Academic journal article Journal of International Business Ethics

Consumer Perception, Behavioral Gap, and Response to Ethical Business: The UK Perspective

Academic journal article Journal of International Business Ethics

Consumer Perception, Behavioral Gap, and Response to Ethical Business: The UK Perspective

Article excerpt

Introduction

Due to social, political, and economic developments, stakeholders of business, particularly consumers, are becoming more empowered and vocal in today's world. Bird and Hughes (1997) indicate that there are many curious consumers who even want to know the details of the production process. Consequently, consumers, as well as pressure groups (such as human rights organizations and ecological and environmental organizations) are increasingly demanding that businesses should be ethical, ecological, and environmentally friendly. In practice, consumers own the power to force businesses to accept a socially responsible paradigm by preferring ethically standard products and services and by denying/avoiding unethical products (Astous & Legendre, 2009; Pelsmacker et al., 2005). Carrigan and Attalla (2001) state that by boycotting the companies like Shell and Nestle for their unethical business, consumers proved that if they (consumers) become socially responsible, it might cause huge financial loss for ethically irresponsible businesses. Hence, ethics and corporate social responsibility (CSR) have become extremely crucial in business.

"Ethical consumerism" is the choice of products or services by consumers that do not cause any harm to humans, animals, or the natural environment. Consequently, "business ethics" in this study stands for the ethical relationship between businesses and consumers and between businesses and their employees. Business ethics also includes no negative activities that may harm the environment and the society at large. According to Loureiro et al. (2002), Maietta (2003), and Trudel and Cotte (2009), consumers are willing to spend extra to buy ethical products. However, consumers might have different thinking and different views about ethical purchasing. For example, some factors, such as cultural background, moral philosophy, professional code, and level of rewards, play a significant role in an individual's perception about ethical business (see, for example, Ferrell and Gresham, 1985). Ottman (1992) asserts that consumers have been gradually attracted by environmentally responsible products.

In developed countries, generally, ethical business practices, as well as consumer concern about ethical business, have been well documented (Shaw et al., 2005). The UK, for example, is one of those countries that have formed a large database (Mintel International Group Ltd, London) on ethical businesses. More than one-third of consumers in the UK consider themselves as "ethical consumers" (Cowe & Williams, 2000). However, despite the emergence of consumer concern about ethically recognized products, ethical products (fair trade products) have only achieved a 1-3% market-share (Ethical Consumerism Report, 2011).

Nevertheless, there has been a powerful shift in the behavior of supermarkets from unethical to ethical sourcing, labor rights, and green consumerism in the last decade. Some supermarkets are making a real effort to turn to ethical sourcing, fair trade, and other ethical business activities that put their business counterparts under pressure to become ethical. Hence, there is a competition in the ethical business arena among the supermarkets to convince consumers. Mintel's (2009, 2011) report suggests that in the UK, there is a growing number of consumers who are interested in fair trade products and who are also concerned about animal welfare, employee welfare, and other ethical issues.

The Ethical Consumer Behavior Report (2011) indicates that, despite the economic downturn in this decade, the sales of ethical goods and services in the UK increased by almost 9% in 2010 compared to 2000 (from £43bn to £46.8bn). Figure 1 shows the sector-wise ethical spending by UK consumers in 2010 compared to 2009 and 2000:

Carrigan et al. (2005) point out that if any company follows ethical codes and norms and appears to be ethical, then consumers are happy to reward that company by purchasing more products from it and by paying extra for its products. …

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