Should Firms Care About Ethics

Stakeholders use consumerism as a push for social change, based on the concept that companies make decisions according to consumer demands (Newholm, 2000). Consumer demand is constrained by the massive influence large companies create via their advertising and branding. On the other hand, it has been argued that consumer power may be used to ensure companies are accountable to society, consumerism can be seen as a tool for social change (Newholm, 2000). However, some literature expresses that corporate accountability is too far fetched to capture the attention of most consumers (Smith, 1990). Smith expresses ethical purchasing behaviour more in a negative sense of consumers boycotting certain products rather than specifically buying ethically.

Ethical consumption is not perceived in a standardised way in the literature covering it. Two popular aspects of research focus on alternative concepts of what consuming ethically consists of (Chatzidakis & Mitussis, 2007). First, consumer ethics-based literature analyses consumers reactions to purchase situations potentially perceived as unethical. Examples of these studies consist of shoplifting, copying or buying pirate software, altering price tags and many other examples that portray unethical behaviour (Vitell, 2003). The other literature focuses on ethical consumer behaviour, focusing on understanding consumers choose what to purchase and why they make these decisions for ethical and environmental reasons.

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The ethical consumer is considered to be an evolution of the green consumer (Shaw & Shiu, 2002). The green consumer is described as a consumer that is interested in the environment and expresses it with their general attitude towards environmental protection and conservation as well as the way they behave when purchasing (Kinnear, et al., 1974). This shows that a consumer that purchases alternatively as an act of what they believe to be kind has been a concept for a long time. However, previous literature shows that there is a difference between green and ethical consumers. Green consumers focus their attention on animal welfare and the environment, not just purchasing environmentally products but living in an environmentally friendly manner daily through activities such as recycling, using energy saving appliances and using public transport over driving (Grønhøj, 2006). Whereas ethical consumers are directed also towards the social aspects such as fair trade, social injustice and human rights (Newholm & Shaw, 2007).

Types of Ethical Consumer Behaviour

Ethical consumer behaviour is not simple, it is a complicated phenomenon encircling a wide diversity of behaviours (Harrison, et al., 2005). Individuals choose to express their ethical beliefs through purchasing behaviour in different ways, in current literature four behaviours in particular are mentioned:

The first is boycotting, consumers avoid purchasing certain products or using particular services to express social concerns they have. This often occurs for either as a result of company-oriented boycotting where ethical consumers avoid products due to the company responsible for it having an unethical social record, or product-oriented boycotting because the product is unstable (Harrison, et al., 2005). Boycotting is often described as typical semi-organised purchasing action (Newholm & Shaw, 2007). This research suggests that boycotting is an action in which people express their values and beliefs in social and environmental ethics by not consuming what they label as unethical, an example of this is not buying from a clothing. Next is the other side, buycotting is defined as using social and environmental considerations to choose certain products and services over others (Shaw, et al., 2006b). boycotting can also be known as affirmative or positive buying. Example are purchasing free range eggs, using solar power or buying fair trade coffee.

Another behaviour is voluntary simplicity also known as ethical simplifiers, where consumers part of the ethical movement decides to reduce their consumption levels and live a simpler life (Shaw & Newholm, 2002). This is more a way of life than just a behaviour and is usually portrayed in most aspects of a daily routine, for example, the way in which they run their home or raise their children (Cherrier, 2005). The final ethical consumer behaviour is the Slow Food movement which focuses on purchasing alternative foods that are good for the environment, counteract fast food expansions and support local food traditions (Pietrykowski, 2004).

Rise of The Ethically Minded Consumer?

The increasing trend towards ethical purchasing was indicated in 2007 when there was a 47% global increase in sale of fair trade endorsed products (Shaw, et al., 2006). The increase of organised consumer activist groups and discussion of both environmental and social issues in the media, has resulted in mounting ethical concerns about the impact of modern consumption culture on society and the environment. Thus, increasing availability of ethical products and leading to a growing awareness by consumers of the impact their purchasing and consumption behaviour has socially and environmentally (Carrigan & Attalla, 2001). A new type of consumer has appeared and grown who feel a sense of responsibility socially and environmentally and attempt to express these feelings when purchasing and consuming (De Pelsmaker, et al., 2005). This in turn attracts companies to care more about ethics to suit their stakeholders which is including an increasing number of ethical consumers (Polonsky, 1995).

However, there may be evidence to suggest that even though some data shows ethical purchasing increasing, if you dig deeper it may not be increasing relative to the population growing an indication of this is in 2014 according to the Consumer Data Research Centre (CDRC) there was an increase of only 0.86% increase in the purchase of ethical food and drink in the UK and according to the Office of National Statistics the UK population grew by 0.77% showing a similar change. Or if you investigate the food and drinks market itself for example, it is increasing in size each year expressed by Gov.uk with a growth of 2.65% in 2013 where the CDRC shows a decline of 15.66% in the purchase of ethical food and drink resulting in a 17.84% decline in ethical food and drinks market share from the previous year.

Consumer Attitude-Behaviour Gap with ‘Ethical Consumers’

The number of ethically minded consumers may be increasing every year however, not all ethically minded consumers pursue their apparent desire to purchase ethically sourced goods and ethically run services. There is a difference between what consumer’s claim they do and what they actually do when it comes to purchasing (Auger & Devinney, 2007). This occurrence is called the work-deed or attitude-behaviour gap and applies to everyday human nature in this case in purchasing (Carrigan & Attalla, 2001). Furthermore, this suggests that intentions are not a great predictor of actual behaviour, so gaining knowledge on this gap is of great importance to influence, interpret and understand how consumers will behave (Bagozzi, 1993). This gap remains poorly understood and addressing this issue I came across two conflicting theories highlighted within ethical consumer literature.

The first theory is based on identifying factors that influence both directly and indirectly how ethical attitudes translate into ethical purchase intentions as well as actual behaviour (Shaw & Shiu, 2002). Methodologies do not explain the gap between attitude and behaviour fully. Responses to questions regarding an individual’s ethical intentions when purchasing is unlikely to be correct. For instance, a consumer may intend to act ethically in the purchases when entering a shop, however, several things can make their behaviour differ to their intentions. For example, they may find an attractive deal for a less ethical or unethical product and choose to purchase it instead. Or they may have less money than predicted at that point in time and have no choice but to choose the less ethical substitute. There are many other reasons an individual that classes themselves as an ethical consumer may not purchase ethically.

The second theory is constructed on the limitations of consumers completing surveys, this method is a common approach to investigate consumers ethical purchase intentions and subsequent behaviour (Carrigan & Attalla, 2001). It is suggested that when completing a survey considering ethical issues, intentions and attitudes it is in our human nature to respond in a way they believe to be socially acceptable, which results in people overstating how important ethical consideration is in their buying behaviour (Auger & Devinney, 2007). Furthermore, this creates what Cowe and Williams (2000) described as the 30:3 phenomenon, since they found that 30% of consumers stated that they cared about ethical standards whereas only 3% of purchases reflect this claim. (Ethical market share vs Ethical purchases claim regression).

Factors Impeding Ethical Consumption

Although ethical products may be appealing as they are environmentally friendly or serve a social cause, but a higher cost amount incurred, or extra effort exerted in order to find the products (De Pelsmaker, et al., 2005). Prior research seems to suggest that when consumers are questioned on their ethical behaviour, the main claim for them not purchasing ethically is the high price and effort accompanying ethical purchases (De Pelsmaker, et al., 2005). Moreover, there are plenty of attributes consumers evaluate about products when purchasing which jointly help an individual decide. Generally, being ethical is not the most important attribute general consumers look for. Price, quality, availability, convenience and trusted brands are the most significant factors that have an effect on buying decisions (Boulstridge & Carrigan, 2000).

Price was highlighted as more important by Bray, Johns and Kilburn (2011) especially concerning regularly purchased goods such as food. Participants in their study claimed that they do not consider ethical products in the supermarket as their food bill needs to remain as small as possible. Another example of alternative purchasing factors was personal experience, as some consumers claim they do not know where their money is going if they purchase ethically (for example fair trade) so they would much rather purchase local produce as they feel a greater confidence their money is doing good (Bray, et al., 2011). This is strongly linked to Bird and Hughes (1997) claiming that consumers could potentially still need convincing that what they purchase can make a difference in ethical terms in order to alter their purchasing behaviour and persuade them to be more ethical in purchasing decisions. Consumers like to be fully informed in order to make effective purchasing decisions.

Although some individuals believe that their consumption pattern will make a difference others believe that it will have no impact overall, for example, some consumers choose to be vegetarian to save animals lives whereas others argue that the animals are bred to be eaten and their decision to not eat them will have no effect on the outcome (Forte, 2004). Bray, Johns and Kilburn (2011) found that people much preferred to avoid unethical products or companies that receive negative attention as its more achievable than proactively consuming ethical products. Some consumers see acting within the law as adequate behaviour and will not compromise quality for the sake of being ethical, research suggests that the quality of ethical products is an important factor when making purchase decisions (Carrigan & Attalla, 2001). Even when not perceived as ethically correct some consumers have a certain loyalty with brands they use and trust even claiming to disregard price which was earlier described as an important factor in purchase decision, as a result these consumers may be less likely to convert to an overtly ethical substitute (Bray, et al., 2011).

Consumers can take a pessimistic view on ethical products, taking the ethical claim as just another marketing scheme to charge higher and take advantage of people’s goodwill, as well as the belief that the extra premium they pay does not benefit the cause or ethical movement it is supporting (Shaw & Shiu, 2003). Steenhurst and Van Kenhove (2006) suggested that feeling guilty is not an early factor when making purchasing decisions suggesting that the guilt consumers may feel about social and environmental issues will not necessarily alter their purchasing behaviour.