o. c. ferrell & larry g. gresham a contingency framework...

o. c. Ferrell & Larry G. Gresham

A Contingency Framework forUnderstanding Ethical Decision

Making in MarketingThis article addresses a significant gap in the theoretical literature on marketirig ethics. This gap resultsfronn the lack of an integrated framework which clarifies and synthesizes the multiple variables that ex-plain how marketers make ethical/unethical decisions. A contingency framework is recommended as astarting point for the development of a theory of ethical/unethical actions in organizational environments.This model demonstrates how previous research can be integrated to reveal that ethical/unethical de-cisions are moderated by individual factors, significant others within the organizational setting, and op-portunity for action.

MOST people agree that a set of moral principlesor values should govem the actions of market-

ing decision makers, and most marketers would agreethat their decisions should be made in accordance withaccepted principles of right and wrong. However,consensus regarding what constitutes proper ethicalbehavior in marketing decision situations diminishesas the level of analysis proceeds from the general tothe specific (Laczniak 1983a). For example, mostpeople would agree that stealing by employees iswrong. But this consensus will likely lessen, as thevalue of what is stolen moves from embezzling com-pany funds, to "padding" an expense account, to pil-fering a sheet of poster board from company suppliesfor a child's homework project. In fact, a Gallup pollfound that 74% of the business executives surveyedhad pilfered homework supplies for their children and78% had used company telephones for personal long-distance calls (Ricklefs 1983a).

0. C. Ferrell is Associate Professor, and Larry G. Gresham is AssistantProfessor, Department of Marketing, Texas A&M University. The au-thors wish to thank Patrick E. Murphy, Gene R, Laczniak, Mary Zey-Ferrell, Charles S. Madden, Steven Skinner, Terry Childers, and twoanonymous reviewers for their helpful suggestions and constructivecomments.

Because of the lack of agreement concerning eth-ical standards, it is difficult to find incidents of de-viant behavior which marketers would agree areunethical. For example, in the Gallup poll cited above,31% had ethical reservations in accepting an expen-sive dinner from a supplier, but most of the respon-dents indicated that bribes, bid rigging, and price col-lusion had become more common in recent years{Ricklefs 1983a, 1983b). Dishonesty is reportedlyperverting the results of market tests (Hodock 1984).Obviously, there is a wide-ranging definition of whatis considered to be ethical behavior among marketingpractitioners.

Absence of a clear consensus about what is ethicalconduct for marketing managers may lead to delete-rious results for a business. Due to faulty test mar-keting results, potentially successful products may bescrapped and unwise market introductions may bemade. In either case, both the consumer and the"cheated" firm are losers. Productivity and other mea-sures of efficiency may be low because employeesmaximize their own welfare rather than placing com-pany goals as priorities.

Absence of a clear consensus about ethical con-duct among marketers has resulted in much confusionamong academicians who study marketing ethics. Theseacademicians have resorted to analyzing various lists

Journal of MarketingUnderstanding Ethical Decision Making in Marketing / 87

of activities to determine if marketing practitioners feelspecific behaviors are ethical or unethical. This re-search seems unenlightened by evidence that ethicalstandards are constantly changing and that they varyfrom one situation/organization to another. Individ-uals have different perceptions of ethical situations anduse different ethical frameworks to make decisions.Thus, no attempt is made here to judge what is ethicalor unethical (the content of the behavior). Our con-cern is with the determinants of decision-making be-havior which is ultimately defined as ethical/unethi-cal by participants and observers. Rather than advocatea particular moral doctrine, we examine contexts andvariables that determine ethical decisions in the man-agerial process.

This article intends to fill a significant gap in thetheoretical literature related to marketing ethics. Theconceptual framework developed and discussed fo-cuses on a multistage contingency model of the vari-ables that impact on ethical decisions in an organi-zational environment. The article's specific objectivesare (1) to review empirical research and logical evi-dence useful in creating a contingency framework toexplain ethical decisions of marketers, (2) to defendthe contingency framework with existing empirical re-search and logical evidence, and (3) to suggest ad-ditional research to test portions of the contingencyframework.

Definitions and ApproachWe assume that the operating exigencies of the firmbring the marketer into contact with situations that mustbe judged as ethical or unethical (right or wrong). Suchsituations may include placing marketers in positionsto use deceptive advertising, fix prices, rig bids, fal-sify market research data, or withhold product test data.The opportunity variable is especially salient since themarketer performs a boundary spanning role for theorganization. That is, the marketer links the task en-vironment to the organization by defining consumerneeds and satisfaction. As Osbom and Hunt (1974)note, those parts of the organization most exposed tothe environment will be under more pressure to de-viate. Therefore, many of the ethical questions de-veloping in any firm are related to marketing deci-sions. The model described is equally applicable toother functional areas of the organization, such as ac-counting, management, etc. However, the opportu-nity to deviate from ethical behavior may be less prev-alent in nonmarketing areas, due to a lower frequencyof boundary spanning contacts.

The proposed framework for examining ethical/unethical decision making is multidimensional, pro-cess oriented, and contingent in nature. The variablesin the model can be categorized into individual and

organizational contingencies. The individual variablesconsist of personal background and socialization char-acteristics, such as educational and business experi-ences. The organizational characteristics consist of theeffects of organizations external to the employing or-ganization (customers, other firms) and intraorgani-zational infiuences (e.g., peers and supervisors). Thesevariables are interdependent as well as ultimately af-fecting, either directly or indirectly, the dependentvariable—ethical/unethical marketing behavior.

The general framework is a contingency approachto individual decision making, which suggests that wecan observe wide variations in ethical decision mak-ing, but this variation is not random. Theoretical andpractical contributions are achieved through identify-ing important contingency variables that distinguishbetween contexts in which decisions are made. Thissimply means that the decision making of marketersis dependent on contingencies external to the deci-sion-making process. These contingency factors maybe found within the individual, in the organizationalcontext, or external to both the individual and the or-ganization (i.e., in the interorganizational environ-ment).

The contingency framework presented in Figure 1demonstrates that multifaceted factors affect the like-lihood of ethical actions by individual decision mak-ers. Individual factors (including knowledge, values,attitude, and intentions) are posited as interacting withorganizational factors (including significant others andopportunity factors) to influence individuals involvedin an ethical/unethical decision-making dilemma. Thesocietal/environmental criteria used to define an eth-ical issue are treated as exogenous variables in thistheoretical framework and are, therefore, beyond thescope of this analysis.

Constructs in the ContingencyFramework

Individual FactorsIt is impossible to develop a framework of ethical de-cision making without evaluating normative ethicalstandards derived from moral philosophy. Based onthe emphasis of normative approaches in the litera-ture, it is assumed that marketers develop guidelinesand rules for ethical behavior based on moral philos-ophy. Various philosophies related to utilitarianism,rights, and justice explain how individuals create eth-ical standards.

The oldest approach to ethics is based on the studyof moral philosophy. It is assumed that, knowingly orunknowingly, individuals may use a set of philosoph-ical assumptions as a basis for making ethical deci-sions. This assumption about the influence of cultural

88 / Journal of Marketing, Summer 1985

FIGURE 1A Contingency Model of Ethical Decision Making in a Marketing Organization

INDIVIDUAL FACTORS-knowledge•values-attitudes-intentions

SOCIALand

CULTURALENVIRONMENT

ETHICAL ISSUEOR

DILEMMA-advertising deception-falsifying research data-price collusion-bribes-bid rigging

INDIVIDUALDECISION MAKING BEHAVIOR

/

I

EVALUATIONOF BEHAVIOR

-ethical-unethical

SIGNIFICANT OTHERS-diffère ntiaiassociation

-role setconfiguration

OPPORTUNITY-professional codes-corporate policy-rewards/punishment

1

and group norms/values on individual decision-mak-ing processes is soundly based in marketing literature(cf. Engel and Blackwell 1982, Fishbein and Ajzen1975).

Philosophy divides assumptions about ethics intotwo basic types—teleological and deontological(Beauchamp and Bowie 1979). These two approachesdiffer radically in terms of judging ethical behavior.Teleological philosophies deal with the moral worthof behavior determined totally by the consequences ofthe behavior. One's choice should be based on whatwould be best for all affected social units. For manymarketing decision makers, ethical action is tied intothe business and their ability to meet company per-formance objectives (Sherwin 1983). The assumptionis that the economic success of a firm's marketing ac-tivities should benefit employees, management,stockholders, consumers, and society. Utilitarianismis a teleological philosophy that attempts to establishmorality not in the motives or intentions of marketers'decisions but in the consequences of such decisions(Velasquez 1982).

Utilitarianism. The act is ethical only if the sumtotal of utilities produced by the act is greater than the

sum total of utilities produced by any other act. Thatis when the greatest possible balance of value for allpersons is affected by the act. Under utilitarianism, itis unethical to select an act that leads to an inefficientuse of resources. Also, it is unethical to engage in anact which leads to personal gain at the expense of so-ciety in general. Implicit in the utilitarian principle isthe concept of utility and the measurement and com-parison of value. For example, it may cost the publicmore through higher prices to redesign an automobilethan to pay damages to a few people who are injuredfrom a safety defect in the automobile.

Deontological philosophies stress the methods orintentions involved in a particular behavior. This fo-cus on intentions is consistent with marketing theoriesof consumer choice (cf. Engel and Blackwell 1982,Howard 1977), which specify behavioral intentions asa cognitive precedent of choice behavior. Results ofaction are the focus of deontological philosophies.Standards to defend personal ethics are often devel-oped from the types of deontological philosophies de-scribed in the following summaries (Velasquez 1982).

Rights principle. This principle specifies mini-mum levels of satisfaction and standards, independent

Understanding Ethical Decision Making in Marketing / 89

of outcomes. Moral rights are often perceived as uni-versal, but moral rights are not synonymous with legalrights. The rights principle is based on Kant's cate-gorical imperative which basically incorporates twocriteria for judging an action. First, every act shouldbe based on a reason(s) that everyone could act on,at least in principle (universality). The second crite-rion is that action must be based on reasons the actorwould be willing to have all others use, even as abasis of how they treat the actor (reversibility). Forexample, consumers claim that they have a "right toknow" about probable defects in an automobile thatrelate to safety.

Justice principle. This principle is designed toprotect the interests of all involved. The three cate-gories are distributive, retributive, and compensatory.Basically, distributive justice holds that equals shouldbe treated equally and unequals should be treated un-equally. Retributive justice deals with blaming andpunishing persons for doing wrong. The person musthave committed the act out of free choice and withknowledge of the consequences. The punishment mustbe consistent with or proportional to the wrongdoing.Compensatory justice is concemed with compensationfor the wronged individual. The compensation shouldrestore the injured party to his/her original position.Corporate hierarchies and executive prerogatives areexamples of distributive justice in practice. Antitrustlegislation allowing criminal prosecution of corporateofficials is based on the notion of retributive justice.Class action suits embody compensatory principles.

It is important to note that all of these philosophiesproduce standards to judge the act itself, the actor'sintentions, or the consequences ofthe act. Also, thesephilosophies are based on assumptions about how oneshould approach ethical problems. Standards devel-oped from utilitarianism, justice principles, and rightsprinciples are used to socialize the individual to actethically and may be learned with no awareness thatthe standards are being used. The precise impact ofthese philosophies on ethical behavior is unknown, butthere is widespread acceptance in the marketing lit-erature that such culturally derived standards impacton the decision-making process.

Ethical decision making may be influenced by theIndividual Factors identified in Figure I. Beliefs mayserve as inputs affecting attitude formation/change andintentions to resolve problems. Also, evaluation or in-tention to act (or even think about an ethical dilemma)may be influenced by cognitive factors that result fromthe individual's socialization processes. It is at thisstage that cultural differences would influence per-ceptions of problems. For example, variations in eth-ical standards are illustrated by what Mexicans call lamordida—the bite. The use of payoffs and bribes are

commonplace to business and govemment officials andare often considered tips for performing requiredfunctions. U.S. furos often find it difficult to competein foreign environments that do not use American moralphilosophies of decision making.

Organizational Factors

The preceding discussion explored philosophies thathave an impact on individuals' knowledge, values, at-titudes, and intentions toward ethical issues. In thissection, recognition is given to the fact that ethics isnot only a matter of normative evaluation, but is alsoa series of perceptions of how to act in terms of dailyissues. From a positive perspective, success is deter-mined by managers' everyday performances inachieving company goals. According to Cavanaugh(1976, p. 100), "Pressure for results, as narrowlymeasured in money terms, has increased." Laczniak(1983a) suggests that this pressure to perform is par-ticularly acute at levels below top management be-cause "areas of responsibility of middle managers areoften treated as profit centers for purposes of evalu-ation. Consequently, anything that takes away fromprofit—including ethical behavior—is perceived bylower level management as an impediment to orga-nizational advancement and recognition" (p. 27). Thus,intemal organizational pressures seem to be a majorpredictor of ethical/unethical behavior.

Significant Others

Figure 1 posits Significant Others as a contingencyvariable in individual decision making. Individuals donot leam values, attitudes, and norms from society ororganizations but from others who are members ofdisparate social groups, each bearing distinct norms,values, and attitudes. Aspects of differential associ-ation theory and role-set theory provide theoretical ra-tionales for including organizational factors in the de-cision framework. These theories, and empirical testsof their relevance to the ethical decision-making pro-cess, are discussed in the following sections.

Differential association theory. Differential asso-ciation theory (Sutherland and Cressey 1970) assumesthat ethical/unethical behavior is leamed in the pro-cess of interacting with persons who are part of inti-mate personal groups or role sets. Whether or not theteaming process results in unethical behavior is con-tingent upon the ratio of contacts with unethical pat-tems to contacts with ethical pattems. Cloward andOhlin (1960) are responsible for incorporating an op-portunity variable (discussed in a later section) in thedifferential association model of deviant behavior.Thus, as posited in our model, it is expected that as-sociation with others who are perceived to be partic-


ipating in unethical behavior, combined with the op-portunity to be involved in such behavior oneself, aremajor predictors of unethical behavior.

In the Zey-Ferrell, Weaver, and Ferrell (1979) studyof marketing managers, differential association withpeers and opportunity were found to be better predic-tors of ethical/unethical behavior than the respon-dent's own ethical belief system. This finding contra-dicts DeFleur and Quinncy's (1966) reformulation ofSutherland's differential association model, whichspecifies intemalization of group norms as a necessarysecond step in the development of deviant behavior.The Zey-Ferrell, Weaver, and Ferrell (1979) conclu-sion that an individual may act in compliance withgroup pressure without internalizing group norms is,however, congruent with the value/behavior incon-sistency noted by Newstrom and Ruch (1975) in theirsurvey of marketing practitioners.

Empirical support for the impact of superiors onthe ethics of their subordinates is provided by a va-riety of studies of business ethics spanning the lasttwo decades. For example, more than 75% of themanager/respondents (n = 1200) to Baumhart's (1961)ethics survey reported experiencing conflict betweenpersonal standards and what was expected of them asmanagers. In Brenner and Molander's (1977) repli-cation of the Baumhart research, 57% of those re-sponding (n = 1227) indicated similar role conflictsituations. Carroll (1975) found that young managersin business indicated they would go along with theirsuperiors to demonstrate loyalty in matters related tojudgment of morality. Almost 60% of the respondents(« = 236) agreed that young managers in the businessworld would have done just what junior members ofNixon's re-election committee had done. In Bow-man's (1976) follow-up, an even higher percentage(70%) of public officials expressed this same opinion.

Central to the application of differential associa-tion theory to the model of ethical/unethical market-ing behavior is the identification of referent others inthe decision process. This perspective is provided viaa consideration of the decision maker's (focal per-son's) role-set configuration.

Role-set theory. A role set refers to the comple-ment of role relationships which focal persons haveby virtue of their social status in an organization(Merton 1957). A role-set configuration is defined asthe mixture of characteristics of referent others whoform the role set, and may include their location andauthority, as well as their perceived beliefs and be-haviors. Previous evidence (Merton 1957, Miles 1977)suggests that role-set characteristics provide clues forpredicting behaviors of a focal person.

One important dimension of role-set configurationappears to be the organizational distance between the

referent other and the focal person. Organizationaldistance in this context is defined as the number ofdistinct intra- and interorganizational boundaries thatseparate the focal person and the referent other. Per-sons in the same department as the focal person tendto be least differentiated. They are hired and social-ized within the same immediate organizational con-text and share the focal person's functional special-ization and knowledge base. People in differentdepartments within the same organization are moresimilar than people separated by organizationalboundaries. Those in other organizations have differ-ent socialization and reinforcement under systems whichpursue separate and sometimes varying objectives withdifferent personnel selection criteria. Boundaries withinand between departments serve to reduce the focalperson's knowledge of referent others" attitudes andbehaviors. Further, referent others outside the focalperson's own organization are likely to differ from thefocal person in orientation, goals, interests, and mo-dus operandi. Thus, one would expect that the greaterthe distance between the focal person and the referentother, the less likely their influence on the focal per-son's ethical/unethical behavior.

In the only reported direct test of the distance hy-pothesis, Zey-Ferrell and Ferrell (1982) compared re-sponses from ad agency account executives with thosefrom their corporate clients. The expectation that nei-ther of those groups would be perceived by the otheras influencing their own behavior (due to the inter-organizational distance involved) was confirmed. Fur-ther support for the distance proposition came fromthe ad agency respondent type. Peer group, the refer-ent other closest to the focal person, was the strongestpredictor of ethical/unethical behavior. But, for thecorporate respondent, top management, rather than peergroup, was the most influential. The latter finding doesnot support the distance hypothesis but is consistentwith predictions deriving from the relative authoritydimension of the role configuration.

The relative authority dimension is a measure ofthe amount of legitimate authority referent others have,relative to the focal person, on issues requiring con-tact between them. Kahn et al. (1964) view powerfulreferent others in a role set as those capable of re-stricting the range of behavior available to the focalperson. They posit the status and powers of referentothers as directly related to the amount of pressurethey can exert on the focal person to conform to theirrole expectations. Thus a role set configured with ref-erent others who are superior in authority relative tothe focal person would be in a position to exert strongrole pressures for compliance to their expectations.Applying this logic to business settings, one wouldanticipate that top management, as referent others withgreater authonty. would have more influence than peer


groups on the focal person's ethical/unethical behav-ior.

The Baumhart (1961) and Brenner and Molander(1977) surveys support this relative authority propo-sition—behavior of superiors was perceived by re-spondents in both studies as the number one factorinfluencing ethical/unethical decisions. Similar re-sults are also reported in a study by Newstrom andRuch (1975). Hunt, Chonko, and WUcox (1984) foundthe actions of top management to be the single bestpredictor of perceived ethical problems of marketingresearchers. Ferrell and Weaver (1978) suggest thattop management must assume at least part of the re-sponsibility for the ethical conduct of marketers withintheir organization. In addition, the general conclusionthat the ethical tone for an organization is set by uppermanagement is common to most attempted synthesesof ethics research (cf. Dubinsky, Berkowitz, and Ru-delius 1980; Laczniak 1983a; Murphy and Laczniak1981).

Responses from the Zey-Ferrell and Ferrell (1982)ad agency executive sample do not support the au-thority proposition—this group was infiuenced bypeers, rather than top management. The authors spec-ulate that this unexpected outcome may have been at-tributable to the high frequency of contact among adagency account executives and their relatively infre-quent associations with superiors. Such an explana-tion is congruent with differential association theoryand appears to indicate that frequency of contact withreferent others is a more powerful predictor (than rel-ative authority) of ethical/unethical behavior. Corpo-rate client responses from the same survey also sup-port a differential association explanation of the resultsobtained—top management, rather than peers, wasperceived as the relevant referent other. In a corpo-ration, the advertising director does not have a num-ber of individuals at the same level with whom to in-teract. Thus, the frequency of interaction with uppermanagement levels is usually higher for advertisers incorporations because the advertising director does nothave anyone else performing the same job tasks.

OpportunityFigure 1 depicts opportunity as having a major impacton the process of unethical/ethical decision making.Opportunity results from a favorable set of conditionsto limit barriers or provide rewards. Certainly the ab-sence of punishment provides an opportunity forunethical behavior without regard for consequences.

Rewards are external to the degree that they bringsocial approval, status, and esteem. Feelings of good-ness and worth, intemally felt through the perfor-mance of altruistic activities, for example, constituteintemal rewards. Extemal rewards refer to what anindividual in the social environment expects to receivefrom others in terms of values extemally generated

and provided on an exchange basis. It is important tonote that deontological frameworks for marketing eth-ics focus more on intemal rewards, while teleologicalframeworks emphasize extemal rewards.

Cloward and Ohlin (1960) are responsible for in-corporating an opportunity variable in the differentialassociation model of ethical/unethical behavior. Zey-Ferrell and Ferrell (1982) empirically confirm that theopportunity of the focal person to become involved inethical/unethical behavior will infiuence reported be-havior. In this study, opportunity for unethical be-havior was found to be a better predictor of behaviorthan personal or peer beliefs. Therefore, we can con-clude that professional codes of ethics and corporatepolicy are moderating variables in controlling oppor-tunity.

Weaver and Ferrell (1977) suggest that codes ofethics or corporate policy on ethics must be estab-lished to change individual beliefs about ethics. Theirresearch indicates that beliefs are more ethical wherethese standards exist. Also, it was found that the en-forcement of corporate policy on ethical behavior isnecessary to change the ethical behavior of respon-dents. Their research discovered a poor correlationbetween ethical beliefs and ethical behavior. Oppor-tunity was a better predictor of ethical behavior thanindividual beliefs. This research supports the need tounderstand and control opportunity as a key deter-minant (as indicated in Figure 1) in a multistage con-tingency model of ethical behavior.

A Contingency Framework forEthical Decisions

A contingency framework for investigating behavioraloutcomes of ethical/unethical decisions across situa-tions is shown in Figure 1. The basic elements of theframework are: (a) the individual's cognitive struc-ture—knowledge, values, beliefs, attitudes, and in-tentions; (b) significant others in the organizationalsetting; and (c) opportunity for action.

Figure I specifies that the behavioral outcome ofan ethical dilemma is related to the first order inter-action between the nature of the ethical situation andcharacteristics associated with the individual and theorganizational environment. Potential higher order in-teractions are anticipated in the basic postulate. At thisstage of development, there is no claim that this is anall-inclusive framework; rather, it is the initial steptoward constructing such a framework.

Propositions from the ContingencyFramework

Each of the constructs associated with the frameworkwere discussed in the preceding sections. Some prop-ositions incorporating the previously defined con-


stnicts are presented in the section that follows. Thesepropositions are stated so that testable hypotheses canbe derived to direct future research efforts. The ele-ments and propositions discussed were selected on thebasis of the past research and logical evidence usedto construct the contingency framework in Figure 1.They are presented as a representative subset of po-tential propositions that can be derived from the par-adigm.

Propositions Concerning the Individual Factors

Proposition 1: The more individuals are aware of moralphilosophies for ethical decision making, the more in-fluence these philosophies will have on their ethicaldecision.

a. Individuals will be influenced by moral philoso-phies learned through socialization, i.e., family,social groups, formal education.

b. Within the educational system, courses, trainingprograms, and seminars related to ethics will in-fiuence ethical beliefs and behavior.

c. The cultural backgrounds of individuals will influ-ence ethical/unethical behavior.

Propositions Concerning OrganizationalFactors

Proposition 2: Significant others located in role setswith less distance between them and the focal indi-vidual are more likely to influence the ethical behav-ior of the focal person.

a. Top management will have greater influence on theindividual than peers, due to power and demandsfor compliance.

b. Where top management has little interaction withthe focal person and peer contact is frequent, peerswill have a greater influence on ethical behavior.

Proposition 3: In general, differential association(learning from intimate groups or role sets) predictsethical/unethical behavior.

a. Intemalization of group norms is not necessary todevelop ethical/unethical behavior through differ-ential association.

b. Unethical behavior is influenced by the ratio ofcontacts with unethical patterns to contacts withethical patterns.

Propositions Concerning the OpportunityVariable

Proposition 4: The opportunity for the individual tobecome involved in unethical behavior will influencereported ethical/unethical behavior.

a. Professional codes of ethics will influence ethical/unethical behavior. Ethics related corporate policywill influence ethical/unethical behavior.

b. Corporate policy and codes of ethics that are en-forced will produce the highest level of compli-ance to established ethical standards.

c. The greater the rewards for unethical behavior, themore likely unethical behavior will be practiced.

d. The less punishment for unethical behavior, thegreater the probability that unethical behavior willbe practiced.

Developing and TestingContingency Propositions

The research program for developing and testing con-tingency hypotheses outlined by Weitz (1981) pro-vides valuable guidance for future studies of market-ing ethics. This program, recommended for tests ofhis contingency framework of effectiveness in salesinteractions, is adaptable to examinations of ethicalphenomena. The three stages of the research programare hypotheses generation, hypotheses testing in a lab-oratory environment, and hypotheses testing in a fieldsetting.

Hypotheses Generation

The primary objectives of this step in the researchprogram are to (1) add specificity to the propositionspresented in the preceding section, i.e., move from"bridge laws" (Hunt 1983, p. 195) to research hy-potheses; (2) identify additional propositions from thetheoretical framework; and (3) develop a richer tax-onomy of moderator variables within the IndividualFactors, Significant Others, and Opportunity subsets.

Past studies of business ethics (cf. Darden andTrawick 1980; Dubinsky, Berkowitz, and Rudelius1980), with their foci on identifying perceptions ofethical/unethical situations, provide a useful startingpoint for achieving the first objective of adding spec-ificity to propositions. The theoretical framework ofethical decision making developed in this article re-quires identification of a variety of ethical issues tomake the hypotheses derived from the specified re-lationships empirically testable. In addition, the prac-tical and theoretical value of the proposed contin-gency framework can only be determined by testingits explanatory power across a variety of ethical sit-uations.

Theories in use methodologies (Zaltman. Le-Masters, and Heffring 1982) might be useful in gen-erating additional theoretical propositions and devel-oping a richer taxonomy of moderator variables, aswell as in identifying a wide range of ethical dilem-mas. Such methodologies involve observing andquestioning marketing decision makers. Examples ofhow these techniques might be employed in ethics re-search include studies of verbal protocols recordedduring the decision-making process, interviews with


marketing practitioners concerning their behavior inspecific decision situations, and investigations of thecharacteristics marketers use to classify ethical/uneth-ical situations. Levy and Dubinsky (1983) have de-veloped a methodology for studying retail sales ethicsthat applies the protocol technique. Their approach startsby generating situations that might be ethically trou-blesome to the retailer's sales personnel. This is firstaddressed by meeting with 8 to 12 retail sales per-sonnel from different departments with a moderatorto generate, individually and silently, ethical prob-lems they confront on their jobs, and to record theseon a sheet of paper.

Expérimentai TestingRegardless of the procedure used to develop contin-gency hypotheses from the theoretical framework, thenext step in the ethics research program is to test thesehypotheses in a laboratory environment, using an ex-perimental design. The advantages of laboratory ex-periments to researchers attempting to assess causalrelationships between variables are widely recognized(cf. Cook and Campbell 1976) as including control ofexogenous variables and elimination of potential al-ternative explanations for the results obtained. How-ever, the difficulties involved in testing hypothesesconcerning marketing ethics in lab settings is evi-denced by the absence in the marketing/business lit-erature of reports of such experiments. The subjectivenature of self-report operationalizations of constructsfrom the ethical decision-making framework and theproblem of achieving experimental realism (Carl-smith, Ellsworth, and Aronson 1976, p. 83) in labo-ratory tests of ethical issues represent major threats tothe internal validity of these studies.

However, the management Hterature on collectivebargaining contains numerous examples of laborato-ry studies of negotiation techniques (cf. DeNisi andDworkin 1981, Johnson and Tultar 1972, Notz andStark 1978), which are very similar to the type of ex-periment needed in ethics research, i.e., unobtrusive,experimenter-controlled predictor variables and clearlydefined behavioral outcomes. Such studies illustratehow complex cognitive phenomena (e.g., attitudes)can be operationalized, manipulated, and measuredwhile minimizing threats to internal validity.

Applying similar techniques to studies of market-ing ethics might involve, for example, manipulatingthe "opportunity" to engage in unethical behaviorthrough the presence/absence of specific experimen-ter instructions regarding the rules of the game, orvarying the impact of significant others through theuse of a confederate in experimental groups. Labo-ratory experiments represent quick and effective waysfor testing behavioral propositions. In addition, theprimary value of such studies to a research program

for marketing ethics may well lie in the purificationof existing measures of the constructs under consid-eration, as well as the development of new and morevalid and reliable operationalizations.

Field TestingThe survey procedures used in earlier tests of someof the relationships posited in the theoretical frame-work of ethical decision making (Zey-Ferrell, Weaver,and Ferrell 1979) represent efficient and practicalmethods of examining these linkages. However, thecorrelational nature of the results obtained in thesestudies prohibits causal inference. In addition, the va-lidity of the self-report measures used in these studiesis open to question.

Future research programs on marketing ethicsshould address the latter problem in the laboratorytesting phase. Lab studies focusing on the purificationof existing measures of the constructs of interest andthe identification of new and different measurementmethods (e.g., physiological measures) may well re-sult in the valid and reliable instruments needed forthe field testing portion of the research program.

The ethical problems inherent in experimental ma-nipulation of ethical issues/problems in field settingsmake solutions to the former problem much more dif-ficult to overcome. Some of the hypotheses derivedfrom the propositions presented earlier (e.g., thoseconcerning the effects of corporate policy and trainingprograms/seminars) are more amenable to field test-ing than others. For example, multi-unit corporationsmight institute training programs/seminars related toethics at some locations and not at others. Before andafter indices of ethical/unethical behavior (e.g., em-ployee theft, customer complaints) could then becompared for the treatment and control units. Cookand Campbell (1976) indicate that "quasi-experimen-tal" designs of this sort are acceptable surrogates for"true experiments" in field settings where random as-signment of subjects to treatment control conditionsis frequently impossible or impractical.

Nevertheless, the ethical issues and practical prob-lems associated with random assignment of subjectsto treatment conditions and unobtrusive assessment (orinducement) of ethical/unethical behavior present majorobstacles to the implementation of experimental de-signs in field settings.

ConclusionResearch and theoretical development in marketingethics have not been based on multidimensional modelsthat are contingent in nature. Most articles in the fieldof marketing ethics focus on moral philosophies, re-searchers provide descriptive statistics about ethicalbeliefs, and correlational linkages of selected vari-


ables. This article attempts to integrate the key deter-minants of ethical/unethical behavior in a multistagecontingency model. The framework is based on theassumption that the behavioral outcome of an ethicaldilemma is related to first order interaction betweenthe nature of the ethical situation and characteristicsassociated with the individual (cognitive factor), sig-nificant others, and opportunity. The framework pro-vides a model for understanding the significance ofprevious theoretical work and empirical research andprovides direction for future studies.

The contingency framework is process oriented,with events in a sequence causally associated or in-terrelated. The contingency variables represent situ-tional variables to the marketing decision maker. Thecomplexity and precision of the framework developedin this paper should increase as research is conductedthat permits more scientific conclusions about the na-ture of ethical decision making in marketing. Ourframework is a start toward developing a comprehen-sive framework of ethical decision making. We haveattempted to construct a simple and direct represen-tation of variables based on the current state of re-search and theory development.

Propositions conceming individual factors andpropositions conceming the organizational factors ofsignificant others and opportunity were developed tobe used in a research program for testing contingencyhypotheses. Based on a research program for testingcontingency hypotheses outlined by Weitz (1981), wesuggest hypotheses generation, hypothesis testing ina laboratory environment, and hypothesis testing in afield setting. Both retail store management and fieldsales management provide excellent opportunities fortesting the contingency framework in Figure 1. Forexample, Dubinsky (1985) has developed a method-ology for studying the ethical problems of field sales-people as an approach for designing company poli-

cies. Dubinsky's methodology could be tested usingthe contingency framework of ethical decision mak-ing, hypotheses generation, laboratory testing, and fieldtesting.

To develop new directions in research and theoryconstmction, new propositions are needed to test thecontingency framework. More research to develop ataxonomy of ethical standards (Velasquez 1982) andattempts to incorporate these standards into marketing(Fritzche 1985) are needed to understand more aboutindividual factors related to beliefs, values, attitudes,or intentions. Attempts to develop logical decision rulesfor individual decision making (Laczniak 1983b) alsocontribute to understanding individual factors. Chonkoand Bumett (1983) provide an example of descriptiveresearch classifying individual beliefs about sales sit-uations that are a source of role conflict. Their re-search may assist in developing additional proposi-tions, especially as it relates to pinpointing new ethicalissues. In addition, marketers should be able to drawfrom a rich source of research on organizational be-havior to develop and test propositions related to sig-nificant others and opportunity.

The importance of ethical decision making in mar-keting is becoming more evident. Laczniak and Mur-phy (1985) suggest organizational and strategic mech-anisms for improving marketing ethics, including codesof marketing ethics, marketing ethics committees, andethics education modules for marketing managers. Toimprove specific recommendations for marketing eth-ics, more needs to be leamed about the process ofethical decision making. We suggest an integrated ap-proach to understanding marketing ethics with im-proved propositions that test the contingency modelpresented in this article. By taking a multidimensionalview of ethical decision making, a new level of rigorin research should be achieved.

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o. c. ferrell & larry g. gresham a contingency framework...

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