Special Issue Research Article

Journal of Public Policy & Marketing

2022, Vol. 41(4) 336-352
The Role of Social Norms on Direct-to- © American Marketing Association 2022
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Physician Pharmaceutical Marketing sagepub.com/journals-permissions

DOI: 10.1177/07439156221098724
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Payment Acceptance

Pui Ying Tong, Christopher Yencha , and Chiharu Ishida

Abstract
In this article, the authors apply institutional theory to explain physician acceptance of pharmaceutical marketing payments and
the mechanisms by which the behavior may be influenced by social groups. Using a large panel of over three million physician-year
observations, the authors provide evidence that peer and organization norms, captured by the prevalence of peers and organi-
zational members accepting pharmaceutical marketing payments, play an important role in one’s decision to accept such pay-
ments. The authors further show that this effect attenuates with physical and psychological distances, as proximal social
groups most influence one’s decision to accept pharmaceutical marketing payments. The authors also find that being male, having
longer tenure, or practicing at a teaching hospital strengthens the positive effect of peer influence on volume of pharmaceutical
marketing payments accepted. The findings contribute to the literature on institutional theory, provide insights into the manage-
ment of conflicts of interest, and suggest policy to mitigate the externalities resulting from direct-to-physician pharmaceutical
marketing payment.

Keywords
pharmaceutical marketing, conflicts of interest, institutional theory, social norms

In the United States, the acceptance of marketing payments from
pharmaceutical companies by physicians is the norm rather than
the exception.1 According to Schwartz and Woloshin (2019),
marketing to health care professionals by pharmaceutical compa-
nies increased from $15.6 billion in 1997 to $20.3 billion in 2016,
including $979 million in direct-to-physician payments for drug
promotion.2 Prevalence of direct payments to physicians from
pharmaceutical companies increased by more than 15%
between 2014 and 2019 (Centers for Medicare & Medicaid
Services 2021). A study on opioid marketing shows that 1 in
12 physicians received payments from pharmaceutical companies
to push painkillers to patients, which raises concerns about phar-
maceutical marketing’s impact on physician prescribing behaviors
1
U.S. Centers for Medicare and Medicaid Services (CMS) reports, for instance,
that in 2019, ∼615,000 Medicaid/Medicare recipient physicians accepted phar-
maceutical marketing payments. Given that there are ∼1 million professionally
active physicians in the United States, this means well over half of them accept
payments in any given year (see https://openpaymentsdata.cms.gov/summary).
2
Direct-to-physician pharmaceutical marketing payments come in various
forms, including free meals, gifts, travel subsidies, promotional speaking fees,
and investment ownership.
(Hadland, Krieger, and Marshall 2017). Although there are
industry-level guidelines concerning pharmaceutical marketing
payments, evidence suggests that they are inadequate at prevent-
ing biased prescribing behaviors (Mitchell et al. 2021; Rothman
et al. 2009).
Acceptance of marketing payments from pharmaceutical com-
panies places a physician in a conflict of interest in which their
professional obligation to serve a patient’s welfare may be
unduly influenced by financial gain (Fickweiler, Fickweiler,
and Urbach 2017; Thompson 1993). Concern over physicians
favoring marketed medications has been raised in public
health and health economics research. Although there is an
arguably positive role for direct-to-consumer advertising of
pharmaceuticals, particularly in that it can help increase
Pui Ying Tong is Assistant Professor of Marketing, College of Business, Illinois
State University, USA (email: ptong@ilstu.edu). Christopher Yencha is
Assistant Professor of Economics, Foster College of Business, Business and
Engineering Convergence Center, Bradley University, USA (email: cyencha@
bradley.edu). Chiharu Ishida is Professor of Marketing, College of Business,
Illinois State University, USA (email: cishida@ilstu.edu).
Tong et al.
consumer involvement in their health care and educate con-
sumers about health conditions and potential treatments
(U.S. Food & Drug Administration 2015), direct marketing
to physicians is linked to a variety of negative outcomes for
patients (Paul 2018; Wazana 2000). Much research suggests
that pharmaceutical marketing to physicians distorts pre-
scription patterns. For instance, DeJong et al. (2016)
suggest that even a single, sponsored meal with a mean
value of less than $20 results in significantly higher prescrip-
tion rates of promoted drugs by benefiting physicians.
Although much research examines how pharmaceutical mar-
keting payments may bias medical judgement and health out-
comes (Mitchell et al. 2021; Wazana 2000), few studies
examine the antecedents of this behavior.
Drawing from institutional theory, we posit that social norms
influence physician acceptance of marketing payments. We
examine physicians’ decisions to accept pharmaceutical market-
ing payments that have high potential to create conflicts of inter-
est (including payments toward entertainment, travel, other
gifts, and ownership and investment interests in pharmaceutical
companies) and the volume of these accepted payments. Social
norms are the behaviors shared by social members that play a
critical role in shaping one’s behavior (DiMaggio and Powell
1983; Scott 2008). In the context of health care, the prevalence
of peers, organizational members, and field members accepting
pharmaceutical marketing payments constitute the social norms
that may shape physicians’ perceptions of the acceptability of
pharmaceutical marketing payments. Through observing
social environments, people learn and mimic behaviors
(Meyer and Rowan 1977). Although social norms play an
important role in shaping ethical behaviors, research has yet
to consider this antecedent on the acceptance of pharmaceutical
marketing payments.
To estimate the effects of social influence on physician
behavior, the causal effect of social norms must be isolated
from the spurious correlations of observed behavior within a
social group. Physician behavior within a social group may be
a result of homophily, in which individuals in a self-selected
profession behave similarly as a result of comparable character-
istics and backgrounds, rather than social influence. To solve
this identification issue, we control for numerous individual
and organization level confounds, lag the hypothesized anteced-
ents to the individual’s behavior, and approach a causal inter-
pretation for our results through a two-stage least squares
study design with a Heckman-type selection bias correction.
In doing so, we produce estimates for the causal effects of
social norms on direct-to-physician pharmaceutical marketing
payment acceptance. Results presented in this article are
robust to concerns of reverse causality, correct for endogenous
sample selection bias, and represent a resolved parameter iden-
tification problem through the inclusion of leads for dependent
variables in a fixed effects model.
We demonstrate the extent to which accepting pharmaceuti-
cal marketing payments is affected by the norms within one’s
peer, organization, and field groups. We leverage a unique
data set to test the effect of social norms on the acceptance of
337
pharmaceutical marketing payments. Our results provide evi-
dence that acceptance of pharmaceutical marketing payments
by one’s social group legitimizes the behavior and encourages
in-group members to follow. Aligned with the arguments of
institutional theory, the prevalence of accepted pharmaceutical
marketing payments by peers within the same field and same
organization has a positive effect on a physician’s willingness
to accept pharmaceutical marketing payments. The same mech-
anism leads the focal physician to accept a greater volume of
payments. By contrast, we find that the prevalence of accepted
pharmaceutical marketing payments by members of the same
organization who are in different fields has a weaker positive
effect on a physician’s willingness to accept payments but,
interestingly, a negative effect on volume of payments accepted.
We observe that the behaviors of field members of different hos-
pitals have no effect on a physician’s acceptance of pharmaceu-
tical marketing payments. Overall, our results suggest that
physical and psychological distance attenuates the effects of
social influence on ethical decision making. We further argue
that these findings are generalizable to the broader business
context.
This article offers three main contributions. First, this study
explores the effect of social norms on pharmaceutical marketing
payment acceptance, which, to the best of our knowledge, is
novel in the literature. We examine multiple social norms
using longitudinal data from the medical care industry to
address the nested nature of social environments. We empiri-
cally test three social norms that form acceptable behavior
and influence physicians: peer, organization, and field groups.
Second, we extend institutional theory to explain how social
norms may affect one’s willingness to engage in conflicts of
interest. Our results suggest that both peer and organization
norms affect the acceptance of payments but peer norms have
the strongest influence. We further show that the effects of
peer influence are exacerbated by being male, having a longer
tenure, or working at a teaching hospital. Finally, our results
provide stakeholders and regulators with useful insights that
inform private and public policy solutions for more effectively
mitigating physician engagement in conflicts of interest. The
findings underscore the role of social norms, suggesting that
nurturing social environments at the hospital level may be the
key to reducing acceptance of pharmaceutical marketing
payments.
Conceptual Framework and Hypothesis
Development
Institutional theory suggests that agents observe their social
environments, such as industry norms, organizational traditions,
and behaviors of peers, to learn which behaviors are acceptable
within social groups (Eisenhardt 1988; Scott 2008). Research
has shown that when an ethically questionable behavior becomes
more commonly observed in the social environment, an individual
in a social group perceives the behavior as increasingly acceptable
(Reynolds 2006). Arguably, the social environment may have a
338
greater impact on unethical behavior if the negative externalities of
the behavior are ambiguous (Chugh, Bazerman, and Banaji 2005).
The process of institutionalization gives legitimacy to a behavior or
a generalized perception that a particular action is deemed desirable,
proper, or appropriate (DiMaggio and Powell 1983; Grewal and
Dharwadkar 2002).
The perspective that ethical decision making is a product of
the influence of social environments is widely supported in
business ethics literature (Ferrell and Gresham 1985; Hunt
and Vitell 1986, 2006). Trevino and Youngblood (1990)
argue that actors engaging in unethical behavior create a conta-
gion effect that influences social group members who would
otherwise not engage in unethical behavior. Social group
members who observe peers engaging in unethical behaviors
may feel pressured to conform to culture and norms, and they
have few options but to compromise their ethical standards
(Quinn et al. 1997). Unethical behaviors become even more
common when actors give in to social pressure. A person may
not recognize potential ramifications from unethical behavior
because of its ubiquity within the social environment (Jones
1991).
Despite the significance of social influence, few empirical
studies examine the effect of social norms on ethical decision
making and behaviors of medical professionals (Randall and
Gibson 1991; Rich et al. 2020). Much of this research is
grounded in the theory of planned action, in which social
norms are generally defined as medical professionals’ per-
ceptions of whether important others think they should
behave in a certain way (Ferencz-Kaddari, Shifman, and
Koslowsky 2016). To our knowledge, no empirical article
in this area examines multiple levels of medical profession-
als’ social environment, although social relationships are
nested within one another in the medical care industry
(Scott et al. 2000). Because of this scarcity, there is an equiv-
alent dearth of longitudinal quantitative studies on the effects
of norms. Without the consideration of multiple social envi-
ronments and longitudinal data, it is difficult to test the inter-
relations among norms and the causal relationships between
norms and outcomes.
In this article, we specifically examine norms of physicians at
three levels: peers, organizations, and professional fields. These
three levels of social norms are crucial drivers of physician
behaviors. Research on ethical decision making consistently
shows that peer influence is a strong predictor of behaviors
(Zey-Ferrell and Ferrell 1982). Furthermore, health care
research shows that physician behaviors and ethical practices
are often guided by hospital practices and norms as well as pro-
fessional standards established by professional associations
(Scott et al. 2000; Spencer et al. 2000).
Professional Influence
Members tend to imitate the behaviors of others from the same
field or specialty. In this article, members of the same field as the
focal physician outside of the physician’s hospital represent the
professional environment. Institutional theory suggests that the
Journal of Public Policy & Marketing 41(4)
process of professionalization drives members to reinforce legit-
imacy by imitating their fields’ well-accepted standards and
practices (DiMaggio and Powell 1983). Professionalization is
the “collective struggle of members of an occupation to define
the conditions and methods of their work, to control ‘the pro-
duction of producers’ (Larson 1977, p. 50), and to establish a
cognitive base and legitimation for their occupational auton-
omy” (DiMaggio and Powell 1983, p. 152).
Members imitate their fields’ well-established standards and
practices to rationalize their behaviors. In doing so, they may
follow standards and practices without question (Meyer and
Rowan 1977). This form of imitation is called normative imita-
tion (DiMaggio and Powell 1983), and it may be fostered by
socialization through training. Members communicate the
norms of the field through training. For example, surgeons
may learn about well-accepted standards and practices from
training at medical schools.
In addition to training, intensive communication and social-
ization between members reinforce the standards and practices
of a field. Professional activities (e.g., conferences, meetings,
speakers bureaus, peer-reviewed journal publications, advisory
boards) reiterate and reinforce the standards and practices
(Singh and Jayanti 2014). In summary, members are likely to
imitate others in the same field to gain legitimacy.
H1: The acceptance of pharmaceutical marketing payments
by members of one’s field increases a physician’s (a) likeli-
hood of accepting pharmaceutical marketing payments and
(b) volume of payments accepted.
Organization Influence
Organization members, including their attitudes and behaviors,
are another social force affecting one’s ethical behavior. In the
current context, organization members are the physicians who
work in the same hospital as, but in a different field than, the
focal physician. Institutional theory suggests that an individual
attempts to make sense of an organization by observing the
behaviors of organization members (Deshpandé and Webster
1989). Observation and experience enable members to deduce
what behaviors are acceptable and appropriate in an organiza-
tion. The behaviors of organization members provide informa-
tion about the organization’s prevalent rules, norms, and
values (Tsui, Wang, and Xin 2006).
Organizational ethical climate is also crucial in setting the
ethical standards for the organization’s members (Appelbaum,
Deguire, and Lay 2005; Verbos et al. 2007). Ethical climate rep-
resents members’ shared perceptions of organizational proce-
dures, policies, practices, norms, and conventions related to
moral issues (Martin and Cullen 2006; Victor and Cullen
1988). Through socialization and observation, organization
members learn common values that reward those who follow
those values and punish those who do not. The ethical climate
of an organization has a great impact on its members’ willing-
ness to engage in ethical behaviors. When an organization has
Tong et al.
a strong ethical climate, organization members are less likely to
be unethical (Appelbaum, Deguire, and Lay 2005).
H2: The acceptance of pharmaceutical marketing payments
by organization members increases a physician’s (a) likeli-
hood of accepting pharmaceutical marketing payments and
(b) volume of payments accepted.
Peer Influence
Research consistently shows that peer influence has a strong
impact on an individual’s judgment and behavior. In this
article, peers are defined as physicians who work in the same
field and organization as the focal physician. Peers convey
expectations of behaviors and define norms at work (Salancik
and Pfeffer 1978; Venkatesh and Morris 2000). These expecta-
tions may pressure a person to behave in ways that do not align
with their beliefs or values. Indeed, studies show that the per-
ception of a peer’s willingness to engage in unethical behavior
is a stronger predictor of a person’s unethical behavior than that
person’s ethical beliefs (Zey-Ferrell and Ferrell 1982;
Zey-Ferrell, Weaver, and Ferrell 1979). An agent who observes
peers engaging in unethical behaviors is more likely to engage
in the same or similar activities (O’Fallon and Butterfield 2012;
Posner and Schmidt 1984).
Because peers represent the immediate social environment,
they likely present the strongest social influence among the
three social groups we examine. According to the theory of
social impact, proximity in distance and time to peers can
lead to more frequent social interactions and, thus, stronger
social influence (Latané et al. 1995). Similarly, because peers’
behaviors are likely interpreted as psychologically close
because of proximity, construal level theory predicts that physi-
cians are more susceptible to their peers’ influences and are less
likely to act according to their personal values (Ledgerwood,
Trope, and Chaiken 2010).
H3: The acceptance of pharmaceutical marketing payments
by peers increases a physician’s (a) likelihood of accepting
pharmaceutical marketing payments and (b) volume of pay-
ments accepted.
Methods
Data
Our data describe a panel of physicians who accepted Medicare
or Medicaid between August 2013 and December 2017.
Centers for Medicare and Medicaid Services (CMS) reports
that more than half of the physicians in the United States accepted
some form of pharmaceutical marketing payment between
August 2013 and the end of 2013. Information in our database
is primarily from three sources: (1) the Open Payments (OP) data-
base of physician acceptance of pharmaceutical marketing pay-
ments from CMS, (2) the Medicare Provider Utilization and
Payment Data (MPUP) for information about physicians from
CMS, and (3) U.S. Census data that describe sociodemographic
339
characteristics of hospitals’ local markets. The OP data are a
direct product of the Physician Payments Sunshine Act of
2010, which was passed to increase financial transparency
between pharmaceutical companies and health care providers.
The OP database includes information that identifies physicians
and their acceptance of pharmaceutical marketing payments.
This pharmaceutical marketing database is further separated
into categories from the arguably innocuous, such as food and
drink, to clear conflicts of interest, including partial ownership
in the same pharmaceutical company marketing to the physician.
The MPUP data were predominantly collected by CMS to
describe charges for hospital services. Although data on
charges are not immediately relevant to our study, this data
set includes information regarding personal characteristics of
physicians (e.g., gender, field) and aggregated information con-
cerning the hospital. Lastly, we include U.S. Census data at the
zip code level to control for heterogeneity in sociodemographic
characteristics of the market local to the hospital, which is
typical in empirical public health and health economics
research.
When possible, we merged physician observations from the
OP database with the MPUP data to combine pharmaceutical
marketing payment acceptance information with physician and
hospital characteristics. Observations were dropped if they
could not be confidently merged after standard data cleaning pro-
cesses. Failed merges constitute fewer than .1% of total observa-
tions and are assumed to be randomly distributed. We eliminated
observations with values for accepted pharmaceutical marketing
payments or personnel sizes via standard interquartile range
methods, such that an observation was considered an outlier if
either variable took on values above the third or below the first
quartile by a factor of (Q3 − Q1) × 1.5 (Khezrimotlagh, Cook,
and Zhu 2020; Swallow and Kianifard 1996). Consequently,
we removed about 7.3% of observations. Lastly, we matched
zip code–level sociodemographic data from the U.S. Census to
hospital zip codes to complete the construction of the study
database.
Measurements
Dependent variables. Our primary dependent variables are
(1) physician acceptance of direct-to-doctor pharmaceutical
marketing payments, coded as a dummy variable to indicate
incidence, and (2) the volume of accepted pharmaceutical mar-
keting payments in dollars. We focus on types of pharmaceuti-
cal marketing payments that present a conflict of interest, such
as those in the forms of entertainment, travel, ownership and
investment interests in pharmaceutical companies, and gifts.
Although all forms of accepted pharmaceutical marketing pay-
ments are arguably unethical,3 many pharmaceutical marketing
3
Indeed, much research finds that physicians accepting marketing payments in
even the most arguably benign forms, such as for food and drink, alter prescrib-
ing practices (DeJong et al. 2016) and that even interacting with pharmaceutical
representatives presents serious professional ethical and prudential concerns
(Brody 2005).
340 Journal of Public Policy & Marketing 41(4)

payments are accepted for unselfish reasons. For instance, other, Table 1. Summary Statistics.
arguably less opportunistic, categories of pharmaceutical marketing
Variable Mean SD Min Max
payments include monetary donations to charity on the physi-
cian’s behalf, payments by the pharmaceutical company for con- Dependent Variables
sulting work, and the provision of royalties paid to physicians for Payment Volume $467.50 $3,691 $0 $130,248
the use of patents.4 For this reason, we make a distinction Accept Payments .334 .471 0 1
between pharmaceutical marketing payments that lead to imme- Social Influences
diate and clear personal gains to the physician at the potential det- Field Influencea .334 .022 0 1
riment of the patient and other forms of pharmaceutical Organization Influencea .333 .045 0 1
marketing payments. Peer Influencea .333 .080 0 1
Individual-Level Controls
Female .247 .336 0 1
Independent variables. Table 1 reports descriptive characteristics
Tenure 8.395 1.806 0 12
and Table 2 is a correlation table for study measures. Covariates MD .463 .499 0 1
of interest include the social norms of one’s peers, organization PhD .007 .085 0 1
members, and field members. “Peer Influence” is operationalized F-Evaluation .155 .362 0 1
as the proportion of physicians in the same field and at the same F-Anesthetic .087 .281 0 1
hospital who accept pharmaceutical marketing payments. A F-Surgery .451 .498 0 1
higher proportion of physicians within the same field and hospital F-Radiology .067 .250 0 1
accepting pharmaceutical marketing payments indicates stronger F-Pathology .050 .217 0 1
peer influence on an individual’s acceptance of payments. F-Medicine .214 .410 0 1
“Organization Influence” is the proportion of physicians in the Organization-Level
same hospital (not the same field) who accept pharmaceutical Controls
marketing payments. “Field Influence” is the proportion of phy- Evaluationa .164 .130 0 1
sicians in the same field (not the same hospital) who accept phar- Anesthetica .084 .092 0 1
maceutical marketing payments. A physician’s field is classified Surgerya .440 .183 0 1
on the basis of the American Medical Association’s current pro- Radiologya .066 .073 0 1
cedural terminology (CPT) code. A higher percentage of Pathologya .049 .072 0 1
members of the same hospital or field accepting pharmaceutical Medicinea .217 .159 0 1
marketing payments represents stronger social influences at the Teaching Hospital .255 .436 0 1
Personnel Size 161 137.30 1 605
organization or field levels. We argue that acceptance rates are
Off Patent Drug .057 .231 0 1
a better indicator of social norms than the volume of payments
Demographic Controls
received because the former is revealed through observation
Median Age 37.927 6.168 13 84
and socialization, whereas the latter is imperfectly observed by
Median Household 56.282 23.730 2.499 250
individual agents. Income (1,000’s of $)
High School or Less (%) 44.210 15.443 0 100
Control variables. In addition to the variables of interest, we a
include a selection of control variables. Individual-level con- Measured as proportions and may take on any value between 0 and 1, inclusive.
trols include gender (Female is an indicator equal to 1 if the phy-
sician is female and 0 if male), education level, and tenure.5
Indicators for the CPT Category I service set, which describe 1 Surgery label), are also included. Hospital-level controls
a physician’s field (e.g., F-Surgery is an indicator equal to 1 if account for the proportions of given CPT Category I physicians
a physician’s services fall primarily under the CPT Category in a given hospital (e.g., Evaluation indicates the proportion of
physicians whose primary services are characterized by evalua-
4 tion and management, as defined by the CPT Category I classi-
The complete list of reported direct-to-physician marketing payments include
travel, food, consulting, royalties, grants, education, charity, gifts, speaking fication). We included these measures to control for
engagements (separated into accredited and nonaccredited), honoraria, invest- heterogeneity between hospitals in the types of services per-
ment, research, entertainment, and other. Mean acceptance of formed and associated staff hired. A dummy variable indicating
direct-to-physician marketing payments that arguably present no potential whether the focal organization is characterized as a teaching
harm to patients in the sample is $590.42 and is weakly correlated with market-
hospital is also included. In addition, a measure indicating a
ing payments that lead to immediate and clear personal gains at the detriment of
patients (r = .285). given hospital’s personnel size (Count) is included because
5
Tenure data was collected from each physician’s National Provider Identifier larger hospitals may be differentially targeted by pharmaceuti-
(NPI) enumeration date in the NPPES NPI registry API. The NPI Final Rule cal companies and, therefore, physicians at larger hospitals
established NPIs as the standard in 2004. Because measurable variation only may have more opportunities to accept pharmaceutical market-
exists for physicians who received NPIs beginning in 2005, marginal effects
ing payments. This measure is also intended to proxy for the
interpreted from this measure may be most precisely considered as the effect
of an additional year for “young” physicians. We have been careful to interpret size of operations in each hospital. Lastly, as is standard in
the results for this measure justly. public health and health economics research, we include
 Table 2. Correlation Matrix.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25)

1. Payment 1
Volume
2. Field Influence .048 1
3. Organization .096 .047 1
Influence
4. Peer Influence .169 .277 .567 1
5. Female −.054 −.075 −.022 −.066 1
6. MD .003 .080 .027 .039 −.037 1
7. PhD .0004 −.016 −.0002 −.005 −.008 −.010 1
8. Tenure .021 .072 .015 .034 −.093 −.016 −.009 1
9. F-Evaluation −.026 −.522 −.019 −.153 .083 .039 −.018 −.051 1
10. F-Anesthetic .005 .301 .006 .074 −.010 −.021 −.014 .025 −.132 1
11. F-Surgery .043 .887 .041 .244 −.080 .101 −.038 .066 −.389 .340 1
12. F-Radiology −.001 −.018 .009 −.003 −.015 .054 −.008 .024 −.115 −.083 −.243 1
13. F-Pathology −.006 −.091 −.002 −.020 .056 .036 .001 .009 −.098 −.070 −.207 −.061 1
14. F-Medicine −.011 −.226 −.019 −.060 .011 −.188 .076 −.043 −.224 −.161 −.473 −.140 −.119 1
15. Evaluation .009 −.094 .040 .023 .011 .092 .013 −.021 .150 −.049 −.055 .016 −.024 −.083 1
16. Anesthetic .011 .071 .089 .050 −.008 .058 −.005 .011 −.024 .131 .099 .013 −.027 −.101 .420 1
17. Surgery .014 .068 .106 .061 −.013 .096 −.003 .007 −.019 −.005 .110 .021 −.039 −.131 .611 .723 1
18. Radiology .011 −.011 .077 .044 −.007 .084 .001 .001 .009 −.038 −.013 .157 −.024 −.097 .561 .446 .641 1
19. Pathology .008 −.032 .055 .031 .002 .061 .013 .002 .009 −.026 −.029 .018 .145 −.077 .451 .358 .464 .399 1
20. Medicine .010 −.047 .064 .036 .004 .056 .016 −.005 .020 −.044 −.047 .014 −.031 .033 .662 .482 .658 .555 .427 1
21. Teaching .004 −.047 .002 .002 −.001 .056 .004 −.010 .059 −.037 −.021 .015 −.007 −.055 .472 .212 .369 .316 .300 .372 1
Hospital
22. Personnel Size .012 −.025 .079 .045 −.005 .100 .005 −.005 .033 −.036 .020 .035 −.027 −.107 .812 .649 .920 .740 .570 .805 .454 1
23. Median Age .002 .048 .039 .022 .003 −.029 −.007 .021 −.046 .036 .031 −.003 −.0001 .026 −.212 .001 −.091 −.106 −.107 −.093 −.161 −.159 1
24. Median HH .006 .024 .065 .037 .045 −.012 .006 .0004 −.036 .010 .006 −.00003 .0001 .039 −.118 .001 −.031 −.037 −.037 .023 −.134 −.059 .303 1
Income
25. High School or −.007 −.001 −.051 −.029 −.022 −.025 −.015 .003 .002 .009 −.005 −.007 .020 .003 −.195 −.158 −.241 −.209 −.127 −.250 −.100 −.259 .127 −.338 1
Less

Notes: n = 3,231,350. For a two-tailed test at α = .05, the critical correlation value rc = .000787 such that the null hypothesis is rejected if |r|>rc.

341
342
demographic controls at the hospital’s zip code level to control
for differing levels of health risk, financial means, and educa-
tion. These sociodemographic controls include median age,
median household income, and the percentage of the population
with a high school degree or less.
One final control is a variable indicating if a physician
received payments promoting a drug that went off patent in
the previous year (Off Patent Drug). This measure serves as
an instrument to control for sample selection bias, which is dis-
cussed in the next section. We posit that promotion of a drug to
physicians decreases when the drug goes off patent and compe-
tition increases as a result of generic alternatives to the drug
entering the market. We suspect that a drug going off patent
will lead to fewer pharmaceutical marketing payments by
related pharmaceutical companies. Furthermore, drugs going
off patent should lead to little or no change in the average
volume of accepted pharmaceutical marketing payments
because relatively few drugs fall off patent each year, and
these drugs are replaced with new products to market. This var-
iable will serve as an exclusionary restriction that will help
determine selection of those who do or do not accept pharma-
ceutical marketing payments without correlation with the
average volume of payments accepted by physicians.
Research Design
Although a standard probit model can provide information on
the likelihood of an individual to accept pharmaceutical market-
ing payments for our sample, censoring in the dependent vari-
able makes it ill-advised to use the entire sample for
predicting the volume of payments accepted. Selection bias is
likely, but we aim to infer about the representative physician
rather than a subset, so our principal model of the volume of
payments accepted tests and corrects for expected bias with a
standard Heckman-type two-stage selection bias correction,
commonly referred to as the Heckit method (Heckman 1979).
Heckman-type selection bias corrections are widely used in
marketing (e.g., Liu, Otter, and Allenby 2007; Yang et al.
2012) and many other disciplines to correct for nonrandomly
selected samples.
We face likely sample selection bias when analyzing the
complete sample of physicians and their decisions to accept
pharmaceutical marketing payments. Fewer than half of physi-
cians in the total sample accept pharmaceutical marketing pay-
ments that represent a clear conflict of interest, as previously
defined. Naive estimation of the volume of payments accepted
by the entire sample, therefore, would likely dilute the impact
of individual and social environmental attributes that drive a
physician’s decision to accept payments. However, estimation
of the volume of payments accepted by the subsample that
accepts any amount of pharmaceutical marketing payments
only speaks to the severity of the behavior. We leverage the
entirety of the sample and eliminate the possibility of sample
selection bias to infer about a representative physician by allow-
ing for the decision to accept pharmaceutical marketing
Journal of Public Policy & Marketing 41(4)
payments to be endogenous to the volume of pharmaceutical
marketing payments accepted.
Following notation set out by Heckman (1979) and
Wooldridge (2002), we begin by obtaining the probit estimate,
δ, from
P(Acceptance of Pharmaceutical Marketing Payments = 1|Z)
= Φ (Zδ), (1)
where Z includes all regressors from X plus one additional var-
iable that acts as an exclusionary restriction.6 Next, we calculate
the estimated inverse Mills ratio (IMR) for each observation:
ϕ(Zδ̂)
λ̂≡λ(Zδ̂) = . (2)
Φ(Zδ̂)
Finally, the IMR is included in a simple linear estimating equa-
tion to yield our principal model,
Yit = βXit−1 + γλ(Zδ) + δt−1 + ϵit , (3)
where λ describes the IMR evaluated at Zδ at time, t − 1. Such a
specification not only enables us to correct for sample selection
bias but to also test for its existence. Because the asymptotic
variance of γ̂ is not affected by δ when γ̂ = 0, a standard
t-test of γ̂ for H0: No Selection Bias is valid (Wooldridge 2002).
Results
Principal Results
The acceptance of pharmaceutical marketing payments by phy-
sicians is commonplace, although it may be considered a con-
flict of interest. Our focus is to identify social norms that
predict this ethically questionable behavior. Our findings
suggest that social norms influence the acceptance of pharma-
ceutical marketing payments. Table 3 provides probit estimates
of the likelihood that a physician accepts pharmaceutical mar-
keting payments, and Table 4 estimates the volume of accepted
payments.
The results in Table 3 suggest that physicians who are in
social environments where accepting pharmaceutical marketing
payments appears more prevalent are more likely to accept pay-
ments. There is no evidence that individuals are influenced by
the broader norms of the field, so H1a is unsupported (β =
−2.073, p > .05). Interestingly, stronger norms of engaging in
conflicts of interest at the organization level decrease the likeli-
hood that an individual will engage in such behavior, which is
against H2a (β = −.062, p ≤ .05). Furthermore, physicians
whose peers accept pharmaceutical marketing payments that
may represent a conflict of interest are more likely to also
accept payments. H3a is supported (β = 3.022, p ≤ .05). In
6
While Z can be set such that Z is composed of X, including additional vari-
ables to act as exclusionary criteria allows for tighter standard errors for the
parameter estimates. When Z is composed only of X, parameter estimates are
identified only by nonlinearities of the IMR leading to relatively imprecise
estimates.
Tong et al. 343

Table 3. Probit Estimates of Incidence of Physician Acceptance of Pharmaceutical Marketing Payments.

Dependent Variable: Accept Payments

Hypothesis (1) (2) (3) (4)

Field Influence H1a (+) −.121*** (.036) −1.985 (4.027) −1.984 (4.028) −2.073 (4.027)
Organization Influence H2a (+) −.055*** (.021) −.053** (.021) −.061*** (.021) −.062*** (.021)
Peer Influence H3a (+) 3.047*** (.013) 3.024*** (.013) 3.026*** (.013) 3.022*** (.013)
Female −.155*** (.002) −.155*** (.002) −.157*** (.002)
Tenure .003*** (.0004) .003*** (.0004) .003*** (.0004)
MD .033*** (.002) .032*** (.002) .032*** (.002)
PhD .031*** (.009) .031*** (.009) .032*** (.009)
F-Evaluation .057 (.081) .057 (.081) .058 (.081)
F-Anesthetic −.028*** (.003) −.030*** (.003) −.028*** (.003)
F-Surgery .134 (.273) .134 (.273) .140 (.273)
F-Radiology .078 (.181) .077 (.181) .082 (.181)
F-Pathology .077 (.153) .078 (.153) .080 (.153)
F-Medicine .089 (.150) .090 (.150) .091 (.150)
Evaluation −.00002 (.00003) −.00002 (.0001)
Anesthetic .0004*** (.0001) .0004*** (.0001)
Surgery −.00003 (.00002) −.00004 (.00005)
Radiology .00005 (.0001) .00004 (.0001)
Pathology .00004 (.0001) .00003 (.0001)
Medicine .0001* (.00004) .0001 (.0001)
Teaching Hospital .002 (.002) .002 (.002)
Personnel Size .00001 (.00004)
Off Patent Drug .117*** (.003)
Median Age −.0002 (.0001)
Median Household Income .0001 (.00004)
High School or Less −.0001 (.0001)
Observations 3,231,350 3,231,350 3,231,350 3,231,350
Year Fixed Effects Yes Yes Yes Yes
Log-Likelihood −2,002,528 −1,999,694 −1,999,674 −1,998,966
AIC 4,005,068 3,999,422 3,999,397 3,997,992

*, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively.
Notes: Heteroskedasticity-robust standard errors are in parentheses. AIC = Akaike information criterion.

addition, we find that male physicians are more likely to accept
pharmaceutical marketing payments than female physicians and
that a marginal increase in tenure for newer physicians increases
the likelihood of accepting pharmaceutical marketing payments.
Model 1 in Table 4 presents results from a naïvenaive spec-
ification of a subsample of observations in which pharmaceuti-
cal marketing payments are accepted. We find no evidence to
support H1b’s prediction that behavior of peers in the same
field influences volume of accepted payments (β = .569, p ≥
.05). Despite this deterrent effect on the likelihood of engaging
in conflicts of interest, tested previously in H2a, greater
organization-level influence leads to an increase in volume of
marketing payments accepted by the individual, which
supports H2b (β = .204, p ≤ .05). These findings together
suggest that although a norm of accepting pharmaceutical mar-
keting payments at the organization level reduces the likelihood
that an individual will engage in such behavior, physicians who
do choose to accept payments collect a greater volume on
average.
Finally, we find evidence in this specification that marginal
increases in peer-level influence increase the amount of
payment accepted by the focal physician, which supports H3b
(β = 3.785, p ≤ .05). Taken together, we find evidence that
proximal social groups affect the decision to accept the pharma-
ceutical marketing payments more than distal social groups
(p ≤ .01).
Although conclusions about the drivers of the volume of
accepted payments from the subsample that chooses to
engage in conflicts of interest are informative in describing
observed behavior, the results from Model 1 in Table 4 do
not represent a random sample from the population of physi-
cians. Because the decision to accept pharmaceutical marketing
payments is so polarizing in the sample, there are likely unob-
served differences between those who do and do not engage
in such behavior. To predict the behavior of a randomly selected
physician, we allow for the choice to accept marketing pay-
ments to be modeled endogenously to the decision of how
many marketing payments to accept. In doing so, we intend
344 Journal of Public Policy & Marketing 41(4)

Table 4. Estimates of Volume of Accepted Pharmaceutical Marketing Payments – Selection Bias Correction.

Dependent Variable: ln(Payment Volume)

Hypothesis (1) (2) (3) (4) (5) (6)
Field Influence H1b (+) .569 (9.410) .567*** (.207) 4.122 (2.012) 4.245 (2.012) 3.732 (2.011) .602 (2.026)
Organization H2b (+) .204*** (.055) .241** (.117) .289** (.117) .266** (.118) .237** (.113) .203** (.103)
Influence
Peer Influence H3b (+) 3.785*** (.173) 16.419*** (.068) 16.168*** (.068) 16.153*** (.069) 16.140*** (.069) 18.012*** (.471)
Female −.399*** (.012) −1.001*** (.013) −1.001*** (.013) −1.009*** (.013) −1.115*** (.029)
Tenure −.020*** (.001) .012*** (.003) .012*** (.003) .012*** (.003) .014*** (.003)
MD −.071*** (.005) .178*** (.009) .172*** (.009) .170*** (.009) .191*** (.011)
PhD .167*** (.024) .247*** (.050) .239*** (.050) .240*** (.050) .261*** (.051)
F-Evaluation −.100 (.190) −.010 (.403) −.016 (.403) −.012 (.403) .065 (.403)
F-Anesthetic −.007 (.008) −.205*** (.016) −.210*** (.017) −.205*** (.017) −.223*** (.017)
F-Surgery −.029 (.638) −.235 (1.356) −.234 (1.356) −.206 (1.356) .014 (1.357)
F-Radiology −.068 (.424) −.208 (.902) −.213 (.902) −.193 (.902) −.058 (.902)
F-Pathology −.374 (.357) −.178 (.758) −.174 (.758) −.163 (.758) −.045 (.759)
F-Medicine −.141 (.350) −.103 (.744) −.098 (.744) −.090 (.743) .042 (.744)
Evaluation .002*** (.0002) .001*** (.0002) .001*** (.0003) .001*** (.0003)
Anesthetic −.001*** (.0002) .001*** (.001) .001*** (.001) .002*** (.001)
Surgery .0001 (.0001) −.0002* (.0001) −.0001 (.0003) −.0002 (.0003)
Radiology .001** (.0002) .0004 (.0004) .001 (.001) .001 (.001)
Pathology .001*** (.0003) .0001 (.001) .0002 (.001) .0003 (.001)
Medicine −.0001 (.0002) .0002 (.0003) .0001 (.0004) .0002 (.0004)
Teaching .040*** (.005) .013 (.011) .017 (.011) .019* (.011)
Hospital
Personnel Size .0003*** (.0001) −.0001 (.0002) −.0001 (.0002) .0002 (.0002)
Median Age −.002*** (.0004) −.001* (.001) −.001* (.001)
Median .001*** (.0001) .001*** (.0002) .001*** (.0002)
Household
Income
High School or −.001*** (.0002) −.001* (.0003) −.001** (.0003)
Less
Off Patent −.874 (.911)
Drug
IMR .890*** (.221)
Observations 1,077,905 3,231,350 3,231,350 3,231,350 3,231,350 3,231,350
Year Fixed Yes Yes Yes Yes Yes Yes
Effects
Log-Likelihood −2,346,725 −11,181,433 −11,177,966 −11,177,935 −11,177,644 −11,177,636
AIC 4,693,512 22,362,877 22,355,967 22,355,920 22,355,349 22,355,334

*, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively.
Notes: Heteroskedasticity-robust standard errors are in parentheses. AIC = Akaike information criterion.

to establish the influence of selection bias and contrast results
from the previous subsample across the behavior of all
physicians.
Because we find evidence that drugs falling out of patent
statistically influences the rate at which individuals accept phar-
maceutical marketing payments in Table 3 (p < .01), we include
the Off Patent Drug variable in the first stage of the selection
model as an exclusionary restriction. This exclusionary restric-
tion acts as an instrument and helps determine selection of those
who do or do not accept pharmaceutical marketing payments
without direct effect on the average volume of payments
accepted. Off Patent Drug is significant if included in Model
4 from Table 3 (p < .01) and nonsignificant in Model 1 from
Table 4 (p > .10), lending credence to its inclusion as an appro-
priate instrument for the Heckit specification. Including this
effective exclusionary criteria in the first stage prevents
extreme collinearity of the IMR with the dependent variable.
Remaining models in Table 4 build up to the principal model
(Model 6) to observe for the possibility of Type II error in key
covariates as a result of multicollinearity because controls are
included. Model 2 includes only the key social influence mea-
sures, Model 3 adds in individual-level controls, and Model 4
includes controls at the organization level. Model 5 presents
results and includes all controls of a naive model of the
Tong et al.
volume of accepted pharmaceutical marketing payments but
fails to control for potential selection bias. The final model,
Model 6, corrects for possible selection bias by endogenously
modeling the choice of whether to accept pharmaceutical mar-
keting payments.
Notably, we find evidence that selection bias is indeed an
issue because the coefficient for the IMR is significant. The pos-
itive IMR suggests that the naive model likely underestimates
the magnitude of marketing payments accepted by a medical
professional. Failure to address issues of censoring is found to
negatively bias estimates of peer influence (Δ peer influ-
ence = −1.872, p < .01) and positively bias estimates of orga-
nization influence (Δ organization influence = .034, p < .01).
There is no difference in the hypothesized drivers of the
volume of pharmaceutical marketing payments between the
naive (Table 4, Model 1) and Heckit (Table 4, Model 6)
models. This suggests that although selection bias skews point
estimates of the volume of payments, it does not substantially
influence the validity of the conclusions drawn from the hypoth-
esized relationships. However, in comparing the Heckit model
with the estimates for marketing payment acceptance by only
the subsample (Table 4, Model 1), it is clear that leaving out
those who do not choose to accept pharmaceutical marketing
payments dismisses the importance of peer influence on such
behavior in terms of magnitude.
Taken together, results from Tables 3 and 4 suggest that
although peers especially influence the likelihood of accepting
pharmaceutical marketing payments, the behaviors of peers
and organization members signal what volume of pharmaceuti-
cal marketing payments one may expect to get away with at a
given organization, providing further support for H2b and H3b.7
Post Hoc Moderator Analysis
The relationships of social norms on physician acceptance of
pharmaceutical marketing payments can be affected by
individual- and organization-level factors. In consideration of
this, we examine the moderating effects of gender, physician
tenure, and practicing at a teaching hospital. Female physicians
are a minority in our data set and represent fewer than a quarter
of physician-year observations. Literature in business ethics
suggests that women tend to have a higher level of moral aware-
ness and reasoning (Eynon, Hills, and Stevens 1997;
Liyanarachchi and Newdick 2009). Female physicians may be
less susceptible to social norms. Research also shows that
tenure can affect unethical behaviors, although there is no con-
sensus on the direction of the effect (Andreoli and Lefkowitz
2008). Lastly, the emphasis of mentorship and learning in teach-
ing hospitals likely enhances social learning among physicians.
7
It is possible that omitted variable bias at the individual level may be driving
the observed effects of social groups on the volume of payments accepted. An
individual-level fixed effects model was developed to control for unobserved
heterogeneity at the individual level, and although no substantive difference
in H3b was noted, the coefficient estimate associated with H2b becomes signifi-
cant at p < .1.
345
Being in a teaching hospital may strengthen the effect of social
norms on accepting pharmaceutical marketing payments.
The results of the moderator analysis are reported in Table 5.
Model 1 presents principal results from Table 4 for comparison.
Potential moderators of interest include key significant
individual- and organization-level predictors of payment
volume: being female, physician tenure, and practicing at a
teaching hospital. Model 2 considers the interaction effects of
the three potential moderators. Model 3 considers solely the
moderating effect of being female on the social influence mea-
sures, whereas Model 4 evaluates the interaction of tenure and
social influence measures. Model 5 investigates the impact of
practicing at a teaching hospital on the social influence mea-
sures, and finally, Model 6 considers all previous interactions.
We find that the previous statistically positive main effect of
organization influence becomes nonsignificant when some com-
binations of moderators are added, whereas the nonsignificant
main effect for field influence remains so. The main effect of
the peer influence measure is robust to the inclusion of moder-
ators. Being male, having longer tenure, or practicing at a teach-
ing hospital strengthens the positive relationship between peer
influence and volume of pharmaceutical marketing payments
accepted. The implications of these and other findings will be
discussed.
Discussion
General Discussion of Research Findings
Physicians place themselves in conflict of interest positions when
they accept certain types of pharmaceutical marketing payments.
Being the agents of patients, physicians are obligated to prescribe
medications that are best for the patients. Yet, as numerous
studies point out, pharmaceutical marketing payments bias phy-
sicians toward prescribing marketed medications. Furthermore,
even simply interacting with pharmaceutical representatives pre-
sents serious professional ethical and prudential concerns (Brody
2005). It is crucial to understand what leads some physicians, an
occupation that the general public considers to be highly ethical
(Gallup 2020), to engage in the ethically questionable behavior of
accepting pharmaceutical marketing payments.
The focus of this article is to understand the role of social
norms on a physician’s decision to accept pharmaceutical mar-
keting payments. Our findings suggest that social norms influ-
ence such behaviors. Among the examined social norms,
peers have the strongest positive effect on the accepted
volume of payments and organization members have the
second-strongest positive effect. Members of the same field
outside of the organization do not directly affect one’s accep-
tance of payments. A general pattern that emerges is that prox-
imity is associated with the degree of social learning and
imitation. Being close to a social member creates more opportu-
nity for one to interact, observe, and, ultimately, imitate. As a
result, norms among peers are the strongest reference in
guiding and shaping one’s behaviors. The findings contribute
346 Journal of Public Policy & Marketing 41(4)

Table 5. Generalized Linear Model Estimates of Individual- and Organization-Level Moderators of Physician Acceptance of Pharmaceutical
Marketing Payments.

Dependent Variable: ln(Payment Volume)

(1) (2) (3) (4) (5) (6)

Main Effects
Female −1.115*** (.029) −1.655*** (.058) −4.171*** (.226) −1.107*** (.029) −1.122*** (.029) −4.569*** (.231)
Tenure .014*** (.003) −.002 (.003) .014*** (.003) −.133*** (.040) .014*** (.003) −.226*** (.041)
Teaching Hospital .019* (.011) −.019 (.047) .020* (.011) .019* (.011) −.257 (.199) −.234 (.202)
Field Influence .602 (2.026) .801 (2.026) 1.349 (2.026) −1.021 (2.052) .561 (2.027) −1.932 (2.052)
Organization Influence .203** (.103) .212** (.103) −.017 (.132) −.505 (.533) .200 (.124) −.786 (.546)
Peer Influence 18.012*** (.471) 17.976*** (.471) 18.026*** (.473) 17.157*** (.579) 18.068*** (.471) 17.210*** (.582)
Interactions
Female × Tenure .074*** (.006) .075*** (.006)
Female × Teaching −.221*** (.029) −.177*** (.030)
Hospital
Tenure × Teaching .008 (.005) .008 (.005)
Hospital
Female × Field Influence 1.031*** (.634) 9.470*** (.639)
Female × Organization .977*** (.293) 1.015*** (.294)
Influence
Female × Peer Influence −1.752*** (.165) −1.697*** (.166)
Tenure × Field Influence .276** (.113) .503*** (.114)
Tenure × Organization .085 (.062) .089 (.063)
Influence
Tenure × Peer Influence .084** (.036) .082** (.037)
Teaching Hospital × Field −.223 (.501) −.371 (.502)
Influence
Teaching Hospital × .383 (.405) .519 (.406)
Organization Influence
Teaching Hospital × Peer .669*** (.213) .470** (.214)
Influence
Observations 3,231,350 3,231,350 3,231,350 3,231,350 3,231,350 3,231,350
Controls Yes Yes Yes Yes Yes Yes
Year Fixed Effects Yes Yes Yes Yes Yes Yes
Log-Likelihood −11,177,636 −11,177,531 −11,177,488 −11,177,622 −11,177,626 −11,177,370
AIC 22,355,334 22,355,129 22,355,044 22,355,313 22,355,320 22,354,827

*, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively.
Notes: Heteroskedasticity-robust standard errors in parentheses. AIC=Akaike information criterion.

to the literature on institutional theory and provide insights to
stakeholders in managing this phenomenon.
Theoretical Implications
Our article applies and extends the institutional theory frame-
work to explain ethically questionable behaviors. This research
answers Powell and Colyvas’s (2008) call for applying institu-
tional theory to explain micro-level individual agent behaviors.
Their research argues that norms emerge from daily activities of
individual agents instead of active organizational management,
which means that it is necessary to investigate how individuals
perceive their social environments to understand their behaviors
and norms. Our results appear to support Powell and Colyvas’s
argument because a physician’s behavior is influenced more by
the activities of their peers than the institution-level social envi-
ronment. Our study also answers the call for research from
Grewal and Dharwadkar (2002), who point out that social pres-
sures have been largely neglected in understanding agent behav-
iors. Our findings suggest that social environments shape how
ethically questionable behaviors are perceived. When ethically
questionable behaviors are common among social group
members, such behaviors are legitimized and perceived as
acceptable. Our findings extend the theory and suggest that
the strength of social norms varies.
Our study also connects institutional theory to social
impact theory and construal level theory and shows support
for these theories. Social impact theory argues that proximity
leads to more social interactions and influences. Construal
level theory suggests that individuals’ behaviors are suscepti-
ble to social influence when the behaviors from social
members are characterized as psychologically proximal. In
the context of this study, social influence is observed
through a physician’s willingness to accept pharmaceutical
Tong et al. 347

marketing payments. The three social environments of physi- Public Policy Implications
cians that we examine represent varying degrees of physical
Industry-level policy. Since at least the 1960s, there has been
and psychological proximity; peers are the most proximal,
debate about the appropriateness of marketing to the health
organization members are more distant, and members of the
care industry (Greene 2007). The industry relies in part on phy-
same field are the most distant. Consistent with the predictions
sicians to self-regulate and follow ethical standards and prac-
of social impact theory and construal level theory, we show
tices that are in the patient’s best interest. The American
that peers have the strongest influence on a physician’s likeli-
Medical Association first introduced ethics guidelines under
hood to accept pharmaceutical marketing payments, followed
substantial pressure from legislators in 1991. In 2002,
by organization members, then field members.
PhRMA and the American Medical Association issued and
Our moderator analysis also suggests that being male, prac-
updated guidelines, respectively, that allow gifts valued at
ticing for longer, or working at a teaching hospital intensifies
$100 or less if there is a benefit to patients or a physician’s prac-
the positive effect of peer influence on accepting pharmaceu-
tice.8 However, these guidelines do not appear to be sufficient in
tical marketing payments. The findings on gender provide
curtailing financial conflicts of interest (Rothman et al. 2009).
support to the literature, which generally argues that women
Data provided from state and federal disclosure laws demon-
have a greater awareness of ethical issues and a higher level
strate substantial evidence that guidelines are generally not fol-
of moral reasoning (Eynon, Hills, and Stevens 1997;
lowed (Campbell et al. 2007). Perhaps this is to be expected
Liyanarachchi and Newdick 2009). Individuals with a
because a survey from 1998 shows that only 9% of surveyed
higher level of moral awareness and reasoning may be less
physicians believe that marketing industry gifts are influential
sensitive to peer influence and more likely to act according
(Gibbons et al. 1998), and a more recent survey, in which the
to their ethical values. Although the effects of tenure on uneth-
majority of surveyed physicians report that low-cost gifts are
ical behaviors often yield mixed results (Andreoli and
acceptable and do not present an ethical dilemma, reflects this
Lefkowitz 2008), our results suggest that physicians with a
attitude (Khazzaka 2019). Because industry-level policy to
shorter tenure are less likely to compromise their own
manage and promote ethical behavior has been largely tooth-
ethical values and give in to peer influence. This finding
less, legislation that limits or eliminates pharmaceutical market-
aligns with previous research that proposes that individuals
ing to physicians may be warranted.
with a shorter tenure have a higher level of moral reasoning
(Pennino 2002). Trainings, supervision, and mentorships
in teaching hospitals not only increase social
Public policy. Just as public policy may be used to correct for a
interactions between physicians but also encourage social
market failure, it may also correct for a physician’s systematic
learning. The practices of teaching hospitals may explain
failure to manage their time prudently in the interest of their
why physicians in teaching hospitals are more susceptible to
patients (Brody 2005). Combined with the stressful and time-
peer influence.
intensive nature of a physician’s work, distractions from pharma-
Furthermore, our longitudinal data and method of analysis
ceutical representatives are not insignificant and are hard to
enable us to isolate the causal effect of social members’ conflict
justify along with a physician’s professional obligations (Griffith
of interest behavior on individual behavior in the next period.
1999; Rothman 2000). If the costs to society outweigh the benefits
We observe a feedback mechanism between group norms and
to the physician, pharmaceutical marketing to physicians may
individual behaviors: as social groups engage more often and
rightfully present a market failure that merits public policy
with greater vigor in conflicts of interest, individuals observe
correction.
and follow in the next period. As more individuals conform to
Current “sunshine laws”—laws that require pharmaceutical
the norm in the next period, more individuals are expected to
companies to make the value of gifts to physicians public (e.g.,
imitate the behaviors in the following period.
the National Physician Payments Transparency Program is the
This reinforcing mechanism is double-edged. If not limited,
provision of the Affordable Care Act responsible for making
we should expect groups practicing a norm of engaging in con-
this study’s data public)—make the industry more transparent
flict of interest behavior to continue to do so. As such behavioral
but have led to some unintended consequences. Disclosure stat-
norms become more dominant, we expect the behavior to
utes with reporting thresholds may weaken public scrutiny of
prevail. Alternatively, social influence enables declines in
small gifts, although evidence shows that even small gifts lead
such behavior to continue. Should a shock occur that changes
to prescription biases and lost time. Even with increased transpar-
the group’s behavior in one period, we expect that change to
ency, there is no clear path by which consumers can correct for
ripple into future periods, for better or worse. This result
likely bias, which effectively mitigates the intended purpose of
implies a role for public or private policy to diminish conflict
these laws. This is exacerbated by low consumer literacy regard-
of interest behavior. In the case of pharmaceutical marketing
ing the health and pharmaceutical industries (Sarkees, Fitzgerald,
payment acceptance, the introduction of an effective policy
shock that increases the costs or decreases the benefits of engag- 8
See https://www.phrma.org/en/Codes-and-guidelines/Code-on-Interactions-
ing in conflict of interest behavior will propagate over future with-Health-Care-Professionals and https://journalofethics.ama-assn.org/article/
periods to build and reinforce a norm that is against engaging ama-code-medical-ethics-opinions-physicians-relationships-drug-companies-
in conflicts of interest. and-duty-assist-containing/2014-04, respectively.
348
and Lamberton 2020; Vervloet et al. 2018; Zhang, Terry, and
McHorney 2014). But, perhaps most importantly, disclosures
imply moral licensing to physicians, which, combined with our
finding that close peer groups engaging in conflicts of interest
help legitimize unethical behavior, may exacerbate prescription
biases as a result of pharmaceutical marketing to physicians.
Despite the limitations, sunshine laws succeeded in increasing
transparency, which led to Congressional hearings (e.g., Waxman
2005), increased media coverage, and academic research on the
topic (e.g., Fitzgerald and Yencha 2019; O’Connor 2018),
including this study.
Banning pharmaceutical marketing payments to physicians
altogether is another possible public policy initiative. The earliest
such state law was enacted in Minnesota in 1993, which banned
pharmaceutical manufacturers from giving physicians gifts in
excess of $50 per year. States such as Maine and Vermont fol-
lowed with similar bans, and other states attempted to pass
related bills in the following years.9 Although effective enforce-
ment is required for such legislation to have enough power, evi-
dence from Minnesota suggests that the ban, once enforced,
resulted in a relative decline in visits from pharmaceutical repre-
sentatives compared with the national average (Harris 2007).
More recently, some states chose to provide their own detail-
ing programs as opposed to regulating pharmaceutical represen-
tatives.10 Publicly supported creation of information clearing
houses and “counterdetailing,” wherein health care workers
are funded to disseminate state-of-the-art medical information,
is intended to help counteract commercial detailing efforts.
These programs aim to educate physicians about equivalent
but cheaper drug options. In fact, physicians who participate
in Medicaid have the incentive to lower prescription costs to
leave more money from the state available to pay physicians.
Reflective of our results regarding the role of social influence,
the employment of medical professionals for counterdetailing
may influence physicians to recommend lower cost pharmaceu-
ticals, which improves patient outcomes. Although studies
show some evidence of cost savings and improved quality of
care (Avorn and Soumerai 1983; O’Brien et al. 2007), it is
not clear if this is a result of correction in commercial detailing-
produced biases, dissemination of scientific research to clinical
practitioners, or simply enhanced moral awareness. Therefore,
other process-oriented policy, such as requiring regular physi-
cian ethics training, may lead to similar improved outcomes.
Although some of the previously considered public policies
may have promise for curtailing bias from pharmaceutical mar-
keting payments, the cost and capacity for states to regulate
behavior are often uncertain, and unintended consequences of
public policy are difficult to anticipate (Studdert, Mello, and
9
For related state-level policy, see Minnesota Statute § 151.461: https://www.
revisor.mn.gov/statutes/cite/151.461; Maine Statute 111N § 4; Title 32,
Chapter 117: The Maine Pharmacy Act: http://www.mainelegislature.org/
legis/statutes/32/title32sec13759.html; Vermont Statute § 4632: http://www.
leg.state.vt.us/docs/2010/bills/Passed/S-048.pdf; and California Senate Bill 490.
10
States having attempted such a strategy include Pennsylvania, Vermont, and
West Virginia (e.g., https://www.ncsl.org/research/health/marketing-and-
advertising-of-pharmaceuticals.aspx)
Journal of Public Policy & Marketing 41(4)
Brennan 2004). Even with effectively enforced legislation, strong
self-regulation and cultural norms are crucial. Furthermore, phar-
maceutical marketing is shown to be highly adaptive (Statman
and Tyebjee 1984) and should be expected to exploit legislative
loopholes and continuously find better ways to promote.
Hospital-level regulation. Because of the limitations of industry-
and government-level policy, private policy introduced at the
hospital level is likely the most effective in realigning physician
incentives toward improving patient outcomes. Public policy
targeting the field broadly may be ineffective unless coupled
with hospital-level regulations because peer norms are
roughly at the intersection of organization and field norms.
Our findings show that peer influence plays a critical role in
influencing physicians’ behaviors, so hospital regulations that
enforce or promote ethical practices can drastically change the
behaviors of peers in a departmental unit and, subsequently,
one’s ethical choices.
Some managed care organizations, such as Kaiser Permanente,
and academic medical centers have created hospital-level policies
for either restricting visits from pharmaceutical representatives or
outright banning the acceptance of gifts. Hospital-level detailing
restrictions are shown to be associated with a reduction in
detailed drug prescriptions (Larkin et al. 2017). Furthermore, sig-
nificant changes to prescribing behaviors have been observed in
medical centers that regulate gifts to physicians, which likely cor-
rects for previous bias from commercial detailing (Larkin et al.
2017). A study shows that private policy eliminating marketing
of opioids at academic medical centers contributed to an 8.8%
reduction in the total volume of opioids prescribed by physicians
in the sample (Eisenberg et al. 2020). Such hospital-level policies
can help mitigate the negative externalities associated with com-
mercial detailing.
Our results also highlight the feedback mechanism of social
norms and one’s acceptance of pharmaceutical marketing pay-
ments. Hospital-level restriction on such payments may effec-
tively disrupt this feedback loop to mitigate pharmaceutical
marketing payment acceptance in future periods. Hospital-level
policies may also promote social norms, which is further dis-
cussed in the next section. Changes in social norms that result
from reducing the acceptance of pharmaceutical marketing pay-
ments would reinforce this behavior in the long run. This combi-
nation of policy and social engineering better aligns physician
incentives toward providing optimal patient outcomes, enables
physicians to take ownership of their education, and reinforces
itself through social norms to preserve these new, positive
social norms.
Managerial Implications
The context of this study implies a distinction between norma-
tive norms and injunction norms. Normative norms describe
what people do, whereas injunctive norms describe what
people should do (Cialdini, Kallgren, and Reno 1991). Based
on the results of our study, the normative norm of accepting
pharmaceutical marketing payments among physicians is
Tong et al. 349

relatively strong. Although some stakeholders in the health care an unobserved confounder presents some bias to the results.
sector attempt to outline what physicians should do, it appears Future research could consider how the variation in vigor
that injunctive norms still need to be strengthened. with which pharmaceutical companies market to particular hos-
Besides the hospital-level policies discussed in the previous pitals influences the results presented in this article. Relatedly,
section, hospitals may cultivate injunctive norms through the an examination of the minority of physicians who accept an
emphasis of moral rules by using social rewards and informal extraordinary amount of pharmaceutical marketing payments
sanctions to persuade agent behaviors. Hospitals may promote or are employed at unusually large hospitals, which were
ethical values through social events, such as trainings and con- excluded from the present study as outliers, may also be war-
ferences, where values can be communicated and reinforced. In ranted. Because of our identification strategy and lags in the
addition, stakeholders can appoint thought leaders or role publication of some of the data utilized in this study, future
models to provide informal sanctions to guide physician behav- research can provide additional insights by gathering more
iors. Thought leaders can exert their social powers to discourage recent data as it becomes available and investigating a larger
the acceptance of pharmaceutical marketing payments on the sample period. The value of reassessing research on pharmaceu-
basis of an agent’s desire to gain legitimacy and approval tical marketing will only increase as health care policy and phar-
(French and Raven 1959; Singh and Jayanti 2014). Because maceutical marketing regulation continue to evolve and
our results suggest that being in a teaching hospital leads physi- substantial policy changes are made.
cians to be more susceptible to peer influence, it may be partic-
ularly important for appointed thought leaders to instill and
promote ethical values to young medical professionals in teach-
ing hospitals (Rothman et al. 2009).
Conclusion
In this article, we examine the role of social norms in a physi-
Limitations and Future Research cian’s willingness to accept marketing payments from pharma-
The acceptance of pharmaceutical marketing payments is ceutical companies. Aligned with the logic of institutional
viewed as ethically questionable because many studies demon- theory, our results suggest that the social norms of peers and
strate that such payments bias a physician’s medical judgment organization members legitimize and encourage the acceptance
and prescribing behaviors (Spingarn, Berlin, and Strom 1996). of such payments, and peers have the strongest effect. The find-
Our results provide evidence that the social norms of peers ings highlight the role of social environment and inform public
and organization members legitimize and encourage physicians and private policy to mitigate this conflict of interest behavior.
to accept more payments. It is unclear whether social groups
influence willingness to engage in conflicts of interest in other
Appendix: Generalized Linear Model Estimates of Pharmaceutical
industries, and that is worth consideration in future research. Marketing Payments by Type
Future research exploring other mechanisms that explain
why some physicians accept (or do not accept) marketing pay- Dependent Variable:
ments from pharmaceutical companies would provide addi- ln(Payment Volume)
tional insights on this topic. Although opportunities arise for High Conflict of Low Conflict of
physicians to accept pharmaceutical marketing payments, Interest Interest
many physicians do not take advantage of the situation. It is
possible that some physicians refrain from accepting payments Field Influence .602 (2.026) .336 (12.180)
Organization .203** (.103) .758*** (.072)
because they value the intrinsic reward from providing the best
Influence
medical treatment to patients more than the extrinsic reward
Peer Influence 18.012*** (.471) 2.304*** (.286)
offered by pharmaceutical companies. It is also likely that phy- Female −1.115*** (.029) −.450*** (.018)
sicians distinguish between acceptance of marketing payments Tenure .014*** (.003) .010*** (.002)
on the basis of potential conflicts of interest. To explore the MD .191*** (.011) .043*** (.006)
antecedents of the acceptance of pharmaceutical marketing pay- PhD .261*** (.051) .239*** (.031)
ments, our findings highlight the importance of the development F-Evaluation .065 (.403) −.012 (.245)
of social norms for the management of such behavior. Future F-Anesthetic −.223*** (.017) −.033*** (.010)
research may consider exploring how physician attitudes F-Surgery .014 (1.357) .102 (.826)
toward pharmaceutical companies and different types of mar- F-Radiology −.058 (.902) −.065 (.549)
keting moderate the findings of the present study. F-Pathology −.045 (.759) −.004 (.462)
Although the sample is representative of the population and F-Medicine .042 (.744) .015 (.453)
characterizes the majority of physicians in the United States, Evaluation .001*** (.0003) .003*** (.0002)
future research may benefit from extending the sample to Anesthetic .002*** (.001) −.0002 (.0003)
include physicians who do not accept Medicare or Medicaid. Surgery −.0002 (.0003) −.001*** (.0002)
We control for omitted variable bias and selection bias (continued)
through numerous methods and controls, but it is possible that
350 Journal of Public Policy & Marketing 41(4)

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