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Marketing Intelligence & Planning

The impact of moral equity, relativism and attitude on individuals digital piracy
behaviour in a developing country
Denni Arli Fandy Tjiptono Rebecca Porto
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Denni Arli Fandy Tjiptono Rebecca Porto , (2015),"The impact of moral equity, relativism and attitude
on individuals digital piracy behaviour in a developing country", Marketing Intelligence & Planning,
Vol. 33 Iss 3 pp. 348 - 365
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MIP
33,3
The impact of moral equity,
relativism and attitude on
individuals digital piracy
348 behaviour in a developing country
Received 12 September 2013
Downloaded by Panyapiwat Institute of Management, Mr Khoa Tran At 23:47 10 September 2016 (PT)

Revised 24 January 2014 Denni Arli


14 May 2014 Department of Marketing, Griffith Business School, Griffith University,
Accepted 18 July 2014
Nathan, Australia
Fandy Tjiptono
School of Business, Monash University, Sunway Campus,
Subang Jaya, Malaysia, and
Rebecca Porto
Faculty of Economics, Universitas Atma Jaya Yogyakarta,
Yogyakarta, Indonesia

Abstract
Purpose The purpose of this paper is to explore the impact of moral equity, relativism, and attitude
towards digital piracy behaviour in a developing country. End-user piracy is more difficult to detect than
commercial piracy. Thus, an effective strategy to combat piracy needs a comprehensive understanding of
both the supply and demand sides of piracy. The current study focuses on the demand side by investigating
the impact of moral equity, relativism, and attitude on consumer piracy behaviour in Indonesia.
Design/methodology/approach Using a convenient sample in Yogyakarta, Indonesia,
questionnaires were distributed in a large private university. In addition, through snowball sampling
techniques, the surveys were also distributed to other adults who live within a walking distance from the
campus. The data collection resulted in 222 usable surveys (a response rate of 68 per cent).
Findings In Indonesia, moral equity had a negative and significant impact on purchases of illegal
copies of music CDs and pirated software. Relativism affects the purchase of pirated software
positively, but its effect on purchases of illegal copies of CDs is insignificant. Attitude towards the act
was negatively impacted by moral equity for CDs and software. Relativism only significantly affects
the purchase of pirated software but in the opposite direction while it has failed to reach significance
for illegal music CD purchases. Attitude towards the software piracy and purchases of illegal copies of
music CDs positively affect consumers digital piracy behaviour. Finally, Indonesian consumers feel
more morally wrong to purchase illegal copies of CDs than to buy pirated software.
Practical implications In the context of Indonesia, higher moral equity has affected piracy
behaviour negatively. Therefore, efforts to reduce piracy should focus on highlighting the importance
of fairness and justice. One of the main drivers of digital piracy (e.g. buying, downloading, copying,
and sharing digital materials illegally) is overpriced products. It has led many Indonesians to believe
that it is acceptable to purchase pirated software and illegal copies of CDs. Nonetheless, if companies
are able to lower prices; thus make it affordable to consumers, consumers will perceive fairness
and justice in purchasing original copies of software and CDs.
Originality/value There are very limited studies investigating factors impacting the purchase
of pirated software and CDs in the developing countries specifically Indonesia, the fourth most
populous nation in the world and one of the biggest markets for counterfeit products. This is one
of first few studies exploring this issue in Indonesia.
Marketing Intelligence & Planning
Vol. 33 No. 3, 2015 Keywords Relativism, Developing countries, Emerging markets, Indonesia, Moral equity,
pp. 348-365 Piracy behaviour
Emerald Group Publishing Limited
0263-4503 Paper type Research paper
DOI 10.1108/MIP-09-2013-0149
Introduction Digital piracy
Digital piracy (buying, copying, downloading, and/or sharing illegal CDs and software) behaviour in a
has been an issue of concern for business. It is the greatest threat facing software and
music industry worldwide today (Chiou et al., 2005; Hennig-Thurau et al., 2007; Phau
developing
and Liang, 2012). Results of the Business Software Alliances (BSA) study in 2011 country
showed that 57 per cent of computer users admit to commit software piracy resulting in
US$64.4 billion of lost revenue. Another study revealed that people in the emerging 349
economies are the driving force for software piracy as it is significantly correlated to
GNP per capita and income inequality and varies by region (Husted, 2000). China and
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Vietnam has some of the highest (90 per cent) rates while the USA/Canada has one
of the lowest rates (23 per cent) of digital piracy.
In the music industry, International Federation of the Phonographic Industry (IFPI)
(2005) estimated that sales of pirated music CDs outnumbered original CDs in 2004,
with 31 countries had higher than 50 per cent music piracy rates, including Brazil
(52 per cent), China (85 per cent), India (56 per cent), Indonesia (80 per cent), Mexico
(60 per cent), Pakistan (59 per cent), and Paraguay (99 per cent). Moreover, Bender and
Wang (2009) found that for a 1 per cent increase in piracy rate, music sales decreased
by 0.6 per cent.
Digital piracy is also an issue of interest for academic research. Empirical studies
show that consumer ethics is a key factor influencing unethical behaviour, such as
software piracy and music piracy (Al-Rafee and Cronan, 2006; Cockrill and Goode,
2012; Cronan and Al-Rafee, 2008; Swinyard et al., 1990; Tan, 2002). There exists
a growing body of literature concerning digital piracy in the context of software
piracy (e.g. Aleassa et al., 2011; Cheng et al., 1997; Goles et al., 2008; Moores et al., 2009;
Moores and Esichaikul, 2011; Peace et al., 2003; Wang et al., 2005), music piracy (e.g.
Chiou et al., 2005; Kwong et al., 2003; Lysonski and Durvasula, 2008; McCorkle et al.,
2012; Morton and Koufteros, 2008; Robertson et al., 2012; Sinha and Mandel, 2008),
digital piracy in general (e.g. Al-Rafee and Cronan, 2006; Cockrill and Goode, 2012;
Cronan and Al-Rafee, 2008; Yoon, 2011), as well as both software and music piracy
(e.g. Shoham et al., 2008). However, most of the previous studies were conducted in the
context of developed countries, especially the USA. Wang et al. (2005, p. 340)
criticised that Eastern/Asian culture is blamed as one of the major causes for the
high piracy rates in Asian countries but research dedicated to understand the digital
piracy issue in the developing country context is limited. Aleassa et al. (2011, p. 663)
noted that surprisingly few studies have examined the determinants of software
piracy in developing countries. Similarly, Shoham et al. (2008, p. 206) called for
a digital piracy research in developing and less developed nations. To date, studies
of digital piracy behaviour focusing on Asian developing countries were limited to
a few countries, such as China (e.g. Kwong et al., 2003; Wang et al., 2005; Yoon, 2011),
Jordan (e.g. Aleassa et al., 2011), and Thailand (e.g. Moores and Esichaikul, 2011).
Therefore, a study of digital piracy behaviour in another developing nation is
needed for two main reasons. First, differences in national culture may influence
an individuals intention to pirate digital products (Yoon, 2011, p. 415). Second, digital
piracy poses a more serious problem in developing countries than in developed
countries (Aleassa et al., 2011).
Indonesia is an ideal research context for examining digital piracy behaviour in
a developing country. Indonesia is also one of the pirates havens where digital piracy is
widespread. A study by BSA Ninth Annual BSA Global Software (2011), for example,
revealed that software piracy rate in Indonesia reached 86 per cent with estimated loss
MIP of US$1.47 billion in 2011. The data indicate a significant increase of loss from time to
33,3 time. The figures from the previous years were 87 per cent software piracy rate and
US$1.32 billion loss in 2010; 86 per cent and US$0.89 billion in 2009; 85 per cent and US$0.54
billion in 2008; and 84 per cent piracy rate with estimated loss of US$0.41 billion in 2007.
Meanwhile, Indonesian music industry has suffered more, where it reported downloaded by
Griffith University at 20:46 23 March 2015 (PT) 3 an overall loss of 95 per cent of the market
350 due to piracy in all forms, i.e. physical, internet, and mobile (International Intellectual
Property Alliance (IIPA), 2012a). The Indonesian Record Industry Association (AIRI)
estimated that illegal downloads by about 6 million people in Indonesia cost record
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companies US$1.65 million a day (The Jakarta Post, 2013). Moreover, a survey by
Political and Economic Risk Consultancy (PERC) found that Indonesia scored worst in
Asia in terms of protecting intellectual property rights (Daily Indonesia, 2010). Within a
score between 0 (the best case) and 10 (the worst case), Indonesia was given a score of
8.50, while Vietnam was the second worst at 8.40, followed by China scored 7.90,
the Philippines 6.84, India 6.50, Thailand 6.17 and Malaysia 5.80. As a result, it is not
surprising that currently, China, Indonesia, Thailand, Malaysia, Philippines,
and Vietnam are on the priority watch list of copyright infringement (IIPA, 2012b).
Government and business have employed various methods to reduce software and
digital media piracy through preventive methods (i.e. by making it very hard to do
so or through deterrents methods) and by using threats of undesirable consequences
(Al-Rafee and Cronan, 2006; Gopal and Sanders, 1997). Nonetheless, the results appear
to be non-significant, digital piracy remains a serious problem. The losses due to
the piracy of digital products (i.e. software, music, videos, books, and pictures) keep
increasing (Chiou et al., 2005; IIPA, 2012a, b). Therefore, a better understanding
of consumer ethics and attitude towards digital piracy that affect piracy behaviour in
different contexts (i.e. Indonesia) could help explain the widespread of this behaviour.
In addition, there are very limited studies investigating factors influencing the purchase
of pirated software and illegal CDs in the eastern cultural contexts specifically Indonesia,
the fourth most populous nation and one of the biggest markets for counterfeit products
in the world. In addition, there are still very limited studies comparing consumers
piracy behaviour on CD and software. Music CDs are often linked with individual
artists where software is often affiliated with large corporations. Thus, the purpose of
this study is to explore the impact of ethical judgement (moral equity and relativism)
and attitude towards digital piracy on digital piracy behaviour towards CDs and
software in Indonesia by adapting Shoham et al.s (2008) study on digital piracy
behaviour. Since end-user piracy is more difficult to detect than commercial piracy
(Bender and Wang, 2009), an effective strategy to combat piracy needs a comprehensive
understanding of both the supply and demand sides of piracy. The current study focuses
on the demand side by investigating the impact of moral equity, relativism, and attitude
on consumer piracy behaviour in Indonesia.

Literature review
Various studies have indicated that higher level of moral judgement leads to
higher incidence of ethical behaviour (Forsyth and Scott, 1984; Tan, 2002). Most
studies suggest that ethical judgement is to be predictive of ethical intent including
software and music piracy behaviour (e.g. Cronan and Al-Rafee, 2008; Peace et al.,
2003; Shoham et al., 2008; Yoon, 2011). When explaining digital piracy behaviour,
Rest and Barnett (1986) suggest a theoretical model which stipulates that an individual
must: recognise the moral issue; make moral judgement; resolve to place moral concern;
and act on the moral concerns. Nonetheless, success in one stage does not imply Digital piracy
success in other stage ( Jones, 1991). Each individual will initially assess whether behaviour in a
a case such as digital piracy, theft or other case is considered a moral issue
or otherwise. This will eventually influence their moral judgement and subsequently
developing
their behaviour. country
Furthermore, Bender and Wang (2009) stated that digital piracy is a form of
end-user piracy, where individuals can obtain digital materials (e.g. music, software, 351
movies, pictures, e-books, and games) for their own personal enjoyment without
physical transactions. Software and music CDs are just two types of digital products,
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which refer to any products that can be digitalised. The advancement of information
technology has made such products significantly easier to distribute, especially in
online and mobile businesses. Consequently, digital products are vulnerable to pirate
via illegal downloading, copying, sharing, and transferring of files. Digital products
that have been pirated heavily include software (programs, games), audio products
(music, recorded speech, tutorials, conversations), video (movies, video clips, recorded
concerts, television shows), books (e-books, magazines, journal articles), and pictures
(images and photos).
Many studies have investigated whether particular types of digital piracy are
considered ethical or unethical (e.g. Glass and Wood, 1996; Harrington, 1989; Shim and
Taylor, 1993; Wagner and Sanders, 2001). Nonetheless, most of these studies were
conducted in the context of developed countries, such as Australia (Phau and Liang,
2012); Hong Kong (e.g. Chang, 1998); Singapore (e.g. Swinyard et al., 1990; Tan, 2002);
Israel (e.g. Shoham et al., 2008); German (Hennig-Thurau et al., 2007); Taiwan (e.g. Chiou
et al., 2005; Kuo and Hsu, 2001); UK (Cockrill and Goode, 2012), and USA (e.g. Al-Rafee
and Cronan, 2006; Cohen and Cornwell, 1989; Douglas et al., 2007; Gupta et al., 2004;
Logsdon et al., 1994; Sinha and Mandel, 2008; Simpson et al., 1994; Schepers, 2003;
Solomon and OBrien, 1990; Wagner and Sanders, 2001).
In regards to cross-national differences, Swinyard et al. (1990) found that Asians
(i.e. Singaporeans) appear to have more casual attitudes than Americans towards
software piracy. Americans based their moral decisions on the nature of the decision itself
while Singaporeans based their moral decision on the outcomes of the behaviour. Lysonski
and Durvasula (2008) also suggested that Asians might have a different value system in
regards to the use of copyrighted materials, such as software and music. Nevertheless, few
studies have analysed digital piracy in the context of developing countries where the acts
are more prevalence (e.g. China Kwong et al., 2003; Wang et al., 2005).

Conceptual framework and research hypotheses


Our conceptual framework is derived from Shoham et al. (2008; see Figure 1) and theory
of planned behaviour (Fishbein and Ajzen, 1975). The main premises suggested that
ethical judgement will negatively affect attitude and digital piracy behaviour. Ajzen
(2005) defined attitude towards digital piracy as an individuals favourable or
unfavourable evaluation regarding pirating any digital products (Ajzen, 2005; Yoon,
2011). Attitude is one of the major components of the theory of planned behaviour
(Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980). Studies have found support on the
significant impact of attitude on intention to pirate (e.g. Chang, 1998; Cronan and
Al-Rafee, 2008; Morton and Koufteros, 2008; Wang et al., 2005; Yoon, 2011). Furthermore,
two of the three ethical judgement dimensions by Reidenbach and Robin (1990) were
employed, i.e. moral equity and relativism. Moral equity reflects justice and deontological
values: fair, just, and morally right, while relativism concerns with the beliefs about what
MIP
33,3 H3 ()
Moral Equity

H1 ()
Purchase of illegal
352 Attitudes toward the H5 (+)
music CD or
act
pirated Software
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H2 ()

H4 ()
Relativism

Figure 1.
Conceptual model
Source: Adapted from Shoham et al. (2008)

is culturally and traditionally acceptable/unacceptable in a social system (Reidenbach and


Robin, 1990). Meanwhile, the last dimension, contractualism, covers the notions of
implied obligation, contracts, duties, and rules and consists of two measures (i.e. whether
an action violates/does not violate an unspoken promise and an unwritten contract)
(Reidenbach and Robin, 1990, p. 646). Therefore, contractualism is mostly applicable to
managerial decision making and is not relevant to a study of consumers perspective of
piracy behaviour (e.g. buying pirated products context) (Shoham et al., 2008).

Moral equity
Moral equity examines basic issues of right and wrong. It represents a universal ethics
construct and is the main evaluative criterion for ethical judgement (Maiga, 2005;
Reidenbach et al., 1991). Individuals assess equity through comparison of outcomes vs
inputs in their social exchanges (Oliver and Swan, 1989). If there is a discrepancy, the
individual will consider his or her exchanges to be inequitable. The main proposition of
equity theory is that individuals will attempt to maximise their outcomes where
outcomes equal rewards minus costs (Douglas et al., 2007). This is one of the factors
influencing consumers attitude and behaviour (Ajzen, 1982). Moral equity is essential
to understand the social behaviour surrounding digital piracy (Douglas et al., 2007).
Despite increased attention on digital piracy behaviour, studies on the ethicality of
digital piracy have produced mixed results. Cohen and Cornwell (1989) found that
among college students, software piracy was considered acceptable and normal.
Similarly, Solomon and OBrien (1990) found that students viewed pirating software
as socially and ethically acceptable. Lysonski and Durvasula (2008) reported that
94 per cent of their respondents admitted that they downloaded music without paying
for it. Digital piracy was also found to be common among 76.5 per cent of the
respondents in Cronan and Al-Rafees (2008) study. Simpson et al. (1994) found that
consumers decision to pirate software is made irrespective of their ethical perception.
Many other studies show that moral reasoning has weak relationship with digital
piracy (e.g. Al-Rafee and Cronan, 2006; Glass and Wood, 1996; Logsdon et al., 1994;
Wang et al., 2005). Many consumers who bought illegal copies of CDs often deny that
they are doing anything illegal and blame music industry of charging high prices
(Kwong et al., 2003). They believed that they can save money by pirating digital Digital piracy
products and they did not have any fears when doing it (Al-Rafee and Cronan, 2006). behaviour in a
In contrast, recent studies indicate that moral judgement is a significant negative predictor
of digital piracy behaviour (e.g. Cronan and Al-Rafee, 2008; Douglas et al., 2007; Shoham
developing
et al., 2008; Yoon, 2011). It shows that in the last few years, increased campaigns against country
software piracy and illegal CDs have improved consumers awareness towards piracy
behaviour. Therefore, the following hypotheses are put forward[1]: 353
H1. The higher the degree of moral equity among consumers, the lesser will
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be tendency to form a positive attitude towards digital piracy behaviour for:


(a) CD and (b) software.
H2. The higher the degree of moral equity among consumers, the lesser will
be tendency to commit digital piracy behaviour for: (a) CD and (b) software.
Relativism
The relativism concept suggests that all normative beliefs are a function of a culture
or individual and therefore no universal ethical rules exist that apply to everyone
(Reidenbach et al., 1991, p. 90). Every individual devises his/her own set of moral
standards based on his/her own culture. What is deemed ethical in one culture may be
judged unethical in another culture. Studies found empirical support for the negative
impacts of relativism on attitude towards digital piracy act and piracy behaviour
(Aleassa et al., 2011; Chaudhry and Stephen, 2011; Shoham et al., 2008; Vitell and
Paolillo, 2003). In addition, various studies have explored the ethical beliefs of
consumers within a country or culture, including Austria (Rawwas et al., 1996),
Belgium (Van Kenhove et al., 2001), Egypt (Al-Khatib et al., 1995), Romania (Al-Khatib
et al., 2004), and the USA (Vitell et al., 1991). In general, these studies show that an
individuals perception of ethically questionable actions is affected by their ethical
ideology, where relativism correlates with a lower level of ethicality (Lu and Lu, 2010;
Rawwas et al., 1994). Hence, the following hypotheses can be formulated:
H3. The higher the degree of relativism among consumers, the lesser will
be tendency to form a positive attitude towards digital piracy behaviour for:
(a) CD and (b) software.
H4. The higher the degree of relativism among consumers, the lesser will be
tendency to commit digital piracy behaviour for: (a) CD and (b) software.
Attitude towards digital piracy behaviour
Attitude towards digital piracy behaviour refers to the degree to which a person has
a favourable or unfavourable evaluation towards software piracy and purchases of illegal
copies of music CDs. According to theory of reasoned action and its extension theory of
planned behaviour, attitude towards the act is the major determinant of behavioural
intention (Ajzen, 2005; Ajzen and Fishbein, 1980; Fishbein and Ajzen, 1975). A positive
attitude towards software and music piracy will lead to the engagement in the digital
piracy behaviour, and vice versa. Empirical studies have found support for positive causal
relationship between attitude towards digital piracy act and digital piracy behaviour
(e.g. Cronan and Al-Rafee, 2008; Morton and Koufteros, 2008; Peace et al., 2003; Shoham
et al., 2008; Wang et al., 2005; Yoon, 2011). Consequently, we hypothesise that:
H5. The more positive consumers attitude towards digital piracy behaviour, the higher
will be tendency to commit digital piracy behaviour for: (a) CD and (b) software.
MIP Methodology
33,3 Research context
Indonesia was chosen as a good representation of a developing country. Indonesia is
in the top three countries with the highest piracy rates Venezuela at 88 per cent,
Indonesia at 86 per cent and China at 77 per cent (BSA, 2011). Moreover, Indonesia is
the fourth most populous nation in the world with around 240 million people and the
354 largest country in South East Asia (Population Reference Bureau, 2011). Indonesian
economy is growing faster than other major emerging-market economies except for
China with 6.5 per cent growth in 2011 (Reuters, 2012). In regards to software piracy
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and illegal copies of CDs, Indonesia is experiencing declining CD sales and significant
piracy problems. The industry loss up to US$1.47 billion in 2011 with 86 per cent
of software used in Indonesia is pirated (BSA, 2011). While in the music industry,
the overall loss is 95 per cent of the market due to piracy of all kinds (IIPA, 2012a).
Access to pirated software and illegal copies of CDs remains unstoppable through
kiosks and malls throughout major cities in Indonesia (IIPA, 2012a). The situation is
worsening due to the lack of transparency in the Indonesian court system and minimal
efforts by the government to combat piracy. Indonesia is unique due to the widespread
of corruptions throughout the nations government and businesses. Moores (2008)
assumes that software piracy is an example of corruption and studies have found
a significant relationship between cultures and corruption. Therefore, high digital
piracy rate might be impacted by its culture. In addition, Indonesian is also one of
the most religious nations (i.e. 86.1 per cent Muslim, 8.7 per cent Christian/Catholic,
1.8 per cent Hindu, and 3.4 per cent other). Finally, Indonesian consumers perceived
original software and CDs as expensive and unaffordable, thus justifying them to
purchase pirated software and illegal copies of CDs. With less than US$1 a consumer
can buy a pirated CD, DVD, or MP3 of a compilation of several latest albums or
a movie. For pirated games and software, the prices range from US$2 for each CD
to US$4 per DVD. In addition, there are many CD/DVD rentals in most cities across
the country renting a movie, game, or software CD for less than US$0.50 per day. Some
rentals even promote renting 3 CDs, bonus 1 CD rental free of charge. The size of its
population and the prevalence of pirated software and other digital products makes
this study unique.

Survey stimuli
Survey research using student samples have been employed widely in research on
digital piracy (e.g. Cheng et al., 1997; Cronan and Al-Rafee, 2007; Goles et al., 2008;
Logsdon et al., 1994; Lysonski and Durvasula, 2008; Simpson et al., 1994; Yoon, 2011;
Wang et al., 2005). Students are important segment for digital piracy since it is
prevalent in academia (Wang et al., 2005; Cheng et al., 1997). Thus, survey research was
deemed appropriate to investigate this issue.
Software piracy and illegal CDs were chosen as the survey stimuli for three main
reasons. First, although both cases are similar in some aspects, Morton and Koufteros
(2008) argued that they are significantly different issues. The lower initial cost of
producing music than producing software may make some consumers to perceive that
music piracy is a less serious offense (Morton and Koufteros, 2008). The Indonesian
context, software programs are mostly imported, while there are some local artists for
music CDs. Second, previous studies have investigated both categories, either alone
(e.g. Aleassa et al., 2011; Bender and Wang, 2009; Lysonski and Durvasula, 2008;
McCorkle et al., 2012; Morton and Koufteros, 2008; Robertson et al., 2012) or together
(e.g. Shoham et al., 2008). Third, as discussed earlier in the Research context section,
Digital piracy
both products have been heavily pirated in Indonesia. behaviour in a
developing
Survey development
To assess the impact of moral equity, relativism and attitude on individuals digital
country
piracy behaviour, all the scales used in Shoham et al. (2008) were also employed in
the present study. Moral equity was measured using five seven-point relevant items 355
by Reidenbach and Robin (1990) which consist of three items for moral equity (i.e. fair,
just, and morally right) and two items for relativism (culturally acceptable and
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traditionally acceptable). The current study conducted exploratory factor analysis


on all scales measures to permit identification and removal of items with poor reliability
(see Table I). Principle component with varimax rotation was used on the Ethics
scale which consist of five items (i.e. fair, just, culturally acceptable, traditionally
acceptable, and morally right). The results reveal that one of the items measuring
relativism traditionally acceptable for both CDs and software was loaded poorly
with the other item. The factor loading was 0.45, below the 0.5 criterion (Bagozzi and
Yi, 1988). The item was considered to be conceptually distinct from the remaining item
measuring relativism and was therefore removed from further analysis. As a result,
relativism was measured with a single item. The Cronbachs s for moral equity were
0.70 and 0.74 for CDs and software, respectively.
Moreover, varimax rotation was also used to explore attitude toward the act.
It was measured using five seven-point items by Bagozzi et al. (1992) and Sawyer and
Howard (1991). All factors demonstrate acceptable level of consistency. The scales
asked bad-good, unfavourable-favourable, negative-positive, unpleasant-pleasant,

Scales CDa Softa CDb Softb

Ethics (moral equity items 1; 2; 5 and relativism items 3;4) (Buying_______is)


1. Fair 1 : 2 : 3 : 4 : 5 : 6 : 7 Unfair 0.770 0.791 0.596 0.507
2. Just 1 : 2 : 3 : 4 : 5 : 6 : 7 Unjust 0.734 0.776 0.824 0.999
3. Culturally acceptable 1 : 2 : 3 : 4 : 5 : 6 : 7 Culturally unacceptable 0.793 0.830 na na
4. Traditionally acceptable 1 : 2 : 3 : 4 : 5 : 6 : 7 Traditionally unacceptable
5. Morally right 1 : 2 : 3 : 4 : 5 : 6 : 7 Not morally right 0.681 0.711 0.673 0.676
Attitude towards the act
(Please signify your overall feelings or impressions about using______)
1. Bad 1 : 2 : 3 : 4 : 5 : 6 : 7 Good 0.775 0.828 0.649 0.766
2. Unsatisfactory 1 : 2 : 3 : 4 : 5 : 6 : 7 Satisfactory 0.771 0.885 0.670 0.862
3. Unfavourable 1 : 2 : 3 : 4 : 5 : 6 : 7 Favourable 0.842 0.865 0.841 0.837
4. Negative 1 : 2 : 3 : 4 : 5 : 6 : 7 Positive 0.790 0.795 0.704 0.720
5. Unpleasant 1 : 2 : 3 : 4 : 5 : 6 : 7 Pleasant 0.881 0.895 0.900 0.881
Piracy behaviour
1. How often do you buy a non-original_______(1 very rarely to 7 very often)
2. Compared to other people, you buy________(1 much less to 7 much more)
3. Of your purchases of____, non-original____constitute (1 a very small share to 7 a very large
share) Table I.
4. How many non-original______have you purchased (0; 1-3; 4-6; 7-9; 10-12; 13-15; over 15) Scales and items
Notes: , Item dropped. aExploratory factor analysis, principal component analysis, varimax rotation; used (ethics, attitude
b
confirmatory factor analysis first-order measurement model standardised regression weights towards the act and
Source: Shoham et al. (2008) piracy behaviour)
MIP and unsatisfactory-satisfactory in regards to illegally copying software and buying
33,3 pirated music CDs (see Table I for scales and items used). The questionnaire also
included two sets of items for CDs and software. The Cronbachs s were 0.87 (CDs)
and 0.90 (software). Finally, four behavioural items from Shoham et al. (2008) were used
for each product context. The items measure frequency, behaviour relative to others,
ratio of unethical purchases/copying out of total ownership of the products and total
356 quantity of ethical products purchased over the last year. The Cronbachs s of digital
piracy behaviour were 0.83 (CDs) and 0.89 (software). The scales were all translated
from English to Indonesia and then back translated to ensure their consistency.
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Data collection and sample characteristics


Using a convenient sample in Yogyakarta, Indonesia, 325 questionnaires were
distributed in a large private university. In addition, through snowball sampling,
the surveys were also distributed to other adults who live within a walking distance
from the campus. Incomplete responses were removed, resulted in 222 usable surveys
(a response rate of 68 per cent). In the sample, 53 per cent of the respondents are male
and 47 per cent are female. The age distributions are as follows: 22 per cent are less
than 20 years old; 65 per cent are between 21 and 31 years old; 11 per cent are between
31 and 41 years old and 2 per cent are over 50 years old.

Hypotheses testing
Structural equation modelling using AMOS 19 was used to analyse the data.
The two-step procedure was followed whereby a single confirmatory factor analysis
was estimated including all constructs before estimating the structural model
(Anderson and Gerbing, 1988). The underlying structure of the items retained from
the EFA was then verified with the more rigorous CFA approach (Cleveland and
Chang, 2009) (see Table I).
The combined model for CDs resulted in a 2 143.297 (60 df; p o 0.000);
/df 2.38; CFI 0.93; NFI 0.89; RFI 0.85; TLI 0.91; RMSEA 0.07. The model
2

for software resulted in a 2 125.084 (60 df; p o 0.000); 2/df 2.08; CFI 0.96;
NFI 0.93; RFI 0.90; TLI 0.95; RMSEA 0.07.
Moral equity explained 8 and 17 per cent of the variances in attitudes towards
the act of using illegal copies of music and software in Indonesia, much lower than
34.4 and 29.8 per cent of the Israeli study (Shoham et al., 2008). Combined with attitude
towards the act, they explained 28 and 49 per cent of the variances in purchasing illegal
copies of music CDs and illegally copying software, respectively (see Figure 2).
H1 proposed that moral equity will negatively affect consumers attitude towards
software piracy and purchases of illegal copies of music CDs. The data supported H1a
and H1b, which show that moral equity had a negative and significant impact
on consumer attitudes towards purchases of illegal copies of music CDs ( 0.36)
and pirated software ( 0.47).
H2 suggests that moral equity will negatively affect consumers digital piracy
behaviour. The data supported the H2a and H2b. Digital piracy behaviour was
negatively influenced by moral equity for CDs ( 0.36) and software ( 0.74).
It shows the more consumers perceive digital piracy as unfair, unjust, and morally
wrong, the less likely those consumers commit digital piracy.
However, relativism has no significant impacts on both consumer attitudes towards
purchases of illegal copies of CDs and pirated software. Thus, H3a and H3b are not
supported. The findings are in contrast with Shoham et al.s (2008) results which
Digital piracy
0.36 behaviour in a
Moral Equity 0.74
developing
country
0.37 Purchase of illegal
0.47 Attitudes toward the
music CD or
act 0.30 pirated Software 357
R 2 CD = 0.08 0.38
R 2 Software = 0.17 R 2 CD = 0.28
R 2 Software = 0.49
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0.11
0.07

0.01
Relativism 0.40
Figure 2.
SEM model for
Notes: Coefficients for CDs on top and for software at the bottom. Fit statistic CDs: 2 = illegal music CDs
143.297 (60 df; p < 0.000); 2 /df = 2.38; CFI=0.93; NFI=0.89; RFI=0.85; TLI=0.91; and software piracy
(standardised
RMSEA=0.07. Software: 2 = 125.084 (60 df; p < 0.000); 2 /df=2.08; CFI=0.96; NFI=0.93; coefficients)
RFI=0.90; TLI=0.95; RMSEA=0.07

found that both morality and relativism have negative impacts on attitude towards
the act.
Furthermore, H4 proposed that relativism will negatively affect consumers digital
piracy behaviour. The findings only support H4b. Relativism only significantly affects
downloading or using pirated software but in the opposite direction ( 0.40).
However, it has failed to reach significance for H4a, in regards to buying pirated music
CDs. Although the insignificant effect of relativism on digital piracy behaviour in
music CDs was also found in Shoham et al.s (2008) study, the impact on digital piracy
behaviour in the context of software is inconsistent.
Finally, H5 stated that attitude towards software piracy and purchases of illegal
copies of music CDs will positively affect consumers digital piracy behaviour of both
products. The findings supported the H5a for CDs ( 0.29) and H5b for software
( 0.38) (see Figure 2 and Table II). The findings support the theory of planned
behaviour. The attitude towards behaviour, either positive or negative, is a function of
the beliefs concerning the perceived consequences of performing a specific action and

Estimate po Estimate po
(music (one-tailed (pirated (one-tailed
Path CDs) tests) software) test)

Moral equitybehaviour 0.36* 0.02 0.74* 0.01


Relativismbehaviour 0.07 0.96 0.40* 0.01
Moral equityattitude towards the act 0.36* 0.02 0.47* 0.01 Table II.
Relativismattitude towards the act 0.11 0.40 0.07 0.65 SEM results
Attitude towards the actbehaviour 0.29* 0.01 0.38* 0.01 standardised
Note: *Significant paths coefficients
MIP a personal evaluation of each of those consequences (Ajzen, 2001; Godin, 1993).
33,3 Consumers with favourable attitude towards digital piracy are more likely to commit
digital piracy. Therefore, focusing on consumers attitude towards digital piracy will
be an important task for governments and companies.
This study also explores whether the relationships among the models constructs
will differ for the two products (Shoham et al.s, 2008). The base model allowed all
358 structural relationships to differ for the two products (2 143.297, 60 df). This model
was also compared to one where relationships were constrained to equality. The 2
differences (2 24.042, 6 df) were significant. Finally, we also examine the overall
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mean values of these constructs in order to compare differences between the two
products. The mean values for moral equity are MCD 4.10 vs MSoftware 3.93
(p o 0.00), indicating that consumers consider buying illegal copies of CDs as more
unfair/unjust and not morally right compared to downloading, using or buying pirated
software. The mean values of relativism were MCD 4.03 vs MSoftware 3.83 (p o 0.00),
also indicating that buying illegal copies of CDs as unacceptable/not morally right
compared to purchasing pirated software. The mean values of attitude towards the act
were MCD 3.79 vs MSoftware 4.11 (p o 0.00) which show that buying illegal copies of
CDs are perceived as more negative than buying pirated software and finally, the mean
values of piracy behaviour were MCD 3.19 vs MSoftware 3.53 (p o 0.00). Overall,
buying pirated software is considered morally and ethically more acceptable than
buying illegal CDs.

Discussion
As previously mentioned, Bender and Wang (2009) stated that digital piracy is a form
of end-user piracy for the users own personal enjoyment without physical transactions
where end-user piracy is more difficult to detect than commercial piracy. Thus, an
effective strategy to combat piracy needs a comprehensive understanding of both the
supply and demand sides of piracy. By focusing on the demand side, this study aimed
at investigating the impact of moral equity, relativism, and attitude on consumer piracy
behaviour in Indonesia.
The findings of this study partially support Shoham et al.s (2008) study. Moral
equity negatively affects attitude towards the acts and attitude towards the acts
positively affects digital piracy behaviour. Moreover, the current study found that
relativism did not significantly affect attitude which in contrast to Shoham et al.s
(2008) study. They found that relativism negatively affect attitude towards the act.
In the context of Indonesia, moral equity has affected digital piracy behaviour
negatively. Therefore, efforts to reduce piracy should focus on highlighting the importance
of fairness and justice. A study shows that one of the main drivers of software piracy
in digital products is overpricing (Al-Rafee and Cronan, 2006). This condition creates
perceptions of inequity and unfair among consumers, thus justifying them in purchasing
pirated software and illegal copies of CDs. The findings support Rest and Barnetts (1986)
theoretical framework which suggests that an individual will recognise the moral issue,
make moral judgement, establish moral intent and implement moral actions. When
consumers see that digital piracy is a moral issue, consumer will make an appropriate
moral judgement. Thus, government and music industry should strongly introduce stricter
law on digital piracy. Moreover, to improve the issue of fairness, managers also need
to consider lowering the price and make it more affordable to consumers. This in turn will
make consumers perceive fairness and justice in purchasing original copies of software
and CDs. Lower prices may also make potential and current pirates re-examine the costs
and benefits of committing digital piracy while higher software prices will make piracy Digital piracy
more desirable (Cheng and Sims, 1997). In Indonesia, the price of a music CD for local artists behaviour in a
is far cheaper than one for foreign musicians (e.g. American, Chinese, Korean, and others)
artists. The producers of local artists music CDs have started to distribute their products in
developing
non-conventional outlets, such as minimarkets (e.g. a significant discount of music CD country
prices was offered for purchases of products at a particular value) and fast-food restaurants
(e.g. music CDs are bundled with particular food packages at Kentucky Fried Chicken 359
outlets). This situation may explain why Indonesian consumers are more willing to pirate
software than music CDs.
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The present study also found that relativism did not affect digital piracy behaviour.
The insignificant impact of relativism may indicate that software piracy and buying
illegal copies of CDs are still considered acceptable practices in Indonesia. Average
Indonesians tend to believe that it is legal to buy, but illegal to sell pirated products.
While cases of pirated product sellers being caught by police can be found, to date there
has not been a case of a consumer being prosecuted for buying pirated goods
in Indonesia. It may make Indonesian consumers do not have any fears when they buy
pirated software and music CDs. This situation can be explained by the fact that
generally in Indonesian culture, the ethical criterion is not what is right and wrong,
but what is appropriate and inappropriate (Widjaja, 2013, p. 20). Its collectivism
cultural characteristic may explain why many Indonesian consumers justify their
digital piracy behaviour by looking at what other consumers do. Thus, as previously
mentioned, tougher laws on digital piracy and consistent law enforcement should
be introduced to curb digital piracy in Indonesia.
Nonetheless, the current study also indicated that Indonesian consumers feel more
morally wrong to purchase illegal copies of CDs than purchasing pirated software.
One of the possible explanations is that consumers can identify the individuals
(i.e. artists) who are being disadvantaged, thus increasing consumers moral equity
when they purchase music CDs. Consequently, it will affect digital piracy behaviour
negatively. However, with the case of software, consumers are dealing with large
corporations (e.g. Microsoft, Adobe, and the likes), thus reducing personal connection
with the product being pirated. As a consequence, consumers are feeling less guilty.
Therefore, in regards to music CDs, managers should continually promote individuals
or artists who are being disadvantaged, which in turn might increase moral equity
of consumers. In the case of software industry, the consequences of software piracy to
individuals or society should be enhanced instead of using a deterrence approach.
Through various media, government and companies should promote and display the
consequences of software piracy such as job losses, loss on revenues, and poor image
of Indonesia to Indonesian consumers. This effort will increase the notions of fairness
and justice in the mind of consumers. Moreover, companies should continue educating
public on why some of the prices of these digital products are the way they are now.
Whether the existence of local products (e.g. software products sold in Indonesia
are almost exclusively imported products) affects consumers moral judgement and
willingness to pirate is worth further research.
Furthermore, consistent with previous studies (e.g. Cronan and Al-Rafee, 2008;
Morton and Koufteros, 2008; Peace et al., 2003; Shoham et al., 2008; Wang et al., 2005;
Yoon, 2011), the present study found a positive effect of attitude towards the act on
digital piracy behaviour. In order to curb piracy effectively, integrated efforts of all
relevant parties, such as government, industry players, educators, and general public,
are essential. Law enforcement and stricter ethical codes of conduct in regards to
MIP intellectual property rights protection have to be consistently implemented. Simpson
33,3 et al. (1994) found that simply teaching ethical consideration is insufficient to change
individuals behaviour. There is a need to adopt strong software copying policies which
may impede digital piracy. When applied, this may contribute to the development of
negative attitudes and high levels of guilt towards digital piracy among consumers,
which in turn will reduce their intention to pirate digital products. Finally, this study
360 suggests cross-cultural differences on peoples attitude and behaviour towards
digital piracy. The rate on increase and decline of software piracy is determined
by cultural factors. Studies have shown significant relationship between national
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cultural variables and piracy behaviour (Gopal et al., 2006; Moores, 2008). Thus, new
enforcement approach to combat digital piracy may be tailored according to each
national culture.

Limitations and direction for future research


We recognise that certain features of the present study may impose limits on the
generalisability of its findings. For example, similar to other ethical studies that used
student populations (e.g. Al-Rafee and Cronan, 2006; Burnett et al., 2003; Cronan and
Al-Rafee, 2008; Nevins et al., 2007; Wang et al., 2005), our samples derived from mostly
younger populations in one city in Indonesia. Future research should obtain data from
other demographic categories (i.e. age, income, and gender) in other cities in Indonesia,
which may produce more generalisable results. Studies show that gender may
influence ethical decision making (Borkowski and Ugras, 1998; Reiss and Mitra, 1998).
For instance, Cronan and Al-Rafee (2008) reported that the proportion of male students
who have pirated software was higher than female counterparts. In addition, the
present study did not look at the level religiosity as religion is integral part of most
individuals in Indonesia. Religiosity has been shown to influence peoples ethical
behaviour (e.g. Arli and Tjiptono, 2014; Vitell et al., 2005, 2006). Future research may
investigate this issue in details. Finally, our study shows differences towards digital
piracy between CDs and software, future research may investigate further on the
differences between piracy for end-user purposes vis--vis commercial uses. This effort
will assist government and corporate in developing a more detail strategy to combat
digital piracy in many parts of the world (see footnote 1).

Note
1. We thank an anonymous reviewer for this suggestion.

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Corresponding author
Dr Denni Arli can be contacted at: d.arli@griffith.edu.au

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