How Important Are Ethics and Social Responsibility?

The research register for this journal is available at http://www. mcbup. com/research_registers The current issue and full text archive of this journal is available at http://www. emerald-library. com/ft How important are ethics and social responsibility? A multinational study of marketing professionals Anusorn Singhapakdi and Kiran Karande College of Business and Public Administration, Old Dominion University, Virginia, USA How important are ethics? 133

Received September 1998 Revised March 1999 June 1999 September 1999 College of Administrative Sciences, Kuwait University, Safat, Kuwait, and School of Business Administration, University of Mississippi, USA Keywords International marketing, Ethics, Social responsibility, National cultures, Consumer behaviour Abstract States that in the present era of global marketing, as more companies enter international markets, ethical problems are likely to increase.

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As companies and their managers deal with their counterparts in different countries, there is a need to understand the latter’s ethical decision-making processes. Divergence in ethical behavior and attitudes of marketing professionals across cultures can be explained by, among other variables, differences in perceptions regarding the importance of ethics and social responsibility in achieving organizational effectiveness. This study investigates the variation in those perceptions among marketing professionals from Australia, Malaysia, South Africa, and the USA.

The variation is explained by country differences (cultural differences, differences in the economic environment, and differences in legal/political environment), organizational ethical climate, and selected demographic characteristics of the marketer (gender and age). C. P. Rao Scott J. Vitell Introduction The study of ethics has become increasingly important with global business expansion, because of an increase in ethical and social responsibility ± concerns that businesses face in different country environments.

There exists, however, a wide divergence in the level of importance attached to these two issues in different countries (Czinkota and Ronkainen, 1998). Moreover, vast differences exist from country to country in the economic development, cultural standards, legal/political systems, and expectations regarding business conduct (Wotruba, 1997). In addition, there is great divergence in the enforcement of policies (Mittelstaedt and Mittelstaedt, 1997). The authors would like to thank Mohd.

Rashid Ahmed, Universiti Pertanian Malaysia, Malaysia; Nicola Higgs-Kleyn, University of the Witwatersrand, South Africa; and Muris Cicic, University of Wollongong, NSW, Australia for their assistance in the data collection for this study. The authors would also like to thank Janet Marta for her comments on the earlier versions of the manuscript. European Journal of Marketing, Vol. 35 No. 1/2, 2001, pp. 133-152. # MCB University Press, 0309-0566 European Journal of Marketing 35,1/2 134

In the business ethics literature, ethical variations among marketers/ managers from different nations are documented in many empirical studies on various types of ethical issues (e. g. Armstrong et al. , 1990; Graham, 1985; Becker and Fritzsche, 1987). Variation in ethics across cultures was evidenced in a cross-national study of industrial salespeople by Dubinsky et al. (1991) where some significant differences in ethical perceptions were found among marketing managers from Japan, Korea, and the USA. A study by Singhapakdi et al. 1994) also revealed that American and Thai marketers differ on various components of their ethical decision-making process. However, international researchers have not investigated differences in the extent to which marketers from different countries believe that ethics and social responsibility are important for organizational effectiveness. An individual’s perception about whether ethics and social responsibility contribute to organizational effectiveness is likely to be a critical antecedent of whether he/she even perceives an ethical problem in a given situation (Singhapakdi et al. 1995). This is a pragmatic view based on an argument that managers must first perceive ethics and social responsibility to be vital to organizational effectiveness before their behaviors will become more ethical and reflect greater social responsibility. This view is consistent with Hunt and Vitell’s (1986) depiction of ethical judgment as including a teleological evaluation, when an individual evaluates alternative actions by weighing the perceived probability and desirability of consequences.

Essentially, a manager’s choice of behavior in a situation that has problematic ethical content will be based on his/her perception of the likelihood that the actions will bring about a desired outcome. This view is also consistent with Jones’ (1991) issue-contingent model where it is postulated that the “probability of effect” which is defined as “the probability that the act in question will actually take place and the act in question will actually cause the harm (benefit)” (Jones, 1991, p. 75) will affect an individual’s ethical decision making. Intuitively, ethics and social responsibility should have a positive impact on the success of an organization, because consumers make ethical judgments that are likely to influence their purchases. As Laczniak and Murphy (1993, p. 5) put it: Consumers over time will normally recognize the organizations that attempt to be responsive to various ethical and social factors in the marketplace.

Accordingly, it is vital for marketers to incorporate ethical and social considerations in their work. Thus, the aim of this study is to investigate whether marketers from Australia, Malaysia, South Africa, and the USA differ in the extent to which they believe that ethical and socially responsible practices are important in relation to various aspects of organizational effectiveness such as quality, communication, profits, competitiveness, survival, efficiency, and stakeholder satisfaction.

Based on past literature that emphasizes cultural factors, corporate culture, and individual characteristics (e. g. Hunt and Vitell, 1986; Ferrell and Gresham, 1985), the cross-cultural variation in marketers’ perceived importance of ethics and social responsibility in achieving organizational effectiveness is explained by country differences (including cultural differences and differences in the economic environment), organizational ethical climate, and selected demographic characteristics of individual marketers.

The four countries included were judged appropriate because they are geographically separated and exhibit differences in terms of Hofstede’s (1980) five cultural dimensions and the level of economic development, which are used to support the hypothesis about country differences.

Theoretical foundation and hypotheses In this section it is proposed that the variations in the perceived importance of ethics and social responsibility as determinants of organizational effectiveness is explained by country differences (including cultural differences and differences in the economic environment), organizational ethical climate, and individual characteristics of gender and age. Figure 1 summarizes the proposed framework. Country differences Cultural differences. Hofstede (1980) and Hofstede and Bond (1988) proposed a typology for classifying cultures based on five dimensions: (1) individualism; (2) uncertainty avoidance;

How important are ethics? 135 Figure 1. Theoretical framework European Journal of Marketing 35,1/2 136 (3) power distance; (4) masculinity; and (5) Confucian dynamism. It is hypothesized that these cultural dimensions contribute to differences in the perceived importance of ethics and social responsibility. For example, marketers in collectivistic countries (such as Malaysia) would be expected to be more loyal to their organizations because of greater dependence (Hofstede, 1983), and therefore, concerned for their organization’s well-being when making decisions that enhance organizational effectiveness.

Consequently, collectivistic cultures would attach more importance to achieving superior organizational performance than to ethics and socially responsibility. Masculine societies encourage individuals to be ambitious and competitive, and to strive for material success (Hofstede, 1980), which may tempt marketers from countries ranking high on masculinity to achieve greater efficiency, at all costs. Therefore, they would attach less importance to ethics and social responsibility than to efficiency, competitiveness, and long-term survival.

Individuals from cultures with high power distance (such as Malaysia) usually accept the inequality of power, perceive differences between superiors and subordinates, are reluctant to disagree with superiors and believe that superiors are entitled to privileges (Hofstede, 1983). Consequently, marketers from high power distance countries are likely to perceive a need to minimize disagreement with superiors and satisfy superiors through improved performance. In other words, organizational performance is likely to be relatively more important to them relative to the extent to which a decision is ethical and socially responsible.

The risk-taking orientation of marketers from low uncertainty avoiding countries would lead them to believe that it might be worth taking the risk of unethical actions in order to improve efficiency and competitiveness. Therefore, marketers from low uncertainty avoidance countries are likely to attach less importance to ethics and social responsibility in achieving organizational effectiveness. Individuals in countries ranking high on Confucian dynamism tend to adhere to the more future-oriented teachings of Confucius; those from countries ranking low on Confucian dynamism tend to be more present- and past-oriented (Hofstede and Bond, 1988).

From the perspective of this study, marketers from cultures ranking high on Confucian dynamism have a strong sense of shame and are likely to be wary of actions that are improper or disgraceful. Marketers from high Confucian dynamism countries (such as Hong Kong, Taiwan, Japan, and Korea) would, therefore, believe that any actions bringing disrepute and shame to the company would be detrimental to organizational performance. This is also consistent with the greater future-orientation of individuals from these countries.

Alternatively, it is also possible that marketers from high Confucian dynamism countries might be sensitive to the shame arising out of inferior performance and might therefore believe that greater efficiency and profits are important at the cost of ethics and social responsibility. In other words, the effects of Confucian dynamism might be expected in both directions. Table I summarizes Hofstede’s ranking of the four countries on five dimensions of culture (Hofstede, 1980; Hofstede and Bond, 1988).

It is apparent that, in general, Australians, Americans, and South Africans are higher on individualism and masculinity and lower on uncertainty avoidance and power distance than Malaysians. On Confucian dynamism, the USA and Australia rank very close. Although there is no ranking available for South Africa and Malaysia, Malaysians can be expected to rank higher because of a strong Chinese influence, especially in the business sector (Hong Kong and Taiwan rank first and second on Confucian dynamism).

Based on individualism, power distance, and uncertainty avoidance, Malaysian marketers would be expected to have lower perceived importance of ethics and social responsibility than marketers from Australia, South Africa, and the USA. Based on masculinity, it would be expected that Malaysian managers will have greater perceived importance of ethics and social responsibility in achieving organizational effectiveness than those from the other three countries, whereas based on Confucian dynamism it is only possible to hypothesize differences.

Therefore, based on the cultural differences outlined above, we would expect Australian, Malaysian, US, and South African marketers to attach different levels of importance to ethics and social responsibility in achieving organizational effectiveness. Economic environment differences. Countries also have different economic and business environments, including the legal environment and societal expectations about business ethics in a given country.

In developed countries (such as the USA and Australia), the business environment is typically characterized by powerful business enterprises, a legal environment aimed at eliciting ethical behaviors on the part of businesses, and societal expectations that businesses should be more ethical and socially responsible. These environmental forces may make the marketers in developed countries attach greater importance to the ethical and social responsibilities of their respective businesses. In developing countries, on the other hand (e. . Malaysia and South Africa), the business and economic environmental forces are still evolving and hence the marketers’ perceived importance of business ethics and social responsibility may be lower relative to their counterparts in developed Country Australia Malaysia South Africa USA Power distance Individualism 36 104 49 40 (41) (1) (36-37) (38) 90 26 65 91 (2) (36) (16) (1) Masculinity 61 50 63 62 (16) (25-26) (13-14) (15) Uncertainty avoidance 51 36 49 46 (37) (46) (39-40) (43) Confucian dynamism 31 (11-12) n/a n/a 29 (14)

How important are ethics? 137 Note: a Ranks range from 1-53 for all dimensions except Confucian dynamism 1-20 Source: Hofstede (1980) and Hofstede and Bond (1988) Table I. Scores (and ranks) for the four countries on Hofstede’s dimensionsa European Journal of Marketing 35,1/2 138 countries. From another perspective, in developed countries the markets are likely to be more competitive, and therefore, issues of customer service and satisfaction might be relatively more important.

Therefore, in making decisions, marketers from developed countries are less likely to take actions that are detrimental to the reputation of the company, fearing regulation as well as consumer dissatisfaction. In the context of this study, marketers from the USA and Australia should place greater importance on ethics and social responsibility as determinants of organizational effectiveness than marketers from South Africa and Malaysia. Differences in legal/political environment. In the Hunt and Vitell (1993) model, legal/political environment is depicted as a variable influencing ethical decision making.

The relationship between the legal environment and ethics has been recognized by many business ethics scholars. For example, Beauchamp and Bowie (1993, p. 4) noted that: Law is the public’s agency for translating morality into explicit social guidelines and practices and stipulating offenses. DeGeorge (1990, p. 14) noted that: Business is a social enterprise. Its mandate and limits are set by society. The limits are often moral, but they are also frequently written into law. Dunfee (1996, p. 18) stated that the legal system is sometimes required to nurture or implement the moral preferences of society, particularly with reference to universal moral prohibitions against physical harm. He also argued that where moral views have not converged toward a sufficiently broad consensus, the law may help to bring about a change in attitude. In the context of our study, these discussions imply that the legal/political framework within a country can be expected to impact a manager’s perceptions about ethics and social responsibility.

Business ethics scholars have also noted that the legal/political systems vary across countries (e. g. Vogel, 1992). In his analysis of the USA, Western Europe, and Japan, Vogel (1992) noted that in spite of globalization, the norms of business (as well as business and academic interest) in ethics were substantially higher in the USA than in other advanced capitalist countries. He attributed this to the distinctive institutional, legal, social, and cultural environment in the USA.

In the context of this study, differences can be expected in the legal/political environments in the USA, Australia, Malaysia, and South Africa. While in the USA the legal/political systems are relatively well developed (and in Australia to a certain degree), the regulatory environments in Malaysia and South Africa are evolving, and therefore, the existence as well as the specificity of laws may vary across the four countries. The importance of ethics is also influenced by the degree of law enforcement, where we also can expect differences across the four countries.

While elaborate legal/political systems prevail for enforcement in the USA, they are relatively less prevalent (and to varying degrees) in Australia, Malaysia, and South Africa. Vogel (1992, p. 32) pointed out that even compared to other advanced countries, the enforcement of law in the USA is more stringent, and gave the following example, In America each new disclosure of business misconduct prompts a new wave of public indignation, accompanied by numerous articles n the business and popular press which bemoan the general decline in the ethical conduct of managers and seek to explain “what went wrong” in the most recent case. This is frequently followed by Congressional hearings featuring politicians demanding more vigilant prosecution of white-collar criminals; shortly thereafter, regulatory standards are tightened, penalties are increased, and enforcement efforts are strengthened. How important are ethics? 139

It should be recognized that the potential influences of the legal/political environment are more complex than discussed here, because of the range of issues involved as well as the aspects of environment that cannot be measured directly, such as the enforcement of regulatory systems. However, differences exist between the four countries in the legal/political environment, which can be expected to influence managers’ perceived importance of ethics and social responsibility relative to organizational effectiveness.

In the preceding paragraphs, country differences were analyzed based on three aspects: (1) culture; (2) economic development; and (3) legal/political environment. Overall, based on cultural differences, we expect Australian, Malaysian, US, and South African marketers to attach different levels of importance to ethics and social responsibility in achieving organizational effectiveness. Based on economic environment differences, we expect that marketers from the USA and Australia will place greater importance on ethics and social responsibility than marketers from South Africa and Malaysia.

Given that legal and political environments tend to vary between the four countries, we also expect the managers from these four diverse countries to attach different levels of importance to ethics and social responsibility in achieving organizational effectiveness. Thus, the following hypothesis was formulated: H1: Due to differences in culture, economic development, and legal/political environment, there are differences in the perceived importance of ethics and social responsibility among marketers in Malaysia, Australia, South Africa, and the USA.

In analyzing country differences, it is evident that multiple aspects of country differences influence marketers’ perceived importance of ethics and social responsibility, at times in conflicting ways (as in the effects of masculinity and individualism). Also, since this is the first attempt at investigating crosscultural variation in the perceived importance of ethics and social responsibility as determinants of organizational effectiveness, there is a lack of knowledge regarding the relative importance of differences in cultural European Journal of Marketing 35,1/2 140 dimensions.

Consequently, it is not possible to hypothesize the direction of differences, only their existence. Organizational ethical climate In the Hunt and Vitell (1986; 1993) models, organizational ethical climate is included as a background variable that affects a marketer’s ethical decision making. Organizational ethical climate refers to the shared understanding regarding what is correct behavior and how ethical issues will be handled (DeConinck, 1992). It helps establish and maintain the standards that delineate the “right” things to do and the things “worth doing” (Jansen and Von Glinow, 1985).

The ethical climate in an organization affects ethical attitudes and standards of individuals. An organization that seeks to foster an ethical environment will not only have a code of ethics, but also the willingness and commitment to enforce it. Managers consider modifying the morality of their actions not just because of stated organizational concern, but only when specific sanctions are attached for misconduct (e. g. Laczniak and Inderrieden, 1987). The contention that organizational pressures, and not individual moral deficiencies, account for unethical standards is held by several authors (e. . Ford and Richardson, 1994). Weeks and Nantel (1992) found that wellcommunicated codes of ethics led to higher ethical standards and superior job performance of salespeople in the USA. Consequently, marketers in companies with an ethical climate that encourages ethical and socially responsible behavior and that punishes unethical behavior would perceive ethics to be more important for organizational effectiveness. Research has shown that when ethical standards of an organization are widely shared, organizational success will be enhanced (Hunt et al. 1989). Relevant to this study, in a recent study of US marketers, Singhapakdi et al. (1995) revealed that marketers in organizations with high levels of corporate ethical values tended to assign a higher level of importance to certain elements of corporate ethics and social responsibility. Therefore, we hypothesize that H2: Irrespective of country, organizational ethical climate is positively related to managers’ perceived importance of ethics and social responsibility relative to different aspects of organizational effectiveness.

Gender Gender is generally recognized as an important personal characteristic influencing an individual’s ethical decisions. For example, Gilligan (1982) argued that men and women differ in their moral reasoning. In particular, men are more likely to adhere to the “ethic of justice” by emphasizing rules and individual rights. Women, however, are more likely to adhere to the “ethic of care” by emphasizing relationships and compassion. In a recent meta-analysis, Franke et al. (1997) used data from more than 20,000 respondents in 66 samples nd revealed that women are more likely than men to perceive business practices as unethical. Although there has been no research directly investigating the effects of gender on perceived important of ethics and social responsibility, it has been incorporated in numerous marketing ethics studies. Based on the work of Gilligan (1982) and Franke et al. (1997), it can be argued that “the ethic of caring” exhibited by women would lead them to believe that taking actions in the interest of the customer would enhance company performance and would contribute to a perception of greater importance of ethics in organizational effectiveness.

Thus, we would expect women to attach greater importance to ethics and social responsibility as determinants of organizational effectiveness. H3: Irrespective of country, women perceive ethics and social responsibility to be more important relative to different aspects of organizational effectiveness than men. Age Marketing ethics theories generally recognize personal characteristics as determinants of various aspects of a marketer’s ethical decision-making process (e. g. Ferrell and Gresham, 1985; Hunt and Vitell, 1986).

Age could also directly influence an individual’s ethical decision. According to Kohlberg’s (1981) cognitive moral development theory, an individual’s cognition, emotion, and judgment may change as he/she moves through stages of moral development. Given that an individual moves through stages of moral development and the changes are essentially due to life experiences, intuitively one would expect a positive relationship between age and ethical behavior. In fact, Terpstra et al. (1993) have argued that people tend to become more ethical as they grow older.

A good explanation is that as people age they tend to become less concerned with wealth and advancement and more interested in personal growth (Hall, 1976). In other words, older marketers are likely to appreciate the long-term benefits (to organizational performance) of acting in an ethical and socially responsible manner. Accordingly, we would generally expect a positive relationship between a marketer’s age and his or her perception about the importance of ethics and social responsibility.

H4: Irrespective of country, a marketer’s age is positively related to his/her perception of the importance of ethics and social responsibility relative to different aspects of organizational effectiveness. Methodology Sample A self-administered questionnaire was used as the data collection technique for all four groups of marketing practitioners. For the US and South African groups, national mailing lists of professional members of the American Marketing Association (AMA) and the South African Institute of Marketing How important are ethics? 141 European Journal of Marketing 35,1/2 142 Management were used as sampling frames.

For the Australian sample, a mailing list of recipients of the Australian Marketing Institute magazine was used. For the Malaysian group, the sampling frame consisted of managers responsible for making marketing decisions for companies listed on the Kuala Lumpur Stock Exchange. The questionnaire was administered in English for all four samples. Because Malaysia and South Africa are members of the British Commonwealth, English is a well-understood language, particularly in the business setting. The numbers of respondents were: 500 from Australia, 446 from the USA, 256 from South Africa, and 159 from Malaysia[1].

The response rates were 22. 7 percent (USA), 13 percent (South Africa), and 45 percent (Malaysia). Since questionnaires were not directly mailed to the sample in Australia, the response rate could not be assessed. The non-response bias for the USA and South African samples was assessed with an analysis of variance between the early and late respondent groups (Armstrong and Overton, 1977). There were no statistical differences among the two groups for either country[2]. The profiles of the respondents are summarized in Table II.

They represent a range of age groups, gender, job titles, industry, and years of experience, with minor differences between the four sets of respondents. Age and gender were included in the analyses. Other variables (such as job title, education, and industry) were not included as control variables because educational systems, industry classifications, and job titles and functions vary from country to country. Measures Singhapakdi et al. (1995) developed a scale for measuring managers’ perceptions about the importance of ethics and social responsibility (PRESOR) in organizational effectiveness.

Seven of the 14 items from that scale were used, relating to specific aspects of organizational effectiveness such as output quality, efficiency, profitability, communication, long-term survival, competitiveness, and stakeholder satisfaction. Excluded items were statements such as “Good ethics is good business” and “Corporate strategy should include ethics and social responsibility”, which do not address specific aspects of organizational effectiveness. The scale items used in the analyses are shown in Table III. The factor structures were found to be similar across the four countries and the reliabilities were generally high[3].

It may be noted that the PRESOR scale has previously performed satisfactorily in terms of reliability, as well as content and predictive validity (Singhapakdi et al. , 1995, 1996). Organizational ethical climate, gender and age. The corporate ethical values (CEV) scale developed by Hunt et al. (1989) was used in this study to measure organizational ethical climate. The scale was designed to reflect “a composite of the individual ethical values of managers and both the formal and informal policies on ethics of the organization” (Hunt et al. , 1989). The five-item CEV scale[4] was developed to three broad-based perceptions:

Characteristics of respondents Gender Male Female Age group Under 30 30 to 39 40 to 49 50 and over 50 Education High school or less Some college Bachelor’s degree Master’s degree Doctorate Othera Job title CEO/president/MD/director Marketing managers Others Industry USA Wholesale or retail Manufacturer or construction Services Communications Advertising or public relations Marketing consulting Other Malaysiab Consumer products Diversified Construction Trading services Finance Properties Plantation Mining and primary resources Notes: sample; a b Australia (%) Malaysia (%) South Africa (%) USA (%)

How important are ethics? 73. 0 27. 0 20. 0 35. 0 29. 0 17. 0 11. 0 15. 0 58. 0 15. 0 1. 0 ± 37. 0 52. 0 11. 0 84. 0 16. 0 11. 0 39. 0 40. 0 10. 0 6. 0 10. 0 43. 0 24. 0 1. 0 16. 0 39. 0 30. 0 31. 0 80. 0 20. 0 4. 0 29. 0 40. 0 27. 0 6. 0 15. 0 30. 0 30. 0 19. 0 2. 0 44. 0 37. 0 19. 0 51. 0 49. 0 17. 0 37. 0 29. 0 17. 0 1. 0 6. 0 43. 0 43. 0 6. 0 ± 47. 0 43. 0 10. 0 143 3. 0 10. 0 20. 0 33. 0 7. 0 17. 0 6. 0 ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± 37. 0 4. 0 3. 0 28. 0 11. 0 13. 0 3. 0 1. 0 7. 0 20. 0 25. 0 7. 0 1. 0 5. 0 35. 0 ± ± ± ± ± ± ± ± 12. 0 17. 0 35. 0 9. 0 7. 0 18. 0 2. 0 ± ± ± ± ± ± ± ±

Other educational qualifications include professional education in the Malaysian This categorization of industries was appropriate in the Malaysian context Table II. Profiles of respondents in Australia, Malaysia, South Africa and USA 144 European Journal of Marketing 35,1/2 Organizational effectiveness dimension Univariate tests Quality: while output quality is essential for corporate success, ethics and social responsibility are not NS Communication: communication is more important to the overall effectiveness of an organization than whether or not it is concerned with ethics and social responsibility 5. 1 0. 0001 Profits: The most important concern for a firm is making profits, even if it means bending or breaking rules 5. 45 0. 0001 Competitiveness: To remain competitive in a global environment, business firms will have to disregard ethics and social responsibility NS Survival: If survival of a business enterprise is at stake, then you must forget about ethics and social responsibility 21. 25 0. 0001 Efficiency: Efficiency is much more important to the firm than whether or not the firm is seen as ethical or socially responsible 14. 1 0. 0001 Stakeholder satisfaction: If stakeholders are unhappy, nothing else matters 11. 19 0. 0001 Multivariate tests ± F based on Wilk’s lambda (21, 3,673 df) 5. 38 0. 0001 66. 43 28. 62 74. 24 49. 95 39. 79 29. 46 27. 17 0. 0001 0. 0001 0. 0001 0. 0001 0. 0001 0. 0001 0. 0001 Table III. Multivariate and univariate results Country Organizational culture Gender Age 17. 88 0. 0001 3. 68 0. 0552 8. 97 0. 0028 6. 46 0. 0112 17. 63 0. 00001 NS NS 2. 56 NS 0. 0535 NS NS NS NS NS 1) the extent to which employees perceive their managers are acting ethically in their organization (item 1); (2) the extent to which employees perceive that managers are concerned about the issues of ethics in their organization (item 3); and (3) the extent to which employees perceive that ethical (unethical) behavior is rewarded (punished) in their organization (items 2, 4, and 5) (Hunt et al. , 1989). The CEV was measured using a nine-point Likert scale with 1= “completely disagree”and 9= “completely agree”.

For each respondent, the CEV score was obtained by summing all CEV items (with items 1 and 2 reverse-coded). A high CEV score means that the manager works in an organization with higher corporate ethical values. The similarity of factor structures of the CEV scale between the four countries was assessed to be moderate and the reliabilities of the scale were high[5]. The CEV measure has been used in the past (e. g. Hunt et al. , 1989; Singhapakdi et al. , 1995). Gender was measured as a dichotomous variable and age was measured in four categories.

Results Multivariate analysis of variance (MANOVA) was performed using the seven PRESOR items as dependent variables, and the country of residence, organizational ethical climate, gender, and age as independent variables[6]. MANOVA results show that overall country of residence, organizational ethical climate, gender, and age significantly explain differences between marketers from the four countries in their perception of the importance of ethics and social responsibility in achieving organizational effectiveness (F = 5. 38 based on Wilks’ Lambda, p < 0. 001). H1 states that there are country differences in the perceived importance of ethics and social responsibility in achieving organizational effectiveness. Univariate analysis of variance (ANOVA) identified significant cross-country differences between marketers on all PRESOR items except output quality and competitiveness. For example, there are differences in the extent to which marketers from the four countries believe that “the most important concern for a firm is making profits, even if it means bending or breaking rules” (F = 5. 45, p < . 001). Also, there are differences in the extent to which they agree with statements such as “if survival of a business enterprise is at stake, then you must forget about ethics and social responsibility” (F = 21. 25, p < 0. 0001), “efficiency is much more important to the firm than whether or not the firm is seen as ethical or socially responsible” (F = 14. 91, p < . 0001), and “communication is much more important to the overall effectiveness of an organization than whether or not it is concerned with ethics and social responsibility” (F = 5. 1, p < 0. 0001). Therefore, there is support for H1 (average scores for marketers from the four countries on each of the seven items are given in Table IV). How important are ethics? 145 European Journal of Marketing 35,1/2 146 H2 states that the organizational ethical climate positively influences managers’ perceived importance of ethics and social responsibility. In fact, results indicate it has a strong influence on all seven dimensions of PRESOR with F statistics ranging from 27. 17 to 74. 24 (with all p ; 0. 0001). Therefore, H2 is supported.

Results also indicate gender differences in managers’ perceived importance of ethics and social responsibility in achieving organizational effectiveness on the quality, communication, profits, competitiveness, and survival dimensions, but not on the efficiency and stakeholder satisfaction dimensions (F statistics ranging from 3. 68 to 17. 88). Therefore, H3 is generally supported. Also, results related to H4 indicate that, in general, there are no age differences in the perceived importance of ethics and social responsibility in achieving organizational effectiveness.

Therefore, H4 is not supported. The lack of significance of age in influencing PRESOR is probably a reflection of the greater impact of environmental factors such as greater societal expectations and awareness about ethical issues. Discussion and implications The current investigation into cross-country variation in perceptions of marketing professionals regarding the importance of ethics and social responsibility as determinants of business success has potential implications for international companies.

In the international marketing context, cultural, economic, and other gaps between international buyers and sellers create the potential for conflicts of values, which in turn hinder smooth business interactions between the parties. Whether a marketing organization engages in exporting, importing, joint ventures, licensing agreements or fully owns an overseas operation, the scope exists for conflict of values, especially in the areas of marketing ethics and social responsibility. For example, in recent years, companies in the USA have faced public disapproval of the unethical practices of their overseas suppliers.

As businesses all over the world progressively globalize their operations, it becomes necessary that they understand whether there are significant gaps between their ethical and social responsibility perceptions and their overseas partners. Such perceptual gaps need to be systematically investigated and measures taken to reduce or, preferably, eliminate them in the interest of establishing enduring international business Organizational effectiveness dimension Australia 7. 67 6. 16 6. 93 7. 56 7. 22 6. 44 6. 82 Malaysia 7. 61 5. 27 6. 61 7. 27 5. 76 5. 12 5. 79 South Africa 7. 96 6. 40 7. 01 7. 71 7. 05 6. 26 6. 6 USA 7. 82 6. 23 7. 46 7. 69 7. 64 6. 72 7. 08 Table IV. Output quality Mean perceived Communication importance of ethics Profits and social responsibility scores on Competitiveness different dimensions of Survival Efficiency organizational Stakeholder satisfaction effectiveness relationships. This study identified three sources of gaps that can exist between marketers from different countries in terms of the perceived importance of ethics and social responsibility as determinants of organizational effectiveness. They are: (1) Country differences in culture, economic development, and legal/ political environment. 2) Differences in organizational ethical climate. (3) Gender differences. Similarities and differences were found between countries in terms of the extent to which they find ethics and social responsibility to be important relative to some dimensions of organizational effectiveness. On two dimensions, output quality and competitiveness, there were no significant inter-country differences. It seems that output quality and competitiveness are universal business orientations exhibited by marketing executives, which is consistent with globalization of markets and the accompanying intensification of competition.

International companies, therefore, may assume that their counterparts in different parts of the world will be as concerned with output quality and competitiveness (relative to ethical and social responsibility concerns). Hence, these two core business values can provide common bases for successful international negotiations and establishing long-term relationships, which are critical for success in the international business arena.

While there are inter-country similarities on these two dimensions, significant inter-country differences were found with regard to other organizational effectiveness dimensions: communications, efficiency, profits, survival, and stakeholder satisfaction. Based on the findings of our study, multi-national companies who transfer employees between these four countries can help them anticipate differences in perceptions about the importance of ethics and social responsibility relative to different aspects of organizational effectiveness.

For example, Malaysian companies posting managers in Australia (or South Africa or the USA) might want to educate them about the environmental differences that lead to Australian managers placing greater importance on ethics and social responsibility relative to profitability, efficiency, communication, survival, and stakeholder satisfaction. These perceptual differences can impact ethical attitudes and actions, and therefore, managerial expectations about overseas employees should be altered accordingly.

Corporate managers should also give a thought to what can be done to overcome these differences in perceived importance of ethics and social responsibility. The content of ethics training programs can incorporate the findings of this study by developing scenarios and cases highlighting the tradeoffs between ethics and social responsibility, and specific aspects of organizational effectiveness, such as efficiency and stakeholder satisfaction. These scenarios can be extended by including cross-national differences in How important are ethics? 47 European Journal of Marketing 35,1/2 148 culture, economic development, and legal/political environment, as well as differences in perceptions about ethics and social responsibility across countries. Organizational ethical climate positively influenced the perceived importance of ethics and social responsibility across all four countries. Irrespective of the country, organizational ethical climate had a strong influence on all seven dimensions of organizational effectiveness vis-a-vis ethics A and social responsibility.

Therefore, we can conclude that organizations from different countries with similar organizational ethical climates can find common ground on issues of ethics and social responsibility. Hence, international companies, when scouting for suitable partners in foreign markets, may look for overseas partners with similar organizational ethical values. This would ensure smoother business relations and interactions especially in the areas of ethics and social responsibility.

Also, it is useful for international marketers to know that, in general, women perceive ethics and social responsibility to be more important in achieving organizational effectiveness than men, though there are no differences across age groups. This is particularly relevant given the increase in employment of women in the workplace. Limitations This study has some potential limitations. One concerns the limited number of factors investigated in our study. Ethical decision making is a very complex phenomenon, and exploring cross-cultural differences is even more difficult.

For example, in addition to the variables we studied, marketing ethics theories have also specified moral philosophies, personal values, religion, professional environment, and organizational and industrial characteristics as important background factors underlying the ethical decision making of managers (e. g. Ferrell and Gresham, 1985; Hunt and Vitell, 1986). However, the scope of this study is limited to cultural dimensions, economic environment, organizational ethical climate, and selected demographic variables as explanatory factors.

It should be pointed out that in this study, some important demographic variables, such as education, were not included because of a lack of conceptual equivalence, as explained in the next section. Another limitation concerns the samples analyzed in this study. Although four relatively diverse countries were studied, the findings can not be generalized to other countries with different cultural characteristics and levels of economic development. Future research avenues This research can be extended in many ways. As a first step, a non-directional hypothesis for country differences was presented.

This was necessitated by the fact that this was the first study dealing with the investigation of cross-cultural variation in the perceived importance of ethics and social responsibility as determinants of organizational effectiveness. Future research should investigate the direction of expected differences. A comprehensive framework modeling antecedents and consequences of the perceived importance of ethics and social responsibility can be developed and tested. This will add another dimension to our understanding of ethical decision making.

As pointed out earlier, one limitation of this study concerns its limited samples and, consequently, its limited generalizability. Therefore, there is a need to replicate this study using managerial samples from other countries with different cultural characteristics and/or levels of economic development. Given the complexity of the phenomenon under study, future research should investigate other determinants specified in marketing ethics models, such as moral philosophies, personal values, religion, professional environment, and organizational and industrial characteristics.

Among demographic variables, education could be an important determinant but was not included because of a lack of conceptual equivalence. In cross-cultural research, conceptual equivalence in terms of the meaning of research concepts, stimuli, and materials must first be established before any meaningful comparisons are made (Malhotra et al. , 1996). In our study, the US sample is predominantly business-educated, which might not be the case with the other three samples. In addition to differences in the educational background of the managers, the lack of conceptual equivalence can also be attributed to: .

The educational systems and curricula in the four countries being different. . Differences in the extent to which ethics is required to be emphasized in the curriculum content across different countries (for example, accredited business schools in the USA are required to incorporate business ethics into their curricula, and such requirements might exist to a greater or lesser degree in other countries). . Variation in the extent to which ethics is actually incorporated and emphasized in the curricula.

Thus, it is not education per se, but the incorporation of ethics into educational curricula, the actual implementation, and its impact on the managers that is likely to influence their perceived importance of ethics and social responsibility. In the future, the cross-country differences in educational background of the respondents as well as the extent to which ethics is emphasized in education should be measured, and analyzed as a potential factor influencing a manager’s perceived importance of ethics and social responsibility.

Conclusion To summarize, this research investigated whether marketers from Australia, Malaysia, South Africa, and the USA differ in their beliefs regarding the importance of ethics and social responsibility as determinants of organizational effectiveness. The study was based on an alternative approach to studying perceptions about ethical issues and problems in business. Traditionally cross- How important are ethics? 149 European Journal of Marketing 35,1/2 150 cultural researchers have evaluated ethical perceptions, attitudes, and intentions with regard to specific business/marketing practices involving ethical problems.

Here, we investigate differences in the perceived importance of ethics and social responsibility in relation to various aspects of organizational effectiveness such as quality, communication, profits, competitiveness, survival, efficiency, and stakeholder satisfaction. The results of this study are important because perceived importance of ethics and social responsibility has been shown to influence ethical intention, when managers are faced with an ethical situation (Singhapakdi, 1999). Results indicate that differences in the perceived importance of ethics and social responsibility among marketers from the four countries exist because of: . ountry differences in culture, economic development, and legal/political environment; . differences in organizational ethical climate; and . gender differences. There are not any differences due to age. Overall similarities and differences among the four countries emerged on specific dimensions of business effectiveness. On the dimensions of output quality and competitiveness, there were no differences among the four countries. Inter-country differences were found on the dimensions of communication, efficiency, profits, survival, and stakeholder satisfaction.

These findings regarding cross-cultural similarities and differences are useful in furthering our understanding and management of ethics and social responsibility in the international context. Notes 1. For subsequent analysis using LISREL, a sample size of 159 was judged adequate because it is close to the recommended level of ten observations for every parameter estimated (Haire et al. , 1998). 2. For the Australian and Malaysian sample, the non-response bias based on early and late respondents could not be assessed as this information (i. e. dates when the questionnaires were received) was not recorded at the time of data collection. . The similarity of factor structures of the seven-item scale for individual countries was assessed with confirmatory factor analysis. Fit measures for individual countries, including chi-square per degree of freedom (range 1. 87-3. 32), GFI (0. 94-0. 97), AGFI (0. 890. 95), and CFI (range 0. 91-0. 96), for the four countries were high. The reliability of the seven-item scale ranged from 0. 73-0. 76 for the four countries. 4. The five items in the corporate ethical values scale were: . Managers in my company often engage in behavior that I consider to be unethical. . In order to succeed in my company, if is often necessary to compromise one’s ethics. Top management in my company has let it be known in no uncertain terms that unethical behaviors will not be tolerated. If a manager in my company is discovered to have engaged in unethical behavior that results in personal gain (rather than corporate gain), he/she will be promptly reprimanded. . If a manager in my company is discovered to have engaged in unethical behavior that results in corporate gain (rather than personal gain), he/she will be promptly reprimanded. 5.

The similarity of factor structures of the five-item CEV scale for individual countries was assessed with confirmatory factor analysis. Fit measures for individual countries, including chi-square per degree of freedom (range 2. 00-35. 23), GFI (0. 88-0. 99), AGFI (0. 63-0. 99), and CFI (range 0. 74-0. 99), for the four countries were moderate. The reliability of the five-item scale ranged from 0. 69-0. 87 for the four countries. 6. Since a requirement of MANOVA is that the dependent variables be correlated, the appropriateness of the multivariate technique was tested by Bartlett’s test of sphericity (Hair et al. 1998). The test (Bartlett’s chi-square = 123. 7 with six degrees of freedom, p = 0. 001) indicated that MANOVA is appropriate for analyzing the data. . How important are ethics? 151 References Armstrong, J. S. and Overton, T. S. (1977), “Estimating non-response bias in mail surveys”, Journal of Marketing Research, No. 14 No. 3, pp. 396-402. Armstrong, R. W. , Stening, B. W. , Ryans, J. K. , Marks, L. and Mayo, M. (1990), “International marketing ethics: problems encountered by Australian firms”, European Journal of Marketing, Vol. 25 No. 10, pp. 5-19. Beauchamp, T. L. and Bowie, N.

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