International Marketing Ethics: mation jarketing Problems Encountered by Ethics Australian Firms Robert W. Armstrong fe Murdoch University, Western Australia, Bruce W. Stening University of Western Australia, John K. Ryans, Larry Marks and Michael Mayo Kent State University, Ohio, USA Introduction Interest in the ethical issues pertaining to international business has grown enormously over the past 15 years or so. At one level this has probably developed ‘out of a more general concern with ethics and business ethics brought on by a number of well-publicised incidents or events in which ethics was a central issue: sch “incidents'’ would include Watergate, the Vietnam War, and the insider trading scandals on Wall Street. Specifically in the international business field, too, the infant-formula controversy, a variety of cases related to the marketing of drugs in third world countries, and the Bhopal disaster, come immediately to mind as issues which have focused more attention on ethics. The objective of this article is to explore the ethical problems encountered in the international marketing activities of a representative sample of Australian firms engaged in international business, and to compare these findings with an American sample. The study seeks to answer the following research questions: (1) What are the major ethical problems facing Australian international business managers? (2) How do the major ethical problems compare with those faced by American international business managers? (3) Is there a significant difference between Australian and American ‘managers in terms of their perceptions of ethical problems? (4) Is there a significant difference between Australian and American ‘managers on each individual item of the “attitudes towards ethical issues” scale? ‘The present research is envisaged as the pilot stage of a project of several stages, one of the central purposes of this first stage being to classify the principal ethical dilemmas faced by Australian firms. ‘Much of the research on marketing ethics is concerned with responsibilities and duties of managers or the perception of the ethicality of particular marketingInternational Marketing Ethics practices|l|. Other than the study conducted by Chonko and Hunt, there has been a lack of research directed at the determination of major ethical problems Murphy and Laczniak(2} reviewed the research on marketing ethics, and concluded that the methods of most researchers are without theoretical foundation and creative methodology. Vitell and Grove(3| observed that, as a business discipline, marketing is particularly vulnerable to criticism of ethical practices. They posit that the sub- disciplines of marketing (Le. advertising, personal selling, pricing, marketing research and international marketing) offer extensive opportunities for unethical behaviour. Research identifying the ethical problems relating to international ‘marketing is needed, yet very litle currently exists, as observed by Vogell4]. Ethical issues of international marketing have been of great significance in recent years, owing to publicity and controversy generated from certain international events and legislation occurring in the 1970s and 1980s. The case of Nestlé’s infant formula sales to Third World countries provides a pertinent example. The company has been the subject of an organised boycott {rom 1977 to 1984, Nestlé’s behaviour initiated a subsequent World Health Organisation (WHO) code on the topic, and the formation of the International Council of Infant Food. In the late 1970s, the SEC was involved in litigation with several large US companies for alleged bribery overseas. Literature Review Ethics Research Over the history of the study of ethics, Solomon|5] claims one paradigm has motivated philosophers — the idea that there exists a correct theory of ethics — that the goals, ideals, rules and principles governing behaviour do, in fact, form a coherent and comprehensible system, which itis the purpose of ethics to understand. He states that itis not possible to say anything at all about ethics and not betray one's own views and perspective. ‘The proposition that ethics and morality bear some sort of relationship is acknowledged; however disagreement exists as to the nature of this relationship. Thilly(6} posits that the subject matter of ethics is morality, while Solomon|5] disagrees, claiming it is as broad-ranging as human behaviour itself, and that ‘morality is a subset of ethical rules that are of particular importance, consisting of the most basic and inviolable rules of society. Barry{7] states that the study of ethics involves a search for what constitutes morally right human conduct, though he claims it is more accurate to use morals to refer to conduct itself and ethics to refer to the study of moral conduct or to the code it follows. With regard to moral conduct, Rogers|8, p. 1] postulates that ethics “investigates the general principles for determining the true worth of the ultimate ends of human conduct” and it is distinguished from instinctive action in that one of its causes is ‘the preconception of an end desired by an agent”|8, p. 12). He further states that ethical problems arise naturally when one questions the reasons for undertaking any enquiry, or for performing any deliberate action.Business and Marketing Ethics Research In an early study of business ethics, Baumhart|9] catalogued the salient ethical problems perceived by business managers: gifts, gratuities, bribes and ‘‘call girls”, price discrimination and unfair pricing, dishonest advertising, unfair competitive practices, cheating customers, unfair credit practices, overselling, price collusion by competitors, dishonesty in making a contract, and unfairness to employees and prejudice in hiring]1}. In a later study, Baumhart|10] further examined corporate ethics by surveying 1,710 business people concerning respondents’ reactions to ethical scenarios. In 1977, Brenner and Molander|11] replicated Baumhart's study; they also investigated social responsibilty issues. Carroll{12] questioned managers across organisational levels to determine their attitudes about ten propositions on general business ethics. Bowman(13| utilised Carrols propositions in a public sector study and compared results. Newstrom and Ruch(14] performed a similar study that surveyed managers’ attitudes towards 17 potentially questionable behaviours: e.g. padding expense accounts, divulging confidential information, concealing errors. In studies related directly to marketing, Crawford|15] presented 20 scenarios associated with marketing research practices such as: use of hidden tape recorders, use of fictitious company names, distortions by marketing vice- presidents, and use of one-way mirrors. Akaah and Riordan{16| replicated Crawford's study to find whether significant changes in ethical judgement have occurred since that original study. The following researchers have also examined the ethics of market researchers: Bezilla et al |17|; Ferrell and Skinner(18]; Hunt et al,(19); McDaniel et al.(20); Schneider and Holm|21|; and Tybout and Zaltman|22} Dornoff and Tankersley[23] studied differences between consumers and retail, specialty, discount and department store managers. They also used a scenario approach that utilised 14 situations containing potential buyer-seller conflict. Levy and Dubinsky/24) did a related study where they examined a methodology for studying retail salespeople’s ethical perceptions, to help retail managers in developing policies to address salespeople’s ethical concern: Ferrell and Weaver|25] studied the ethical perceptions of marketing managers, using the instrument developed by Newstrom and Ruch(14]. Again they asked respondents to classify 17 behavioural situations in terms of six response areas. Ferrell and Weaver added corporate policies as a sixth response area. In studies related to the perceptions of purchasing managers, Rudelius and Bucholz|26] asked purchasing managers to react to 13 scenarios. ‘These were developed through personal interviews with purchasing agents. An adapted survey was used to assess perceptions of industrial buyers by Dubinsky et al.|27} Dubinsky and Gwin|28) compared industrial buyers and sellers, using the studies, of Rudelius and Bucholz[26), and Dubinsky ef al.[27|, Other marketing studies have dealt with advertising ethics (Krugman and Ferrell 29)) and ethics research on students’ perceptions (e.g. Hawkins and Cocanougher!30|, Goodman and Crawford[3l|, and Dubinsky and Rudelius|32)). International Marketing EthicsInternational Marketing Ethics A summary of the methodologies used in the preceding research reveals that most of the studies involve the use of scenarios as research instruments, and relate to the following marketing sub-disciplines: market research, retail management, purchasing management, sales management, industrial marketing, and marketing education (student attitudes). Few studies relate to international marketing, where unethical practices have been most prominent in terms of legislation and publicity. Most of the research has been largely directed towards American firms engaged in international business. One cannot assume that the same issues are relevant in the same way, or with the same magnitude, for firms from other countries. Research Method The sample frame for the study comprised 150 firms randomly drawn from a list of the 500 largest Australian exporters, a group that also encompassed firms with direct foreign investment in manufacturing. The target person within each firm was the executive responsible for international marketing. Thirty- eight usable questionnaires were returned, representing a response rate of 25 per cent. Ina similar study conducted in the United States, a survey of all US District Export Council practitioner members (DECs) was conducted during the summer and fall of 1988. The mailing list used was the US Department of Commerce’s (DOC) 1988 listing of all DEC members. Questionnaires were sent to some ‘790 individuals, and responses were received from 207, or 26.2 per cent. This response rate is essentially identical to the 25 per cent response rate of the Australian sample. The survey used was analogous to that used in the Australian study, except for changes in language and terms more appropriate to Australian business persons. ‘The research instrument comprised a questionnaire divided into three sections, seeking information on, respectively: the nature of the international marketing activities of the firm; the three most difficult ethical problems facing the executive (an open-ended question seeking a description and a ranking), and the executive's attitudes towards seven Likert-scaled items relating to ethical practices; and general background on the executives themselves and their firms. The attitudes of CEOs towards ethical issues were sought concerning top management actions related to unethical behaviour, and to the extent of ethical problems. The instrument used for this determination was an adaptation of the instrument development by Chonko and Hunt{l], who used three questions for the management actions measure; the authors dropped the third question related to corporate gain. The extent of ethical problems questions were also adapted to conform with the international arena, with three of the questions being removed owing to their lack of relevancy to international marketing. Face validity for the instrument was determined through an expert panel at Kent State University. The Australian “attitudes towards ethical issues” scale was tested for reliability, using the Chronbach’s Alpha test of internal consistency. ‘The instrument yielded an alpha coefficient of 0.98.‘The questionnaires were adressed to the executives by name. A reply paid envelope was enclosed for return of the completed questionnaire. Results Australian and American Sample Characteristics ‘As explained above, it was intended that the study would survey a cross-section of Australian and American firms with international business operations. The way the respondent firms provided this representation is conveyed in several facts. In the first place, they covered a wide range of industrial areas from ‘manufacturing to computer firms. In the American sample, the most prominent firms represented were industrial communications equipment manufacturers followed by manufacturers involved in chemical/luid processing, agricultural! environmental control, and aviation/automobile/transportation. By Australian standards the size of the firms represented in the study was large, total annual sales averaging $417 million; the range though was very wide, the smallest firm having sales of only $500,000, whilst the largest had sales of $6 billion. Within the American sample, the average firm size was much smaller, with annual sales cof $643,000. On average, the Australian firms had a major marketing commitment in 16 countries (range, 1 to 100 countries), and production facilities at four overseas sites. The American firms had a much larger marketing commitment in foreign countries with a mean of 30.1, and 34 production sites on average. The personal demographics of the Australian sample included executives who were exclusively male. On average they had 13 years of international experience, though here too the range was wide (1 to 30 years). The majority (60 per cent) were graduates, and only 16 per cent did not have any tertiary education. The American executives were 94.2 per cent male and 58 per cent female. The mean international experience was 18.1 years. The majority of American respondents (30.8 per cent) had some graduate work, with a bachelors degree (267 per cent) being the next leading category. Research Question 1 What are the major ethical problems facing Australian international business managers? Managers were asked to respond to the following open-ended question: In all professions (e.g. law, medicine, education, accounting, advertising) decision makers are exposed to at least some situations that pose moral or ethical problems. In the case of business executives, who may become involved in different cultures and environments, the potential for such problems undoubtedly increases. Would you please describe the aspect(s) of international marketing that. pose(s) the most difficult ethical or moral problem(s) to US (Australian) executives like yourself. The respondents were given three positions on the survey to list their responses. ‘The most frequent ethical problem faced by Australian international business managers was bribery (35 per cent). Cultural differences followed, and were International Marketing BthiesInternational __ mentioned on ten occasions (20 per cent). Pricing practices (12 per cent) were Marketing the third ranked ethical problem. Gifts/favours/entertainment (10 per cent) tied Ethics with questionable commissions as the fourth ranked items. Products/technology : (4 per cent) and involvement in political affairs (4 per cent) followed in the fifth position. Tax evasion (2.5 per cent) and illegal/immoral activities in host country (25 per cent) were mentioned least of the ethical problems. Five of the respondents (13 per cent) indicated that they had not experienced any ethical 10 problems in international business. Appendix I defines and explains the categories of ethical problems based on responses to the open-ended question. Table I provides a rank ordering of the response categories, with frequency and percentage listed (American: » = 207; Australian: = 38) Australian American" | Ethical Problem Rank Frequency (Js) Rank Frequency (8) Bribery 1 yo 1 59 4 Cultural diferences Ge Oe ac0heoe 9 5 Pricing 3 6 Rn 3 5 3 Gitts/Favours/Entertainment 4 5 wo 5 3 2 Questionable commissions — 5 5 0 Not ranked Product/Technology 5 2 4 ae 5 3 Involvement in polities 7 2 4 Not ranked Table I. ‘Tax evasion 8 1.25. Not ranked Comparisons of Fihical | Megatimmoral activites 9 125. Not ranked International * Appendix Il ists explanations and complete ranking of American Ethical Problems. Marketing: Australian ‘and American Samples 2 The American respondents identified Product/Technology as separate categories. Research Question 2 How do the major ethical problems compare with those faced by American international business managers? ‘The American sample responded to an identical question related to perception of ethical problems. The American executives, like the Australian, cited bribery as the major ethical problem in international marketing (33.7 per cent). In categories 2, 3 and 4, the American responses differed from those of the Australian, The Americans indicated government interference (15.2 per cent), customs clearance (74 per cent), and transfer of funds and cultural differences as the next most salient ethical problem (5.1 per cent). Pricing (2.9 per cent) ‘was ranked sixth. Technology/copyright theft (2.3 per cent) followed in the seventh position. The last ranked categories were immoral entertainment (1.7 per cent) and product use (0.6 per cent)‘The Australian and the American samples are very similar. The second, third and fourth categories (ie. government interference, customs clearance and transfer of funds) represent more pragmatic difficulties in conducting business overseas, and are not strictly ethical in nature. Table II compares the samples, with these categories being excluded Research Question 3 Is there a significant difference between Australian and American managers in terms of their perceptions of ethical problems? ‘The American and Australian frequencies of ethical problems for the ranked categories were tested for significant difference, using the chi-square test. The following Australian ethical problems had corresponding American categories: bribery, cultural differences, pricing, gifts/favours/entertainment, and products! technology. The test revealed that there are no significant differences between the Australian and corresponding American frequencies of ranked ethical problems (je. Australian ranks 1, 2, 3, 4 and 6 in Table ID. Research Question 4 Is there a significant difference between Australian and American managers on each individual item of the “attitudes towards ethical issues’ scale? AAs explained in the ‘*Methods"’ section, the attitudes of the respondents were sought with regard to seven Likert-scaled items related to various ethical issues: i.e. “attitudes towards ethical issues scale”. Those items, and the responses, were scaled down into frequencies and categorised as follows: agree, neutral and disagree. Table Ill compares the Australian and American results on views on the ethical statements section of the survey. This comparison was made using percentages from the frequency distributions vielded from the seven ethical statements questions. Question 1 asked if managers in international business often engage in behaviours that they would consider unethical. The response percentages to this question were almost identical, with 25 per cent of the Australians either strongly, or moderately agreeing and 24.6 per cent of the Americans doing likewise. The response frequencies of the two groups were tested for significant difference, using the chi-square test. No statistically significant difference was found at the 0.05 level. Question 2 queried respondents concerning opportunities for US or Australian managers in international business to engage in unethical behaviours. The Australians’ response varied to a greater degree from the Americans’ on this question. Eighty-four per cent of the Australians strongly or moderately agreed with this question, compared to 55.7 per cent for the Americans. However, the chi-square test revealed that the observed frequencies were not significantly different. ‘The third question asked if there were many opportunities for foreign managers in international business to engage in unethical behaviours. The Australians differed from the Americans on this question, but with less difference than on the previous question. The Australians either strongly or moderately agreed International Marketing Ethics 1International Marketing Statement Agree Neutral Disagree Ethics Freqaeney (8) Frememy (9) Frequeny (8) 2. Managers in international business ‘often engage in 12 behaviours that | Austrian 1025, consider uncthiel = American «5225 a» 2% 8 fe ee 2, There are many ‘opportunites for UsvAustalian managers in international business to engage in Australian 31 ‘unethical behaviours American 116 ae Be Ba a5 3. There are many ‘portunities for foreign managers in international business to engage in Austraan 33 ‘unethical behaviours American il ae Re 4. In onder to ‘succeed in international business itis often necessary ‘to compromise one's Australian ties ‘American mM 5 2 Bot OS fe ag 5. Top management in ny company has let tbe known inno uncertain terms that ‘Unethical behaviours Australian 0B ‘wil not be tolerated American 15776 6. 1a manager in sy company is ddacovered to have engaged in unethical ‘behaviour helshe wll be prompt Ro et) 0 mh a) reprimanded American 168 polo —- ome a, Palen ae ee eee Tee eraoe | Seniiclowures Sacra Ethical Statements Re ae Be Be be Re88 per cent of the time, with the Americans recording similar perceptions at 68 per cent frequency. Again, the differences were not statistically significant. (Question four sought to determine if, in order to succeed in international business, it is often necessary to compromise one's ethics. The Americans and Australians were very similar in their responses to this question, with 75 per cent of the Americans strongly or moderately disagreeing and 68 per cent of the Australians reflecting similar responses. As expected, the chi-square test revealed no significant difference. ‘The fifth question queried respondents to determine if top management in their company has let it be known in no uncertain terms that unethical behaviours will not be tolerated. Again the Americans and Australians were almost identical in their response frequencies, with 76 per cent of the Americans strongly or moderately agreeing and 80 per cent of the Australians recording similar attitudes. The differences were not statistically significant. (Question six asked whether or not a manager in his/her company would be promptly reprimanded if he/she was discovered to have engaged in unethical behaviour. Again the response frequencies were strikingly similar, with the ‘Australians possibly being firmer in their belief that reprimands would be issued. ‘The Australians stated that they strongly or moderately agree in 89 per cent of the cases, while the Americans recorded similar tendencies in 79 per cent ‘of the cases. Additionally, none of the Australians strongly or moderately disagreed with this statement, while 17 per cent of the Americans did. As ‘expected from casual observation, no statistically significant differences were found. Question seven asked whether the US and Australian managers in international business encounter more ethical problems when dealing with less developed countries than with developed countries, The Australians have stronger attitudes that there are more ethical problems encountered in less developed countries and either strongly or moderately agreed with this statement 79 per cent of the time, while the Americans recorded similar attitudes at a frequency of 65 per cent. The result did not yield a statistically significant difference, however. ‘These comparisons reveal many similarities and some differences in the perception of Australian and American international business managers. The intent of the analysis is to make a comparison of the ethical perceptions of managers from similar cultures. While the percentage differences hint at variations in perceived attitudes, there are no statistically significant differences between Americans and Australians with regard to the perception towards the ethical statements at the 0.05 level of probability. Conclusions and Implications The objective of this study was to answer the following research questions: (1) What are the major ethical problems facing Australian international business managers? (2) How do the major ethical problems compare with those faced by American international business managers? International Marketing Ethics 13International (3) Is there a significant difference between Australian and American Marketing managers in terms of their perceptions of ethical problems? Ethics (4) Is there a significant difference between Australian and American ‘managers on each individual item of the “attitudes towards ethical issues” scale? ‘The most salient ethical problems for Australian managers involved in “4 international business are: bribery, cultural differences, pricing, gifts/ favourslentertainment, questionable commissions, product/technology transfer, involvement in politics, tax evasion, and illegalimmoral activities. These perceived ethical problems are very similar to those listed by the American sample, and are not significantly different from one another. Similar conclusions may be drawn from the questions related to the ethical issues and management practices. The American and Australian samples were not significantly different. ‘These findings indicate that Australians and Americans have similar perceptions of the ethical problems normally encountered in international marketing, and differ very litte with regard to ethical issues and management practices related to ethical problems. While it must be conceded that these problems and issues are likely to have high prominence in the minds of respondents and that, moreover, executives may be more inclined to see others as responsible for their ethical dilemmas, rather than themselves, these results do nevertheless match the experience of American firms. The similarity of the American and Australian samples can be explained to some extent through the research of Lee|33| and Hostede|34|. Lee posited that managers from different cultures display different ethical beliefs in marketing management. The study concluded that there were no significant differences between British and Chinese managers with regard to ethical beliefs related to marketing management. In Hostede’s(34| classic study, it was determined that Australia’s and the United States’ cultures were similar when measured across four cultural dimensions: power distance, individualism, masculinity, and uncertainty avoidance. ‘Though further investigation, particularly by personal interview, would be necessary, the question may well be raised as to whether or not Australia should introduce legislation equivalent to the United States’ Foreign Corrupt Practices Act of 1977. However, careful consideration should be given to the possible negative ramifications for Australian firms’ competitiveness. While one cannot condone ‘‘corrupt"” payments, the choice may be between ‘‘paying up”’ or forgoing multi-million dollar contracts, enduring tedious red-tape delays, and suffering other costly hindrances. As Ulmer|35| has argued, bribery may be an objectionable but necessary cost of doing business. Balanced against this is American evidence (e.g. Richman|36)) that in most instances the revenue Jost from not bribing is a minimal proportion of total sales. In short, there remain. a number of unresolved issues vis-d-vis the ethical dilemmas facing Australian firms doing business abroad. This study reveals that international marketing and business managers experience ethical problems when conducting business internationally. Anawareness of these problems and issues provided a framework for the development of a written, corporate code of ethics. Such a code or written guide to ethical behaviour could potentially avoid some of the costly ethical mistakes of the past and legislation that could potentially further regulate Australian trade. It would be very difficult to determine the cost to Nestlé for the negative publicity of the infant formula controversy, or the cost of the Foreign Corrupt Practices Act to American firms. ‘The awareness of the existence of ethical problems allows managers to plan and prepare for the problems they are likely to encounter in foreign markets. A better understanding of these issues, particularly if the differences are culture based, provides international marketing managers with the information necessary to more effectively market a product or negotiate a sale in a foreign market. References 1. Chonko, L.B, and Hunt, $.D., ‘“Ethies and Marketing Management: An Empirical Examination’, Journal of Business Research, Vol. 13, 1985, pp. 339-59, 2. Murphy, PE. and Lacaniak, G.R., “Marketing Ethics: A Review with Implications for Managers, Edtcators and Researchers" in Enis, B.M. and Roering, KJ. (Bds.), Review of Marketing 1981, American Marketing Association, Chicago, 1981, pp. 251-66 3, Vitel, S.J. and Grove, SJ., “Marketing Ethics and the Techniques of Neutralisation’ Journal of Business Ethics, Vl. 6, 987, pp. 433-8 4, Voge, B., “The Study of Socal Issues in Management: A Critical Appraisal", Calformia ‘Management Review, Vol, 28 No. 2, Winter 1986, pp. 142-51 5, Solomon, RC, Ethics: A Brief Introduction, McGraw-Hill, New York, 1984, 6, ‘Thilly, F, Introduction to Ethies: Charles Scribner's Sons, New York, 1900 7. Barry, V., Aplin Ethis: A Text with Readings, 2nd ed, Wadsworth Publishing, California, 1985. 8. Rogers, R.A.P., A Short History of Ethics, Macmillan, London, 1987 9, Baumhart, R.C., “How Ethical are Businessmen?" Harvard Business Review, Vol. 39, 1961, pp. 6-9, 1567. 10. Baumhart, RC, Ethics in Business, Holt, Reinhart and Winston, New York, 1968, IL. Brenner, S.N, and Molander, E.A., ‘Is the Ethies of Business Changing?"’, Harvard Business Review, Vol. $5, January-February 1977, pp. 577. 12. Carroll, A.B., “Managerial Ethies: A Post Watergate View", Business Horizons, Vol. 18 April 1975, pp. 75-80, 13, Bowman, JS., “Managerial Ethics in Business and Government”, Business Horizons, Vol, 19, October 1876, pp. 48.54, rom, JW. and Ruch, W.A., "The Ethics of Management and the Management of "MSU Business Topics, Vol. 23, Winter 1975, pp. 29-87 15, Crawford, MC., “Attitudes of Marketing Executives toward Ethics in Marketing Research Journal of Marketing, Vol. 4, Api 1970, pp. 46-52. 16, Akiah, LP. and Riordan, E.A., “Judgements of Marketing Professionals about Ethical Issues in Marketing Research: A Replication and Extension". Jounal of Marketing Research, Vol. 26, February 1989, pp. 112-20 17 Bezila, R., Haynes, J.B. and Eliot, C., "Ethics and Marketing Research”, Business Horizons, Vol. 19, April 1976, pp. 83-6. International Marketing Ethics 15International Marketing Ethics 16 25, 26, Rudelius, W. and Buchola Ferrel, OC, and Skinner, SJ, “Ethical Behaviour and Bureaueratic Structure in Marketing Research Organisations", Journal of Marketing Research, Vol. 25, February 1988, pp, 103-9. Hunt, S.D,, Chonko, L.B. and Wileox, .B., “Ethical Problems of Marketing Researchers Journal of Marketing Research, Vol! 21, August 1984, pp. 309-24 McDaniel, SIV., Verille, P, and Madden, C.., “The Threats to Marketing Research: An Empirical Reappraisal”, Journal of Marketing Research, Vol. 22, February 1985, pp. 7480, Schneider, K. and Holm, C.K., “Deceptive Practices in Marketing Research: The Consumer's Viewpoint", California Business Review, Vol. 24, Spring 1982, pp. 89-96, ‘Tybout, A.M. and Zaltman, G., “Ethics in Marketing Research: Their Practical Relevance” Journal of Marketing Research, Vol. 1, November 1974, pp. 357-68. Dormoff, RJ. and Tankersley, C.B., “Perceptual Differences in Market Transactions: A Source of Consumer Frustration, journal of Consumer Affairs, Vol. 9, Summer 1975, pp. 9703 Levy, M. and Dubinsky, AJ., “Identifying and Addressing Retail Salespeople's Ethical Problems: A Method and Application’ Journal of Retailing, Vol. 59 No. 1, Spring 1983, p. 47-66, Ferrell, OC, and Weaver, K.M., "‘Ethical Beliefs of Marketing Managers”, Journal of Marketing, Vol. 42, July 1978, pp. 69-73 R.A., “Ethical Problems of Purchasing Managers", Harvard Business Review, Vol. 37, MarclrApril 1979, pp. 8f. Dubinsky, AJ., Berkowitz, E.N. and Rudelius, W., “Ethical Problems of Field Sales Personnel"”, MSU Business Topics, Vo. 28, Summer 1980, pp. 1116. Dubinsky, AJ. and Gwin, J.M., "Business Ethics: Buyers and Sellers”, Journal of Purchasing and Materials Management, Vol. 17, Winter 1981, pp. 9-16. Krugman, D.M. and Ferrel, OC, “The Organisational Ethics of Advertising: Corporate and: Agency Views", Journal of Advertising, Vol. 10 No. 1, 1981, pp. 21-30. Hawkins, DJ. and Cocanougher, A.B., “Student Evaluations of the Ethics of Marketing Practices: The Role of Marketing Education”, Journal of Marketing, Vol. 36, Apil 1972, pp. 61-4 Goodman, C.S. and Crawford, C.M., “Young Bxecutives: A Source of New Ethics?” Personnel journal, Nol. 53, March 19%, pp. 1807. Dubinsky, AJ. and Rudetius, W.,“‘Ethical Beliefs: How Students Compare with Industrial Salespeople", in Bagozri, R.P. etal. (Eds.), AMA Educators’ Conference Proceedings, ‘American Marketing Association, Chicago, 1980, pp. 73-6. 33, Lee, K.HL., "Bthical Beis in Marketing Management: A Cross-Cultural Study", European 35, 36, Journal of Marketing, Vol. 15 No. 1, 1981, pp. 58-67 Hostede, G., Culture's Consequences: International Differences in Work-Related Values, Sage, Beverly Hills, California and London, 1980. Ulmer, M,., *Muitnational Corporations and Third World Capitalism’, Journal of Economic Issues, Vol. M4 No. 2, 1980, pp. 45347, Richman, B., "Can We Prevent Questionable Foreign Payments?”, Business Horizons, Vol. 22 No. 3, 1979, pp. H-9.Appendix I: Major Ethical Problems and Definitions Australian Sample Traditional Smal Scale Bribery — payment of somewhat small sums of money, typically to a Toreign oficial in exchange for him/her wating some official duty ot responsibilty orto speed routine government actions (e.g. “grease payments”, "kickbacks". Lange Scale Bribery — a elatvely large paymert intended to allow a violation of the law or designed to influenced policy directly or indirectly (e.8. poltical contributions) Gifts/Favowrs/Entertainment — includes a range of items such as: plysica gifts, expensive meals, call girls, opportunities for personal travel at the company’s expense, gifts received after the completion of a transaction, and expensive entertainment Pricing — ineludes ditferential pricing, questionable invoicing — where the buyer requests a ‘written invoice showing a price other than the actual price paid, pricing to force out focal ‘competition, dumping products a prices well below those inthe home country, pricing practices that ace illegal inthe home country but legal in host country (e.g. price fixing agreements). Products/Technology — includes products and technology that are banned for use in the home Country but permitted in the host country and/or appear unsuitable or inappropriate for use by the people of the host country. ‘Tax Evasion Practices — practices used specifically to evade tax such as: transfer pricing (Le. ‘where prices paid between alates and parent company are adjusted to effect profit allocation) including the use of “tax havens”, where any profit arising would do so in a low tax jurisdiction, adjusted interest payments on intrafirm leans, questionable management and service fees charged between affiates and/or the parent company. egal/Immoral Activities inthe Host Country — practices such as: polluting the environment; ‘maintaining unsafe working conditions; product/technology copying where protection of patents, tradenames or trademarks has nat been enforced; and shortweighting overseas shipments, 0 as to charge a country a phantom weight Questionable Commissions to Channel Members — unreasonably lange commissions or fees paid to channel members, such as sales agents, middlemen, consultants, dealers and importers. Cultural Differences — differences between cultures may involve potential misunderstandings (eg, transactions may be regarded by one culture as bribes but may be acceptable business practices in another culture, These incide: gifts, monetary payments, favours, entertainment, and political contributions). Involvement in Political Afjirs — the combination of marketing activities and pots including the following: the exerting of political infuence by multinationals, engaging in marketing activities when either the home or host county is at war, and technology transfers between ‘communist and non-communist countries. Appendix Il: Categories for, and Examples of Ethical Problems in Intern Marketing: American Sample (0). Einbes and/or Quustionable Payments — This category included any response that directly identified the issue of paying bribes or questionable commissions, or making payments ‘which would not be legal or ethical in the US ("Kickbacks to buyers", “Palm greasing for smoother paperwork”), (2). Political Issues and/or Government Interwntion — Tris category included any response ‘which ‘identified problems created by politcal issues/policies or direct government intervention oF sanctions, Included here would be problems caused by either the US ‘government or the government of 2 foreign country ("Understanding US law in these areas"), (8) Customs Clearance — This category included any requests or demands for special payment or documentation the intent of which was to circumvent customs regulations (Requests to falsify export documentation”, "Altering product description to lower duty fr circunwent import restrictions" International Marketing Ethics 7International Marketing Ethics 0 o © o ® o 00 ay ‘Questionable Transfer of Funds — This category dealt with the ilegal or questionable ‘transfer of funds out of the country or to unusual places, people, or accounts for any purpose including avoiding taxes or a foreign country's regulations ("Transfer of profits Or dividends can cause tax avoidance opportunities”, "Getting profits back to parent corporation”). Cultural and/or Business Practice Diferences — This category included any response that relaes to problems which arse as a result of trading with markets with cultural _ndlor business practice ferences. Some of these may be not ethical isues, but simply problems that result when dealing with others who have different ways of conducting their business and private lives (""Confct of moral standards ~ monetary, sexual — between cultures”, ‘Tax situations and environmental issues Pricing Practices — This category included pricing polices and structures that represent Uuniair and/or unethical practices towards competition, consumers, and/or intermediaries (C"Unlair competition due to dumping at near cost or below cost”, “Pricing below US. discounts to be competitive”). Technology Thef and Copyright Infringement ~ Given diflerences in legal systems and/or ethical values, some foreign firms do not honour US patent and copyright legislation. “This category included any response which identified copyright infringement and/or technology theft by a foreign frm ("Counterfeiting or copying a product”, “Unassociated individuals licensing simar sounding company or trade names overseas”). Immoral Entertainment — The norms in some countries allow or even encourage the ‘provision of entertainment which would not be allowed inthe US. This category included fll zesponses which refer to such immoral entertainment being provided or expected (‘Having to provide female companionship... “Considerably higher level of ‘entertainment of Buropean buyers than US buyers"). ‘Questionable Product Use ~ This category included all responses which identified the improper, dangerous, and/or non-recommended use ofa firm's product(s) by foreign ‘consumers ("“Questionable end-use statements”), [No Ethical or Moral Problems — This category included all responses which indicated that no ethical problems were encountered in international trade. ‘Miscellaneous — This category included all responses which did not ft into any of the ‘other more specialised categories (“Conflicts of interest”)