Antecedents of Consumer Ethical Beliefs and Intention

Topic: BusinessOrganization
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Last updated: April 15, 2019

Ethics has received increased attention from the private and public sectors as well as from the academics over the past several decades. In the West, the highly publicized incidents at Enron, Arthur Anderson and WorldCom have brought the topic of ethics particularly business ethics to the public’s attention. The recent collapse of financial institutions in America notably Lehman Brothers and AIG Group due to the sub-prime mortgage scandals has sent “economic tsunami” across the world. The result of this is an unprecedented financial meltdown dubbed by many as the worst economic crisis since the Great Depression. The devastating impact of the US-led global financial catastrophe is taking a heavy toll on the rest of the world and with it, asset and equity values have taken a severe beating. The wealth destruction has significantly weakened consumers’ confidence.

With any economic crisis, the GDP growth of a nation will be adversely affected. Furthering to this, the rate of unemployment is expected to increase due to the closing down of businesses and spiraling profits. In Malaysia, notwithstanding the fact that the country is experiencing a slower effect of the crisis, Malaysia is not exempted from the impact of the global recession. It was reported that in Malaysia 26,000 jobs were lost since the global financial crisis blew up in September 2008 and nearly twice as many workers could lose their job in 2009 as struggling manufacturers cut output (The Star, 18 March, 2009, p.7).

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Flagging demand for electronic products, which accounted for 40% of Malaysia’s exports has led several companies such as Flextronics International, Western Digital, Intel Corp and Panasonic Corp to announce job cuts.Furthering to the deepening of the worldwide calamity, it was also reported that the consumer price index (CPI) for January 2009 shows an upward trend compared to January 2008 due to the increase in food and fuel prices. The CPI recorded a rise of 3.9% with food and non-alcoholic beverages up 9.8% and housing, water, electricity, gas and other fuels up 1.7% (Ng 2009).

Together, these two groups accounted for 89.2% of the overall increase recorded for the month of January 2009. The impact of the slowing down of the economy and higher inflation rate on essentials goods will undoubtedly affect consumer purchasing power and habits. With the economic uncertainties coupled with higher cost of living, consumers therefore will be more cautious in their spending. Some might even resorted to unethical behaviour when purchasing goods and services.The main objective of this research therefore is to examine and analyse consumer ethical beliefs and intention in the Malaysian context. This paper attempts to develop a conceptual framework for identifying antecedents that influence the ethical beliefs and intention of young Malaysian consumers.

Although there are many factors influencing consumers’ ethical behaviour, it is still not clear how these factors affect ethical beliefs and intention especially in the Malaysian context. Young consumers will be the focal point of the study as this group is growing rapidly and has been the target of many marketing and promotional efforts. Lewis and Bingham (1991) classified young consumers as youths between the ages of 15 to 24 years old.With the siege of advertising, direct marketing, e-commerce and recently mobile marketing, it has made decision-making among young consumers more complex.

Furthermore advertising, personal selling, pricing, marketing research and international marketing have been subjected to frequent ethical controversy (Murphy & Laczniak 1981), as many questionable practices have been uncovered over the years. Another reason for the emphasis on young consumers is that many of them would one day become future corporate leaders. Understanding the factors that contributes to the ethical beliefs and intention of this group of consumers would certainly assist policy makers in formulating guidelines that will address the ethical problems.Research ProblemIn 2004, a US Senate Committee revealed that the World Bank has lost about US$100bil slated for development in the world’s poorest nations to corruption since 1946, nearly 20% of its total lending portfolio (Gnanalingam 2009). Corruption has become a global issue as developing countries; watchdog groups and some economists complain that poor nations lose huge funds from multilateral development banks like the World Bank because of misuse of money. The spread of corruption, incompetence, malpractices, abuse of power, fraud and other unethical behaviour have been attributed to the alarming decline in integrity in the private sector, especially among individuals and organizations at large.

The case of Enron in America and Satyam in India are some examples of widespread accounting fraud. The latter is tagged as India’s biggest corporate scandal in history.The number of young Malaysian consumers has been increasing.

In 2003, it was estimated that 43% of the country’s 25 million people falls into the category of less that 20 years old (PricewaterhouseCoopers 2004). As Malaysia moves towards modern economy, the growing affluence and potential declining moral and religious standards, especially in urban areas contributes to the shaping of the ethical orientation of these young consumers. One issue that would be interesting to explore is the ethical stance of the new generation of consumers on their acceptance of ethical and potentially unethical situations. Are they more accepting to unethical behaviours or are they less tolerant to unethical behaviours?The proposed research will look at the category of ‘consumer ethics’ especially among young Malaysian consumers. In their research on consumer behaviours, Cowe and Williams (2001) found that many young consumers are yet to be set in their purchase behavioural patterns.

Therefore it is important that consumer ethics research be conducted especially among young consumers as knowing the ethical orientation of this group of consumers will provide researchers and policy makers the means of addressing ethical issues early, while they are still receptive and impressionable.Importance of the StudyEthical issues involving consumers are as important as other marketing and advertising practices due to the fact that these issues are major partaker in a market interaction. Consumers are the major contributors in the business process and not considering them in ethics research may result in an incomplete understanding of this process.

An understanding of why some consumers engage in an unethical behaviour may be helpful in ultimately curtailing such practices. As Bernstein (1985, p. 24) pointed out, consumers are ‘out-doing big business and the government at unethical behaviour’. Hence, it is pertinent to study consumer behaviour in ethics research so as to gain a complete understanding of ethical issues in the marketplace (Vitell 2003).The study of ethical consumer behaviour can be categorised into two groups: ‘ethical consumerism’ and ‘consumer ethics’. According to Harper and Makatouni (2002, p. 289), being an ethical consumer means ‘buying products which are not harmful to the environment and society’. Shaw and Clarke (1998, p.

163) refer to ethical consumption as ‘the degree to which consumers prioritize their own ethical concerns when making product choices’. In the nutshell, ethical consumerism therefore relates to environmental and social concern in consumption-related activities (e.g. recycling, buying fairly traded products, charitable giving and market place activism such as boycotting).Muncy and Vitell (1992) define consumer ethics as ‘the moral principles and standards that guide behavior of individuals or groups as they obtain, use and dispose of goods and services.’ Consumer ethics have also been described as the ‘rightness as opposed to the wrongness of certain actions on the part of the buyer or potential buyer in consumer situations’ (Dodge, Edwards ; Fullerton 1996). Therefore in this instance, consumer ethics refers to the role of ethics in decision-making, including misconduct in the marketplace (e.g.

shop lifting, failing to declare undercharging, buying counterfeit goods and downloading pirated digital products). The focus point for this research would be ‘consumer ethics’ rather than ‘ethical consumerism’.Fundamentally the study of business and consumer ethics lies in the definition of ethics itself. According to Valasquez (2006) ethics is a discipline that examines one’s moral standards or the moral standards of a society. The question that would normally be asked would be how these moral standards apply to our lives and whether these standards are reasonable or unreasonable. Another definition of ethics by Desjardins (2009) is concern about how we should act, what we should do and what kind of person we should be, i.

e. how we should live our lives. There are several theoretical models that emerged for explaining ethical behavior. The following theory of utilitarian, deontology, virtue ethics and religious ethics will be discussed in brief.The fundamental insight of utilitarian thinking is rooted in the idea of “maximizing the overall good” or producing “the greatest good for the greatest number” (Desjardins 2009).

Therefore in utilitarian concept we should consider all the consequences of our actions before deciding what to do. The principle underlying this is that we should consider not only the consequences that our acts might have for ourselves, but also the consequences of our acts for all parties affected by them. Most economic decisions are implicitly justified on utilitarian grounds. From the original rationale for market-based economies found in Adam Smith, to much public policy and law governing finance, employment, consumerism and world trade, utilitarian considerations have played a prominent role.Likewise, deontological approaches to ethics capture another insight that is recognized in such common observations, as “the end does not justify the means”. Deontological approaches demand that something should, or should not be done regardless of the consequences (Valasquez 2006). Some acts are right or wrong, as a matter of principle and therefore the duty is to act accordingly even if beneficial consequences would suggest otherwise. Respecting individual rights and fulfilling the ethical obligations can set limits on decisions aimed at producing good consequences.

Virtue ethics encourages us to step back from specific decisions and actions to ask the very profound and personal questions: Who am I? What type of person am I to be? Throughout the course of our lives, each one of us develops a personal character that is reflected in what we believe, what we value, what we desire, and how we act. This character is manifested in our habits, dispositions and personality. Virtue ethics seeks to articulate which of those habits and character traits are likely to be part of a meaningful and happy human life. Whether reflected in the ordinary language of such virtues as honesty, integrity, modesty and trustworthiness, or such vices as greed, materialism, belligerence and rudeness, virtue ethics plays an important role in ordinary business life.The religious ethics is one that relies on the guidance of a supreme being, who sets standards of right and wrong. Thus, the source of the ethic is identified as God.

God provides ethical direction via written commandments or through prayer. Major world religions include Christianity, Judaism, Islam, Hinduism, and Buddhism. Western civilization has been most affected by the Judeo-Christian moral perspective. Religion is a meaningful ethical foundation because the religious person can point to God as the source of the ethical standard. The Judeo-Christian religious ethic offers moral imperatives such as: be honest, respect other people’s lives, respect other people’s property, be kind to others, and so forth.The basic approaches to ethics outlined above will provide essential tools for understanding business and consumer ethics in this study.

The ethical perspective from virtue and religious ethics will be further explored. Based on past studies, religious ethics has been found to be a significant contributor towards consumer ethical beliefs (Vitell & Paolillo 2003; Vitell, Paolillo & Singh 2005). Past research have also identified ethical values such as the love of money (Tang 2002) and attitude towards business (Vitell, Singh & Paolillo 2006) to have direct influence on consumer ethical beliefs.

Furthermore, the current study will also explore the demographic determinant of gender on consumer ethical belief.The basis and foundation of this study originated from the general marketing ethics model developed by Hunt and Vitell (1986). The theory draws on both deontological and teleological aspects of moral philosophy. Deontologist believe that certain features of the act itself other than value it brings into existence make an action or rule right while teleologists believe that there is one and only one basic or ultimate right-making characteristic.The Hunt and Vitell (1986) theory also posits that an individual’s ethical judgments (e.g., the belief that a particular alternative is the most ethical alternative) are a function of the individual’s deontological evaluation and the individual’s teleological evaluation. Furthermore, ethical judgments affect behaviour through the intervening variable of intentions.

The model proposes that ethical judgments will sometimes differ from intentions because teleological evaluation also independently affects intentions. That is, although an individual may perceive a particular alternative as the most ethical, the person may intend to choose another alternative because of certain preferred consequences.Research GapsFrom the readings of past literatures, three research gaps have been identified.

For the first research gap it was discovered that there were many studies conducted to investigate whether there were differences in gender to ethical beliefs but these results were not conclusive. Vitell (2003) called for further investigation on demographic factors especially gender in future research, as past studies on gender differences were not conclusive.Review of past literatures revealed that there was a lack of published research specifically attempting to directly link religiosity with consumer ethical beliefs. Attitude toward business and money ethics were also not included in many of the past research on consumer ethics. Therefore this is the second research gap identified. The only recent study linking all the three psychographics factors of religiosity, attitude towards business and money ethics was the Vitell, Singh and Paolillo (2006) research.

Furthermore, none of these past research link these psychographics factors in the Malaysian setting.Finally, there were also no past studies that empirically test the relationship between all the five dimensions of consumer ethics and ethical intention. In his article on suggestions for future research, Vitell (2003) proposed that future researchers should consider linking consumer ethics (all the five dimensions) to consumer ethical intention. Review of past literatures found that no empirical research have been conducted on this.

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