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Business Unethicality as an Impediment to Consumer Trust: The Moderating Role of Demographic and Cultural Characteristics

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Abstract

The article reports the findings of a study conducted among 387 consumers regarding their perceptions of the unethicality of business practices of firms and how these affect their response behavior, in terms of trust, satisfaction, and loyalty. The study confirmed that high levels of perceived corporate unethicality decrease consumer trust. This in turn reduces consumer satisfaction, which ultimately has negative effects on customer loyalty. It was also revealed that, although both consumer gender and urbanity have a moderating effect on the link between perceived unethicality and trust, the age group and level of education of the consumer did not exhibit such an effect. With regard to consumer cultural characteristics, both high uncertainty avoidance and low individualism were found to increase the negative impact of business unethicality on trust, as opposed to power distance and masculinity that did not have any moderating effect on this relationship. Implications for managers are extracted from the study findings, as well as directions for future research.

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Notes

  1. Research on business ethics has followed two different directions: normative, where the emphasis is on what businesses should do in order to be ethical, and descriptive, where the focus is on understanding and predicting ethical behavior (Cohen 2001).

  2. According to the study of Srnka (2004), culture constitutes a complex factor of ethical decision-making, affecting different stages of this process. In particular, influences from the wider cultural environment (e.g., economic or political system) determine stages in the affective part of the process (e.g., perceptions or evaluations), whereas influences from the closer cultural environment (e.g., organizational culture) are more likely to have an impact on the behavioral part (e.g., intentions).

  3. Some researchers suggest that trust has a direct influence on consumer loyalty (Foster and Cadogan 2000). Specifically, the greater the trust the buyer has in the company, the greater the value placed on the relationship and the smaller the likelihood of consumer switching behavior (Ramsey and Sohi 1997).

  4. Hoffman (1998) suggests that the mixed results of past research are due to the fact that ethical perceptions and behavior are situation-specific. For instance, Serwinek (1992) argues that ethical perceptions for males and females are similar when considering most types of business ethics questions, but the difference does appear in the areas where females have clearly been taken advantage of in the past.

  5. Face-to-face interviews may give rise to social desirability responses, that is, a tendency by respondents to describe their case in more favorable terms by conforming to socioculturally sanctioned norms (Mick 1996; De Jong et al. 2010). To avoid this possibility in our study, the following measures were taken: (a) anonymity and confidentiality were emphasized and communicated to all study participants (Randall and Fernandes 1991; Chung and Monroe 2003); (b) it was confirmed that our analysis would be restricted to an aggregated level that would prevent the identification of any individual (Tsai and Ghoshal 1998); (c) interviewers were carefully selected and trained in order to objectively handle the answers given by respondents (Nederhof 1985); (d) it was clearly stated (both orally and written) to participants that there were no right or wrong answers for the questions asked (Randall and Gibson 1990); (e) during the interview, respondents were provided with their own copy of the questionnaire and, following a discussion of each section, they were asked to write down their own answers while the interviewer maintained a discrete distance (Holbrook et al. 2003); and (f) the ‘ballot box’ solution was applied to collect completed questionnaires (Mitchell et al. 2009).

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Acknowledgments

The authors would like to express their appreciation to the Section Editor and the anonymous reviewers of the Journal for their insightful comments, constructive input, and useful guidance on earlier versions of the manuscript. The authors would also like to thank Crystalleni Paridi and Marina Vasiliou for their assistance in collecting the data for the purposes of this study.

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Authors and Affiliations

  1. Department of Public and Business Administration, School of Economics and Management, University of Cyprus, P.O. Box 20537, 1678, Nicosia, Cyprus

    Leonidas C. Leonidou

  2. Leeds University Business School, University of Leeds, Maurice Keyworth Building, Leeds, LS2 9JT, UK

    Constantinos N. Leonidou & Simos Chari

  3. Praxitelous 4, 4520, Limassol, Cyprus

    Olga Kvasova

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  1. Leonidas C. Leonidou
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  2. Olga Kvasova
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  3. Constantinos N. Leonidou
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Correspondence to Constantinos N. Leonidou.

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Leonidou, L.C., Kvasova, O., Leonidou, C.N. et al. Business Unethicality as an Impediment to Consumer Trust: The Moderating Role of Demographic and Cultural Characteristics. J Bus Ethics 112, 397–415 (2013). https://doi.org/10.1007/s10551-012-1267-9

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