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of Business Ethics, Vol. 75, No. 3 (Oct., 2007), pp. 229-238 Published by: Springer Stable URL: http://www.jstor.org/stable/25123990 . Accessed: 09/07/2013 10:41
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Springer 2007
The
International
Business Union
Ethics
John Tsalikis
Bruce Seaton
Index: European
The of
present
study
expands
the towards
The The
sentiments
extension economic
arena. gathered
Data in three
coun
the of this paper is to describe purpose of the BEI to the European Union (EU). choice of the EU was primarily based on its importance. a population The EU consists of 25 coun
Union The (UK, Germany, European Spain). were were the most whUe the British pessimistic the future of about ethical behaviour optimistic
The
460 miUion. of approximately output of the EU, asmeasured by GDP in international doUars, is shghtly greater than that of In 2005, the combined GDP of the EU and the USA1. tries with economic the USA represented approximately 40% of the world as a focus of the
KEY
WORDS:
business
ethics,
consumer
sentiments,
Germany,
Spain
GDP. Other factors supporting the EU are: initial international expansion a. Similarity in culture:
value
Brooks
systems
(1998)
are
argued
to
Introduction
Business transactions are
that
American
similar
becoming
increasingly
a deeper of necessitating understanding is cultures. An cultural element divergent important the degree of consumer acceptance of current business practices. Such consumer trust is vital for the efficient global, functioning
In order to
those of Europeans, but with such differences as the higher importance that Europeans attri bute to issues of pace-of-life and long term
pay-offs.
ofthe marketplace
systematicaUy evaluate
(Johnson
et al. 2005).
senti
in methodology: b. Similarity the CATI (Com Assisted puter Telephone Interviewing) system of data collection was used in the US. The research is well of opinion practice in Western the countries European developed of the EU, aUowing the respective BEI's of to be methodologicaUy the chosen countries equivalent to those of the USA.
consumers'
ments Ethics
towards business ethical practices, Index (BEI) was conceptualized, in the USA
(Tsalikis
Literature
review
of Marketing
Science, journal
in Marketing.
and Psychology
The
foUowing
framework
at Florida
include and the the
As
the BEI
of Global Marketing.
evaluation
(ethical) context
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by Theory/Principles/Context
There are various perspectives
sketched
on how
perceptions
Ethics and
Scale
the culture
uniformity
of a country
in the above
provides
process.
some
degree
Polonsky
Muncy et al.
One
human
school of thought
nature and posits
standards does exist (Bigoness and Blakely, et al., 1996; Ralston et al, 1996; Husted 1997). to this school cultural differ of According thought, ences are superficial and people in China basicaUy as people in France. The other school of thought posits that there are sig nificant differences in cultural values that need to be exhibit values studied cultures
gue that
and ethical
but statisticaUy significant, consumer in ethical differences percep sHght, tions between Northern and Southern EU
consumers.
b. The
second
related
to the Social It is
present
study
Corporate 2001).
Responsibihty hypothesized
and
addressed
are
when
(Vogel,
cultures
1992). Wines
similar
with
diverse (1992) ar
and dif
question
French
and
and
contribute
consumers were
to (2001)
values
advantage. to than of
German
Maignan sociaUy
ferent on the application of moral principles to specific situations. Similarly, Dees and Starr (1992) see the
"core tions latter social to moral perspective values" as cultural are universals culturaUy with while specific. the reac This relativ duemmas is more
companies is indicative
French and
ethical Index
consistent
consumers.
that has come to dominate moral approach In the relativistic FerreU and tradition, thought. Gresham introduced their "contingency (1985) istic for understanding ethical decision mak to discover universal Rather than ing." attempting moral principles, recommended the examination they contexts of situational or indi (cultural, historical, vidual) and variables that influence ethical behaviour. As a set of self-referenced measures, the BEI has been to facilitate (i.e. comparisons developed longitudinal a cultural context) rather than horizontal within (i.e.
between cultural contexts) and is thus more consistent
c. The
Ethical
Reputation
and the
Ethical
framework
to Index (EPI). According Purchasing consumers the ERI, UK ranked McDonald's as the most unethical in the world company
were foUowed (Gilbert, 2006). They by BP. The oU and SheU, Barclays Nike, Adidas, sectors were and clothing the lowest ranked said In the same survey 74% of consumers not buy from a company they would as unethical. Bold (2003) noted they perceive that a MORI found that 75% of UK report sectors.
said that a firm's ethical behaviour
consumers
with
a relativistic on
Previous focused
perspective. cross-cultural
influence
perceptions managerial 1997; (Fraedrich et al., 2000; Jackson and Artola, Jeurissen and van Luijk, 1998; Palazzo 2002; Ritt and Ritten 2002; Valentine enburg and Valentine, burg 2004). Such ethical ViteU from standards and different and studies influencing example, "people ethical support cultural factors as beliefs and behaviour. For PaoliUo that found (2004) countries utilize different In their
their purchasing behaviour. the EPI showed a 15% increase in market" (Goodwin consumption in concept, At least these 2003).
provide to the a micro BEI's macro viewof business,
and Francis,
perspective.
American
study, scored higher in ethicaUty than did their Spanish counterparts. the ethical sen Very few studies have measured business persons
timents of consumers. on The consumer three streams ethicality of are: related
evaluations."
EU
PoliticaUy
population it is best
combining
the
research
focusing
federation
and confederation.
However,
in distinct
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to
the US,
to be eliminated was Poland. Poland's per GDP is less than half that of the EU average capita and less than a third that ofthe US. As an "eco countries nomic outlier" noted it was removed from further
consideration.
Due
constraints,
to the composition
we had to
of the EU
ourselves
and resource
to a smaU
restrict
As gated
set of
countries.
The
foUowing
guidelines
were
et al. (2001) investi earlier, Polonsky the nature of consumer ethics in four Northern countries
developed:
a. chosen countries had to be monolingual, or at
a dominant national language. This excluded a country such as Belgium; the focus would possible, that were demographically in the EU; dominant
access a representative
The (Denmark, Germany, Scotland) as compared to four Southern countries (Greece, Italy, Portugal, European Spain). Wood (1995), along with others, had suggested that the "less developed" countries Southern European European Netherlands, in perspective be less ethical than their might Northern there were statisticaUy counterparts. While between the Northern differences and significant
Southern sets of countries, the effect sizes were
be on and
of
c.
the
ability
to
sample
residents
consumer
using
the CATI
was
method
essential.
of eliciting
smaU
direction.
and
the
differences
were between of
inconsistent "northern"
in and is not
responses
Based were
criteria, further
countries France,
Germany, Italy, Poland, Spain, and United Kingdom. Selected economic and study demographic, of the EU, of the above six specific characteristics are reproduced in Table I. the resource constraints, Given this initial explora to three of tion of the BEIEU needed to be confined countries and the US
the above countries.
European ethicality the judgment sample was com pleted by adding a country from each of Northern and Southern The Northern choice was Europe. fuUy convincing, the EU's Germany, Table I). The Southern dominant choice was economy
Although "southern"
the distinction
notions
Spain. for the EU as a the mean per capita is just below whole (about 10% less than Italy) and is thus in line with Southern European levels. In addition, Spanish is the dominant
represents summarize, the next the
The first country chosen in our judgment sample was the United The basis for this Kingdom. selection was a commonahty of language and the to the US. The first of the six cultural proximity
language
region three
in Latin America
for BEI measurement. chosen countries
which
To were:
Germany,
Spain
TABLE
Economic/demographic
I
for selected countries
characteristics
Country
Population
(in thousands)
GDP*
(inmilHons) 26,940
GDP/Capita*
CATI
CPI**
EU 461,297 France 62,370 82,500 Germany 58,462 Italy 38,173Poland 43,038 Spain 60,034 UK USA 295,000 * =
** = Corruption Perception
7.5 29,316 yes 8.2 30,579 yes 5.0 28,760 yes 3.4 12,994 yes 7.0 26,320 yes 30,470 yes 41,399 yes 8.6 7.6
PPP,
International DoUars
(2005)
Index (10 point scale where 10 is least corrupt).
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232 John Tsalikis The The instrument same four items used
Telefonstichproben"
representative
were for the BEIus was in the This consistent with BEIEU. employed some BEI the cross-sectional having provide insight to its primary in addition focus on longitudinal of consumer ethical perceptions. The was retained for interview
every
cHent...
of
numbers to include
not
knowledge
registered
www.omniquest.de
in German
2006).
telephone
Hstings"
(http://
original English version and Spanish versions ing in the UK, while German were for the developed respective corresponding
countries. The scales were back-translated
into
German
and
SPAIN: TNS-Global (http://www.tns-global.com) uses the Random Digit Dialing (RDD) methodol of unhsted ogy in order to incorporate a proportion users telephone in 9 geographic in their sample of 1000 households regions (see Table II).
associated
Results Population
The
interviews
using
the computer
interviewing the by necessity, populations accessible by telephone. As use in each of the three countries the sam
assisted
telephone
The
national 1001
probabUity
comprised
UK:
pling frames application to the raw data is designed to mitigate of weights this A brief of the deficiency. description sampling process in each country foUows: UK: NEMS research uses the CATI system to collect a representative 1000 of adults from sample 10 geographic regions (see Table II). The company utiUzes a stratified random sampUng methodology across 10 ITV to NEMS regions. According
research:
in
The
sets
are pre
of
characteristics
sented
in Table
II.
of the BEI
BEIs were International calculated the using same formula used in the calculation of the 2006 US Inter
(Tsalikis and Seaton, 2006b). The 2006 national BEIs and the 2006 US BEI were:2 UK =119.7
are
across each of evenly accurate data weighting... are also to ensure that the appUed the profile of these TV regions. By conducted to ensure sampHng within is each created TV and (http://
location
telephone
= 90.3 GERMANY = 98.5 SPAIN 2006 US = 102.63. the confidence interval ranges of the 2006 US = BEI can say that the CI (95% ?4.6) we no show Spain/US dyads significant differences. The are other 5 dyads significantly different. The internal characteristics of the BEI are discussed below.
www.nemsmr.co.uk
ple. According
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Index 233
II
characteristics
UK Gender Male Female Employment Status FuU-time Part-time Unemployed Retired/invaHd Age 16-24 25-34 35-44 45-54 55-64 65+
GEPJvlANY
SPAIN
48.7% 51.3% 38.1% 16.5% 16.2% 28.4% 5.1% 17.5% 18.4% 16.3% 13.1% 19.6%
GenderGender Male 46.7% Female 53.3% Employment Status FuU-time 34.8% Part-time 16.5% 8.7% Unemployed 19.5% Retired Age 14-24 25-34 35-44 45-54 55-64 65+
Education
44.2% 55.8% Employment Status Working Retired/invaHd 4.4% Other Male Female Age 18-24 25-34 35-44 45-54 55-64 65+
68.7% 27.0%
No
5.2% 26.7% 50.6% 17.1% Region 8.3% 6.4% 12.2% 9.6% 11.1% 15.2% 7.0% 18.2% 9.3%
No
46.9% 26.7%
Region Scodand North/Borders Lancashire Yorkshire Wales Midlands East England London Southern Ulster
Barcelona AM7.5% Catalano-Arag. 11.6% Levante 14.5% 19.6% Sur 10.9% Madrid AM Central 9.8% North-east 10.8% 10.8% North-center Canarias 4.5%
2.6%
Analysis As with of
ofthe the US
individual
very
unethical)
analysis,
to provide a analyzed more consumer sentiments of the precise picture Index Component Ethics (Exhibit 1). A Business score was calculated for each of the (BEIcomponent) the BEI four BEI For questions components using the Personal/Past (QI and Q2): the foUowing formula: and Vicarious/Past
was
questions (% more
ethically-%
unethically)
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EXHIBIT
Questions comprising
the Business
Personal/Past QI. Very Based on your own experiences Somewhat as a consumer unethically in the past year, nor businesses you dealt with ethicaUy generaUy behaved: Very ethicaUy
unethicaUy
Neither
Somewhat
Vicarious/Past Q2. Very Personal Q3. More Vicarious Q4. More Based Based on what you heard from others or the media in the Neither past nor year, businesses behaved: ethicaUy Very ethicaUy
Somewhat
unethicaUy
Somewhat
Based
last year,
do
you
expect
businesses
in
the
coming
year
to behave?
ethicaUy
heard About
from the
others same
or
last year,
do
you
expect
businesses
in the
coming
year
to behave?
unethicaUy
ethicaUy
countries and results for the three European in Table III and de the 2006 US BEIs are presented 1. AU three in European picted graphicaUy Figure The
countries show a positive sentiment for BEIpersonai/past,
albeit not as strong as the 2006 US data. Similar to the 2006 US data, the BEIvicarious/past were distinctly negative for aU 3 EU countries with Spain having the
strongest negative sentiment = (BEIvicarious/past 73.2).
to the internal components ofthe BEIfomre showed marked those BEIpast, country distinctiveness simUarity and between
the tries, four the countries difference was than were between smaU the examined. In aU four
internal when
coun the
with
difference between personal and vicarious ethical were similar for Spain and Germany perceptions (slightly less than the 2006 US) but the UK showed a source. lesser distinction by information markedly
However, as examination of Figure 1 wiU confirm,
The
BEIvicarious/future
for
Germany.
ences between were
StatisticaUy
no country different
aU four within
from zero. were
country
However, extremely
differ
the large.
distinctions
UK
aU 4 BEIpast profiles exhibited the distinctly crepancy between of business based on personal with a tendency
dis
were
positive of business.
BEIfoture
about At
the the
perceptions
scores
experience,
toward "unethical
were
view of pessimistic and the US business future ethicality. Spain occupied As of the middle of the distribution. inspection indicative of III wiU were
across
a distinctly
Table TABLE
Business Ethics Component
readily
the four
confirm
III
Scores for the Four Index
differences
BEIfuture
primarily
countries.
UK
BEIpersonal/past BEIvicarious/past BEIperS0nal/future BEIvlcarious/future BEIs BEIs over under 100 100 115.5 93.8 136.0 133.6 indicate indicate
ofthe effect
not
were:
positive negative
sentiments.
a general exhibited respondents for both future components of sentiment, positive were and the BEI younger Q4), (Q3 respondents more about the future ethical behaviour optimistic UK: While UK
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Index 235
140
-Hk?
SPAIN
1 I 110-V--r
120--f--
2006US
i 10?-\
/-/-?
-\
/
80-\/^'
70 J-.-.-. Personal/Past Vicarious/Past
^?_*?
Personal/Future Vicarious/Future
BEI Component
Figure 1. Business ethics component scores for the four countries.
of businesses Swords
and respondents. Whipple a in American and British of (1992), study ethical student's found that demo perceptions, variables did not affect ethical
than older
of business ethical practices. perceptions Polonsky et al. (2001) identified some differences in consumer ethical countries Netherlands) perceptions between four Northern EU The Denmark, Scotland, (Germany, and four Southern EU countries
graphic
significandy In addition, UK females express more judgments. ethical assessments of business ethicality than males, a noted in the US.. pattern previously GERMANY: businesses than males treated did. Females them perceived personaUy that, in the past, more ethicaUy
(Por Van Luijk (1997) sug tugal, Spain, Italy, Greece). countries' gested that Southern and Eastern European those of the practices lag behind and Western Similar countries. European differences between North and South were ethical
SPAIN: As in Germany, Spanish females perceived treated them personaUy that, in the past, businesses more than In addition, Spanish males did. ethicaUy behaviour optimistic of businesses (based on the information they heard from others). No age effect was observed for the Spanish sample. Apparendy the memory ofthe cooking females were more about the future ethical
reported by Wood (1995). The results of the present are countries study show that the three European sirrhlar in their perceptions of the ethical behaviour of in the past. However, the three countries on their perceptions of future ethical vary widely business behaviour tinction widest between the dis by businesses. More specificaUy, of North vs. South breaks down because the
oil scandal of 1981 (where 161 Spaniards died ingesting poisonous rapeseed oil sold as olive oil) has faded from the national memory.
in perceptions about the future exists and the UK, with Spain located Germany in the middle. somewhere gap each country wiU be
Conclusions A problem of real unification ofthe EU is the diversity to the union (Grimond, of cultures belonging 1995). As inspection of Table III and Figure 1 will readily the EU is a coUection of countries rather confirm, a as at than unified entity, least regards consumers'
For clarity of presentation, dealt with individuaUy: GERMANY: According (1987), German orientation. The German behaviour be provided managers same was An
to Becker
and Fritzche
a pessimistic exhibited true in our findings about of future ethical explanation (2000) who corporate for this might that declared behaviour is as
consumers' of business.
sentiments
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236 John Tsalikis as a good loaf of bread. Any company to with be the perceived tampering country's labour laws is bound to regret it" (p. 36). sacrosanct consumers German should be the least However, a to worry because cross-referential survey found were that German managers by other perceived manager as the most ethical (Jeurissen and van Luijk, If the ones that should worry 1998). anything, should be the Spaniards because their managers were second Germans to last.4 This should diink contradiction the most between ethical
and Bruce Seaton in the BEI by far was observed about the future). This (especiaUy perceptions seems to corroborate (2002) finding Gwyther's that in the UK "the fact remains that declaration UK: The highest outright fraud in business other hand, The Economist corporate culture is serving with no more distinction American counterpart. Nor scandals. Indeed, accounting behind America in bringing clash weaker 2002, closer The of capitalist than might p. 63). Our to Gwyther is rare" declared than the (p. 4). On that "Europe's and owners short-termist free of its
UK
shareholders
is the continent
rated what
(having and what they actuaUy think managers) simistic results about future expectations) explained Vogel by the findings (1992) argued the role of the
it appears simply to be them to light. In the is armoury systems, Europe's be expected" (The Economist, data revealed a UK population Economist. of the UK sentiment be explained
as the most
in other cap values, while italist nations relatively more emphasis is placed on as the locus of ethical guidance" the corporation (p. 44). More specificaUy,
or
argument that UK companies conscious of the need increasingly their ethical credentials addition, executives ethical zerland as with
by Bussey's "are becoming to demonstrate (p. 17). In of business with high Swit
in Germany
the focus
ethics where
is
to consumers"
on
"consensual"
"communicative"
he not with the individual but with as a whole (van Luijk, 1997). community individual the ethical behaviour of Apparendy ethical the decisions German
corporation
a poU the Germans, ranked the top 5 countries as being: US, UK, 1991). (Singer,
standards
Canada,
and Germany
managers
or the
For a comprehensive historical perspective of business ethics in Spain see Argandona (1999). to Argandona, in ethical development According SPAIN: Spain "has run paraUel to that of other countries, and has been affected by similar factors" (p. 159). In our con the Spaniards are closer to American findings sumers' ethical sentiments but quite distinct from the ethical and sentiments about The the future of the Germans agree with present findings ofthe cliche that the citizens questioning Argandona's and countries hold a contempt of southern European the British. distrust Spain 10-23% towards has a the law and the State. gray economy (about significant of GDP). Gray economy, being an iUegal to defraud the coUusion of businesses and consumers State, should prima consumer perceptions present data do not to influence facie be expected However the toward business. support such a contention.
A first step was made for the expansion of the BEI in arena. WhUe the results and the the international are intrigu between the four countries comparison ing, the movement was value of the BEI lies on the relative asmeasured by future runs. The first step simUar to the US both in culture
in countries The next and data gathering methodologies. step the BEI in more diverse cul would be to measure tures such as in Africa, Asia, Latin America and the
cultures.
Muslim
Notes 1 2 As the
Power
reported
the Purchasing
by
International Monetary
Parity method.
Fund
using
calculated
calculations for the
in (1999) argued that pubhc corruption Argandona to the ethical per the late eighties was detrimental seem ceptions of Spanish society. Spanish consumers to have bounced the aforementioned back from this pubhc corruption and cooking oil disaster of 1981.
using
of BEI,
the weighted
the BEI. numbers above
unethical
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Sweden
Business
Practices
of Moral
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