A Contingency Framework for Understanding Ethical Decision Making in Marketing

Author(s): O. C. Ferrell and Larry G. Gresham

Source: Journal of Marketing, Vol. 49, No. 3 (Summer, 1985), pp. 87-96
Published by: American Marketing Association
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 O. C. Ferrell& LarryG. Gresham

A
Contingency Framework for
Ethical
Understanding Decision
Making in Marketing
This article addresses a significant gap in the theoretical literature on marketing ethics. This gap results
from the lack of an integrated framework which clarifies and synthesizes the multiple variables that ex-
plain how marketers make ethical/unethical decisions. A contingency framework is recommended as a
starting point for the development of a theory of ethical/unethical actions in organizational environments.
This model demonstrates how previous research can be integrated to reveal that ethical/unethical de-
cisions are moderated by individual factors, significant others within the organizational setting, and op-
portunity for action.

OSTpeople agree thata set of moral principles Because of the lack of agreementconcerning eth-
or values should govern the actions of market- ical standards,it is difficult to find incidents of de-
ing decision makers, and most marketerswould agree viant behavior which marketers would agree are
thattheirdecisions should be made in accordancewith unethical.For example, in the Galluppoll cited above,
accepted principles of right and wrong. However, 31% had ethical reservationsin accepting an expen-
consensus regarding what constitutes proper ethical sive dinner from a supplier, but most of the respon-
behavior in marketingdecision situations diminishes dents indicatedthatbribes, bid rigging, and price col-
as the level of analysis proceeds from the general to lusion had become more common in recent years
the specific (Laczniak 1983a). For example, most (Ricklefs 1983a, 1983b). Dishonesty is reportedly
people would agree that stealing by employees is pervertingthe results of markettests (Hodock 1984).
wrong. But this consensus will likely lessen, as the Obviously, there is a wide-rangingdefinition of what
value of what is stolen moves from embezzling com- is consideredto be ethical behavior among marketing
pany funds, to "padding"an expense account, to pil- practitioners.
fering a sheet of poster boardfrom company supplies Absence of a clear consensus about what is ethical
for a child's homeworkproject. In fact, a Gallup poll conduct for marketingmanagers may lead to delete-
found that 74% of the business executives surveyed rious results for a business. Due to faulty test mar-
had pilferedhomeworksupplies for their childrenand keting results, potentiallysuccessful productsmay be
78% had used company telephones for personal long- scrapped and unwise market introductions may be
distance calls (Ricklefs 1983a). made. In either case, both the consumer and the
"cheated"firm are losers. Productivityand othermea-
sures of efficiency may be low because employees
O.C.Ferrell
is AssociateProfessor,
andLarry G.Gresham is Assistant maximize their own welfare ratherthan placing com-
Professor,
Departmentof Marketing,TexasA&MUniversity. Theau- pany goals as priorities.
thorswishto thankPatrickE. Murphy, GeneR. Laczniak,
MaryZey- Absence of a clear consensus about ethical con-
CharlesS. Madden,
Ferrell, StevenSkinner, andtwo
TerryChilders, duct among marketershas resultedin much confusion
anonymous reviewersfor theirhelpfulsuggestionsandconstructive
comments. amongacademicianswho studymarketingethics. These
academicianshave resortedto analyzing various lists

Journal of Marketing
Vol. 49 (Summer 1985), 87-96. EthicalDecisionMakingin Marketing
Understanding / 87

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of activitiesto determineif marketingpractitionersfeel organizationalcontingencies. The individualvariables
specific behaviors are ethical or unethical. This re- consist of personalbackgroundand socializationchar-
search seems unenlightenedby evidence that ethical acteristics, such as educational and business experi-
standardsare constantly changing and that they vary ences. The organizationalcharacteristicsconsist of the
from one situation/organizationto another. Individ- effects of organizationsexternal to the employing or-
uals have differentperceptionsof ethical situationsand ganization (customers, other firms) and intraorgani-
use different ethical frameworksto make decisions. zationalinfluences(e.g., peers and supervisors).These
Thus, no attemptis made here to judge what is ethical variablesare interdependentas well as ultimately af-
or unethical (the content of the behavior). Our con- fecting, either directly or indirectly, the dependent
cern is with the determinantsof decision-makingbe- variable-ethical/unethical marketingbehavior.
havior which is ultimately defined as ethical/unethi- The general frameworkis a contingency approach
cal by participantsand observers.Ratherthan advocate to individualdecision making, which suggests that we
a particularmoral doctrine, we examine contexts and can observe wide variationsin ethical decision mak-
variablesthat determineethical decisions in the man- ing, but this variationis not random. Theoreticaland
agerialprocess. practicalcontributionsare achieved through identify-
This article intends to fill a significant gap in the ing importantcontingency variables that distinguish
theoreticalliteraturerelated to marketingethics. The between contexts in which decisions are made. This
conceptual framework developed and discussed fo- simply means that the decision making of marketers
cuses on a multistagecontingency model of the vari- is dependent on contingencies external to the deci-
ables that impact on ethical decisions in an organi- sion-makingprocess. These contingency factors may
zationalenvironment.The article's specific objectives be found within the individual, in the organizational
are (1) to review empirical research and logical evi- context, or externalto both the individualand the or-
dence useful in creating a contingency frameworkto ganization (i.e., in the interorganizationalenviron-
explain ethical decisions of marketers, (2) to defend ment).
the contingencyframeworkwith existing empiricalre- The contingencyframeworkpresentedin Figure 1
search and logical evidence, and (3) to suggest ad- demonstratesthat multifacetedfactors affect the like-
ditional research to test portions of the contingency lihood of ethical actions by individualdecision mak-
framework. ers. Individualfactors (including knowledge, values,
attitude,and intentions)are posited as interactingwith
Definitions and Approach organizationalfactors (includingsignificantothers and
opportunityfactors) to influence individuals involved
We assume that the operatingexigencies of the firm in an ethical/unethicaldecision-makingdilemma. The
bringthe marketerinto contactwith situationsthatmust societal/environmentalcriteriaused to define an eth-
be judgedas ethicalor unethical(rightor wrong). Such ical issue are treated as exogenous variables in this
situationsmay include placing marketersin positions theoreticalframeworkand are, therefore, beyond the
to use deceptive advertising, fix prices, rig bids, fal- scope of this analysis.
sify marketresearchdata, or withholdproducttest data.
The opportunityvariableis especially salient since the
marketerperforms a boundary spanning role for the Constructs in the Contingency
organization.That is, the marketerlinks the task en- Framework
vironmentto the organizationby defining consumer
needs and satisfaction. As Osborn and Hunt (1974) IndividualFactors
note, those parts of the organizationmost exposed to It is impossible to develop a frameworkof ethical de-
the environmentwill be under more pressure to de- cision making without evaluating normative ethical
viate. Therefore, many of the ethical questions de- standardsderived from moral philosophy. Based on
veloping in any firm are related to marketing deci- the emphasis of normative approachesin the litera-
sions. The model described is equally applicable to ture, it is assumed that marketersdevelop guidelines
otherfunctionalareas of the organization,such as ac- and rules for ethical behavior based on moral philos-
counting, management, etc. However, the opportu- ophy. Various philosophies related to utilitarianism,
nity to deviate from ethical behaviormay be less prev- rights, andjustice explain how individualscreate eth-
alent in nonmarketingareas, due to a lower frequency ical standards.
of boundaryspanningcontacts. The oldest approachto ethics is based on the study
The proposed frameworkfor examining ethical/ of moralphilosophy. It is assumed that, knowingly or
unethical decision making is multidimensional, pro- unknowingly,individualsmay use a set of philosoph-
cess oriented, and contingentin nature. The variables ical assumptionsas a basis for making ethical deci-
in the model can be categorized into individual and sions. This assumptionabout the influence of cultural

88 / Journal
of Marketing,
Summer
1985

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 FIGURE1
A Contingency Model of Ethical Decision Making in a Marketing Organization

I m ~= m m I i m -, i ~,--an

I
I
I
I
I
ETHICALISSUE
OR
SOCIAL DILEMMA
and -advertisingdeception
CULTURAL -falsifyingresearch data
ENVIRONMENT -pricecollusion
-bribes
-bid rigging
I
I
I
I
I
I
I
I
I
-I
L. ..._ . i . _ _
_J-
m _
i
- / _ _--/ _
-l I

and group norms/values on individual decision-mak- sum total of utilities producedby any other act. That
ing processes is soundly based in marketingliterature is when the greatestpossible balance of value for all
(cf. Engel and Blackwell 1982, Fishbein and Ajzen personsis affected by the act. Under utilitarianism,it
1975). is unethicalto select an act that leads to an inefficient
Philosophy divides assumptionsabout ethics into use of resources. Also, it is unethicalto engage in an
two basic types-teleological and deontological act which leads to personalgain at the expense of so-
(Beauchampand Bowie 1979). These two approaches ciety in general. Implicit in the utilitarianprinciple is
differ radically in terms of judging ethical behavior. the concept of utility and the measurementand com-
Teleological philosophies deal with the moral worth parisonof value. For example, it may cost the public
of behaviordeterminedtotally by the consequences of more throughhigher prices to redesign an automobile
the behavior. One's choice should be based on what thanto pay damages to a few people who are injured
would be best for all affected social units. For many from a safety defect in the automobile.
marketingdecision makers, ethical action is tied into Deontological philosophies stress the methods or
the business and their ability to meet company per- intentionsinvolved in a particularbehavior. This fo-
formanceobjectives (Sherwin 1983). The assumption cus on intentionsis consistent with marketingtheories
is thatthe economic success of a firm's marketingac- of consumer choice (cf. Engel and Blackwell 1982,
tivities should benefit employees, management, Howard1977), which specify behavioralintentionsas
stockholders,consumers, and society. Utilitarianism a cognitive precedent of choice behavior. Results of
is a teleological philosophy that attemptsto establish action are the focus of deontological philosophies.
moralitynot in the motives or intentionsof marketers' Standardsto defend personal ethics are often devel-
decisions but in the consequences of such decisions oped from the types of deontologicalphilosophies de-
(Velasquez 1982). scribedin the following summaries(Velasquez 1982).
Utilitarianism.The act is ethical only if the sum Rights principle. This principle specifies mini-
total of utilities producedby the act is greaterthan the mum levels of satisfactionand standards,independent

EthicalDecisionMakingin Marketing
Understanding / 89

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of outcomes. Moral rights are often perceived as uni- commonplaceto businessand governmentofficials and
versal, but moralrightsare not synonymouswith legal are often considered tips for performing required
rights. The rights principle is based on Kant's cate- functions.U.S. firms often find it difficult to compete
gorical imperative which basically incorporatestwo in foreignenvironmentsthatdo not use Americanmoral
criteriafor judging an action. First, every act should philosophiesof decision making.
be based on a reason(s) that everyone could act on,
at least in principle (universality). The second crite- OrganizationalFactors
rion is that action must be based on reasons the actor The preceding discussion explored philosophies that
would be willing to have all others use, even as a have an impacton individuals'knowledge, values, at-
basis of how they treat the actor (reversibility). For
titudes, and intentions toward ethical issues. In this
example, consumers claim that they have a "rightto section, recognition is given to the fact that ethics is
know" about probable defects in an automobile that not only a matterof normativeevaluation, but is also
relate to safety. a series of perceptionsof how to act in terms of daily
issues. From a positive perspective, success is deter-
Justice principle: This principle is designed to mined by managers' everyday performances in
protect the interests of all involved. The three cate- achieving company goals. According to Cavanaugh
gories are distributive,retributive,and compensatory. (1976, p. 100), "Pressure for results, as narrowly
Basically, distributivejustice holds that equals should measuredin money terms, has increased." Laczniak
be treatedequally and unequals should be treatedun-
(1983a) suggests that this pressureto performis par-
equally. Retributivejustice deals with blaming and ticularly acute at levels below top managementbe-
punishingpersons for doing wrong. The person must cause "areasof responsibilityof middle managersare
have committed the act out of free choice and with often treatedas profit centers for purposes of evalu-
knowledgeof the consequences.The punishmentmust ation. Consequently, anything that takes away from
be consistent with or proportionalto the wrongdoing.
profit-including ethical behavior-is perceived by
Compensatoryjustice is concernedwith compensation lower level managementas an impediment to orga-
for the wronged individual. The compensationshould nizationaladvancementand recognition"(p. 27). Thus,
restore the injuredparty to his/her original position. internalorganizationalpressures seem to be a major
Corporatehierarchiesand executive prerogativesare predictorof ethical/unethical behavior.
examples of distributivejustice in practice. Antitrust
legislation allowing criminalprosecutionof corporate Significant Others
officials is based on the notion of retributivejustice.
Class action suits embody compensatoryprinciples. Figure 1 posits Significant Others as a contingency
It is importantto note thatall of these philosophies variablein individualdecision making. Individualsdo
produce standardsto judge the act itself, the actor's not lear values, attitudes,and norms from society or
intentions,or the consequences of the act. Also, these organizationsbut from others who are members of
philosophiesare based on assumptionsabout how one disparatesocial groups, each bearing distinct norms,
should approachethical problems. Standardsdevel- values, and attitudes. Aspects of differential associ-
oped from utilitarianism,justice principles, and rights ation theoryand role-set theoryprovidetheoreticalra-
principles are used to socialize the individual to act tionales for includingorganizationalfactors in the de-
ethically and may be learned with no awareness that cision framework.These theories, and empiricaltests
the standardsare being used. The precise impact of of their relevance to the ethical decision-makingpro-
these philosophieson ethical behavioris unknown,but cess, are discussed in the following sections.
there is widespread acceptance in the marketing lit-
eraturethat such culturally derived standardsimpact Differential association theory. Differential asso-
on the decision-makingprocess. ciationtheory (Sutherlandand Cressey 1970) assumes
Ethical decision making may be influenced by the that ethical/unethical behavior is learned in the pro-
IndividualFactorsidentified in Figure 1. Beliefs may cess of interactingwith persons who are part of inti-
serve as inputsaffectingattitudeformation/changeand mate personalgroups or role sets. Whetheror not the
intentionsto resolve problems. Also, evaluationor in- learningprocess results in unethical behavior is con-
tentionto act (or even think aboutan ethical dilemma) tingent upon the ratio of contacts with unethical pat-
may be influencedby cognitive factorsthatresultfrom terns to contacts with ethical patterns. Cloward and
the individual's socialization processes. It is at this Ohlin (1960) are responsiblefor incorporatingan op-
stage that cultural differences would influence per- portunityvariable (discussed in a later section) in the
ceptions of problems. For example, variationsin eth- differential association model of deviant behavior.
ical standardsare illustratedby what Mexicans call la Thus, as posited in our model, it is expected that as-
mordida-the bite. The use of payoffs and bribes are sociation with others who are perceived to be partic-

90 / Journalof Marketing,
Summer1985

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 ipating in unethicalbehavior, combined with the op- referent other and the focal person. Organizational
portunityto be involved in such behavioroneself, are distance in this context is defined as the number of
majorpredictorsof unethicalbehavior. distinct intra- and interorganizationalboundariesthat
In the Zey-Ferrell,Weaver,andFerrell(1979) study separatethe focal person and the referentother. Per-
of marketingmanagers, differential association with sons in the same departmentas the focal person tend
peers and opportunitywere found to be betterpredic- to be least differentiated.They are hired and social-
tors of ethical/unethical behavior than the respon- ized within the same immediate organizationalcon-
dent's own ethical belief system. This finding contra- text and share the focal person's functional special-
dicts DeFleur and Quinncy's (1966) reformulationof ization and knowledge base. People in different
Sutherland's differential association model, which departmentswithin the same organization are more
specifies internalizationof groupnormsas a necessary similar than people separated by organizational
second step in the development of deviant behavior. boundaries.Those in other organizationshave differ-
The Zey-Ferrell,Weaver, and Ferrell (1979) conclu- ent socializationandreinforcementundersystemswhich
sion that an individual may act in compliance with pursueseparateand sometimesvaryingobjectiveswith
group pressurewithout internalizinggroup norms is, differentpersonnelselectioncriteria.Boundarieswithin
however, congruent with the value/behavior incon- and between departmentsserve to reduce the focal
sistency noted by Newstrom and Ruch (1975) in their person's knowledge of referent others' attitudes and
survey of marketingpractitioners. behaviors. Further, referent others outside the focal
Empiricalsupportfor the impact of superiorson person'sown organizationare likely to differ from the
the ethics of their subordinatesis provided by a va- focal person in orientation, goals, interests, and mo-
riety of studies of business ethics spanning the last dus operandi.Thus, one would expect that the greater
two decades. For example, more than 75% of the the distancebetween the focal person and the referent
manager/respondents (n = 1200) to Baumhart's(1961) other, the less likely their influence on the focal per-
ethics survey reportedexperiencing conflict between son's ethical/unethical behavior.
personalstandardsand what was expected of them as In the only reporteddirect test of the distance hy-
managers. In Brenner and Molander's (1977) repli- pothesis, Zey-Ferrelland Ferrell (1982) comparedre-
cation of the Baumhartresearch, 57% of those re- sponses from ad agency accountexecutives with those
sponding (n = 1227) indicated similar role conflict from their corporateclients. The expectationthat nei-
situations.Carroll(1975) found that young managers ther of those groups would be perceived by the other
in business indicatedthey would go along with their as influencing their own behavior (due to the inter-
superiorsto demonstrateloyalty in mattersrelated to organizationaldistanceinvolved) was confirmed. Fur-
judgmentof morality. Almost 60% of the respondents ther supportfor the distance proposition came from
(n = 236) agreedthat young managersin the business the ad agency respondenttype. Peer group, the refer-
world would have done just what junior members of ent otherclosest to the focal person, was the strongest
Nixon's re-election committee had done. In Bow- predictorof ethical/unethical behavior. But, for the
man's (1976) follow-up, an even higher percentage corporaterespondent,top management,ratherthanpeer
(70%)of public officials expressedthis same opinion. group,was the most influential.The latterfindingdoes
Centralto the application of differential associa- not supportthe distance hypothesis but is consistent
tion theory to the model of ethical/unethical market- with predictionsderiving from the relative authority
ing behavioris the identificationof referentothers in dimensionof the role configuration.
the decision process. This perspectiveis providedvia The relative authoritydimension is a measure of
a considerationof the decision maker's (focal per- the amountof legitimateauthorityreferentothershave,
son's) role-set configuration. relative to the focal person, on issues requiringcon-
tact between them. Kahn et al. (1964) view powerful
Role-set theory. A role set refers to the comple- referent others in a role set as those capable of re-
ment of role relationshipswhich focal persons have strictingthe range of behavior available to the focal
by virtue of their social status in an organization person. They posit the status and powers of referent
(Merton1957). A role-set configurationis defined as others as directly related to the amount of pressure
the mixture of characteristicsof referent others who they can exert on the focal person to conform to their
form the role set, and may include their location and role expectations.Thus a role set configuredwith ref-
authority,as well as their perceived beliefs and be- erent others who are superiorin authorityrelative to
haviors.Previousevidence (Merton1957, Miles 1977) the focal person would be in a position to exert strong
suggests that role-set characteristicsprovide clues for role pressures for compliance to their expectations.
predictingbehaviors of a focal person. Applying this logic to business settings, one would
One importantdimensionof role-set configuration anticipatethat top management,as referentotherswith
appearsto be the organizationaldistance between the greaterauthority,would have more influencethanpeer

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Understanding Decision in Marketing
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groupson the focal person's ethical/unethical behav- and providedon an exchange basis. It is importantto
ior. note thatdeontologicalframeworksfor marketingeth-
The Baumhart(1961) and Brennerand Molander ics focus more on internalrewards, while teleological
(1977) surveys supportthis relative authoritypropo- frameworksemphasize external rewards.
sition-behavior of superiors was perceived by re- Clowardand Ohlin (1960) are responsible for in-
spondents in both studies as the number one factor corporatingan opportunityvariable in the differential
influencing ethical/unethical decisions. Similar re- associationmodel of ethical/unethical behavior. Zey-
sults are also reported in a study by Newstrom and Ferrelland Ferrell(1982) empiricallyconfirmthat the
Ruch (1975). Hunt, Chonko, and Wilcox (1984) found opportunityof the focal person to become involved in
the actions of top managementto be the single best ethical/unethicalbehaviorwill influence reportedbe-
predictorof perceived ethical problems of marketing havior. In this study, opportunityfor unethical be-
researchers.Ferrell and Weaver (1978) suggest that havior was found to be a better predictorof behavior
top managementmust assume at least part of the re- thanpersonalor peer beliefs. Therefore, we can con-
sponsibilityfor the ethical conductof marketerswithin clude that professional codes of ethics and corporate
theirorganization.In addition, the general conclusion policy are moderatingvariables in controlling oppor-
thatthe ethical tone for an organizationis set by upper tunity.
managementis common to most attemptedsyntheses Weaver and Ferrell (1977) suggest that codes of
of ethics research(cf. Dubinsky, Berkowitz, and Ru- ethics or corporatepolicy on ethics must be estab-
delius 1980; Laczniak 1983a; Murphy and Laczniak lished to change individualbeliefs about ethics. Their
1981). researchindicates that beliefs are more ethical where
Responses from the Zey-Ferrelland Ferrell(1982) these standardsexist. Also, it was found that the en-
ad agency executive sample do not support the au- forcementof corporatepolicy on ethical behavior is
thority proposition-this group was influenced by necessary to change the ethical behavior of respon-
peers, ratherthan top management.The authorsspec- dents. Their research discovered a poor correlation
ulate that this unexpectedoutcome may have been at- between ethical beliefs and ethical behavior. Oppor-
tributableto the high frequency of contact among ad tunity was a better predictorof ethical behavior than
agency account executives and their relatively infre- individualbeliefs. This research supportsthe need to
quent associations with superiors. Such an explana- understandand control opportunityas a key deter-
tion is congruent with differential association theory minant(as indicatedin Figure 1) in a multistagecon-
and appearsto indicate that frequencyof contact with tingency model of ethical behavior.
referentothers is a more powerful predictor(than rel-
ative authority)of ethical/unethical behavior. Corpo-
rate client responses from the same survey also sup-
A Contingency Frameworkfor
porta differentialassociationexplanationof the results Ethical Decisions
obtained-top management, rather than peers, was A contingencyframeworkfor investigatingbehavioral
perceived as the relevant referent other. In a corpo- outcomes of ethical/unethical decisions across situa-
ration, the advertisingdirectordoes not have a num- tions is shown in Figure 1. The basic elements of the
ber of individualsat the same level with whom to in- frameworkare: (a) the individual's cognitive struc-
teract. Thus, the frequency of interactionwith upper ture-knowledge, values, beliefs, attitudes, and in-
managementlevels is usually higher for advertisersin tentions; (b) significant others in the organizational
corporationsbecause the advertisingdirectordoes not setting;and (c) opportunityfor action.
have anyone else performingthe same job tasks. Figure 1 specifies that the behavioraloutcome of
an ethical dilemma is related to the first order inter-
Opportunity action between the natureof the ethical situationand
Figure 1 depicts opportunityas having a majorimpact characteristicsassociated with the individual and the
on the process of unethical/ethical decision making. organizationalenvironment.Potentialhigher orderin-
Opportunityresults from a favorableset of conditions teractionsare anticipatedin the basic postulate.At this
to limit barriersor provide rewards. Certainlythe ab- stage of development, there is no claim that this is an
sence of punishment provides an opportunity for all-inclusive framework;rather, it is the initial step
unethicalbehavior without regardfor consequences. towardconstructingsuch a framework.
Rewardsare externalto the degree that they bring
social approval,status, and esteem. Feelings of good-
ness and worth, internally felt through the perfor- Propositions from the Contingency
mance of altruisticactivities, for example, constitute Framework
internalrewards. External rewards refer to what an Each of the constructsassociated with the framework
individualin the social environmentexpects to receive were discussed in the precedingsections. Some prop-
from others in terms of values externally generated ositions incorporating the previously defined con-

92 / Journalof Marketing,Summer1985

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structsare presentedin the section thatfollows. These b. Corporatepolicy and codes of ethics that are en-
propositionsare stated so that testable hypotheses can forced will produce the highest level of compli-
be derived to direct future research efforts. The ele- ance to established ethical standards.
ments and propositionsdiscussed were selected on the c. The greaterthe rewardsfor unethicalbehavior, the
basis of the past research and logical evidence used more likely unethical behavior will be practiced.
to constructthe contingency frameworkin Figure 1.
d. The less punishment for unethical behavior, the
They are presented as a representativesubset of po-
tentialpropositionsthat can be derived from the par- greaterthe probabilitythat unethicalbehavior will
be practiced.
adigm.
Propositions Concerning the IndividualFactors
Proposition1: The more individualsare awareof moral
Developing and Testing
philosophiesfor ethical decision making, the more in- Contingency Propositions
fluence these philosophies will have on their ethical The researchprogramfor developing and testing con-
decision. tingency hypotheses outlined by Weitz (1981) pro-
vides valuable guidance for future studies of market-
a. Individualswill be influenced by moral philoso-
ing ethics. This program, recommendedfor tests of
phies learned through socialization, i.e., family, his contingency frameworkof effectiveness in sales
social groups, formal education.
interactions,is adaptable to examinations of ethical
b. Within the educational system, courses, training phenomena.The three stages of the researchprogram
programs, and seminars related to ethics will in- are hypothesesgeneration,hypothesestesting in a lab-
fluence ethical beliefs and behavior. oratoryenvironment,and hypotheses testing in a field
c. The culturalbackgroundsof individualswill influ- setting.
ence ethical/unethical behavior.
Hypotheses Generation
Propositions Concerning Organizational The primary objectives of this step in the research
Factors
programare to (1) add specificity to the propositions
Proposition2: Significant others located in role sets presentedin the preceding section, i.e., move from
with less distance between them and the focal indi- "bridge laws" (Hunt 1983, p. 195) to research hy-
vidual are more likely to influence the ethical behav- potheses;(2) identify additionalpropositionsfrom the
ior of the focal person. theoreticalframework;and (3) develop a richer tax-
a. Top managementwill have greaterinfluenceon the onomy of moderatorvariables within the Individual
individualthan peers, due to power and demands Factors, Significant Others, and Opportunitysubsets.
for compliance. Past studies of business ethics (cf. Darden and
b. Where top managementhas little interactionwith Trawick 1980; Dubinsky, Berkowitz, and Rudelius
the focal person and peer contact is frequent,peers 1980), with their foci on identifying perceptions of
will have a greaterinfluence on ethical behavior. ethical/unethical situations, provide a useful starting
point for achieving the first objective of adding spec-
Proposition 3: In general, differential association ificity to propositions. The theoretical frameworkof
(learningfrom intimate groups or role sets) predicts ethical decision making developed in this article re-
ethical/unethicalbehavior. quires identificationof a variety of ethical issues to
a. Interalization of group norms is not necessary to make the hypotheses derived from the specified re-
develop ethical/unethical behaviorthroughdiffer- lationshipsempiricallytestable. In addition, the prac-
ential association. tical and theoretical value of the proposed contin-
b. Unethical behavior is influenced by the ratio of gency frameworkcan only be determinedby testing
contacts with unethical patterns to contacts with its explanatorypower across a variety of ethical sit-
ethical patterns. uations.
Theories in use methodologies (Zaltman, Le-
Propositions Concerning the Opportunity Masters, and Heffring 1982) might be useful in gen-
Variable erating additionaltheoreticalpropositions and devel-
Proposition4: The opportunityfor the individual to oping a richer taxonomy of moderatorvariables, as
become involved in unethicalbehavior will influence well as in identifying a wide range of ethical dilem-
reportedethical/unethical behavior. mas. Such methodologies involve observing and
questioningmarketingdecision makers. Examples of
a. Professionalcodes of ethics will influence ethical/ how these techniquesmight be employed in ethics re-
unethicalbehavior. Ethics relatedcorporatepolicy search include studies of verbal protocols recorded
will influence ethical/unethical behavior. during the decision-making process, interviews with

EthicalDecisionMakingin Marketing
Understanding / 93

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marketingpractitionersconcerning their behavior in for marketingethics may well lie in the purification
specific decision situations, and investigations of the of existing measures of the constructs under consid-
characteristicsmarketersuse to classify ethical/uneth- eration, as well as the developmentof new and more
ical situations. Levy and Dubinsky (1983) have de- valid and reliable operationalizations.
veloped a methodologyfor studyingretail sales ethics
thatappliesthe protocoltechnique.Theirapproachstarts Field Testing
by generatingsituations that might be ethically trou- The survey proceduresused in earlier tests of some
blesome to the retailer's sales personnel. This is first of the relationshipsposited in the theoretical frame-
addressedby meeting with 8 to 12 retail sales per- work of ethicaldecision making(Zey-Ferrell,Weaver,
sonnel from different departmentswith a moderator and Ferrell 1979) represent efficient and practical
to generate, individually and silently, ethical prob- methods of examining these linkages. However, the
lems they confront on theirjobs, and to record these correlationalnature of the results obtained in these
on a sheet of paper. studiesprohibitscausal inference. In addition, the va-
lidity of the self-reportmeasuresused in these studies
ExperimentalTesting is open to question.
Regardless of the procedureused to develop contin- Future research programs on marketing ethics
gency hypothesesfrom the theoreticalframework,the should address the latter problem in the laboratory
next step in the ethics researchprogramis to test these testingphase. Lab studies focusing on the purification
hypotheses in a laboratoryenvironment,using an ex- of existing measuresof the constructsof interest and
perimentaldesign. The advantages of laboratoryex- the identificationof new and different measurement
perimentsto researchersattemptingto assess causal methods (e.g., physiological measures) may well re-
relationshipsbetween variablesare widely recognized sult in the valid and reliable instrumentsneeded for
(cf. Cook and Campbell 1976) as includingcontrol of the field testing portion of the researchprogram.
exogenous variables and elimination of potential al- The ethical problemsinherentin experimentalma-
ternativeexplanationsfor the results obtained. How- nipulationof ethical issues/problems in field settings
ever, the difficulties involved in testing hypotheses make solutionsto the formerproblemmuch more dif-
concerning marketing ethics in lab settings is evi- ficult to overcome. Some of the hypotheses derived
denced by the absence in the marketing/businesslit- from the propositions presented earlier (e.g., those
eratureof reportsof such experiments.The subjective concerningthe effects of corporatepolicy and training
natureof self-reportoperationalizationsof constructs programs/seminars)are more amenable to field test-
from the ethical decision-makingframeworkand the ing than others. For example, multi-unitcorporations
problem of achieving experimental realism (Carl- might institutetrainingprograms/seminarsrelated to
smith, Ellsworth, and Aronson 1976, p. 83) in labo- ethics at some locations and not at others. Before and
ratorytests of ethical issues representmajorthreatsto after indices of ethical/unethical behavior (e.g., em-
the internalvalidity of these studies. ployee theft, customer complaints) could then be
However, the managementliteratureon collective comparedfor the treatmentand control units. Cook
bargainingcontains numerous examples of laborato- and Campbell(1976) indicate that "quasi-experimen-
ry studies of negotiation techniques (cf. DeNisi and tal" designs of this sort are acceptable surrogatesfor
Dworkin 1981, Johnson and Tullar 1972, Notz and "trueexperiments"in field settings where randomas-
Stark 1978), which are very similar to the type of ex- signment of subjects to treatmentcontrol conditions
perimentneeded in ethics research, i.e., unobtrusive, is frequentlyimpossible or impractical.
experimenter-controlled predictorvariablesand clearly Nevertheless,the ethical issues and practicalprob-
defined behavioral outcomes. Such studies illustrate lems associated with random assignment of subjects
how complex cognitive phenomena (e.g., attitudes) to treatmentconditionsand unobtrusiveassessment(or
can be operationalized, manipulated, and measured inducement)of ethical/unethicalbehaviorpresentmajor
while minimizing threatsto internalvalidity. obstacles to the implementationof experimentalde-
Applying similar techniques to studies of market- signs in field settings.
ing ethics might involve, for example, manipulating
the "opportunity"to engage in unethical behavior
throughthe presence/absence of specific experimen- Conclusion
ter instructionsregarding the rules of the game, or Research and theoretical development in marketing
varying the impact of significant others through the ethicshave not been based on multidimensional models
use of a confederate in experimentalgroups. Labo- thatare contingentin nature.Most articlesin the field
ratoryexperimentsrepresentquick and effective ways of marketingethics focus on moral philosophies, re-
for testing behavioral propositions. In addition, the searchersprovide descriptive statistics about ethical
primaryvalue of such studies to a research program beliefs, and correlational linkages of selected vari-

94 / Journalof Marketing,Summer1985

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ables. This article attempts to integrate the key deter- cies. Dubinsky's methodology could be tested using
minants of ethical/unethical behavior in a multistage the contingency framework of ethical decision mak-
contingency model. The framework is based on the ing, hypotheses generation, laboratory testing, and field
assumption that the behavioral outcome of an ethical testing.
dilemma is related to first order interaction between To develop new directions in research and theory
the nature of the ethical situation and characteristics construction, new propositions are needed to test the
associated with the individual (cognitive factor), sig- contingency framework. More research to develop a
nificant others, and opportunity. The framework pro- taxonomy of ethical standards (Velasquez 1982) and
vides a model for understanding the significance of attempts to incorporate these standards into marketing
previous theoretical work and empirical research and (Fritzche 1985) are needed to understand more about
provides direction for future studies. individual factors related to beliefs, values, attitudes,
The contingency framework is process oriented, or intentions. Attempts to develop logical decision rules
with events in a sequence causally associated or in- for individual decision making (Laczniak 1983b) also
terrelated. The contingency variables represent situ- contribute to understanding individual factors. Chonko
tional variables to the marketing decision maker. The and Burnett (1983) provide an example of descriptive
complexity and precision of the framework developed research classifying individual beliefs about sales sit-
in this paper should increase as research is conducted uations that are a source of role conflict. Their re-
that permits more scientific conclusions about the na- search may assist in developing additional proposi-
ture of ethical decision making in marketing. Our tions, especially as it relates to pinpointing new ethical
framework is a start toward developing a comprehen- issues. In addition, marketers should be able to draw
sive framework of ethical decision making. We have from a rich source of research on organizational be-
attempted to construct a simple and direct represen- havior to develop and test propositions related to sig-
tation of variables based on the current state of re- nificant others and opportunity.
search and theory development. The importance of ethical decision making in mar-
Propositions concerning individual factors and keting is becoming more evident. Laczniak and Mur-
propositions concerning the organizational factors of phy (1985) suggest organizational and strategic mech-
significant others and opportunity were developed to anisms for improving marketing ethics, including codes
be used in a research program for testing contingency of marketing ethics, marketing ethics committees, and
hypotheses. Based on a research program for testing ethics education modules for marketing managers. To
contingency hypotheses outlined by Weitz (1981), we improve specific recommendations for marketing eth-
suggest hypotheses generation, hypothesis testing in ics, more needs to be learned about the process of
a laboratory environment, and hypothesis testing in a ethical decision making. We suggest an integrated ap-
field setting. Both retail store management and field proach to understanding marketing ethics with im-
sales management provide excellent opportunities for proved propositions that test the contingency model
testing the contingency framework in Figure 1. For presented in this article. By taking a multidimensional
example, Dubinsky (1985) has developed a method- view of ethical decision making, a new level of rigor
ology for studying the ethical problems of field sales- in research should be achieved.
people as an approach for designing company poli-

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