TABLE 1. Students' Perceptions of Ethics in Marketing Today and Demographic Variables Potentially Influencing Their Perceptions Age Questionnaire Item The conduct of marketers is as ethical as that of people engaged in other areas of business. Marketing ethics today are superior to those of the past. The public at large believes that marketers have a lower ethical standard than marketers actually have. Most marketing decisions involve some degree of ethical judgment. Business leaders should be held accountable for their behavior in an ethical sense. Ethical considerations should be an integral part of marketing's strategic planning process. It is possible for marketers to behave ethically in a competitive world. Most marketing researchers are professionals and conduct themselves in a professional manner. Researcher face more ethical dilemmas than any other marketing personnel. M [a] SD F[b] P

2.19

.77

2.40

.068

2.51

1.03

3.48

.016[*]

2.39

.90

2.00

.113

1.97

.82

0.63

.597

1.54

.77

2.85

.038[*]

1.69

.80

2.33

.074

1.76

.84

1.88

.133

2.41

.82

0.86

.461

3.08

.82

3.52

.015[*]

Sales people face more ethical dilemmas than any other marketing personnel. The application of military principles to marketing is ethical. Corporate values of profit and efficiency should be tempered by values of ethics. Receiving or soliciting gifts, entertainment, or anything else of value should be prohibited. Ethical issues are the single most important issue confronting American business today. Ethical issues should be decided by the legal system.

2.46

.99

1.39

.245

2.96

.81

0.48

.695

2.22

.94

2.46

.63

3.16

1.12

4.38

.005[*]

2.82

1.11

2.84

.038

3.26

1.07

1.13

.337

Gender Questionnaire item The conduct of marketers is as ethical as that of people engaged in other areas of business. Marketing ethics today are superior to those of the past. The public at large believes that marketers have a lower ethical standard than marketers actually have. Most marketing decisions involve some degree of ethical judgment. Business leaders should be held accountable for their behavior in an ethical sense. Ethical considerations should be an integral part of marketing's strategic planning process. It is possible for marketers to behave ethically in a competitive world. F[b] p

Concentration F[b] p

1.61

.205

1.38

.223

0.15

.702

0.41

.873

4.71

.031[*]

0.69

.657

3.44

.065

0.89

.505

5.14

.024[*]

0.54

776

5.51

.020[*]

1.93

.076

2.31

.130

1.59

.148

Most marketing researchers are professionals and conduct themselves in a professional manner. Researcher face more ethical dilemmas than any other marketing personnel. Sales people face more ethical dilemmas than any other marketing personnel. The application of military principles to marketing is ethical. Corporate values of profit and efficiency should be tempered by values of ethics. Receiving or soliciting gifts, entertainment, or anything else of value should be prohibited. Ethical issues are the single most important issue confronting American business today. Ethical issues should be decided by the legal system.

0.00

.968

1.11

.356

0.00

.954

0.71

.641

1.80

.181

0.69

.662

2.90

.090

0.46

.848

3.94

0.48[*]

1.25

.282

0.00

.984

0.97

.449

5.38

.021[*]

1.31

.252

0.90

.342

1.20

.305

[a] Response values for each of the questionnaire items ranged from strongly agree (1) to strongly disagree (5). Mean value reported is for all students. [b] MANOVA tested using Wilk's criterion to approximate the F value. Univariate significance tested using RoyBargman Stepdown Test. [*] p < .05.

TABLE 2. Students' Perception of the Role of Codes of Ethics and Demographic Variables Potentially Influencing Their Perceptions Age Questionnaire item Ethical conduct can be reduced to a code of ethics. Codes of ethics look good but help little. Written codes of ethics can resolve the difficult ethical situations the marketer may face. Corporations need a culture and peer pressure that spells M[a] SD F[b] p

3.10

1.11

0.42

.738

2.93

1.10

1.29

.279

2.88

1.11

0.82

.484

out what is ethical behavior and what is not. Employees should be fined for violations of a company's code of ethics even when these are not violation's of law. The American Marketing Association's code of ethics provides definitive guidelines. The American Marketing Association's code of ethics cannot be enforced.

1.95

0.98

2.06

.106

2.55

1.09

1.94

.123

2.29

1.00

0.37

.777

2.83

1.15

3.71

.012[*]

Gender Questionnaire item Ethical conduct can be reduced to a code of ethics. Codes of ethics look good but help little. Written codes of ethics can resolve the difficult ethical situations the marketer may face. Corporations need a culture and peer pressure that spells out what is ethical behavior and what is not. Employees should be fined for violations of a company's code of ethics even when these are not violation's of law. The American Marketing Association's code of ethics provides definitive guidelines. The American Marketing Association's code of ethics cannot be enforced. F[b] p

Concentration F[b] p

0.00

.982

0.35

.907

0.20

.658

1.07

.382

1.43

.233

0.70

.653

0.02

.897

0.42

.868

0.30

.582

0.84

.539

0.82

.365

0.49

.815

10.63

.001[*]

0.83

.549

[a] Response values for each of the questionnaire items ranged from strongly agree (1) to strongly disagree (5). Mean value reported is for all respondents. [b] MANOVA tested using Wilk's criterion to approximate the F value. Univariate significance tested using RoyBargman Stepdown Test. [*] p < .05.

TABLE 3. Examples of Marketing Decisions for Business Ethics Discussion Marketing activity Strategy Example Mobil, manufacturer of Hefty garbage bags claims, that the bag are fully degradable, to exploit consumers' environmental concerns (1991). RJ Reynolds planned test market of Uptown cigarettes targeting Black male smokers (1990). Heilemann's targeting of PowerMaster Malt Liquor to Black males (1991). Proctor and Gamble's use of the word "Fresh" on the label for Citrus Hills Orange Juice (1991). Whittle Communications's Channel 1 (News) targeted to captive high school students contains advertisements (1991). Demands by supermarkets for payment from cookie manufacturers to stock new product introductions (1991). Price signaling by Northwest Airlines to raise fares (1991).

Marketing research

Segmentation

Product

Promotion

Distribution

Price

DIAGRAM: FIGURE 1. Process for Ethics Discussion of a Business Action (Cavanagh, Mobert, and Velasquez, 1981).

REFERENCES AMA adopts new code of ethics. (1987,September 11). Marketing News, p. 1. Bennett, A. (1988,July 15). Critics say they look good--but help little. The Wall Street Journal, p. 19. Byrne, J. A. (1988,February 15). Businesses are signing up for ethics 101. Business Week, p. 56-57. Cavanagh, G. F., Moberg, D. F., & Velasquez, M. (1981). The ethics of organizational politics. Academy of Management Review, 6, p. 367. DeConinck, J. B., & Good, D. J. (1989). Perceptual differences of sales practitioners and students concerning ethical behavior. Journal of Business Ethics, 8, pp. 667-676. Crant, E. W., Jr., & Broom, L. S. (1988). Attitudes toward ethics: A view of the college student. Journal of Business Ethics, 7, pp. 617-619.

Hawkins, D. 1., & Cocanougher, A. B. (1972). Student evaluations of the ethics of marketing practices: The role of marketing education. Journal of Marketing, April, pp. 61-64. Hegarty, H. W., & Sims, H. P., Jr. (1979). Organizational philosophy, policies, and objectives related to unethical decision behavior: A laboratory experiment. Journal of Applied Psychology, March, pp. 331-338. Hunt, S., & Vitell, S. (1986). A general theory of ethics. Journal of Macromarketing, Spring, pp. 5-16. Hyman, M. R., Skipper, R., & Tansey, R. (1990). Ethical codes are not enough. Business Horizons, March-April, 15-22. Magner, D. K. (1989,March 29). Students urge graduate business schools to emphasize ethical behavior and require courses m standards. The Chronicle of Higher Education, p. A31. Poll says business ethics lacking. (1989,November 29). Sacramento Bee (Nightly Business Report), p. F2. Nichols, C. W., & Zimmerer, T. W. (1985). Situational ethics: An empirical study of differentiators of student attitudes. Journal of Business Ethics, 4, pp. 175180. Shuptrine, K. F. (1979). Evaluating the ethics of marketing practice: Student perceptions. American Marketing Association 1979 Educators' Conference Proceedings, 44, 124-127.