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The Relationship Between Ethical

Vince Howe
and Customer-Oriented Service K. Douglas Hoffman
Provider Behaviors Donald W. Hardigree

ABSTRACT. This study examines the relationship between Introduction


the ethical behavior and customer orientation of insurance
sales agents engaged in the selling of complex services, e.g. Insurance products, e.g. life insurance, are abstract,
health, life, auto, and property insurance. The effect of complex, and often focus on furore benefits that are
ethical and customer-oriented behavior, measured by the difficult to prove (Lynch and Mackay, 1985). Due to
SOCO scale(Saxeand Weitz, 1982),on the annual premiums
the convoluted nature of insurance products, many
generated by the agents is also investigated. Customer-
oriented sales agents are found to engage in less unethical consumers of insurance will never fully understand
behavior than their sales-oriented counterparts. Further, exactly what they have purchased. Hence, relation-
sales-oriented agents are found to perceive greater levels of ship marketing is an essential strategy in overcoming
unethical behavior among their significant others. Alarm- this dilemma and is appropriate for credence-attri-
ingly, higher levelsof salespremiums are found among those buted services which are difficult to evaluate even
agents who engagein unethical behavior. after purchase and use (Berry, 1983; Zeithaml, 1981).
Insurance sales agents, as well as other sales
Vince Howe is Associate Professor of Marketing and Chairman, p&sons of complex services, must build a trusting
Dept. of Management and Marketing, The University of North relationship between themselves and their clients to
Carolina at Wilmington. He has published in severaljournals promote a long-term, mutually beneficial relation-
including: Personnel Psychology, Journal of Personal ship (Crobsy et al., 1990). Ethical marketing practices
Selling & Sales Management,Journal of Risk & Insur- within the insurance industry provide the root
ance, Industrial Marketing Management and Journal of
system from which trust-based relationships be-
Direct Marketing. Former Market Management with Ford
tween sales agents and clients stern (Oakes, 1990).
Motor Co., his major research and consulting interests are in
Market Research and Marketing Strategy. Research concerning the ethical behavior of sales
K. Douglas Hoffman is an Associate Professor of Marketing, a forces provides sales n'tanagers valuable insight into
Cameron Research Fellow and the 1991-92 Chancellor's the potential problems that face sales people on a
Award for Teaching Excellence recipient at The University of day-to-day basis. Efforts made by sales managers to
North Carolina at Wilmington. He has published in the reduce the amount of ethical conflict experienced by
Journal of Personal Selling & Sales Management,Journal sales persons may lead to lower sales force turnover,
of Health Care Marketing,Journal of ServicesMarketing, improved job satisfaction, happier customers, and
Journal of Professional Services Marketing, Marketing increased sales and profits for the firm ~ubinsky
Education Review, and The Journal of Marketing Edu- and Ingrain, 1984).
cation. Trusting relationships are also promoted through
Donald W. Hardigree is the Nevada Insurance Education Founda-
the customer-oriented behaviors exhibited by service
tion Chair of Insurance and the Director of the Institute for
Insurance and Risk Management at the University of Nevada,
providers. Customer-oriented behavior refers to the
Las Vegas. He has published in numerous journals including degree to which service providers practice the mar-
CPCU Journal, Journal of Risk & Insurance,Journal of keting concept by trying to help their customers
Insurance Issues, and Journal of Personal Sellingand Sales make purchase decisions that will satisfy customer
Management. A former financial analyst for Ford Motor Co., needs (Saxe and Weitz, 1982). Service providers that
he serves as a consultant for both insurers and corporate risk are highly customer oriented typically engage in
managers. behaviors conductive to long-term customer satisfac-

Journal of Business Ethics 13: 497-506, 1994.


© 1994Kluwer Academic Publishers. Printed in the Netherlands.
498 Vince Howe et aL

tion. Saxe and Weitz (1982) argue that a customer- opportunity for ethical misconduct. Insurance pro-
oriented approach should be used when: (1) service ducts are complicated, difficult to understand, and/
providers can offer a range of alternatives and have or to evaluate; consequently, agents have the oppor-
the expertise to assist the customer, (2) customers are tunity to easily mislead consumers. Opportunity is a
engaged in complex buying tasks, (3) a cooperative key influence of ethical behavior and is a better
relationship exists between the service provider and predictor of behavior than one's own personal beliefs
customer, and (4) referrals and repeat sales are an (Ferretl and Gresham, 1985).
important source of business. Given the criteria Finally, consumer evaluation of the effectiveness
above, it is readily apparent that insurance agents of insurance products is generally not realized until
should be actively engaged in customer-oriented and some future point in time (e.g., until after the
ethical behavior in order to develop mutually bene- accident, loss, theft, etc.). Hence, insurance agents are
ficial relationships. often not held accountable for their actions in the
The objective of this study is to examine ethical short-term (Hoffman et al., 1991). It may literally
and customer-oriented behavior within the insur- be decades before consumer evaluation of service
ance industry. More specifically, this study: (1) inves- quality takes place.
tigates the ethical behavior of insurance sales agents,
(2) measures the degree of customer-oriented be-
havior among insurance agents, (3) examines the Hypotheses development
relationship between ethical and customer-oriented
behavior, (4) examines the relationship between The customer orientation~ethics relationship
ethical and customer-oriented behavior and per-
formance, and (5) examines the relationship between Conventional wisdom and past research suggests that
individual ethical behavior and perceptions of ethi- insurance agents, who engage in ethical behaviors,
cal behavior of significant others. should also tend to be more customer oriented and
more trusted by their clients than their unethical
counterparts (Lagace et aL, 1991; Saxe and Weitz,
Literature review and hypotheses 1982). Customer orientation, refers to the service
development provider's desire to (1) help customers make satisfac-
tory purchase decisions; (2) help customers assess
Background their needs; (3) offer service that satisfy customer
needs; (4) describe services accurately; (5) avoid
Numerous trade articles have discussed the need for deceptive or manipulative influence tactics; and (6)
ethical conduct and research within the insurance avoid the use of high pressure tactics.
industry (Arndt, 1989; Jones, 1990; King, 1990). Customer orientation promotes a service provider/
Insurance agents face ethical conflict on the job due client relationship that is characterized by trust,
to a number of reasons. First, insurance agents cooperation, lack of conflict, and low pressure, thus
occupy boundary spanning roles where the sales enhancing relationship quality. Therefore, service
agent represents the client's and the insurer's interest personnel who are highly customer oriented engage
(legally, the agent represents their principal, the in behaviors that lead to long-term satisfaction and
insurance company) thereby placing the agent in a emphasize long-term versus short-term results
position of potential ethical conflict (Dubinsky et aL, (Dunlap et aL, 1988; Saxe and Weitz, 1982). Hence,
1980; Oakes, 1990). In addition, as boundary span- many of the components of customer orientation are
ning personnel, many insurance products are sold consistent with ethical behavior.
outside of the office; therefore, insurance agents are
H1. There is a positive relationship between
often not under direct supervision and may act in
customer-oriented behavior and ethical be-
a manner that is inconsistent with organizational
havior.
objectives. Second, due to the convoluted nature
of the service product, insurance agents have the Customer-oriented behavior is more germane to
Ethical and Customer-Oriented Service Provider Behaviors 499

situations involving complex products and services trust and satisfaction, thus enhancing relationship
(Saxe, 1979). With regards to insurance, Life & quality and the probability of future rewards (Lagace
Health insurance products are more complex and et aL, 1991). In contrast, an organization's reward
less standardized than typical auto and homeowner system may encourage, albeit unintentionally, the
policies which are generally sold by Property & unethical conduct of employees. Agent behavior,
Casualty" agents (Greene and Trieschmann, 1988). (including unethical behavior) that results in in-
Property & Casualty products (e.g., home and auto creased sales also increases the agent's commissions,
insurance) are typically required by state law, are which in turn reinforces the behavior utilized to
standardized in terms of product attributes/levels, obtain those sales (Ferrell and Fraedrich, 1991).
and can be switch easily from one insurer to another. Hence, this type of reward system may tend to focus
In contrast, the varieties of Life & Health products employee efforts on activities with immediate pay-
(e.g., term, whole life, variable,annuity, etc.) require a offs rather than on behaviors that build long-term
greater level of involvement by the consumer when relationships between the service provider and the
making a choice. In regard to Life & Health pro- client. Moreover, past studies have indicated that the
ducts, insurance firms instruct their agents to make unethical behavior of top producing sales represen-
personal contact with prospective clients in order to tatives is more likely to be overlooked by sales
determine thUexact needs of the client and the managers thus perpetuating such behavior among
appropriate policy given those needs (Hammes et at., the top producers (Beltizzi and Hite, 1989). Once
1986). again, since past results are inconsistent, we hypothe-
size that no relationship exists between ethical
H> Insurance agents who primarily sell Life & behavior and performance.
Health insurance products report higher
levels of customer orientafon than their H 4. There is no relationship between ethical
Property & Casualty counterparts. behavior and performance.

The customerorientation~ethicsand petformance The behavior o f significant others


relationship
Many of the factors affecting levels of ethical and
Past research examining the relationship between customer-oriented behavior may be explained
ethical and customer-oriented practices with per- through the Theory of Differential Association.
formance is scant and has led to mixed findings. For Differential Association proposes that individuals
example, Saxe (1979) found no evidence of a positive learn behaviors from significant others with which
relationship between customer orientation and sales- they interact (Sutherland and Cressey, 1970). The
person performance. Brown (1988) found customer more frequent the contact with the significant other,
orientation to positively impact performance only the more likely the employee will adopt similar
when the purchase cycle occurs once per week or beliefs or behaviors (Ferrdl and Gresham, 1985). An
more often and when the purchasing agent is less insurance sales agent's set of significant others
than forty, a college graduate, and has 12 or more consists of individuals in wtfich the sales agent
years of experience. Hence, due to the inconsistency interacts and whose behavior the sales agent may
of past results, we must hypothesize that no rela- emulate. The group of significant others meeting
tionship exists between customer orientation and these criteria and investigated in this study include
performance. agency co-workers, successful agents, and other
H 3. There is no relationship between customer agents in the industry. Hence, according to the
orientation and performance. Theory of Differential Association, those who engage
in ethical behaviors believe that their set of signifi-
In regard to ethical conduct and performance, cant others are engaging in these types of behaviors
erh_ical behavior has been found positively related to as well. In contrast, those who perceive their set of
500 Vince Howe et aL

significant others to engage in unethical behaviors TABLE I


are likely to exhibit these same types of behaviors. Characteristics of the sample

H s. There is a positive relationship between Characteristic Percentage


individual ethical behavior and perceptions or mean
of ethical behavior of significant others.
Type of Agent:
1. Exclusive 32%
2. Direct writer 19%
Method 3. Independent 44%
4. Other 6%
Sample and data collection
Agent's tide:
Data was gathered by a self-administered question- 1. Agent 59%
naire mailed to 1200 insurance sales agents in a 2. Principal/owner 24%
Western state in the US. The sample frame consisted 3. _General agent 5%
of all licensed personal lines (e.g. auto, home, health 4. Other 12%
and life) insurance agents in the state and was
Number of agents in the agency: 10.6 agents
provided by the Insurance Commissioners Office.
Systematic random sampling was used to select the SaIes performance with agency:
sample from the frame. The questionnaire, a pre- 1. Top producer 32%
addressed returned envelope, and a cover letter 2. Top 10% 19%
comprised the final mailing. The cover letter pro- 3. Top 25% 11%
mised anonymity and was signed by the presidents 4. Top half 21%
of three insurance agents' trade associations and the 5. Lower half 16%
Director of the Institute for Insurance and Risk
Management in the state. From one mailing, 254 Agent's insurance sales (in premiums)
usable questionnaires were returned. Seven question- - 1990:
naires were undeliverable resulting in a response rate 1. $0 to $100001 33%
of 21.3%. This response rate compares with other 2. $100 001 to $500 000 31%
3. Over $500 000 36%
survey instruments designed to collect personal/
sensitive information, e.g., Hunt et al. (1984) and Source of premiums:
Bellizzi and Norvell (1991). The sample profile in 1. Life, health, and death products 48%
terms of demographic and organizational variables is 2. Property and casualty 46%
described in Table I. 3. Other 6%
The low response rate does raise questions regard-
ing non-response bias. Two techniques suggested by Years as a licensed agent: 12.4 years
Churchill (1991) to check potential non-response
bias were employed. One, sample demographic Sex:
characteristics were compared to population figures, 1. Male 79%
provided by the State Commissioner's Office, to 2. Female 21%
assess representation. Chi-squared statistics were
Age:
calculated to determine representation of the sample 1. 18-24 1%
with the population on sex, agent type, and age. No 2. 25-34 18%
significant values (e.g., all p-values greater than 0.10) 3. 35-44 29%
were found. Second, the first 25 percent of the 4. 45-54 28%
questionnaires received were compared to the final 5. 55-64 18%
25 percent to check for consistency. This approach 6. 65 or over 6%
(Armstrong and Overton, 1977) assumes that late
respondents should be more similar to the non- n = 254
Ethical and Customer-Oriented Service Provider Behaviors 501

respondents. Chi-squared cross tabulations (categori- (6) The sdling of insurance by non-licensed
cal variables) and t-tests (interval scaled variables) agents - NON-HCENSED.
between the early and late respondents revealed no (7) Agent claiming that his/her policy and com-
significant differences on agent type, job tide, annual petitive policies are equivalent when in fact
premiums, sex, age, or any of the measurement scales they are n o t . . , misrepresentation regarding
used in the study. These findings do not eliminate product - EQUIVALENT.
the potential for non-response bias but insure that (8) Offering lower price on policy without dis-
the sampte is representative of the population based closing higher deductibles or other changes in
on the characteristics assessed. classification - LOW-BALL
(9) Providing false information to company and/
or underwriters - FALSE INFO.
Identifying major ethical issues For each of the nine ethical issues, the respond-
ents were asked to provide ratings (e.g. 1 = highly
Whether a business activity is ethical or unethical is disagree to 5 = highly agree) on each of the follow-
not only determined by one's own personal morals ing six items:
and values but also by the morals and standards of
the rdevant business organizations (Ferrell and 1. I have received training/educa-
Fraedrich, 1991). Consequently, items to measure tion regarding this issue ........... EDUC
the agent's participation in and perception of un- 2. Agents in insurance industry
ethical activities in die insurance industry were participate in the activity ......... INq)USTRY
developed using the Nominal Group Technique 3. Agents in my agency participate
(NGT) (Delbecq et al., 1975). This technique was in this activity .......................... AGENCY
used successfully by LeW and Dubinsky (1983) to 4. Successful agents participate in
identify retail salespersons ethical dilemma. Ten this activity .............................. SUCCESS
agents representing independent and exclusive agency 5. I sometimes participate in this
insurers came to a consensus on eleven ethical activity .................................... INDIVID
dilemmas facing the industry. Eighteen insurance 6. This activity is ethical .............. ETHICAL
executives on the board of the state's Institute for
The purposes of these items were to assess the level
Insurance and Risk Management judged the face
of education agents had received on each issue,
validity of the deven ethical issues and the rest of the
deternfine the agent's perception of other agents
survey instrument. Two of the eleven issues were
participation in this activity, measure the agent's
eliminated due to perceived similarity with the
behavior regarding the activity, and determine the
others. The nine remaining issues, which were
agent's belief as to the activity's ethicality. Given the
utilized in the survey instrument are listed below:.
likdihood of social desirability bias (Nederhof,
(1) Assisting a customer in misrepresenting a 1985), the tendency of respondents to deny socially
claim to the company - MISREPRESENT. undesirable traits (e.g. unethical behavior), the re-
(2) Misrepresenting/downsdling a competitor's spondents were asked not only for their level of
product to gain a competitive edge - participation in each unethical activity but also for
DOWNSELLING. their perception of other agent's participation.
(3) Obtaining an agent-of record letter without The responses to four of the items above ( # 2 -
fully informing the consumer of the con- # 5) were summed across all nine ethical issues to
sequences - LETTER. create global measures. For example by summing
(4) Twisting/replacement of policies without across all nine responses to #5, we develop a
offering full disclosure of consequences to the measure of overall ethical behavior of the agent on
consumer - TWISTING. the nine issues. Summing across # 2 - # 4 provides a
(5) Rebating part of the commission as an in- measure for the agent's perception of ethical be-
centive to the potential policyholder - RE- havior by agents in his/her industry, agency, and a
BATING. successful category.
502 Vince Howe et aL

Measure of customer-orientedbehavior Results

Customer Orientation was measured via the 24 item Unethical behavior


Selling Orientation - Customer Orientation (SOCO)
scale developed by Saxe and Weitz (1982). Con- Table II shows the item means and standard devi-
ceptually, a service provider's customer orientation is ations for each of the nine ethical issues. Few
reflected in the service provider's ability to fulfill respondents indicated participation in any unethical
customer needs in a manner which is in the cus- behavior as shown in the INDIVID column (5-point
tomer's best interest. The SOCO scale operationalizes scale: 1 indicating strong disagreement with state-
customer orientation based on its inverse relation- ment that agent participated in activity and 5 indi-
ship with the selling concept. That is, customer- cating strong agreement). Agents did admit to
oriented behaviors allegedly stem from the organiza- participating in DOWNSELLING a product more
tion's practice of the marketing concept which has than any of the other activities. Further analysis
customer satisfaction as its central goal. The selling indicated that 15.6 percent of the agents participated
concept, on the other hand, seeks to stimulate in DOWNSELLING, i.e. 15.6 percent responded
demand for the organization's services as its major with a 2 or higher on the 5-point scale. Although
goal (Saxe and Weitz, 1982). few agents admitted to participating in unethical
The wording of the original 24 items composing activities, they certainly observed unethical behavior
the SOCO scale was modified slightly to match the among other insurance sales agents in their industry,
domain of insurance agents. Coefficient alpha for the e.g. observe average scores on the 5-point scale in the
SOCO scale administered to our sample was 0.88 INDUSTRY column, 3.0, in comparison to INDIVID
indicating a internally consistent measure (Nunnally, column, 1.2. DOWNSELLING and TWISTING
1978). The 24-item scale was also factor analyzed for appear to be the two biggest problems industry wide.
further validation. A two-factor solution was con- The respondents' perception of unethical behavior
firmed by a scree test and accounted for sixty-five by their fellow agency sales representatives (i.e.
percent of the variance. The factor loading of each AGENCY column, 1.4) was lower on average than
item was consistent with Saxe and Weitz (1982) and that of the industry. DOWNSELLING and provid-
the simple structure of the loadings further supports ing FALSE INFO were the biggest perceived prob-
the quality of the construct. lem within the sales rep's agency. Successful agents

TABLE II
Univariate statistics on items for ethnical issues
(means/standard deviations)

EDUC INDUSTRY AGENCY SUCCESS INDIVID ETHICAL

1. MISREPRESENT 2.5/1.7 2.3/1.1 1.3/0.9 1.5/1.0 1.1/0.6 1.3/1.0


2. DOWNSELLING 2.4/1.7 3.4/1.2 1.6/1.0 1.9/1.2 1.3/0.7 1.2/0.7
3. LETTER 2.1/1.5 3.1/1.2 1.4/0.8 1.8/1.2 1.1/0.5 1.3/0.8
4. TWISTING 2.9/1.8 3.4/1.3 1.4/0.8 1.8/1.2 1.1/0.4 1.1/0.7
5. REBATING 2.8/1.9 2.8/1.3 1.3/0.9 1.8/1.3 1.1/0.5 1.2/0.7
6. NON-LICENSED 2.8/1.8 2.6/1.3 1.3/0.9 1.7/1.3 1.2/0.7 1.3/0.9
7. EQUIVALENT 2.8/1.8 3.1/1.2 1.4/0.8 1.8/1.2 1.1/0.4 1.1/0.7
8. LOWBALL 2.6/1.8 3.3/1.3 1.4/0.8 1.9/1.3 t.1/0.4 1.2/0.7
9. FALSE INFO 2.9/1.8 3.2/1.3 1.6/1.0 2.0/1.3 1.2/0.6 1.2/0.7

AVERAGE; 2.6 3.0 1.4 1.8 1.2 1.2


Ethical and Customer-Oriented Service ProviderBehaviors 503

were thought to engage more frequently in Two items, PER-LH and PER-PC, in the correla-
DOWNSELLING, LOWBALL pricing and provid- tion matrix (Table III) represent the percent of the
ing FALSE INFO. The item means on each of the agent's premiums derived from the sale of Life &
nine issues under the EDUC column indicate that Health insurance products and Property & Casualty
few agents had received extensive education relative products, e.g. home, auto, etc., respectively. Hypoth-
to any of the ethical issues (e.g. means of 5-point esis 2 states that agents who sale primarily Life &
scale ranged from 2.1 to 2.9). When compared to Heatth insurance products should engage in higher
other ethical issues, agents did receive more educa- levels of customer-oriented behavior than those
t-ion relative to TWISTING activities. selling mainly Property & Casualty policies. The
significant correlations of PER-LH and PER-PC
with customer orientation, r(CUSTOR, PER-LH) =
Customer-orientedbehavior(I'll & H2) 0.15 and r(CUSTOR, PER-PC) -- -0.22, support the
hypothesis. These convergent resttlts indicate that
The average rating for all 24 items across all re- not only- are Life & Health agents more likely to
spondents was 6.2 on tile 7-point scale used in this engage in customer-oriented behavior but that
study. This result is similar to the results obtained by Property & Casualty agents are less likely to utilize
Saxe and Weitz (1982) in a similar self-administered customer-oriented techniques.
study (7.6 and 7.7 on a 9-point scale).
Hypothesis 1 is supported by the highly signifi-
cant and negative correlation (-0.34) between ethi- Effects of ethical and customer-oriented behavior of sales
cal behavior (INDIVID) and customer-oriented performance (H3 & H4)
behavior (CUSTOR) shown in Table IlL This results
confirm that customer-oriented agents are less likely Agents were asked to indicate what level of insur-
to participate in unethical activity (or vice versa, ance premiums they generated in the previous year.
highly ethical agents are less likely to engage in As indicated in Table I, thirty-six percent of the
selling-oriented behavior). Correlafons between agents were responsible for generating more than
CUSTOR and perception of ethical behavior by half a million dollars in premiums. Analysis of
others shows consistent negative correlations. For Variance procedures were used to determine if
example, the negative correlation (-0.31) between ethical and customer-oriented behavior were dif-
customer orientation (CUSTOR) and agents in my ferent among different levels of producing agents,
agency (AGENCY) indicates that customer-oriented i.e. the three different premium levels as reported in
agents perceive less unethical behavior on the part of Table I.
their fellow agents. Hypothesis 3 was supported by ANOVA results.

TABLE Ill
Correlations between ethical behavior, perceptions, SOCO scale, and other research factors

1 2 3 4 5 6 7

1. INDIVID 1.00
2. AGENCY 0.57 c 1.00
3. SUCCESS 0.44 ~ 0.48 ~ 1.00
4. INDUSTRY 0.19 b 0.33 ~ 0.58 ~ 1.00
5. CUSTOR -0.34 ~ -0.3U -0.25 c -0.20 b 1.00
6. PER-LHD -0.06 0.04 -0.07 -0.02 0.t5 ~ 1.00
7. PER-PC 0.05 -0.07 0.10 0.06 -0.22 c -0.93 c 1.00

p < 0.05
b
p < 0.0I
p < 0.00
504 Vince Howe et at.

When customer orientation was specified as the tomer relationships are dependent on ethical and
criterion variable no significant differences were customer-oriented behavior on the part of the
found (F(2,236) = 0.91, p = 0.41) based on the three service provider. Both behaviors have been linked to
levels of sales premiums. Therefore, in this sample, the customer's trust of the service provider and trust
customer orientation had no direct effect on sales is a key ingredient in the development of satisfactory
performance. relationships (Crosby et al., 1990). It is encouraging
Alarmingly when ethical behavior was specified as then that the results reported here indicate that
the criterion variables, results (F(2,234) - 4.05, p ethical and customer-oriented behavior are posi-
0.02) indicated that top producing agents partici- tively and significantly related. These findings
pated in more unethical behavior (INDIVID) than should be communicated to participants in the ethics
their less productive counterparts. Hypothesis 4 is education programs discussed above. If insurance
thus rejected. The implications of these findings will agents are made aware of the positive impact of
be discussed later. ethical and customer-oriented behavior, their moti-
vation to behave in the desired manner is enhanced.
Results indicating that agents selling more Life &
Behavior of significant others (HS) Health policies (relative to Property & Casualty
policies) are more customer oriented is consistent
Hypothesis 5, which stated there is a relationship with the nature of the two product forms. Given the
between the perception of unethical behavior and complexity of Life & Health insurance products, the
the participation in unethical behavior, is strongly findings above showing greater levels of customer-
supported. As indicated in Table III, the correlations oriented behavior on the part of Life & Health
between INDIVID and AGENCY, INDIVID and agents confirms the earlier findings of Saxe (1979).
SUCCESS, and INDIVID and INDUSTRY are all The finding posing the greatest concern in this
positive and highly significant, r = 0.57, 0.44, and study is the greater level of unethical activity by top
0.19 respectively. The belief, suggested by the Theory producing agents. Given the Theory of Differential
of Differential Association, that unethical behavior Association (which was partially supported in this
can be learned from significant others is supported study), insurance agents emulating the behavior of
by these findings. significant others, e.g. successful agents, may feel
pressured to also engage in unethical behavior. This
behavior is further reinforced by the greater levels of
Discussion and implications sales commissions resulting from higher sales levels.
If management overlooks these behaviors due to
Although the image of U.S. business has declined satisfaction of short-term organizational goals a
overall during 1975-1990, a recent Louis Harris poll vicious cycle is created that can lead to loss of
that ranked several industries put insurance on the customer trust and long-term partnerships. These
bottom (Vinson, 1991). The determination of un- findings underscore the need for investing in ethics
ethical practices in this study provide sales managers education and the appropriate socialization of agents
valuable information concerning potential areas of prior to engaging in selling activities.
ethical conflict for insurance agents and how they
might be managed. Training programs, continuing
education, and the firm's own policy concerning Conclusion
these ethical issues can be designed so as to prepare
agents to properly deal with these issues when they Due to the experience and credence attributes that
arise. If the insurance industry addresses these issues characterize complex services, consumers rely on
in such a formal matter, the opportunity for ethical provider information when making purchasing deci-
misconduct wiuhin the industry should decrease and sions. Many services are so abstract and complicated,
the overall image of the industry should be en- the buyer lacks the means to evaluate the quality of
hanced. service provided. Hence, the sale of complex services
Repeat business and long-term satisfactory cus- offers many opportunities for a sales person to take
Ethical and Customer-Oriented Service Provider Behaviors 505

advantage of an unsuspecting customer or provide ships. The study is further limited due to sample
insight into the consumers valid needs. Thus, the composition considerations. The findings reported
need does exist to study the ethical conduct and here can only be generalized to one state and one
customer-oriented behavior of the providers of industry, insurance.
complex services.
The major objectives of this study were to: (1)
investigate the ethical behavior of insurance sales Future research
agents, (2) measure the degree of customer-oriented
behavior among insurance agents, (3) examines the Results from this study suggest five areas to be
relationship between ethical and customer-oriented addressed in future research on this topic: (1) better
behavior, (4) examines the relationship between measures for self-administered surveys need to be
ethical and customer-oriented behavior and per- developed to measure actual unethical behavior on
formance, and (5) examines the relationship between the part of sales personnel. Also, correlating the
individual ethical behavior and perceptions of ethi- salesperson's perception of unethical behavior with
cal behavior of significant others. Results from this his/her stage of Cognitive Moral Development (see
research indicate nine major ethical issues faced by Gootsby and Hunt, 1992 for a review) would also
insurance sales agents. Although reported individual prove interesting; (2) direct measures of the competi-
participation levels regarding these activities are low, tive pressures facing agents need to be developed so
an increase in perceived unethical activity by other that their effects on unethical behavior can be
sales agents within the agency and within the observed and potentially controlled; (3) other corre-
industry is noted. lates to unethical and customer-oriented behavior
In addition, ethical and customer-oriented be- need to be identified (e.g. socialization processes,
havior were found to be positively related. Further, sales versus customer orientation, etc.); (4) future
customer-oriented behavior was found more preva- research needs to focus on actionable results that can
lent among Life & Health agents as opposed to guide management in the most efficient approach to
Property & Casualty agents which was expected providing ethical training and instilling ethical
giving the helping behavior proposition put forth by values in their sales forces; (5) more research is
Saxe (1979). Finally, supporting the theory of differ- needed to investigate the effect customer-oriented
ential association, results indicate a positive relation- and ethical behavior has on performance outcomes.
ship between individual ethical misconduct and
perceptions of ethical misconduct among significant
others (i.e., agency co-workers, successful agents, Acknowledgements
other agents in the industry).
This project was supported by funds provided by the
First Interstate Bank Leadership Institute, University
Limitations of Nevada, Las Vegas. The authors would like to
thank the Institute for their support.
Although the check for non-response bias indicated
no problems relative to demographic and organiza-
tional variables, there is still the potential of non-
response by certain ethical classes of insurance sales
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