Marketing Ethics

Implication of Ethics in Marketing Strategy Formulation

Implication of Ethics in Marketing Strategy Formulation

Ethics in Strategy Formulation

The corporate world is increasingly paying attention to ethics, the ethical work climate, and ethics institutionalization. Two reasons account for this trend. According to a recent survey, by Fortune as part of their annual ''100 Best Companies to work for'' ranking, of more than 105,000 employees from 446 U.S. companies, the reasons provided by employees for working at many top ranked companies go well beyond simply money (Allen, Meyer, 1990). In fact, money may no longer be the main motivator—as part of the Fortune's report of the top five reasons people quit their jobs, only 30 percent of employees surveyed cited better compensation elsewhere. A good work climate is cited as a critical factor, and a salient dimension of a firm's work climate is the ethics work climate.

A second reason that may account for the surge in interest in business ethics is the increase in business problems involving ethics. One of the most infamous business transgressions in the last decade is the Enron case. Of course, there are others too including Tyco, WorldCom, and Arthur Andersen. If one examines just marketing, numerous ethical issues were identified by Chonko and Hunt (1985) in a survey of American Marketing Association (AMA) practitioner members. The top three ethical marketing issues identified by their research were bribery (e.g., gifts from outside vendors), fairness (e.g., inducing customers to use services not needed), and honesty (e.g., misrepresenting services and capabilities). Marketing ethics books have also documented numerous ethical issues relating to each of the 4Ps, among other areas.

According to many writers, these various problems have motivated many organizations to institutionalize ethics. Singhapakdi and Vitell (2007) suggested that this upsurge of ethics institutionalization by organizations may also have been influenced by the Federal Sentencing Guidelines approved by Congress in the early 1990s, which essentially provide for reduced penalties for organizations that can demonstrate an adequate degree of ethics compliance (Brenner, 1992). As they point out, the courts have consistently given substantial weight to the Sentencing Guidelines when determining appropriate sentences.

Major Ethical Forces in Marketing

In a marketing context, Singhapakdi and Vitell developed a measure of ethics institutionalization that has two dimensions, namely implicit and explicit institutionalization. Implicit ethics institutionalization refers to a work climate in which ethical behavior is understood by employees to be crucial in the makeup and functioning of the firm (Singhapakdi, Vitell, Franke, 1999). For example, a company that has a high level of implicit ethics institutionalization is one that informally expects all of its managers, including its marketing managers, to demonstrate a high level of professionalism, honesty, and integrity. In contrast, explicit ethics institutionalization refers to the codification of ethical behavior in terms of codes of ethics, policy manuals, orientation programs, and ethics committees. In addition to demonstrating construct validity, the authors showed nomological validity by successfully predicting positive relationships with job satisfaction, esprit de corps, perceived importance of ethics, and organizational ...