Ethical evaluation by consumers:

the role of product harm and

disclosure
Pi-Chuan Sun, Hsu-Ping Chen and Kuang-cheng Wang
Department of Business Management, Tatung University, Taipei, Taiwan
Abstract
Purpose The purpose of this paper is to explore the impacts of product harm, consumers product
knowledge and rms negative information disclosure on ethical evaluation of a rm, especially, the
moderating effects of product knowledge and negative information disclosure.
Design/methodology/approach A 3 2 2 between-subject design with three levels of product
harm, two levels of product knowledge, and two treatments of negative information was used in this
study. The experimental product is diet food.
Findings The ndings reveal that the level of product harm affects consumers ethical evaluation.
Furthermore, the individuals ethical evaluation will inuence his or her purchase intention. The main
effect of subjective knowledge is signicant while its moderating effect is not signicant. It is also
found that the negative information disclosure will lower consumers ethical evaluation of a rm, and
the effect of product harm on ethical evaluation will be stronger for harmful products than for
harmless products when the negative information is disclosed.
Practical implications Marketers might need to be especially responsive if their practices result
in a diminished reputation for their rms and lost sales. Exploiting the vulnerability of consumers or
worsening their situation by marketing harmful products might be evaluated as unethical under
principles of justice. It is suggested that marketers include increased disclosures of actual product
harm levels relative to industry norms.
Originality/value Consumers product knowledge and rms negative information disclosure are
integrated into the model, exploring the effect of product harm on consumers ethical evaluation of a
rm and their moderating effects are discussed.
Keywords Consumer behaviour, Product attributes, Ethics, Food products, Purchase intention,
Ethical evaluation, Product harm, Product knowledge, Negative information disclosure
Paper type Research paper
1. Introduction
Early examinations of ethical behavior largely focused on the need to establish public
condence in such professions as the legal, medical, accounting, and marketing
communities. However, recent well-publicized national or international recalls of
ground beef and pet food have increased public awareness of food safety issues. The
2008 milk product recall further added to public concerns about food safety.
Food-related risks to the public health extend beyond those posed by naturally
occurring organisms or chemical residues left from production or processing. The key
ingredients in some of the new diet supplements may be just as dangerous. For
example, some over-the-counter diet pills, drawn from plant leaves and promoted in
many herbal diet remedies as a natural weight loss product, are not regulated and
can have safety problems of their own. Any product that is known to be unsafe and/or
unt for its intended use is a harmful product (Smith and Cooper-Martin, 1997).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0007-070X.htm
BFJ
114,1
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Received October 2009
Revised February 2010
June 2010
Accepted June 2010
British Food Journal
Vol. 114 No. 1, 2012
pp. 54-69
qEmerald Group Publishing Limited
0007-070X
DOI 10.1108/00070701211197365
Polonsky et al. (2003) introduced the concept of a harm chain to broaden the way in
which rms and public policy makers consider potential negative outcomes from
marketing activities. All those whom the rm impacts, either negatively or positively,
have the right to be considered in corporate decision-making (Polonsky and Ryan,
1996). Marketing of a harmful product to any group is generally considered to be
unethical despite the product category (Nwachukwu et al., 1997; Smith and
Cooper-Martin, 1997). Accordingly, a normative prescriptive framework for ethical
conduct on the part of the business community is vital and an adequate understanding
of ethical evaluation of corporate behaviors by consumers is imperative. The ethical
evaluation procedure suggests that consumers follow a four-step decision-making
process: the consumer must:
(1) First recognize a moral issue is present.
(2) Make the moral judgment.
(3) Establish moral intent.
(4) Engage in moral behavior.
Frameworks that describe ethical decision-making in marketing organizations provide
a solid foundation for understanding dimensions of ethical decision-making in sales
(Ferrell et al., 2007). Many researches focused on the effect of organizational factors on
ethical decisions (Bellizzi, 1995; Bellizzi and Norvell, 1991; Dubinsky and Ingram,
1984), on the individuals role (Barnett et al., 1994), or on both (Ferrell et al., 2007).
Nevertheless, their observations are viewed from the perspectives of marketing
organizations. For market-driven organizations, consumers perceptions are critical for
their success. Particularly, product-harm crises and product recalls have the potential
to damage carefully developed brand equity, spoil consumers quality perceptions,
tarnish a companys reputation, and lead to revenue and market share losses (Chen
et al., 2009). Indeed, some researchers examined the ethical evaluation on marketing
strategies from the perspectives of consumers. For example, Smith and Cooper-Martin
(1997) and Jones and Middleton (2007) explored the consumers ethical evaluations of
marketing strategies, focusing on the roles of product harm and consumer
vulnerability. However, if the consumer is unable to identify or incorrectly identies
either the level of product harm or the degree of consumer vulnerability, the consumer
may not even recognize that a moral issue is present, thus resulting in a awed ethical
evaluation process. Indeed, negative information will exert certain inuence on a
consumers attitude and cognition (Fiske, 1980; Herr et al., 1991). Nevertheless, two
people may have the same quantity of information and exhibit different performance
on product judgment and choice. It is the product knowledge that helps the individual
to evaluate product statement and product quality. However, the ethical issue was
seldom studied about consumers product knowledge and rms negative information
disclosure. Hence, this study, to make up for the shortcomings of past research, will
attempt to explore the effects of consumers product knowledge and rms negative
information disclosure in consumers ethical evaluation. In particular, efforts will be
made to examine the moderating effects of product knowledge and negative
information disclosure on the relationship between product harm and ethical
evaluation.
Ethical
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55
2. Literature reviews and research hypotheses
2.1 Ethical evaluation
Two sets of experiences that may inuence how one perceives the business
environment might lie in the persons experiences as a consumer and as a citizen
(Allison, 1978; Bearder et al., 1983). These two sets of experiences may be exemplied
by the individuals attitudes as a consumer and his attitudes toward business in
general (Pettijohn et al., 2007). Ethical evaluation is based on moral philosophy
(Reidenbach and Robin, 1990). The ethical decision depends on individual moral
values, and the judgment of business activity is inuenced by his/her moral
philosophy. There are ve philosophy models for individual ethical decision-making,
including theories of justice, relativism, egoism, utilitarianism and deontology. Based
on these theories, a multidimensional ethics measure has been developed (Reidenbach
and Robin, 1990). Dimension one, labeled a moral equity dimension, focuses on
concepts of fairness and justice, while dimension two is a relativistic dimension which
captures the idea of cultural and traditional acceptance of an action. Finally, dimension
three, named the contractualism dimension, centers on the breach of an implied
contract. The moral equity dimension is broad-based. It relies heavily on lessons from
our early training that we receive at home regarding fairness, right and wrong as
communicated through childhood lessons of sharing, religious training, morals from
fairy tales and fables. The relativism dimension is more concerned with the guidelines,
requirements, and parameters inherent in the social/cultural system than with
individual considerations and can be acquired later in life. The contractualism
dimension is in keeping with the notion of a social contract between business and
society (Donaldson and Dunfee, 1994).
2.2 Product harm and ethical evaluation
The Code of Ethics of the American Marketing Association states that marketers should
conform to the basic rule of professional ethics not to do harm knowingly, and they
should offer products and services that are safe and t for their intended uses. Hence,
marketing activities could be criticized and evaluated as unethical when it involves
products perceived as harmful because of the marketers obligation to avoid causing
harm. Harmful products have been dened as any product that is known to be unsafe
and/or unt for its intended use. Much of the discussion of product safety in the literature
relates to physical harm. However, product harm includes economic harm and
psychological harm(Smith and Cooper-Martin, 1997). Society may viewsuch products as
differing in degrees of harm on a continuum that ranges from less harmful
(i.e. non-sin or guilty pleasures), to more harmful (i.e. lthy habits), to most
harmful (i.e. sinful or socially unacceptable) ( Jones and Middleton, 2007). The
product perceived to be more or less harmful depends on the level of a harmful attribute
in the product, such as the amount of nicotine in cigarettes (Smith and Cooper-Martin,
1997). The marketing environment may be hostile for products if they are considered to
be more or most harmful as evidenced by the organized opposition of social, religious,
political, and regulatory groups. This hostility occurs despite the fact that these socially
problematic products, though strictly regulated, are generally legal and highly desired
by certain customer segments (Davidson, 1996; Rotfeld, 1998). Firms can create value by
reducing harmful organizational activities or outcomes (Polonsky et al., 2003). Although
the process of evaluating the harmful impacts of marketing activities is complex
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(Carrigan, 1985), perceptions of product harm affect publics judgments of the ethics of
the strategy, which in turn inuence any behavioral response. Product harmfulness has a
signicant effect on ethical evaluations, and ethical concern is partly due to perceived
product harm(Smith and Cooper-Martin, 1997). Generally, product harmappears to have
a greater effect on ethical evaluation than target vulnerability (Smith and Cooper-Martin,
1997; Jones and Middleton, 2007). Accordingly, this study infers that the level of product
harm will inuence consumers ethical evaluation of a rm. Based on the preceding
inference, H1 research hypothesis is proposed:
H1. The level of product harmwill inuence consumers ethical evaluation of a rm.
2.3 The effects of product knowledge on ethical evaluation
The measure of consumer product knowledge used in previous studies fall into three
categories: objective product knowledge, subjective knowledge, and experience-based
knowledge (Brucks, 1985). Subjective knowledge is an individuals perception of how
much he or she knows (Park and Lessig, 1981). Objective Knowledge is what an
individual actually has stored in memory ( Johnson and Russo, 1984). Experience-Based
knowledge is the purchasing or usage experience with the product. Consumers make
ethical evaluations of product harm based on information they remember (explicit
memory), information they know (implicit memory), or guess (Monroe and Lee, 1999).
Consumers with more product knowledge have better memory, recognition, analysis,
and logic abilities than those with less product knowledge. As a result, those who think
they have more product knowledge tend to rely on intrinsic cues, like the level of harmful
attribute in the product to evaluate a product because they are aware of the importance
of product information. On the other hand, those with less product knowledge are
inclined to use extrinsic cues, like the price or the brand, to evaluate a product since they
do not know how to judge it (Rao and Monroe, 1988). Accordingly, this study infers that
the consumers product knowledge will moderate the relationship between the level of
product harm and the ethical evaluation of a rm. Although there are three ways to
measure product knowledge, the product knowledge based on experience has less direct
relations with the behavior (Brucks, 1985). Moreover, the mechanisms through which
subjective knowledge and objective knowledge affect search (Brucks, 1985; Park and
Lessig, 1981) and information processing (Park et al., 1994) may be different. These two
knowledge constructs have been distinguished (Brucks, 1985; Park and Lessig, 1981),
because the consumers perceptions of what they know (subjective knowledge) and what
they really know (objective product knowledge) may be inconsistent. Therefore, the
moderating effects of two knowledge constructs are examined separately. Research
hypotheses H2 and H3 are then proposed.
H2. The effect of the level of product harm on ethical evaluation is contingent on
the consumers subjective product knowledge.
H3. The effect of the level of product harm on ethical evaluation is contingent on
the consumers objective product knowledge.
2.4 The effects of negative information disclosure on ethical evaluation
The general public does not normally know the average levels of product harm found
in many popular products. Firms typically do not provide that information, or the
government does not require that such information be printed on the packaging.
Ethical
evaluation of
consumers
57
Although consumers may want to purchase morally pleasing, socially acceptable, safe
products, often times they are not able to make informed judgments as to the true
nature of a product. Without the presence of a prime, subjects are far less likely to be
able to distinguish among high and low levels of product harm ( Jones and Middleton,
2007). While priming may alert the target to the products attributes, it may actually
cause them to more consciously and specically attend to the stimuli, thereby resulting
in more extreme responses (Martin, 1986). If no reference point is provided, the
consumer is less likely to accurately recognize the harm of a product. If consumers
cannot detect levels of product harm, they will be unable to detect a moral issue (Hunt
and Vitell, 1992; Paolillo and Vitell, 2002). If a rm disclosed the harmfulness
information associated with the product, it will provide a reference point and help
consumers to detect the levels of harmfulness and then inuence their attitudes and
cognition. Negative information will exert certain inuence on a consumers attitude
and cognition (Fiske, 1980; Herr et al., 1991). Hence, it is inferred that whether the
negative information is disclosed or not will moderate the effect product harm on
ethical evaluation. Based on the preceding inference, H4 research hypothesis is
proposed.
H4. The effect of the level of product harm on ethical evaluation is contingent on
whether the negative information is disclosed or not.
2.5 The effects of ethical evaluation on purchase intention
Purchase intention refers to the consumers subjective inclination towards a certain
product, and has been proven to be a key factor in predicting consumer behavior
(Fishbein and Ajzen, 1975). People who evaluate a marketer as less ethical are to some
extent more predisposed to engage in disapproving behaviors (Andreasen and
Manning, 1990). Ethical concern evokes the likelihood of disapproving behaviors,
particularly boycotts and negative word of mouth (Smith and Cooper-Martin, 1997). A
consumer who evaluates a strategy as less ethical is more likely to engage in a
disapproving behavior (e.g. a boycott) and less likely to engage in an approving
behavior (e.g. the public could respond positively by praising a companys actions)
than is a consumer with a more ethical evaluation. These disapproving behaviors
appear to apply to all the companys products, not just the product in question. Such
disapproving behaviors can have powerful effects. Consumers perceptions of product
harmfulness are expected to affect their judgments of the ethicality of the marketer,
which in turn inuence their subjective inclinations towards that product. Purchase
intention is a consequent result of ethical evaluation. Accordingly, research hypothesis
H5 is proposed.
H5. A consumers ethical evaluation of a rm will inuence his/her purchase
intention.
3. Research method
This study examines the effects of product harm (harmless, less harmful, and more
harmful), product knowledge (low and high), negative information (disclosure and
undisclosure) on ethical evaluation. Especially, it tries to explore the moderating effects
of product knowledge and negative information on the relationship between product
harm and ethical evaluation. Figure 1 shows the research framework.
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3.1 Measurement
Following the methods used by Smith and Cooper-Martin (1997), product harm was
manipulated as the level of a harmful attribute (senna in diet food: none, 8 mg and
12 mg per unit). Each level of product harm was representative of high and low
amounts of the attribute offered to consumers. Product knowledge is dened as
consumers familiarity, expertise, and experience when a particular product is used or
purchased (Alba and Hutchinson, 1987). Primarily, we drew items from existing scales
and adapted them to reect consumer-specic knowledge of diet food. The scale
developed by Brucks (1985) was modied according to professional medical reports
and pretest. Eight items were used to evaluate the degree of consumers subjective
product knowledge and twelve items were used to measure objective knowledge.
Modied Multi-dimensional Ethics Scale (MES) (Reidenbach and Robin, 1990; Jones
and Middleton, 2007) was employed as a means for measuring general public potential
consumers ethical evaluations of company actions. A set of eight items resulting in a
three-dimensional scale was used. These three-dimensions do reect a generalized
evaluative structure (Humphreys et al., 1993). The moral equity dimension is intended
to measure the value sets thought to be imparted through the training and education
received in childhood. Subjects perceptions of moral equity (i.e. just/unjust,
fair/unfair, morally right/not morally right, and acceptable/not acceptable to my
family) were assessed. The relativism dimension is purported to measure the ethical
boundaries inherent in an individuals social system. This acculturation process is
often described as collective mental programming, such that each culture denes for its
members actions and behaviors that are morally acceptable or unacceptable
(i.e. culturally acceptable/unacceptable and traditionally acceptable/unacceptable)
(Hofstede, 1983). Finally, the contractualism dimension assesses the social contract
inherent between business and society-at-large (i.e. violates/does not violate an
unspoken promise and violates/does not violate an unwritten contract) (Reidenbach
and Robin, 1990). All items were anchored by a ve-point Likert scales.
Purchasing intention is denes as the possibility to make a purchase (Dodds et al.,
1991). Three items were used to measure it (consider buying, be likely to purchase, and
have willingness to buy). A ve-point Likert scale ranging from strongly disagree to
strongly agree (1 strongly disagree, 5 strongly agree) was adopted. Finally,
negative information disclosure was operationalized as providing unfavorable
Figure 1.
Research framework
Ethical
evaluation of
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59
information about the harmful attribute of diet food or not. Anote labeled When taken
in large amounts, senna side effects can include nausea, diarrhea, and severe cramps
will be presented as negative information disclosure. Otherwise, it is negative
information undisclosure.
A pilot test was conducted to clarify the measurement item of product knowledge,
ethical evaluation, and purchase intention as well as to examine measurement reliability.
Of 60 questionnaires 48 were completed and found valid. All the Cronbachs a coefcient
for each research construct are over 0.7, indicating a high internal consistency. The items
of subjective and objective product knowledge for the experimental product were also
tested. The result shows that the subjective and objective knowledge measurement items
can distinguish the level of product knowledge.
3.2 Data collection
A 3 2 2 between-subject design with three levels of product harm (harmless, less
harmful, and more harmful), two levels of subjective (or objective) product knowledge
(high and low), and two treatments of negative information (disclosure and
undisclosure) was used in this study. It could not only measure the main effects, but
also measure the interaction effects of variables. The experimental product was diet
food. Six situations were designed according to two manipulated variables, the level of
product harm (harmless, less harmful and more harmful) and negative information
disclosure (disclosure and undisclosure). Every situation was described by words and
pictures.
The rst part of the questionnaire was the picture and the description of the diet
food, herbal tea. Each subject was required to read one of the six descriptions of the
product rst randomly. After reading the description of the diet food, the subject was
asked to respond to the items on ethical evaluation and purchase intention. The third
part was the test of the subjects product knowledge, including subject and objective
knowledge. Finally, the subjects were asked to complete the demographic data.
There were six situations depicted verbally and pictorially. Because females are
usually the primary users of diet product, this research targeted female consumers as
the experiment unit. Three hundreds questionnaires (50 for each situation) were
delivered to ofce ladies in Taipei city by convenient sampling, of which 192 out of 198
returned were effective. The effective response rate was 62 per cent. Most of the
respondents (65.2 per cent) were under 30 years old, and more than half (53.6 per cent)
were university educated. Approximately 45.3 per cent of the participants worked in
the service sector, and 39.4 per cent of them were married. Approximately 64.6 per cent
of the participants had an annual income of under US$20,000 and 22.4 per cent between
US$20,000 and US$30,000.
3.3 Reliability and validity test
The test of internal consistence of each construct shows that all the Cronbachs a value of
each scale is greater than the suggested value of 0.7. Further, AMOS 7.0 was used to
examine measurement model. Results of the measurement model for intravenous
variables moral equity, relativism, contractualism, and purchase intention were
analyzed. The model shows adequate t: x
2
66:126 p 0:00, x
2
=df 1:787 (less
than 2), GFI 0.970, AGFI 0.947, CFI 0.998, TLI 0.997, and the RMSEA 0.045
(below 0.05). All the coefcients of each item are greater than 0.882 and are signicant at
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the level of 0.001. To test the discriminate validity, the condent interval of correlation
for each pair of latent constructs was examined. The result shows that there is
satisfactory discriminate validity for these theoretical constructs.
4. Result of hypothesis test
SPSS14.0 was used to process collected data and MANOVA was conducted to test the
hypotheses of this study. The results of testing are shown in Table I.
Table I shows the main and interaction effects of product harm, negative
information disclosure and subjective knowledge on ethical evaluation. It is found that
the main effect of product harmis signicant for moral equity (F 418.905, p 0.000),
relativism (F 275.558, p 0.000), and contractualism (F 323.957, p 0.000). The
main effect of negative information disclosure is signicant for moral equity
(F 160.972, p 0.000), relativism (F 146.968, p 0.000), and contractualism
(F 86.708, p 0.000). The main effect of subjective knowledge is signicant in moral
equity (F 5.101, p 0.025), relativism (F 12.808, p 0.000), and contractualism
(F 5.989, p 0.015). There is a signicant interaction effect between product harm
and negative information disclosure on moral equity (F 86.987, p 0.000),
relativism (F 75.044, p 0.000), and contractualism (F 145.267, p 0.000).
4.1 Product harm effects
Table I indicates that the main effect of product harm is signicant for moral equity,
relativism, and contractualism. A Shelf test was further conducted to examine the
Source Dependent variable DF F-value Sig.
Product harm (A) Moral equity 2 418.905 0.000
* *
Relativism 2 275.558 0.000
* *
Contractualism 2 323.957 0.000
* *
Purchase Intention 2 163.145 0.000
* *
Negative information (B) Moral Equity 1 160.972 0.000
* *
Relativism 1 146.968 0.000
* *
Contractualism 1 86.708 0.000
* *
Purchase intention 1 52.391 0.000
* *
Subjective knowledge (C) Moral equity 1 5.101 0.025
*
Relativism 1 12.808 0.000
* *
Contractualism 1 5.989 0.015
*
Purchase intention 1 1.769 0.185
A B Moral equity 2 86.987 0.000
* *
Relativism 2 75.044 0.000
* *
Contractualism 2 145.267 0.000
* *
Purchase intention 2 28.107 0.000
* *
A C Moral equity 2 1.204 0.302
Relativism 2 1.638 0.197
Contractualism 2 2.391 0.094
Purchase intention 2 2.502 0.085
Note:
*
p , 0.05,
* *
p , 0.01
Table I.
MANOVA analysis result
Ethical
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61
effect of product harm. The results are shown in Table II. All the mean scores of moral
equity, relativism, and contractualism for harmless product are higher than those for
the less and more harmful products, while all the ethical evaluations for the less
harmful product are better than those for the more harmful product. The statistics bear
out that product harm erodes the rms ethical evaluation. H1 is supported.
4.2 The effect of product knowledge
Table I shows that the main effect of subjective knowledge is signicant in moral
equity, relativism, and contractualism. This study further examines the effect of
product knowledge by dividing the sample into two groups based on the level of
subjective knowledge. The result is shown in Table III. The mean scores of moral
equity, relativism and contractualism for the respondents with less subjective
knowledge are higher than those with more subjective knowledge, signifying that
consumers subjective knowledge reduces the rms ethical evaluation.
(I) Product harm ( J) Product harm (I-J) Mean difference Std. error Sig.
Moral equity Harmless Less 8.81558 0.31723 0.000
*
More 10.596 0.3244 0.000
*
Less Harmless 28.8155 0.31723 0.000
*
More Harmless
Less
210.5968 0.32447 0.000
*
2 1.7813 0.31723 0.000
*
Relativism Harmless Less 7.73346 0.34777 0.000
*
More 9.580 0.35571 0.000
*
Less Harmful 27.7334 0.34777 0.000
*
More 1.8472 0.34777 0.000
*
More Harmless 29.5806 0.35571 0.000
*
Less 2 1.8472 0.34777 0.000
*
Contractualism Harmless Less 5.82315 0.23691 0.000
*
More 7.193 0.24231 0.000
*
Less Harmless 25.8231 0.23691 0.000
*
More 1.3705 0.23691 0.000
*
More Harmless 27.1935 0.24231 0.000
*
Less 2 1.3705 0.23691 0.000
*
Note:
*
p , 0.01
Table II.
Results of shelf test for
product harm effects
Low-subjective
knowledge
High-subjective
knowledge
Mean Std. error Mean Std. error Sig.
Moral equity 12.408 0.236 10.758 0.165 0.000
*
Relativism 12.831 0.259 10.700 0.180 0.000
*
Contractualism 8.289 0.177 6.762 0.123 0.000
*
Note:
*
p , .05
Table III.
Main effect of consumers
subjective knowledge
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Table I reveals that there is no signicant interaction between product harm and
subjective knowledge. Subjective knowledge does not inuence the relationship
between product harm and ethical evaluation. H2 is not supported. Furthermore, this
study duplicated the analysis by replacing subjective knowledge with objective
knowledge. The results show that both the main effect and interaction effect of
objective knowledge are not signicant for moral equity, relativism, and
contractualism. H3 is not supported.
4.3 The effect of negative information disclosure
Table I shows that negative information disclosure has a signicant main effect on
moral equity (p , 0:01), relativism (p , 0:01), and contractualism (p , 0:01), and there
is a signicant interactive effect between product harm and negative information
disclosure. The interaction effect was further examined. Figure 2 shows the interactive
effect of product harm and negative information disclosure on moral equity. Figure 3
shows the interactive effect of product harm and negative information disclosure on
relativism. Figure 4 shows the interactive effect of product harm and negative
information disclosure on contractualism. The three analyses reveal that the effect
from product harm on ethical evaluations is stronger when negative information is
disclosed. It means that the effect of product harm hinges on whether the negative
information is disclosed or not. H4 is supported.
Figure 2.
The interaction of product
harm and negative
information on the moral
equity
Figure 3.
The interaction of product
harm and negative
information on the
relativism
Ethical
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63
4.4 The effect of ethical evaluation on purchase intention
A regression analysis was then conducted through SPSS14.0 to examine the
relationship between consumers ethical evaluation and purchase intention. The results
reveal that the positive effects of moral equity (b 0.658, t 6.825, p 0.000) and
contractualism (b 0.147, t 2.199, p 0.029) on purchase intention are signicant.
However, the positive effect from relativism is not signicant (b 0.114, t 1.270,
p 0.205). A consumers purchase intention is inuenced by his or her evaluation of a
rms moral equity and contractualism but not by relativism. Table IV provides the
evidence that H5 is partially supported.
5. Conclusions
Based on previous researches, this study examines the effects of product harm on
ethical evaluation. Different from the previous researches, this study also investigates
the effects of consumers product knowledge and negative information disclosure. In
particular, the moderating effects of product knowledge and negative information
disclosure on the relationship between product harm and ethical evaluation are also
explored. In addition, the current study links ethical evaluation and behavioral
intention since consumers perceptions will inuence their behaviors.
The ndings of this study reveal that consumers ethical evaluation of a harmless
product is better than that of a less harmful product or a more harmful product.
Product harmfulness has a signicant effect on ethical evaluation, and ethical concern
partly stems from perceived product harm (Smith and Cooper-Martin, 1997).
Furthermore, the individuals ethical evaluation will affect his or her purchase
intention. If a rm introduced a harmful product to the market, consumers will assign
Y
Purchase intention
X Beta t-value Sig.
Moral Equity 0.658 6.825 0.000
* *
Relativism 0.114 1.270 0.205
Contractualism 0.147 2.199 0.029
*
Note:
*
p , 0.05,
* *
p , 0.01
Table IV.
Results of regression
analysis
Figure 4.
The interaction of product
harm and negative
information on the
contractualism
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it a lower ethical rating. Perception of product harm affects a perspective customers
judgment of the ethics of the strategy, which in turn inuences any behavioral
response. The possibility of experiencing economic or physical harm downgrades
his/her ethical evaluation of the rm and then reduces his/her purchase willingness.
Consistent with the nding of Humphreys et al. (1993), the result of this study suggests
that the moral equity dimension exerts the greatest inuence impact in explaining
consumer intention. Thus, concepts of fairness and justice dominate consumers
behavioral intention.
It is found that the level of subjective knowledge inuences consumers ethical
evaluation of a rm. However, it does not inuence the relationship between the
product harm and ethical evaluation. The level of objective knowledge does not
inuence ones ethical evaluation, nor does it inuence the relationship between the
product harm and ethical evaluation. Consistent with the argument of Park and Lessig
(1981), subjective knowledge could be more helpful in understanding the formulation of
consumers decisions than objective knowledge, since subjective knowledge reects
the self-condence of product knowledge in their decisions. In this research, it is found
that subjective knowledge can affect ones ethical evaluation of a rm. Consumers with
high condence in understanding product may expect more of rms ethical behaviors,
and then lower their ethical evaluation of the rms.
The present study also nds that negative information disclosure will lower
consumers ethical evaluation. A product attribute cannot be evaluated since it carries
no information before disclosure (Carpenter et al., 1994). The disclosed information is a
cue for consumer evaluation. Especially, negative information is more attractive than
positive information. Consumers are more sensitive to negative information for
protecting themselves from being injured. Consequently, the effect of product harm on
ethical evaluation will be stronger from a harmful product than from a harmless
product when negative information is disclosed.
5.1 Managerial implications
For market-driven organizations, consumers perceptions are critical for their success.
All those whom the rm impacts, either negatively or positively, have the right to be
considered in corporate decision-making (Polonsky and Ryan, 1996). Consequently,
public condence in organizations, such as medical, accounting, and marketing
communities, is focused in researches related to ethical behavior (Smith and
Cooper-Martin, 1997). Nevertheless, American public condence in the safety of the
food supply fell in the period from August 2005 to June 2007. The proportion of the
population indicating that they were very condent about the safety of their food
dropped by eleven percentage points to 22 per cent and the proportion indicating that
they were not very condent rose by ve percentage points to 15 per cent (Stinson et al.
2008). During the past several years marketers have witnessed a growing concern for
and inquiry into the moral implications of marketing decision making (Reidenbach and
Robin, 1991). It is believed that in the long run a companys right to continue in
business is granted by the consumers they serve ( Jones and Middleton, 2007). This
study provides the evidence that product harm will affect consumers ethical
evaluation of the rm, and, in turn, affect consumers purchase intention. When levels
of product harm were manipulated in our studies, there was ethical concern about the
marketing of the more harmful product (Smith and Cooper-Martin, 1997). Consumers
Ethical
evaluation of
consumers
65
may want to purchase morally pleasing, socially acceptable, safe products. If a rm is
to maximize its prot potential, it must reconsider its actions if the product possesses a
certain level of actual harm.
Todays market is characterized by actively involved and sophisticated consumers.
It is found that consumers with high condence in understanding of product may
expect and demand more of a rms ethical behaviors, and then lower their ethical
evaluation of the rm. The publics ethical perceptions of business people in general
are commonly low (Pettijohn et al., 2007). Polonsky et al. (2003) suggested a broad
concept of harm chain to consider the potential negative outcomes from marketing
activities. Addressing harm from a harm chain perspective might require rms to alter
production inputs, redesign production process or consider leaving the community or
industry. For food safety, manufacturers are considered more responsible for food
defense than other segments of the food industry or consumers. Manufacturers are
clearly believed to be primarily responsible for food defense, and the percentage
assigning manufacturers primary responsibility grew over the time (Stinson et al.,
2008). Todays consumers are much more knowledgeable about product offerings than
their predecessors. Marketers might need to be especially responsive if their practices
result in a diminished reputation for the rm and lost sales. Nevertheless, consumers
with less knowledge are liable to give higher scores in ethical evaluation even though
having purchased harmful products.
If consumers are unable to accurately detect product harm levels, they may be
putting themselves at risk by not taking necessary precautions to avoid or minimize
the potential risk posed by the product. It would be reasonable to assume that a
consumer would take added precautions to avoid negative outcomes associated with
products perceived to incur greater physical, emotional, or nancial risk. If the
consumer is unable to detect the inherent added risk from a highly harmful product, he
is unlikely to be proactive in minimizing or at least consciously accepting the added
risk. Exploiting the vulnerability of consumers or worsening their situation by
marketing harmful products might be evaluated as unethical under principles of
justice. This may become particularly controversial if consumers are indeed unable to
fully comprehend the level of actual harm associated with a product when making
judgments about these types of products ( Jones and Middleton, 2007). Firms knowing
that consumers are unable to identify the added risk associated with their products
may nd themselves bearing increased liability if actual harm to the consumer results.
It is suggested that marketers should disclose the level of actual product harm and its
side effects. Providing important information, such as the side effects of diet food, can
help consumers understand the risks associated with their decisions. In fact, rms and
organizations are not the only members of the exchange that initiate harm. Consumers
may also cause harm via inappropriate product use (Polonsky et al., 2003). Of course,
the disclosure of negative information may make consumers speculate that the side
effects of this ingredient are serious that the rm had no other choice but to disclose it
to reduce potential impact. In other words, the consumers are likely to interpret
disclosure of negative information as a signal of escaping from legal liability.
Therefore, it worsens ethical evaluation when selling a harmful product. Nevertheless,
a proactive strategy may have positive consequences on consumer perceptions. For
example, such a strategy can be interpreted as an indication that the rm is
trustworthy and cares about its consumers (Chen et al., 2009). Short-run oriented
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businesses which only care about making prots will be punished by their customers
because, in the long run, a companys right to continue in business is granted by the
consumers it serves ( Jones and Middleton, 2007).A growing body of literature has
argued that there is a positive link between rms socially responsible strategies and
their nancial market performance (Margolis et al., 2007).
5.2 Limitations and suggestions for future research
Several avenues for future research can be suggested that would extend the ndings of
this research. Although female consumers are suitable to be the study subjects due to
their greater familiar with and more frequent use of the products selected in this study,
the results of this study may not generalize to their male counterparts. Furthermore,
since this research targeted the ofce ladies in Taipei city by convenient sampling, the
sampling bias should be taken into account. Future research may consider people in
other lines of work as subjects or adopt probability sampling to enhance external
validity. In the course of the experiment, the subjects only read product information
described verbally or pictorially. Future study may provide real products to enhance
the reality of the experimental context. This study considers only product knowledge
and negative information as moderating variables. Further study can include more
other variables to examine the effects of product harm on the basis of ethical
evaluation.
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Corresponding author
Pi-Chuan Sun can be contacted at: pcsun@ttu.edu.tw
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