Consumers' View of Corporate Ethics

Naomi Klein wrote the book No Logo which "hinged on a simple hypothesis: that as more people discover the brand-name secrets of the global logo web, their outrage will fuel the next big political movement, a vast wave of opposition squarely targeting transnational corporations, particularly those with very high name-brand recognition."  In a recent opinion column for Media (May 16, 2003), Jim Aitchinson wrote:

Yet not everyone agrees consumers are so hostile.  In a recent global research study called Research International Observer that seems to me to be out of step with reality, we learn that consumers are prepared to preserve their brand loyalties irrespective of the parent company's political and ethnical malpractices.  The research firm with the rose-coloured glasses, Research International, says that consumers only react negatively when corporate malpractices touch them personally.

RI's spokesman declared: "Brands are seen as essential beacons that help consumers navigate the modern world.  Because of this, and the process by which they are enhanced in consumers' own imaginations, they are nurtured and protected."  RI believes that consumers have  become so good at creating personal, idealised images of their favourite brands that negative issues are largely put aside or forgotten.  True, brands do exist only in the minds of consumers, but are consumers really so forgiving?  Yes, says the study.  Consumers in countries like Malaysia, Indonesia and Turkey may loathe American politics, but have no qualms about buying and supporting American brands.  (I wonder if they checked with anyone in Pakistan or Syria?)

We will now cite some survey data from the TGI Argentina study.  This is a survey of 5,199 persons between the ages of 12 to 75 years old who were interviewed during the first half of 2003.  Of these survey respondents, 50% said that they agreed completely with the statement: "It is important that a company acts ethically."  Thus, half the population regards corporate ethics as important.  In the next two charts, we show the incidences by age/sex, socio-economic level and education.  Concern about corporate ethics is higher among older people (with the puzzling exception of Men 45-54?), the upper classes and the better educated.

(source: TGI Argentina)

(source: TGI Argentina)

But the real purpose of this article is to point out the difficulty in dealing with the issue of corporate ethics with a survey question such this one.  First of all, this particular phrasing is bound to elicit socially desirable question.  Only the true sociopaths would believe that corporations have no ethical obligations.  Indeed, it was surprising to even find that as many as 1% of the respondents admit to completely disagreeing with this statement and we must wonder if they misread the question.

Secondly, the ethics here are situational in nature.  As the quotation in the opinion column said, "consumers only react negatively when corporate malpractices touch them personally."  Therefore, an abstract question may have no meaning.  But when operationalized into concrete situations, there may be radically different reactions.  

Situation #1: A whistleblower reveals that a certain potato chip producer routine calibrates its machines to put in 7.5 ounces in the 8 ounce bags to shave costs.  Here, the consumer may shrug her shoulder and think, "The reason that I bought this particular brand of potato chips is that I like them.  If they had charged more for a full 8 ounce bag, I would have bought it anyway.  What is the big deal?"  

Situation #2:  In order to preserve its reserves, a bank would not let its consumer depositors withdraw the money that is rightfully theirs and which they had deposited in the bank out of trust.  Now that is the sort of thing that caused street riots in Argentina and forced the banks use iron plates to board up their facilities.

(posted by Roland Soong, 5/29/2003)