Ethics dissertation PDF

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This qualitative style research dissertation was conducted for Business Management (BA) and attempted to answer the following: "Do customers between the ages of 18-44 care about a business’s ethical practices enough to pay a premium for products, and what kind of ethical factors of a business’s prac...

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Dissertation by (REMOVED) Business Management (BA)

Do customers between the ages of 18-44 care about a business’s ethical practices enough to pay a premium for products, and what kind of ethical factors of a business’s practices would make them more likely to shop at an establishment or not buy at all? A Qualitative study on factors affecting consumer ethical purchasing behaviour

By (REMOVED) 000861728 Business Management (BA)

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Dissertation by (REMOVED) Business Management (BA) Executive Summary Consumer ethics has changed over the years, as has the ethical purchasing behaviour of consumers due to the nature of globalisation and advances in technology. A business is under much more public scrutiny these days and is expected to keep their practices transparent and ethical. Consumers are affected by different factors and influences which contribute to their purchasing behaviour when it comes to ethical products. Researchers in the past have come up with factors and theories on how ethical consumer purchasing behaviour is formed or affected, yet it is important to understand if the same factors would still be classed as relevant in the present. This paper investigated the main factors which positively or negatively affected a consumers purchasing when it came to ethical or unethical businesses. A Qualitative interview style research was conducted and has shown that the main factors that in the present that affect ethical consumer purchasing are the Cost, Effect on humans, Convenience, Information, and whether it is a Luxury or Essential. Some other factors such as Alternatives or Politics were also shown to have an effect, but at a smaller level. The formations of moral beliefs in consumers depend on the laws set by the government according to a majority of participants. Cost and Human affect have been identified as the most crucial and important factors that affect ethical purchasing decisions in consumers. The demographics of consumers have shown to have no correlation with their ethical consumption or on the factors that affect it.

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Dissertation by (REMOVED) Business Management (BA)

Table of Contents Executive Summary…………………………………………………………………................3 Table of contents…………………………………………………………………................... 4 1.0 Introduction…………………………………………………………………..................5 1.1 Purpose and Layout………………………………………………………………….......... 5 2.0 Literature Review………………………………………………………………….............6 2.1 Previous studies and research…………………………………………………………….6 2.2 The ethical consumer…………………………………………………………………........7 2.3 Formation of beliefs…………………………………………………………………..........8 2.4 Theory of Planned Behaviour……………………………………………………………..9 2.5 Importance…………………………………………………………………...................... 12 2.6 Conclusion…………………………………………………………………........................12 3.0 Interviews…………………………………………………………………........................13 3.1 Methodology…………………………………………………………………....................13 3.2 Interview results………………………………………………………………….............. 14 3.2.1 Legal Morality…………………………………………………………………................14 3.2.2 Human…………………………………………………………………...........................15 3.2.3 Information…………………………………………………………………................... 15 3.2.4 Cost…………………………………………………………………............................... 16 3.2.5 Luxury vs Essential+ Convenience…………………………………………………... 16 4.0 Discussion………………………………………………………………….........................17 4.1 Discussion of results…………………………………………………………………..........17 4.2 Contributions…………………………………………………………………....................21 4.3 Limitations…………………………………………………………………........................ 21 4.4 Future research………………………………………………………………….................22 5.0 Conclusion…………………………………………………………………........................ 22 Bibliography…………………………………………………………………............................23 Appendix…………………………………………………………………................................. 24

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Dissertation by (REMOVED) Business Management (BA) 1.0 Introduction Due to the globalized nature of the modern business world, companies and consumers alike are now focusing more on the ethical aspects of businesses (Salehi et al, 2012). A company seen as being ‘unethical’ can have a negative or positive impact on the company, depending on what the company values most out of its gains. An example of this is how in 2013 the supermarket chain ‘Tesco’ had been implicated in a horse meat scandal. It was seen as highly unethical by the public, which had eventually led to a fall in sales in 9 of its 11 global markets (Guardian, 2013). It is important to understand where the public stand when it comes to the ethical behaviour of companies, specifically large retailers, and what ethical factors would shape customer viewpoints enough for them to feel comfortable paying more for a product/service or what would stop them from shopping at an establishment. When a business makes a decision in the modern era, it is usually thrust under the public spotlight and these decisions may influence the spending habits of ‘ethical’ shopper (Creyer, 1997). In a globalized world, businesses must act in an ethical and responsible manner in order to be able stay connected with customers and the environment around them. According to Crowther and Aras (2008) companies operate within society, so this means that they must not act as if they are a separate entity and should ensure that their decisions do not have a negative impact to anyone that they interact with. Business ethics itself is a broad term but can be defined as “principles and standards that determine acceptable conduct in business organizations. The acceptability of behaviour in business is determined by customers, competitors, government regulators, interest groups, and the public” (Ferrell et al. 2014, p30). 1.1 Purpose and layout of research The purpose of this research is to find out if “customers between the ages of 18-44 care about a business’s ethical practices enough to pay a premium for products, and what kind of ethical factors of a business’s practices would make them more likely to shop at an establishment or not buy at all?”. The research will determine impacts a business’s ethical decisions have on consumers’ willingness to shop at that establishment or whether a business seen to be ‘ethical’ would incline a consumer to pay a premium to shop at their establishment. The research will primarily be focused on a large business itself rather than on individual products or brands such as ‘Fair trade’; we would also like to determine what factors would help change consumers views from negative to positive for an unethical business. The research will consist of 4 interviews being conducted amongst ‘University of Greenwich’ students and 4 interviews being conducted on participants with no formal ‘higher education’ aged between 18-44 in order to determine whether there is a correlation between relevant factors chosen and viewpoints with the different age groups and education levels. Age is an important variable as Rao & Wasserman (2015) state that in the era of globalisation and internet, younger people are more likely to be aware of issues compared to older generations due to social media and the ability to gain news from multiple sources at once, whilst the older generation prefer to stick to their newspapers or television for news. Education is an important variable due to academics showing large differentiation between their research and findings (De-Pelsmacker et.al, 2005)

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Dissertation by (REMOVED) Business Management (BA) The research will initially begin with secondary research in the form of a literature review of past academic research which has tried to tackle the research question, or research conducted on topics which are similar or relevant to understanding and answering the research question. The factors which help form or affect ethical beliefs and behaviour will also be discussed as that is a vital aspect to understanding whether a consumer would act upon their ethical values or beliefs. Ethical consumer behaviour can be defined as “decision making, purchases and other consumption experiences that are affected by the consumer's ethical concerns” (Cooper-Martin & Holbrook, 1993, p.113) The literature will be used as a basis for the best way to carry out my primary research and be used to analyse and compare my findings compared to the findings from the literature review. It is important to gain an understanding on the research question as more consumers become ‘ethically aware’ in the modern era and can directly or indirectly effect a business’s revenue via their own actions or part of larger ‘social’ movements that force businesses to re-evaluate their ethical strategy and determine which factors put them most at risk of being seen as ‘unethical’. The flip side to this is that businesses seen as ‘ethical’ may choose to charge a premium on their services if research shows that consumers are willing to pay extra as a reward for the businesses good practices. As ethics is a broad term, there will be a discussion on whether an ‘ethical consumer’ is only ‘ethical’ when it suits their needs, such as if they had less allowance for luxuries, would this change their views on purchasing from ethical businesses? 2.0 Literature review When conducting research, it is crucial to conduct a literature review on the topic in order to: understand the theoretical background of relevant past research, gain understanding on the scope of research performed on the topic and gain answers to questions which may have been addressed in previous research (Okoli & Schabram, 2010). A literature review can be defined as “a systematic, explicit, comprehensive, and reproducible method for identifying, evaluating, and synthesizing the existing body of completed and recorded work produced by researchers, scholars, and practitioners” (Fink, 2005, cited in Okoli & Schabram, 2010, p1). The Literature review in this case will critically analyse any past studies, theories or frameworks that can help to answer the research question or that may be of relevance when conducting my own research. 2.1 Previous studies and research There have been numerous studies and research previously conducted on the growing phenomenon known as the ‘ethical consumer’ and also on certain factors which would effect a consumers choice to cease shopping at an establishment, however there are many contradictory studies on the education levels and age of the consumers in relation to the factors which would make consumers boycott an establishment or pay a premium to shop at an establishment. Research carried out previously on the topic consists of studies and frameworks conducted by academics such as Azjen (1991), Creyer (1997), Tallontire et al. (2001), Harrison et al. (2001), Muncy & Vitell (1992), and DePelsmacker et al. (2005). The research carried out by these academics and others will help showcase the factors discovered in their research and how these factors relate or contradict each other for the purpose of answering my research question.

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Dissertation by (REMOVED) Business Management (BA) When talking about ethics it is important to gauge in what context we talk about ‘ethics’ as each person can interpret the word ‘ethics’ in different ways or have different understandings of it. There are many reasons why a consumer would make an ethical decision, but primarily it revolves around personal, social, political and religious values (Arnold, 2013). An ethical consumer can be put into many categories which represent their values, such as: Eco-warrior, Green, Apathetics, and Informed consumer (Arnold, 2013). The primary focus for this research will be on the ‘Informed consumer’ as they are said to base their ethical and moral values on facts and evidence instead of solely on emotion (Arnold, 2013), which allows us to gain a more accurate response as emotion can vary and change greatly in each individual depending on time, setting and other factors (Livet, 2009). Morality is the act or belief of distinguishing between what is good and bad or right and wrong (Traer, 2013). It should however be noted that some academics such as Hume et al. (2009) believe emotion is linked with rational decision making, yet Livet (2009) states that making decisions based on facts and rationality leaves little to no room for emotion. The ‘rational’ approach will leave less room for inaccuracy in the research and it will be conducted in a way to present participants with facts instead of trying to play on their emotions. 2.2 The ethical consumer Ethical consumers use their money and networks in order to make a point against ethical/unethical companies by partaking in ‘positive’ buying where a company is deemed to be ethical or by ‘boycotting’ or ‘negative spending’ at businesses that they believe to be unethical (Harrison et al. 2005). The main areas of interest for ethical consumers can be categorised into 5 headings, which are: Environment, Animals, Product, People, and Politics (Gray et al. 1996). Each section consists of major ethical factors, such as ‘Animal testing’ going under the heading ‘Animals’ or ‘Human rights’ going under ‘People’; however Tallontire et al. (2001) state that the main 5 zones of concern for an ethical consumer are: Healthy eating, Community development, Environmental sustainability, Animal welfare, and fair trade. It could be argued that as the 5 headings given by Gray et al. (1996) are very broad, the 5 areas factors by Tallontire et al. (2001) can fit under those 5 headings. When talking about the factors that affect the ethical purchasing of a consumer, Mackenzie (1990); believes that environmental factors are the most important for a ‘ethically conscious’ shopper and that through collaboration, consumers can actively change the policies of a business by deciding not to shop at that establishment. The viewpoint of Mackenzie (1990) is also shared by Elkington et al. (1990), who further expands by stating that the ‘Green’ consumer is one that puts the wellbeing of the environment over their own ‘personal’ needs, and would go out of their way in order to shop from ‘environmentally’ ethical businesses even if it is less convenient or expensive. Elkington et al. (1990) later went on to state that although ‘moderate green’ consumers have the right intentions for shopping ‘ethically’, they do not follow through with it the majority of the time as they do not really want to change, instead they would rather buy what they want, regardless of if the business practices are environmentally ethical or not (Makower, 2010). Bedford (2007, cited in Jackson, 2011) further reiterates this point by stating that according to research, 90% of consumers do believe that ethics plays a big role when deciding where to spend their money, however only 1% of consumers actually shop ethically on a regular basis.

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Dissertation by (REMOVED) Business Management (BA) Tallontire et al. (2001) believe that although earlier studies such as Elkington et al. (1990) do touch upon ethical factors which may affect consumer purchasing, the study is too narrow and focuses only on the ‘environmental’ values of the ethical consumer and do not take into consideration factors such as ‘child labour’ or wider more ‘social’ issues, which have been brought into the spotlight in the modern era due to the nature of globalisation and technology. Lang & Hines (1993) state that ethical and environmental issues are separate and should not be cast under the same category, however Murphy & Bendell (1997) sought to bridge the two and concluded that ’environmental’ consumers fall under ‘ethical’ consumers category. 2.3 Formation of beliefs and behaviour Muncy & Vitell (1992) conducted a study on the ethical beliefs of a consumer in order to determine the factors that affect consumer perception on the ethical practices of a business in relation to personal situations that they may find themselves in. The study conducted by Muncy & Vitell (1992) consisted of them handing out a questionnaire style survey which consisted of 27 unethical scenarios that a consumer may find themselves in, and to rate the scenarios on a scale, with a lower number meaning that it is more ‘acceptable’ and a higher number meaning that they would find it ‘unacceptable’. The research concluded that the ethical beliefs of the consumer were largely dependent on who the fault lay with, whether that be the buyer or seller. The study also concluded that consumers who are ‘pro-business’ are less likely to worry about the ethical practices of a company, due to them believing that the business only carried out unethical practices because they care, and want the best value for their customers. Muncy & Vitell’s (1992) study allowed them to state that the 3 major factors which form belief and leads to affecting customer perception/spending are: ‘the locus of fault’ (Whose fault is it), ‘the presence of deception on the consumer’, and finally ‘the degree of harm’. The research by Muncy & Vitell (1992) has been criticized by Lau (2010) who states that the model has not been used in modern literature due to the technological advances since that era, which has allowed consumers to get news of unethical practices in much more detail and also due to customer perceptions having changed over time; however Lau (2010) states that Muncy & Vitell’s (2005) updated model is of more relevance. The study will also be irrelevant in certain countries/regions such as Malaysia, where consumer attitudes are more different (Lau, 2010). Lau (2010) conducted a research based on Muncy & Vitell’s (1992) model but gave more importance to the demographics of their participants, with the variables being: Gender, level of education, age, and marital status. Lau (2010) concluded that his research showed in the context of Malaysia that consumers were more actively avoiding ‘unethical’ businesses and would shop at more ethical establishments regardless of their own personal situations. The study by Lau (2010) also went on to conclude that education was a big factor on whether a person chose to shop ethically or not. The results show that those with a higher education level would more actively look to shop ‘ethically’, which supports Goolsby & Hunt’s (1992) finding that females and highly educated people usually are the most ethically conscious, however this could be seen to be a generalisation. Unlike Goolsby & Hunt’s (1992) research, Lau (2010) did not conclude in his findings whether there was disparity between males and females in taking ‘ethical’ consumer decisions. Schlegelmich et al. (1996) is his study found that there was a very weak link between demographics and ethical habits, which is similar to Dickson (2001) who believes there to be no link between employment status, age Page | 7

Dissertation by (REMOVED) Business Management (BA) and income with ethical consumption habits, which would contradict Goolsby & Hunt’s (1992) findings. Academics such as Pelsmacker & Janssen (2007) or Roberts (1996) offer a different opinion as their findings have shown that the most ethically conscious consumers are Highly educated elder females who have a higher than average income. Anderson & Cunningham (1972) have a differing viewpoint where their study shows that young consumers were usually the most ethically conscious, whilst income and education were irrelevant, however due to changing social norms, this study could be inaccurate in the modern era. Lau (2010) criticised his own research by stating there were several limitations such as many respondents being highly educated or in professional jobs, which could skewer the results. Burke et al. (1993) conducted research on 80 undergraduate students and proposed a model which links ‘ethical concerns’ in relation to attitudes towards businesses at a ‘Brand’ level or ‘Organisational’ level. The research was conducted to find which ‘unethical’ factors had the biggest impact on consumer spending decision and whether that attitude was different towards an ‘organisation’ versus a ‘brand’. Burke et al. (1993) found that the biggest factor which affected consumer attitude and spending was ‘Animal rights’ but the most negativity for ...