Consumer Ethics in the EU

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Consumer Ethics in the European Union: A Comparison of Northern and Southern Views

ABSTRACT. There is a growing interest in understanding consumer ethical actions in relation to their dealings with firms. This paper examines whether there are differences between Northern and Southern European Union (EU) consumers’ perceptions of ethical consumer behaviour using Muncy and Vitell’s (1992) Consumer Ethics Scale (CES). The study samples 962 university students across four Northern EU countries (Germany, Denmark, Scotland, The Netherlands) and four Southern EU countries (Portugal, Spain, Italy, Greece). Some differences are identified between the two samples, which might question the ability of organisations to consider the EU as one homogeneous market. KEY WORDS: consumer ethics, cross-cultural, EU, globalization/regionalization Michael Jay Polonsky is a Senior Lecturer in Marketing at the University of Newcastle. His research focuses on Stakeholder theory in Marketing, Environmental Marketing, Educational Issues in Marketing, Social/Ethical Issues in Marketing and Cross-Cultural research. He has published a number of works in a diverse range of international journals, including two previous papers in the JBE. Pedro Quelhas Brito is an Assistant Lecturer in Retailing at the University of Porto. His research interests focuses on patronage behaviour, decision making and crosscultural research. He is author and co-author of two books. Jorge Pinto is Assistant Professor of Management at the University of Aveiro. His research focuses on: industrial marketing and cross-cultural research. Nicola Higgs-Kleyn is a marketing consultant who lectures part. Her research interests include marketing ethics, cross-cultural research and marketing strategy. She has published a number of papers in international journals including two previous papers in the JBE.

Michael Jay Polonsky Pedro Quelhas Brito Jorge Pinto Nicola Higgs-Kleyn

Introduction The introduction of the Euro moves the European Union (EU) one step closer to becoming a truly “single” market. However, almost daily there are issues discussed in the popular press that bring into question the homogeneity of this market. These problems frequently focus on broad macro issues, such as differences in political structures or underlying economic conditions that make complete or even substantial integration difficult. For example, in early 1999 there was discussion relating to the appropriateness of having a single European interest rate. It was suggested that a low single rate would force those economies that were already growing, such as Ireland, to overheat. On the other hand, a high single rate would result in depressed economies, such as Spain, experiencing further economic slowing. While coordination of governmental policies amongst the member countries is essential, one of the major motivations of the European Union was to enable expansion of trade amongst member countries (Blanchard, 1996). According to the EU’s web page the ultimate goal of the European Union “. . . is to promote economic and social progress which is balanced and sustainable, assert the European identity on the international scene and introduce a European citizenship for the nationals of the Member States (EU, 1999).” That is, the European Union is partly designed to facilitate the development of one larger market in which European firms can operate. However, achieving this benefit comes at a cost. For example, simply establishing a

Journal of Business Ethics 31: 117–130, 2001. © 2001 Kluwer Academic Publishers. Printed in the Netherlands.

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common set of standards within many industries is something that can only be achieved with the assistance of EU bureaucrats, and requires extensive change by firms in most EU countries. The premise that there are market benefits to the EU has as an implicit assumption that consumers within the member countries behave in the same or similar way, which is in line with Levitt’s (1983) idea of globalisation, i.e. there is a convergence in consumers’ wants, needs and behaviours. However, this also assumes that cultural traits dictating consumer behaviour not only become similar, but that divergent business cultures (Harris, 1982) become similar as well. For only when both these types of cultural change occur can the full benefits of global standardization (or in the case of the EU regionalisation) be realised. Globalisation and regionalisation deal with the integration of many country strategies within a broader worldwide or regional market ( Jeannet and Hennessey, 1998). Therefore, having regionally similar consumers assumes that firm behaviour, as well as customer behaviour, beyond simple activities such as product preferences converge. It also assumes that any differences in the way that consumers and firms interact are reduced. However, if cultural factors, even subtle ones such as the evaluation of friendship, time, space, and possessions (Hall, 1960), are radically different it will be difficult for organisations to standardise marketing activities and thus regionalisation may not result in homogeneous markets or highly integrated marketing strategies and tactics. Thus, it might be suggested that if consumers become more similar as Levitt (1983) suggested, then cultures and consumption will also have to become more similar, which will reduce the influence of cultural interpretation of situations (i.e. high context) and thus in the long-run high context cultures should disappear. Given that Hofstede (1994) found there were a range of different cultures in Europe, it is unlikely that consumer’s behaviour across the European Union will become similar overnight, if at all and complete regionalization may not be achievable in the short term or even medium term. Therefore, firms need to be concerned with the

way that they interact with consumers, as well as other businesses, which are also influenced by national culture (Harris, 1982). This paper focuses on examining one aspect of consumer – firm interaction, that of consumer unethical behaviour in relation to business transactions using Muncy and Vitell’s (1992) Consumer Ethics Scale (CES). Rather than examine consumers within individual countries, this study will group consumers into those in Northern EU countries (Germany, Denmark, Scotland, The Netherlands) and Southern EU countries (Portugal, Spain, Italy, Greece). Students at universities are used as a proxy for consumers in general. While this might be somewhat artificial, in many of the cross-cultural studies student samples are used as a proxy for “future” managers and while students may become business leaders in the future, they are consumers today, and as such they are a representative sampling frame. In addition, using students as respondents assures homogeneity in terms of age and educational level, as well as academic interests. This enables comparisons to be made free of moderating factors other than culture (Waller and Polonsky, 1999). The research question examines whether there are differences between Southern and Northern EU consumers using Muncy and Vitell’s (1992) 4 CES constructs. The following background section discusses the rationale for examining consumer ethics and for focusing on the Northern – Southern EU distinction. The methodology section then follows, examining the consumer ethics scales, sampling techniques and the analytical methods used. Analysis and discussion of the results, limitations and future research, and conclusions follow.

Background Consumer focus Much of the business/marketing ethics literature has focused on the buyer – seller dyad (Brenner and Molander, 1977; Vitell and Festervand, 1987) or the employer – firm relationship (Al-Khatib

Consumer Ethics in the European Union et al., 1997). Such an emphasis might be explained by the fact that the “marketing concept” traditionally considers how organisations can better deal with customers. As such, it is traditionally assumed that firms have the majority of power in the relationship and therefore, consumers need to be protected. This presumption has resulted in countries around the world developing a range of regulations to protect consumers from such corporate abuses. The result of adopting this perspective has been that within the ethics literature there has been less examination of the ethical behaviours on the part of consumers in relation to firms, rather than the traditional firm-consumer perspective. For example, Al-Khatib et al. (1997) suggests that in the early 1990’s there were limited “. . . studies exist that have examined the consumer’s perspective (to ethics in the marketplace), and most of these studies focused on very specific and limited situations such as shoplifting” (p. 750 emphasis added). Some studies of consumers’ attitudes towards unethical consumer practices have been undertaken. In particular, Vitell has examined this issue with a number of co-researchers (Al-Khatib et al., 1996, 1997; Muncy and Vitell, 1992; Rallapalli et al., 1994; Rawwas et al., 1998; Rawwas et al., 1994; Strutton et al., 1994; Vitell et al., 1991; Vitell and Muncy, 1992). This is not to suggest that others have not considered this issue as well, for a range of other authors have also examined consumers’ perceptions of unethical consumer behaviour (Chan et al., 1998; Higgs-Kleyn, 1998; Fullerton et al., 1996; Muncy and Eastman, 1998; Rawwas et al., 1995; Rawwas, 1996; Wilkes, 1978). The majority of the empirical works in this area have applied versions of Muncy and Vitell’s (1992) Consumer Ethics Scale (CES). While the CES was initially developed in the U.S. it has been widely applied in a range of single country and cross-cultural studies and thus is appropriate for further examination within this paper. Some of the countries examined include; Austria (Rawwas, 1996), Egypt (Al-Khatib et al., 1995, 1997; Rawwas et al., 1994), Hong Kong (Chan et al., 1998; Rawwas et al., 1995), Ireland (Rawwas et al., 1995; Rawwas et al., 1998),

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Lebanon (Rawwas et al., 1994; Rawwas et al., 1998) South Africa (Higgs-Kleyn, 1998), as well as the U.S. (Al-Khatib et al., 1997; Muncy and Eastman, 1998; Muncy and Vitell, 1992; Rallapalli et al., 1994). Muncy and Vitell’s (1992) original Consumer Ethics Scale (CES) was developed in the U.S. over several years using a range of items that was refined, reduced and validated to consist of 18 items examining a range of “questionable” consumer behaviours in relation to their dealing with firms (Al-Khatib, 1997). Although many of the non-U.S. studies have omitted or added items for cultural reasons (i.e. the items were deemed to not be applicable in these cultures or others that were deemed to be more applicable were added within other cultures). Muncy and Vitell’s (1972) original items identified that there were four distinct constructs or categories of ethically questionable consumer behaviour and these have been consistently found to be reliable across countries.1 The constructs are labeled as: • Proactively Benefiting at the Expense of the Seller. These situations are initiated by consumers, who perceive the act to be illegal; • Passively Benefiting at Expense of the Seller. These situations result from seller’s mistakes, which are not corrected by consumers. • Deceptive Practices. These situations are initiated by consumers, who do not perceive the act to be illegal. • No Harm/No Foul. These are situations that consumers perceive result in little if any harm to the seller. Many of the works using the Consumer Ethics Scale have also examined how a range of other variables moderate and/or explain differences in consumers views. For example, Al-Khatib et al. (1997) used the CES to profile U.S. and Egyptian consumers and examine the role of respondent’s ethical beliefs, preferred ethical ideology, and their degree of Machiavellianism, which can be defined as a kind of cool detachment that makes individuals less emotionally involved with others. Other earlier studies of consumer ethical attitudes focused on more narrowly defined moderating and/or explanatory factors including demographic variables such as age, gender, education,

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race, income and social class (Higgs-Kleyn, 1998; Rayburn and Rayburn, 1996; Strutton et al., 1997) and personal characteristics (Wilkes, 1978; Mayo and Marks, 1990; Strutton et al., 1994; Vitell and Murcy, 1992; Rallapalli et al., 1994). For the most part CES studies have focused on factors within one society and have tried to determine how these “other” variables interact with consumers’ attitudes towards ethical practices on their part. The few cross-cultural studies that exist have usually chosen to look at divergent markets, to determine if differences or similarities in the various relationships exist. For example, Al-Khatib et al. (1997) examined whether Egyptian and U.S. consumers’ perceived consumer ethical situations differently (i.e. responded to the CES differently). The rationale for selecting these two economically and culturally divergent countries, was that they wanted to broadly examine whether the relationships examined held in diverse cross-cultural settings. Other cross-cultural works have tried to examine countries that have more “similarities”, for example Rawwas et al. (1995) choose to look at Northern Ireland and Hong Kong as these two markets have British/U.K. links and thus might therefore have some common underlying values. An examination of Egypt and Lebanon (Rawwas et al., 1994) and Ireland and Lebanon (Rawwas, 1998) was also undertaken to focus on countries that had similar environments, that of war and/or unrest. While there is an appropriate justification for examining these pairs of countries, it could be suggested that researchers should also focus their examination on pairs or multiple countries within one trading block or market, such as the EU, NAFTA or CIS. It might be assumed that countries within such trading blocks should possibly be more similar than countries in markets that are not formally “integrated”. If any differences occur, the examination of ethical values would be even more pertinent to organisations operating within these regions, as they would be operating within a heterogeneous “unified” market. As such the study described in this paper attempts to focus this work on one market. However, rather than examine differences between “countries” within one trading

block, the EU in this case, which may or may not reflect “one” set of cultural values, this study examines broader regional groupings into Northern and Southern Europe, the rationale for which is discussed below. North/South rationale Some writers have suggested that Europe needs to undergo a process of cultural change, such that there is a common identity as well as a common market (Moller, 1993; Seed, 1993). Such a perspective seems to be a utopian ideal, ignoring the realities of “combining” independent states who have different political traditions, histories (even though they are often related), cultures, and in some cases even values (Bohata, 1997). When thinking about differences in today’s Europe, many think in terms of the problems associated with joining countries that have developed under capitalistic markets, i.e. Western Europe, and those that have evolved under a controlled system, i.e. Eastern Europe (Anonymous, 1993; Ballew and Schnorbus, 1993; Dale, 1995). While the previously controlled Eastern economies have been open to competition for several years, there are still extensive difficulties making the shift to full capitalism. This is not to suggest that there are no differences or difficulties associated with business activities within Western capitalist markets, as these may exist as well. For example, research has found that there are differences in corporate practices, such as corporate codes of ethics, within the developed capitalist markets of Western Europe (Langlois and Schlegelmilch, 1990). While this is only one business practice, there is other evidence that there may be other differences within Western EU countries that makes full European integration “difficult”, ignoring the problems associated with the East – West differences (Grimond, 1995). While the East – West distinction involves important regional differences, there is a much older Northern – Southern division within Europe, which relates to overall economic development and growth that should also be considered (Wood, 1995). That is historically, Northern

Consumer Ethics in the European Union countries/regions have tended to be more industrialized and Southern countries and regions have been more agrarian (Loxley, 1998). In fact, the differences between Northern and Southern regions have been discussed within individual European countries (Cagliozzi, 1991), as well as between Northern and Southern regions of Europe (Wood, 1995). In terms of ethical differences between the two regions (Northern and Southern Europe) Van Luijk (1997) has suggested that “. . . business ethics in Northern and Western Europe have acquired a certain momentum during the last 15 years . . . (p. 1579)”, which, may seem to suggest that within Southern and Eastern Europe business ethics has been slower to “catch on”.2 Wood (1995) also suggests that there are generally, important ethical differences between highly industrialized countries of the North and less industrialized and developing countries of the South. Although Wood’s examined business to business transactions in the purchasing and sales interface, it might be inferred that consumer ethics would also be different in Northern and Southern economies, especially if Southern countries are considered to be less developed. For example, Rossouw (1994) suggests that the general inclusion of ethics into business practices in developing countries may be difficult and Priem et al. (1998) and Al-Khatib et al. (1995,

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1997) found that there are differences in the moral judgements and values of consumers’ in developed and developing “Westernised” countries. While Southern EU countries are not traditionally considered to be “developing nations,” an examination of various socio-economic characteristics frequently used to examine developing countries (Thirlwall, 1989), identifies that Southern EU countries do tend to be “different” as compared to their Northern EU counterparts, although the distinctions are sometimes blurred (see Table I). Table I provides a list of selected socioeconomic data from the United Nations and World Bank. As can be seen Southern countries generally have; slightly lower population growth rates, lower per capita income; fewer years of schooling, higher infant mortality rates and lower proportions of their population live in urban areas. All of these factors, other than lower population growth suggests that Southern EU countries are “less” developed than their Northern neighbors. However, these differences are not universal across countries within the regions. For example, in terms of population growth Greece’s population growth is more “similar” to Northern EU countries and Scotland is more “similar” with Southern EU countries. In the case of per capita income Italy’s figure is

TABLE I Country socioeconomic characteristics REGION/ Country

Population growth 1991–1997b

Per capita GNP 1997a

Years schoolinga

Infant mortalityb

% of urban populationb

SOUTH Greece Italy Portugal Spain

0.4 0.2 0.1 0.2

11,673 21,219 10,923 14,641

13.8 NA 14.3 15.5

8 7 7 5

60 67 37 77

NORTH Denmark Germany The Netherlands Scotland (U.K.)

0.4 0.4 0.6 0.3

33,387 28,728 25,426 19,847

14.6 15.1 15.5 16.3

5 6 6 6

85 87 89 89

Based on United Nationsa and World Bankb figures 1998.

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more “similar” to Northern countries and for unemployment Portugal’s rate appears to be more “similar” to the Northern countries. In regards to education Spain’s mean years of schooling is more “similar” to the Northern EU countries as is its infant Mortality rate. Assuming that there are differences between regions and that Woods (1995), Van Luijk (1997) and Priem et al. (1998) are correct, this would broadly support the idea that there are also likely to be differences in Northern and Southern EU consumers’ ethical perspectives. Which if true would mean that firms dealing throughout the EU would be interacting with consumers who have differing ethical outlooks. Although, it is recognised that while Table I seems to suggest the Southern countries are “less developed” than their Northern counterparts, it is unclear if they fit into the traditional definition of “developing” nations.

Methodology The focus of the study is to examine the hypothesis that consumers in Southern and Northern regions of the EU have similar views towards what could be considered permissible or unacceptable consumer behaviour. This can be further broken down into four sub-hypotheses relating to differences between the regions for each of the four dimensions of the CES; Proactively Benefiting at the Expense of the Seller; Passively Benefiting at Expense of the Seller, Deceptive Practices, and No Harm/No Foul. The data used in this study was collected from students studying business in 8 EU countries, four from Southern EU countries – Italy, 3 Portugal Greece and Spain – and four from Northern EU countries – Scotland, Denmark, The Netherlands and Germany. The sample includes all EU countries from Southern Europe, which also includes the one Southern founding member, Italy. The Northern countries were chosen to represent a broad cross section of Northern EU members and were selected from the founding members, Germany and the Netherlands, and two of those who joined in 1961, Denmark and Scotland (as a proxy for the

U.K.). Some countries were explicitly excluded. For example it was decided not to include France because of its cultural diversified characteristics and geographical position, i.e. it borders seven other European countries make difficult to classify it as a northern or a southern country (Mermet, 1991). The selection of specific universities was undertaken in pragmatic convenient manner, i.e. the authors relied on the generosity of their academic contacts within each of the countries who assisted with the data collection. If universities or particular degrees are not representative, then there could be some response bias introduced, although this is not believed to be the case. Using students samples was not deemed in itself to introduce bias, as it has been suggested that within cross-cultural research that students are relatively homogeneous and thus student samples enable researchers to control for a rage of moderating factors, such as age, education levels, etc. (Waller and Polonsky, 1999). In addition much of the literature examining business ethics and more specifically CES based consumer ethics, has used student samples (Chan et al., 1998; Higgs-Kleyn, 1998; Muncy and Eastman, 1998; Rallapalli et al., 1994). In addition, students are consumers and thus at the extreme the sample would be representative of a segment of the wider population. However, given that they have been used extensively as a proxy for consumers, the sampling frame is not considered to be a major limitation. The CES survey instrument was translated from English to the host county language and back translated from the host language to English when necessary, using the original CES instrument to ensure linguistic consistency. Although, it should be noted that cultural differences could have impacted on the relevance within each culture (i.e. functional equivalency may not exist). Table III provides the English wording of Muncy and Vitell’s (1992) original items, which were used in the English version of the instrument. The CES questionnaire was a self-administrated questionnaire to undergraduate students from each of the countries, there were 962 respondents in total (See Table II for a breakdown by region/country). The sample is region-

Consumer Ethics in the European Union TABLE II Sample distribution amongst regions and countries REGION/ Country

No. of respondents

Percentage total (Region)

SOUTH Portugal Spain Italy Greece

478 123 085 123 147

49.68% (100%). 12.8% (25.73%) 08.8% (17.78%) 12.8% (25.73%) 15.3% (30.75%)

NORTH Germany Denmark Scotland The Netherlands

484 095 156 140 093

50.31% (100%) 09.9% (19.63%) 16.2% (32.23%) 14.6% (28.93%) 09.3% (19.21%)

Total

962

100%

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ally balanced with approximately 50% of respondents from each region, however the composition of each region is not proportional to the country populations within the EU. The distribution of ages (mean 20.7 years) and gender (52.8% male) were similar within regions and across regions. Overall there was an 8.1% nonresponse rate and 2% of the surveys were excluded from analysis because they were incomplete, resulting in an effective response rate of 89.9%. Within the literature a range of versions of the CES scale have been utilised (Al-Khatib et al., 1995, 1997; Higgs-Kleyn, 1998). As was mentioned earlier, adjustments were made to items when it was deemed that they did not have cultural relevance. Within this study a 17-item

TABLE III Consumer ethics scale items Scale: 1 – Strongly believe it is wrong; 5 – Strongly believe it is not wrong Actively Benefiting From Illegal Activity Changing price tags on merchandise in a retail store Drinking a can of cola in a supermarket without paying for it Reporting a lost item as “stolen” to an insurance company in order to collect the money Giving misleading price information to a clerk for an unpriced item (Initially loaded on Passively Benefiting and was omitted from analysis) • Using long distance code that does not belong to you (Not included in this study but included in original CES instrument under this construct) • • • •

• • • •

Passively Benefiting Getting to much change and not saying anything Lying about a child’s age in order to get a lower price Not saying anything when the waitress miscalculates the bill in your favour Moving into a new residence, finding that the cable TV/telephone is still hooked up, and using it rather than signing up and paying for it (Initially loaded on Actively Benefiting From Questionable Action and was omitted from the analysis)

• • • •

Actively Benefiting From Questionable Action Using a coupon for merchandise you did not buy Using an expired coupon for merchandise Not telling the truth when negotiating the price of an old automobile Lying about your income on a credit application form

• • • • •

No Harm/No Foul Using computer software or games that you did not buy Recording a compact disc/album instead of buying it Returning merchandise after trying it and not liking it Spending over an hour trying on different dresses/items of clothing and not buying any Tapping a movie of the television

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version of Muncy and Vitell’s CES (consumer ethics scale) was used. The items evaluate consumers responses to various ethical issues using a five point likert scale with 1 indicating that respondents “Strongly believe it is wrong” and 5 indicating that they “Strongly believe it is not wrong”. Thus a mean response of less than 2.5 indicates that respondents feel the practice is unacceptable, whereas a mean response of greater than 2.5 indicates that respondents feel the activity is acceptable. This type of scale was also used in Muncy and Vitell’s (1992) original study, as well as in the other CES studies.

A factor analysis was undertaken using the SPSS Varimax with Kaiser normalisation procedures to reduce these survey items into a smaller set of underlying variables that measure the same construct (SPSS, 1990). This process is designed to allow researchers to combine variables, such that they “. . . capture the ‘essence’ of the data” and summarise the meaning of these underlying factors or composite variables (Churchill, 1991, p. 896). The variables within the factors were then examined for reliability to further ensure that the items measured the same construct. Composite variables were then calculated (i.e.

TABLE IV Factor structure of CES (The rotated loadings using a 0.45 cut-off) Actively benefiting from illeg alactivity Changing price tags on merchandise in a retail store Drinking a can of cola in a supermarket without paying for it Reporting a lost item as “stolen” to an insurance company in order to collect the money Getting to much change and not saying anything Lying about a child’s age in order to get a lower price Not saying anything when the waitress miscalculates the bill in your favour Using a coupon for merchandise you did not buy Using an expired coupon for merchandise Not telling the truth when negotiating the price of an old automobile Using computer software or games that you did not buy Recording a compact disc/album instead of buying it Returning merchandise after trying it and not liking it Spending over an hour trying on different dresses/items of clothing and not buying any Tapping a movie of the television Lying about your income on a credit application form

Actively benefiting from questionable action

Passively benefiting

No harm/ No foul

0.737999 0.706275

0.639402 0.766107 0.494624 0.781575 0.665328 0.679587 0.532718 0.555785 0.647924 0.506638

0.561895 0.71073 0.573365

Consumer Ethics in the European Union responses added and averaged) based on their factor grouping (i.e. solution). An analysis of variance (ANOVA) was then used to compare whether these composite variables differed between the two regions, i.e. Northern and Southern EU.

Analysis and discussion The factor analysis identified four factors, which were generally consistent with the previous research using the CES. While at first this seemed to support the global generalisability of the CES scale, a detailed examination of the four constructs identified that two variables loaded (i.e. were associated with a specific factor) in an inconsistent fashion, i.e. they were associated with different types of ethical behaviour than had been reported in previous CES research. There was no rationale for these inconsistent associations and their inclusion would have “diluted” the focus of the constructs. As such these two items were removed, which ensures broader consistency with previous CES works and enables some direct comparisons with these works to be undertaken. The remaining items were factor analysed again and resulted in four factors, which explained 51% of the variance in the data and which were also “consistent” with previous CES results, i.e. Actively Benefiting From Illegal Activity, Passively Benefiting, Actively Benefiting From Questionable Action, No Harm/No Foul. The reliability of constructs was examined, using Cornbach’s Alpha to determine if the items could indeed be added into one construct

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(Churchill, 1991). As can be seen in Table V, the reliability of the constructs for the total sample and the two sub-groupings appears to be lower than in some of the previous CES studies, which have reported Alpha’s for the four constructs of greater than 0.8 (for example Rallapalli et al., 1994). However, the Alpha’s of individual constructs have also been found to be lower than 0.8 in some studies, especially those undertaken outside the U.S. For example, when examining Egypt, Al-Khatib et al. (1995, 1997) and Rawwas et al. (1994) reported that the No Harm/No Foul construct had an Alpha of less than 0.50. Other studies have also reported Alpha’s lower than those in this study including the Passively Benefiting construct which was less than 0.6 in Lebanon (Rawwas et al., 1994) and Hong Kong and Northern Ireland (Rawwas et al., 1995). The reliability of the four constructs also appears to differ across the Northern and Southern EU samples, with the constructs being “more” reliable (i.e. higher Alphas) for the Southern countries than the Northern EU sample. Finding differences in Alphas when examining multiple countries/samples is also consistent with other results (Al-Khatib et al., 1997; Rawwas et al., 1994; Rawwas et al., 1995). One possible explanation for difference in reliability might be that there are minor differences amongst consumers within each region, although there do not appear to be substantial differences between regions for three of the four constructs. These reliability results were somewhat unanticipated, given that the CES instrument has been rigorously tested, including studies that have examined CES in European countries, i.e. Austria (Rawwas, 1996) and Ireland (Rawwas et

TABLE V Reliability test of CES for southern and northern EU groupings Total

Southern EU

Northern EU

Construct

Alpha

Alpha

Alpha

Actively benefiting from illegal activity (3 items) Passively benefiting (3 items) Actively benefiting from questionable action (4 items) No harm/no foul (5 items)

0.4060 0.6783 0.5535 0.5384

0.6170 0.7227 0.5745 0.5657

0.3214 0.6390 0.5258 0.5395

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al., 1995; Rawwas et al., 1998). Thus, future research might examine the global generalisability of CES measurements. Based on this study and other non-U.S. studies it is unclear whether the CES is generalisable. Composite item scores were calculated for each construct by adding the relevant items (see Table III) and calculating the mean score for the four constructs for each individual. The overall mean response for each construct within each region was then calculated. The regional mean values were compared using an analysis of variance (i.e. ANOVA). The results of the ANOVA are presented in Table VI and can be used to evaluate the sub-hypotheses related to the four components of the CES. Before examining the ANOVA results it is worth noting that the ordinal ranking of perceptions relating to a construct being perceived as wrong is consistent across the two groupings. That is Actively Benefiting From Illegal Activity is perceived to be most inappropriate (i.e. wrong) by both groups, followed by Actively Benefiting From Questionable Activity, Passively Benefiting, and lastly No Harm/No Foul. This suggests that active “questionable” behaviour on the part of consumers is perceived to be less appropriate than passive (i.e. non-active) questionable behaviour. While this makes intuitive sense, other studies have found different ordinal rankings of the constructs (Al-Khatib et al., 1997). It is also worth noting that the two constructs relating to Actively benefiting were both perceived to be “inappropriate” as they had a mean value of less than 2.5, which is consistent with other non-U.S. CES studies (for example Al-Khatib et al., 1995, 1997).

In examining the ANOVA results in Table VI it can be seen that there are statistical differences between the regions for two of the CES constructs dealing with “Actively Benefiting” from either an illegal or questionable activity, although as mentioned above respondents in both regions perceive these issues to be “wrong”. There are no statistical differences for the two constructs examining non-active behaviours (i.e. Passively Benefiting, No Harm/No Foul), and thus, overall there is a statistical difference in terms of perceptions toward active consumer behaviour but not “passive” consumer behaviour. While there are statistical differences for the two Active constructs the direction of these differences is not consistent. That is, Southern respondents perceived that Actively Benefiting From Illegal Activity is statistically less appropriate than their Northern counterparts, whereas Northern respondents perceived that Actively Benefiting From Questionable Activity is statistically less appropriate than their Southern counterparts. However, in both cases these statistical differences reflect relatively minor differences in absolute terms (i.e. 0.07 and 0.08 respectively). As such, while there are some statistical differences between the two regions, respondents in both broadly perceived issues in similar ways. This finding is somewhat inconsistent with the previous literature as Wood suggested that Northern, highly industrialised regions, would be more likely to perceive a range of “questionable” ethical activities more negatively, which does not occur in this study. The fact that Northern respondents were less concerned with “illegal” activities and more concerned with “questionable” activities than

TABLE VI Examination of the difference in CES components between southern and northern EU

Construct Actively benefiting from illegal activity Passively benefiting Actively benefiting from questionable action No harm/no foul

Southern EU

Northern EU

Mean (Std)

Mean (Std)

F-Value

Significance

1.84 2.93 2.09 4.02

1.91 2.91 2.01 4.08

9.65 2.29 15.59 1.13

0.002 0.131 0.000 0.288

Consumer Ethics in the European Union their Southern counterparts, might reflect the fact that the context (i.e. specific situation) of the activity may play a more important role in the evaluation of the situation. If one assumes that “less developed” countries have a higher context, then the ethical evaluation of the specific situation would depend on the specific circumstances, such as whether the individuals being “harmed” know the individual (Dawson, 1997). Some questionable activities may be inappropriate because of the parties involved and could require a more contextual (i.e. situational) evaluation of consumer ethical situations. For example there are substantially more retailers in Southern EU countries, which are also most likely to be smaller (See Table VII). Thus, Southern EU consumers may associate harming firms with harming individuals. Whereas Northern EU consumers may perceive harming firms as harming faceless corporations. If this is the case, developing relationships with individuals could assist in minimising the occurrence of intentional harm.

Limitations and future research As with any study there are a number of limitations that need to be highlighted. Firstly, is the TABLE VII Retail outlets per 1000 inhabitants REGION/ Country

Retailers (outlets) per thousand inhabitants

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fact that the reliability of the four factors of the CES were lower than might have been expected. While the CES has been used outside the U.S.A. on several occasions, it might be that these items are not as globally generalisable as one would have hoped and more research into the crosscultural validity of the scale needs to be undertaken. A second limitation relates to the sample used. While it is deemed that students are a suitable sample for consumer studies, they may in fact represent a narrow demographic segment of the population. In fact, it is often suggested that students tend to be more similar acrosscountries and as such there might be more variation between different sub-samples and/or from the wider population. Future research could attempt to have more representative sub-samples across each region, both in terms of ages and in terms of overall population (i.e. a stratified sample). A related issue is that the respondents within each of the regional sub-samples were collected at one location in each country and while students do frequently travel, any regional differences within countries may have been underestimated. Not all Northern EU countries were included and thus future researchers might try to include subsamples from all existing member countries and possibly from proposed members as well, which would also broaden the Southern sample. Finally, future research might consider the impact of other factors such as the relationship between the consumer and the firm, to identify whether this impacts on consumers’ ethical behaviour.

Conclusions

SOUTH Greecec Italyd Portugalc Spaina

12.3 25.3 12.5 11.2

NORTH Denmarkd Germanyd The Netherlandsd Scotland (U.K.)b

7.8 5.0 6.5 5.4

Figures based on Corporate Intelligence on Retailing figures 1988,a 1992,b 1994,c 1995.d

The main differences between Northern and Southern EU consumers relates to the way in which they perceive actively benefiting from illegal and questionable activities. Any differences in consumers’ undertaking proactive “unethical” behaviour would have substantial implications for organisations, as they would need to establish differential monitoring systems and procedures to preclude these proactive activities occurring in the two regions. However, given the small differences in terms of consumers’ views, this might

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suggest that differing monitoring mechanisms are not needed in Northern and Southern EU countries. Therefore, even though Southern countries appear to be “less” developed, they do not exhibit the ethical characteristics of developing countries as suggested in the literature (Priem et al., 1998; van Luijk, 1997; Wood, 1995). While there are some differences in consumers attitudes it is unclear if these are sufficient enough to warrant broad based segmentation in action, either on the part of business or legislators trying to regulate ethical behaviours. It therefore appears that the EU is broadly a union of consumers markets, at least in terms of the context of this study, as well as a union of economic markets. This might suggest that within Europe there is some “standardization” of consumer views, which would support Levitt’s (1983) view that consumer are becoming more similar, thus potentially allowing for a broader globalization of corporate activities, including marketing activities. However, in considering more global comparisons, at least based on the previous research, there do appear to be some substantial differences across countries/regions. These differences are not only reflected in different perceptions of the four CES constructs, but also in the way that each of the constructs is measured. Thus, from a pure cross-cultural perspective it could be argued that there might be little functional or metric equivalency. As such, real global comparisons might require refining of the CES instrument, to identify globally generalisable items, which would ensure that national or regional comparisons measure the four constructs consistently. As was identified in the limitations and future research section, this is one important area that can be further investigated in the future.

Acknowledgements We would like to thank Cleopatra Veloutsou, Peder ÿstergaard, Gerhard Bosch, Veronique Jaeger, Marc Ficsher, Jesus Rosel, K. R. E. Huizingh, Francesca Bettio, Manuel Luis Costa, Margarida Ruivo, Pilar Gonzales and Fernando

Almeida for assisting us with translating, distributing and collecting the survey, as well as John Stanton who provided feedback to earlier versions of the paper.

Notes 1

This occurs even after cultural adjustments have been made to items. 2 This does not mean that less developed Southern countries have not developed business ethics or that Business ethics is a 20th century “discovery”, for some “not so developed” Southern EU countries had welldeveloped concepts of business ethics for extensive periods. 3 The Italian university was based in south central Italy.

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Michael Jay Polonsky Marketing and Enterprise Group, School of Management, University of Newcastle, Newcastle, NSW 2380, Australia, E-mail: [email protected] Pedro Quelhas Brito Universidade do Porto, Faculdade de Economia do Porto, Rua Dr. Roberto Frias, 4200 Porto, Portugal. Jorge Pinto Universidade de Aveiro, Secção Autonoma de Cestão e Engenharia Industrial, Campus Universitário, 3810 Aveiro, Portugal. Nicola Higgs-Kleyn University of the Witswatersrand, Johannesburg, South Africa.